APA/CKI: ACCC Maybe, But FIRB Unlikely

The ACCC will release its decision on the APA Group (APA AU)/CKI Consortium proposal today. This may be a final decision or the release of a Statement of Issues.

ACCC's mandate is captured under Section 50 of the Competition and Consumer Act 2010, and prohibits acquisitions that are likely to have the effect of substantially lessening competition in a market. Such pushback from the ACCC may be allayed if by making the argument a portion of APA's assets are regulated, CKI is open to greater regulation on APA's network, therefore the Australian Energy Regulator simply oversees a larger entity; in essence, propositioning the concept it is irrelevant who actually owns the assets, provided they are regulated.

FIRB assesses the potential implications of proposed acquisitions for national security/public interests. Should CKI be successful, the majority of Australia's gas transmission assets - which are considered critical infrastructure- will be controlled by Chinese companies (CKI + State Grid, a Chinese SOE). Although ACCC's approval could potentially get up on this "regulated" technicality, FIRB is probably less inclined to support the acquisition.