Mercury gets the green light to acquire Trustpower’s retail business
The Lead Up
Mercury and Trustpower both generate and sell electricity and are two of the five traditional ‘gentailers’ that operate in New Zealand (the others being Contact Energy, Genesis Energy and Meridian Energy). Both parties also sell gas to residential customers.
Mercury, announced earlier in the year that they’d entered into a binding agreement with Trustpower Limited to acquire Trustpower’s retail business for a sizeable $441 million NZ. It only applies to the retail business and does not include Trustpower’s industrial or commercial customers or any of its generation assets. Trustpower has approximately 234,000 customers across New Zealand, the merge may just see them become the largest Kiwi Gentailer.
The Commerce Commission was tasked to review the merge request and the potential impact to a competitive market on the retail supply of electricity, and separately the retail supply of reticulated natural gas, to residential and small-to-medium enterprise customers.
The Commission’s decision was its assessment of the extent to which Mercury, Trustpower and other electricity and gas retailers compete with one another in different regions of New Zealand.
“Our investigation indicated that there are no regions in New Zealand where Mercury and Trustpower are each other’s closest competitors. Further, the merged entity would face competition from other electricity and gas retailers, including both large gentailers and smaller retailers,” said Deputy Chair Sue Begg, who is satisfied that the acquisition is unlikely to substantially lessen competition in any New Zealand market.
“Our investigation therefore found that the proposed acquisition would not have a significant detrimental effect on competition when compared with what would likely happen if the merger did not proceed.”
“That said, our investigation did reveal differences in the level of competitive intensity, and in prices being offered, in different regions. Several parties also raised concerns about retail competition in electricity in Tauranga, and in particular about the effect of the Tauranga Energy Consumer Trust (TECT) rebate. We encourage consumers – in Tauranga and elsewhere – to shop around to make sure they are getting the best deal, taking into account any applicable rebates and other terms.”
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