ACCC greenlights Brookfield's Origin Energy deal to accelerate green transition; and other developments

The latest in competition and consumer law 6 min read

ACCC greenlights Brookfield's Origin Energy deal to accelerate green transition 

On 10 October, the ACCC authorised Brookfield and MidOcean's proposed acquisition of Origin Energy.  

The deal will see Brookfield acquire Origin's energy markets business, with MidOcean assuming Origin's stake in the Australia Pacific LNG venture in Queensland.

By law, the ACCC must not authorise a proposed acquisition unless satisfied in all the circumstances that it would not be likely to substantially lessen competition, or that the likely public benefits would outweigh the likely public detriments.

The ACCC concluded that the proposed acquisition would likely result in significant environmental public benefits that would outweigh any likely public detriments. In particular, the regulator considered that Brookfield's proposed investment of between $20 billion and $30 billion in renewable energy projects, matched with Origin's large retail base, would enable Origin to become Australia's biggest green energy provider by 2030, leading to a more rapid reduction in Australia's greenhouse gas emissions than if the acquisition did not occur.

'The ACCC concluded that an accelerated build-out of Origin’s renewable energy generation would be a material benefit to the Australian public,' ACCC Chair Gina 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.'

This decision is the first time in Australia, and one of the first times globally, that environmental or carbon reduction benefits have been determinative in a competition clearance.

The authorisation was subject to several minimum conditions, including the novel requirement for Brookfield to publish annual reports on the progress of Origin in meeting its renewables build-out objectives. Further, a range of separation and ring-fencing measures will apply within Brookfield, and between Brookfield, AusNet and Origin, aimed at reducing the likelihood of Brookfield or Ausnet engaging in certain conduct that would favour Origin or otherwise disfavour Origin's rivals. The full suite of the ACCC's conditions can be found here.

A copy of its reasons for determination, and an executive summary of them, can be found here.

Treasury merger makeover: seeking views on changes to regime

In August, Federal Treasurer Jim Chalmers established a special Competition Taskforce within Treasury to conduct a 'Competition Review'. The purpose of the review is to provide ongoing recommendations to the Government, over two years, on improvements that can be made to Australia's competition laws, policies and institutions to ensure they remain fit for purpose in the modern economy.

On 20 November, Treasury announced that the Competition Taskforce had released a consultation paper and was inviting public submissions on potential changes to Australia's merger regime. In general, the taskforce is seeking feedback on:

• the effectiveness of current merger rules in fostering beneficial mergers and curbing potentially anti-competitive ones; and
• opportunities for enhancing Australia's merger rules and processes, to better serve markets and consumers.

Specifically, the Competition Taskforce is seeking feedback on three potential merger review models that could be introduced in place of Australia's current informal clearance model:

• Option 1 – A voluntary formal clearance regime: businesses could choose to notify of a merger and the ACCC could grant legal immunity from court action if satisfied the merger would not be likely to substantially lessen competition.
• Option 2 – A mandatory and suspensory regime: mergers above a threshold would require notification. Transactions would be suspended for a period while the ACCC conducts its assessment. To prevent an anti-competitive merger, the regulator would need to prove to the court that the merger would be likely to substantially lessen competition.
• Option 3 (ACCC’s proposal): a mandatory formal clearance regime, with compulsory notification of mergers above a threshold and allowing the ACCC to ‘call-in’ transactions below the threshold where there are competition concerns. The ACCC would only grant clearance if satisfied the merger was not likely to substantially lessen competition. Clearance would provide formal immunity from court action under section 50 of the Competition and Consumer Act 2010 (Cth).

On these questions, the Competition Taskforce aims to engage key stakeholders to gather a diversity of perspectives representing consumers, business and industry experts. The feedback received will inform the recommendations the taskforce provides to government on whether changes should be made to Australia merger rules and processes.

Interested parties can make a submission to Treasury here.

ACCC's caravan warning weighs heavily

On 12 October 2023, the ACCC put the caravan industry on notice regarding any advertising that contains misleading representations.

Examples it identified are:

• issues as to 'price certainty' representations: where a retailer told customers the price of the caravan was fixed, but subsequently sought to increase it (while simultaneously giving the customer an alternative option to cancel the contract); and
• false or misleading representations in relation to inaccurate caravan weights: where a retailer represented that the advertised weights were the precise weights, when, in fact, these were only an estimated weight for similar caravans.

