The British justice rejected on Friday an appeal by three energy companies against the takeover, which they described as opaque, by their rival Octopus Energy of the energy supplier Bulb, which is under government subsidy after its bankruptcy at the end of 2021.
Centrica (the parent company of British Gas), Germany’s E.on and Scottish Power (owned by Spain’s Iberdrola) had challenged the British government’s decision to approve the deal in late October. In particular, they denounced the billions of pounds of public money put on the table for the rescue and then the sale of Bulb, a transaction whose precise terms were not communicated and which allowed Octopus to recover 1.5 million customers.
But the government “could reasonably conclude” that the process was conducted in an “open, non-discriminatory and competitive” manner, the judges of the High Court of Justice in London found in a decision seen by AFP. In addition, the executive “could rationally conclude” that the public aid “contributed to an objective of general interest” by avoiding the consequences of an abrupt bankruptcy for Bulb‘s clients, according to the judges. The hearing took place over three days between late February and early March.
Bulb had explained in November 2021 that it was hit by rising wholesale prices and found itself selling energy “largely at a loss” due to the UK authorities’ price cap. The group was the largest of about 30 energy suppliers to go bankrupt during this period, out of about 50 in the market, which justified direct government intervention.
The Energy Ministry said Friday it “welcomed” the court’s decision, saying the court had “confirmed the soundness and legality” of a decision that had allowed it to “protect Bulb’s 1.5 million customers,” according to a statement sent to AFP. Octopus was the only company to submit an offer for Bulb, whose sale was officially concluded on December 20. The transfer of customers is currently underway.
Estimates of the final cost to the public purse of rescuing Bulb vary, but the state budget forecasting agency OBR put it at £3 billion in mid-March. This amount has fallen sharply compared to previous estimates, thanks in part to the sharp decline in energy prices on the markets.
Moreover, “much of this cost is ultimately recoverable,” according to the OBR, while the purchaser Octopus must repay almost all of it.
