ACCC gives nod to Brookfield and MidOcean for Origin buyout

Origin Energy logo on side of corporate headquarters (profit)
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The Australian Competition and Consumer Commission (ACCC) has granted authorisation with conditions for the proposed acquisition of Origin Energy by Brookfield and MidOcean Energy.

The proposed acquisition comprises two interdependent transactions. The transactions will result in a consortium led by the Brookfield Global Transition Fund owning Origin’s energy markets business, including Origin’s electricity generation and electricity and gas retail businesses. MidOcean will own Origin’s upstream gas interests.

Related article: Brookfield consortium seeks permission to acquire Origin

Under the Competition and Consumer Act, the ACCC must not grant authorisation unless it is satisfied in all the circumstances that the proposed acquisition would not be likely to substantially lessen competition, or that the likely public benefits would outweigh the likely public detriments.

“On the first limb of the test, we are not satisfied that the proposed acquisition would not be likely to substantially lessen competition. However, after a detailed review, we are satisfied that the proposed acquisition is likely to result in public benefits that would outweigh the likely public detriments,” ACCC chair Gina Cass-Gottlieb said.

“We found that the public benefits and public detriments in this matter were finely balanced. Likely detriments, particularly anti-competitive effects from vertical integration, had to be weighed against likely benefits to Australia’s renewable energy transition. We considered undertakings offered by Brookfield, AusNet and MidOcean in this weighing process.

“The ACCC considers that the acquisition will likely result in an accelerated roll-out of renewable energy generation, leading to a more rapid reduction in Australia’s greenhouse gas emissions,” Cass-Gottlieb said.

“The Brookfield Global Transition Fund has been specifically established to focus on the transition to renewable energy. Its decision to buy Origin, Australia’s fourth largest emitter of greenhouse gases, is driven by a strong imperative and commercial incentive to lower emissions quickly.”

“In this case, we determined that the likely gains for Australia’s renewable energy transition amount to a public benefit sufficient to outweigh the likely public detriments,” Cass-Gottlieb said.

“We drew extensively on our engagement with industry participants to weigh these public benefits and detriments.”

“The ACCC concluded that an accelerated build-out of Origin’s renewable energy generation would be a material benefit to the Australian public,” Cass-Gottlieb said.

“An accelerated build-out by Origin will assist in lowering Australia’s emissions by replacing some fossil fuel generation earlier than would occur without the proposed acquisition. The ACCC considers that a reduction in greenhouse gas emissions is a public benefit of considerable weight.”

However, the ACCC recognises that there are several factors that mean the benefits may not be as large as suggested by the $20 billion to $30 billion build-out plan proposed by Brookfield.

“These factors include constraints within the electricity transmission network, particularly in the short-term, which may delay Brookfield’s ability to build renewable energy generation at the speed claimed. We also recognise that some of Brookfield’s proposed renewable investments would be likely to be made by others if the acquisition does not eventuate,” Cass-Gottlieb said.

Related article: Origin to build Australia’s biggest hydrogen electrolyser

The ACCC considered what investments Origin and Brookfield would make in renewable energy generation without the acquisition to identify benefits that are causally linked to the acquisition and therefore relevant to the ACCC’s assessment.

“Despite these counterpoints we consider that, in this case, the proposed acquisition is likely to increase the speed of the renewable energy generation roll-out,” Cass-Gottlieb said.

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