This comes following previous ACCC action regarding the caravan industry. In November 2021, the regulator released two surveys directed to consumers and suppliers, to better understand issues in the caravan retailing market. Following this, in July 2022, the ACCC released its New caravan retailing report highlighting key issues of concern in the industry.

In relation to the recent notice, ACCC Commissioner Liza Carver said, 'we are concerned that several small and mid-sized caravan retailers may be failing to comply with their obligations under the Australian Consumer Law, and we will continue to investigate complaints and engage with retailers and caravan manufacturers to ensure compliance'.

Watchdog takes a bite at Petstock's proposed divestitures

Retail giant Woolworths is seeking to acquire a 55% interest in PETstock Pty Limited – the second-largest omni-channel specialty pet retailer in Australia.

According to the ACCC, market participants are concerned about the substantial consolidation that has occurred in specialty pet retail in recent years. Notably, the ACCC opened an enforcement investigation into Petstock’s former acquisitions, scrutinising a series of unnotified transactions between 2017 and 2022. It alleges that these former acquisitions may have contravened section 50 of the Competition and Consumer Act, given their impact on:

• national chain-on-chain competition;
• state-wide chain-on-chain competition; and
• competition in multiple local areas.

In response, Petstock is proposing to divest 41 specialty pet retail stores, 25 co-located veterinary hospitals, four brands and two online retail stores (the proposed divestiture).

The ACCC was seeking submissions in response to the proposed divestiture by 1 November 2023, before making its final decision.

However, according to ACCC Commissioner Stephen Ridgeway, the decision to publicly consult on the proposed divestiture should 'not be interpreted to mean that this or any other form of remedy will ultimately be accepted'.

ACCC puts the squeeze on Nutrano's Horticulture Code breach 

Nutrano, an Australian fruit grower, has paid penalties totalling $24,850 after the ACCC issued it with two infringement notices relating to alleged contraventions of the Horticulture Code.

The Horticulture Code, mandated by the Competition and Consumer Act, governs transactions between growers and traders within the horticulture industry, with the primary objective of enhancing transparency and clarity in trade. Essential requirements under the Horticulture Code include that horticultural products be sold in accordance with compliant Horticulture Produce Agreements (HPAs), sales statements be provided to growers by traders, and trade terms be publicly disclosed.

After investigating Nutrano's conduct, due to complaints from various citrus growers, the ACCC alleged that it did not meet its obligations under the Horticulture Code. The regulator found that Nutrano failed to specify the prices it paid for the produce in the grower statements, and engaged in trade using HPAs that inadequately detailed the quality standards and specifications necessary for evaluating the growers' produce quality.

'It is a fundamental obligation under the Horticulture Code that agents must be transparent about sales prices they receive, so that growers know the market value of their produce,' ACCC Deputy Chair Mick Keogh said.

The ACCC also expressed concern that Nutrano's HPAs contained clauses that may be unfair under the ACL, including clauses that provided it with absolute discretion to change the produce specifications.

In addition to the $24,850 in penalties Nutrano paid, it has entered into a court-enforceable undertaking promising to provide growers with updated statements for the 2022 season, review its HPAs to comply with the Horticulture Code, implement a compliance program, and remove the clauses in its agreements that the ACCC considered may be unfair.

The ACCC publishes guidance notes on complying with the Horticulture Code, which can be found here.

Pacific power play: regulators make waves to amp up competition

On 6 November 2023, the ACCC and equivalent competition, consumer protection and economic regulators from across the Pacific region announced the formation of a new initiative called the Pacific Island Network of Competition Consumer and Economic Regulators (PINCCER).

The aim of PINCCER is to actively share information, investigative techniques and best practices, in an effort to build collective skills and ensure Pacific markets are fair for both consumers and traders.

Participating jurisdictions include Australia, Cook Islands, Fiji, French Polynesia, Kiribati, New Caledonia, New Zealand, Papua New Guinea, Samoa, Solomon Islands, Tonga and Vanuatu. National authorities representing these jurisdictions have already began establishing network protocols and focus areas.

The announcement of PINCCER follows a meeting between the Prime Ministers of Fiji and Australia in October 2023, in which they welcomed the signing of a renewed and elevated partnership, and agreed on the importance of regional unity

'The ACCC supports a strong and cooperative Pacific region and looks forward to working closely to address shared challenges', ACCC Chair Gina Cass-Gottlieb said.

More information about PINCCER can be found here.