The Australian Competition Tribunal (ACT) today granted approval for AGL to pursue its proposed $1.5bn acquisition of Macquarie Generation, the largest generation portfolio in New South Wales. AGL had sought authorisation from the Tribunal to allow the transaction to proceed following the ACCC’s rejection of the proposed acquisition during its informal merger clearance deliberations.
The ACCC – both in rejecting informal merger clearance and in arguing that authorisation should not be granted – stated its belief that the proposed transaction raised both vertical and horizontal competition concerns. A key issue argued by the ACCC was that AGL’s acquisition of Macquarie Generation would materially reduce the supply of hedge contracts available to second-tier retailers in New South Wales, thereby harming retail competition.
In handing down its judgement the ACT dismissed these concerns, finding that the costs and risks of the proposed acquisition were small, and very likely to be outweighed by the benefits of the transaction proceeding.
Frontier (Australia) was retained by AGL’s solicitors – Ashurst Australia – to provide expert economic and competition policy advice and modelling as input to both AGL’s informal merger clearance submissions as well as its application to the ACT requesting authorisation. Dr Philip Williams, Mr Danny Price and Prof. Stephen Gray appeared before the ACT as expert witnesses on behalf of AGL.