Australia’s market regulator has approved the takeover of Australia’s largest energy retailer on condition the new owners submit to independent audits to ensure they do not discriminate against rival firms.
The Australian Competition and Consumer Commission on Tuesday said it would not block the $18.7bn takeover of Origin Energy by private equity giants Brookfield and EIG Partners. Other approvals are needed, including by the Foreign Investment Review Board, before the deal is complete.
The ACCC chair, Gina Cass-Gottlieb, said Brookfields’ 45.4% stake in AusNet, the former ASX-listed Victorian energy transmission unit, meant ongoing competition in Victoria in particular would need to be monitored closely to ensure the new owners did not act to stymie other energy companies’ plans.
The takeover approval was “finely balanced” between the benefits and drawbacks of the deal, Cass-Gottlieb told Guardian Australia. “It was given serious and robust consideration.”
The potential for Brookfield to use its increased market clout to favour its own businesses was “subtle and difficult to detect”, she said. However, the ACCC was confident that potential discrimination could be avoided by requiring annual audits and also separate team and personnel between Brookfield and AusNet.
AusNet holds the vast majority of the Victorian high-voltage electricity transmission system. As one of the five electricity distribution networks in the state, it also provides electricity to about 802,000 customers, the regulator said.
Brookfield would be required to “dismiss an employee if they are proven to have deliberately caused, or deliberately attempted to cause, AusNet to discriminate in favour” of Origin in terms of getting access to the grid, the ACCC said.
Key to the approval was Brookfield’s commitment to accelerate the introduction of renewable energy and storage, a move that would lead to a more rapid reduction of Australia’s greenhouse gas emissions.
Canada-based Brookfield would face “material, reputational and commercial consequences if it fails to deliver” on its renewables commitments, Cass-Gottlieb said.
Brookfield has pledged to invest between $20bn and $30bn by 2033 in renewable energy and storage should the deal to purchase Australia’s fourth-biggest greenhouse gas emitter go through.
Brookfield’s renewable energy drive is headed by Mark Carney, chair of the company’s asset management unit. Carney served as governor of the Bank of Canada from 2008 to 2013 and then governor of the Bank of England until 2020, and is currently the United Nations special envoy for climate action and finance and co-chair for the Glasgow Finance Alliance for Net Zero.
The federal energy minister, Chris Bowen, said he “very much welcomed Brookfield’s interest in Australia” and the ACCC decision was “a step forward”. Treasurer Jim Chalmers, though, would have to sign off on the deal as part of the foreign investment review.
The ACCC also considered a number of other vertical integration issues, including Brookfield’s half stake in Intellihub, a smart meter provider. It also assessed risks from information sharing that could arise from “the small overlap in interests in the LNG export facilities in Queensland through MidOcean”, the regulator said.
MidOcean is an LNG company formed by EIG, a US-headquartered institutional investor in the global energy and infrastructure.
Investors welcomed the ACCC move, sending Origin’s share up more than 4% to $9.12 in recent trading.
– with AAP