Wednesday, 12 September 2018 12:28

ACCC clears way for acquisition of energy company APA by Hong Kong consortium

By
Rod Sims, ACCC chairman Rod Sims, ACCC chairman

The Australian Competition and Consumer Commission has said it will not oppose the proposed acquisition of Australian energy company APA Group by the Hong Kong-based CK Consortium.

The competition watchdog  made its determination after receiving a court-enforceable undertaking from the CK Consortium to divest significant gas assets in Western Australia.

APA owns or operates $20 billion of energy infrastructure, including 15,148km of transmission pipelines and 28,600km of gas mains and pipelines. It also has interests in gas storage and processing, and gas-fired and renewable energy power generation businesses across Australia.

“The ACCC concluded that, in the absence of the undertaking, the proposed acquisition was likely to substantially lessen competition,” chair Rod Sims said.

“The ACCC was concerned about the removal of the CK Consortium as a competitor in relation to new pipeline development. The ACCC was also concerned about gas transmission and storage services in Western Australia given that, without the undertaking, the CK Consortium would own most gas transmission and storage facilities in the west.

“The undertaking addresses these concerns and creates an opportunity for a new operator to acquire a valuable set of assets, together with the personnel needed to operate and manage the assets. This will create an operator similar in size to the CK Consortium’s current operations in Western Australia.”

Sims said vertical integration between the CK Consortium’s gas distribution assets — the pipelines servicing individual households/businesses — and APA’s transmission assets  —the high-capacity pipelines servicing major centres and feeding gas into the distribution network — was investigated carefully.

“The ACCC did not consider that any possible bundling, attempts at foreclosure or information-sharing across the vertically integrated combined entity could harm competition. The gas distribution assets at issue are regulated,” he said.

“The purchaser of the divestment assets will need to be approved by the ACCC, and when approving a new owner, we will focus on its ability to be an effective and long-term competitor for the development of new pipelines.”

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