Watchdog sniffs On Energy deal

By BRIAN FALLOW

The winter's electricity crisis is being investigated by competition watchdog the Commerce Commission.

Beyond confirming the existence of an inquiry, the commission declined to comment yesterday.

But it is understood to be investigating not only the acquisition of On Energy's retail business by Genesis and Meridian, but also the wider issue of anti-competitive behaviour in the sector under section 36 of the Commerce Act. Amendments toughening up the act came into effect on May 26.

The law now prohibits acquisitions that substantially lessen competition in a market. The question would be whether the demise of On Energy and the divvying up of its customers between two rivals amounted to a substantial lessening of competition.

Abuse of market power stipulations in section 36 now apply to firms with a substantial degree of market power; previously it applied only to dominant firms.

The issue for the inquiry would be whether the surviving generator/retailers have substantial market power, and if so whether they took advantage of it to eliminate a competitor or prevent competitive conduct.

This would be the first test of the beefed-up section 36 since the law changed.

Power to the People Supplement

Energy Efficiency and Conservation Authority