The competition regulator has rejected gas companies’ claims that the emergency price cap and emissions reduction policies are making Australia uncompetitive for gas projects.
The chair of the Australian Competition and Consumer Commission, Gina Cass-Gottlieb, said it was not “accurate” for companies to claim the Albanese government’s gas price cap and safeguard mechanism were harming new investment.
The comments to the National Press Club on Wednesday undermine the opposition’s case against the price cap, after the shadow treasurer’s repeated claims it will prevent new supply.
Although households are still facing sharp increases in electricity bills, Treasury analysis has shown the December decision to cap coal and gas prices prevented even greater increases in wholesale prices projected for 2023.
Labor’s deal with the Greens to pass the safeguard mechanism also sparked claims of reduced incentives to increase gas supply, despite the fact a new net zero emissions requirement was only imposed on liquified natural gas projects for export.
Asked if the cap and safeguard mechanism were making Australia uncompetitive for new investment, leading to higher prices for consumers, Cass-Gottlieb replied: “I don’t think it is accurate. The emergency price cap does not apply to new supply and the emergency price, we have substantial data, both covers costs and reasonable return on costs in relation to existing supply.”
Cass-Gottlieb said the ACCC had engaged with industry and clarified guidelines to comply with the emergency price cap.
The related mandatory code of conduct for gas suppliers has “an express policy objective that is stated in that consultation, is that the reasonable pricing framework and the process under the code is to be consistent with incentives to invest in new supply”, she said.
“ACCC reports have shown the importance, even in a transitioning economy, of bringing new supply on in the east coast of Australia.”
In March the shadow treasurer, Angus Taylor, claimed that the gas price cap “won’t work and already we’re seeing the result [on] the supply side of the gas industry and I’m very confident we’ll see a lot more than that”.
At the National Press Club, Cass-Gottlieb said the ACCC was investigating a number of “false and misleading representations” involving companies “greenwashing” and the regulator would also be “closely monitoring for illegal collusion as the green transition unfolds”.
Cass-Gottlieb cited agreements in relation to price, information sharing on costs of transition that might signal “common increases in price” and competitors allocating customers and territories.
“Collusion distorts market incentives and investment signals, which may in turn hinder the development of market-based responses to environmental challenges,” she said.
Uncompetitive mergers or collusion “could damage the economy and diminish environmental benefits”, the ACCC chair said.
Cass-Gottlieb also called for the commission to be given tougher powers to regulate mergers, moving away from a voluntary system of seeking clearance for mergers towards mandatory engagement for mergers of a particular size.
Australia’s laws prohibit mergers that are likely to result in a substantial lessening of competition, but the current system requires the ACCC to apply to the federal court to have mergers halted or unwound if it considers them anticompetitive.
Cass-Gottlieb called for a regime with mandatory notification for mergers of a certain size, a requirement that these transactions be suspended without ACCC clearance and a “call-in” power for the ACCC to scrutinise transactions that don’t meet the notification threshold but still raise competition concerns. Non-contentious mergers could be expedited with a waiver of these requirements.
“We are finding that businesses are pushing the boundaries of the informal regime,” she said. “Given that there are no upfront information requirements for an informal review, merger parties are increasingly giving us late, incomplete or incorrect information.”
