The Australian Competition and Consumer Commission (ACCC) has approved the proposed acquisition of APA Group by CK Consortium, after accepting a court-enforceable undertaking from the CK Consortium to divest significant gas assets in Western Australia.

The ACCC said that, in the absence of the undertaking, the proposed acquisition was likely to substantially lessen competition.

“The ACCC was concerned about the removal of the CK Consortium as a competitor in relation to new pipeline development. The ACCC was also concerned about gas transmission and storage services in Western Australia given that, without the undertaking, the CK Consortium would own most gas transmission and storage facilities in the west,” ACCC Chair Rod Sims shared.

“The undertaking addresses these concerns and creates an opportunity for a new operator to acquire a valuable set of assets, together with the personnel needed to operate and manage the assets. This will create an operator similar in size to the CK Consortium’s current operations in Western Australia,” Mr Sims explained.

Presently APA owns and operates $20 billion of energy infrastructure, including 15,148 kilometres of transmission pipelines and 28,600 kilometres of gas mains and pipelines. The company also has interests in gas storage and processing, and gas-fired and renewable energy power generation businesses located across Australia. The assets to be sold include the Parmelia Gas Pipeline, the Goldfields Gas Pipeline, the Kalgoorlie to Kambalda Pipeline and the Mondarra gas storage facility.

The ACCC also deemed that the CK Consortium has only a ‘very limited number of gas transmission pipelines’ in eastern Australia, and these only supply small regional centres or specific customers, so there is is no competition between CK Consortium’s existing eastern Australian assets and those of APA, but this has caused quite a stir with other industry members.

“Concerns raised by industry participants mostly related to APA’s pre-existing dominance in gas transmission. However, this acquisition does not alter that situation in a material way. Outside of Western Australia, the CK Consortium has only minor gas transmission assets,” Mr Sims said.

“The purchaser of the divestment assets will need to be approved by the ACCC and when approving a new owner, we will focus on its ability to be an effective and long-term competitor for the development of new pipelines,” he concluded.

CK Consortium comprises of CK Infrastructure Holdings, CK Asset Holdings, and Power Asset Holdings. The Consortium members all hold interests in major electricity and gas infrastructure assets in Australia.

More information on this announcement can be found here.