Energy suppliers lose court case over government handling of Bulb sale

Three energy suppliers have lost a High Court challenge over the government’s handling of the sale of rival Bulb.

Bulb was placed in special administration in November 2021 and, almost a year later, Octopus Energy announced it had reached a deal to buy the firm and take on its 1.6 million customers.

It was later revealed the government had been prepared to pay up to £4.5bn to help fund the takeover, but Octopus has said the government stands to make a profit of £1.19bn from the deal.

Scottish Power, British Gas and Eon took the matter to court, challenging the decisions taken by what was then the Department for Business, Energy and Industrial Strategy in approving the takeover and providing “very substantial” central government funding for it.

They claimed an “unfair sales process” had led to “billions of pounds of taxpayer money” being used to “facilitate the acquisition of a failed business”.

There were also claims that the way the government handled the sale had prevented British Gas from making a more competitive offer.

But in Friday’s ruling, Lord Justice Singh and Mr Justice Foxton dismissed the energy companies’ case as “not… reasonably arguable”.

Lawyers for the department had said the claims against it were “without merit” and companies were aware they could seek government support.

The department had made “rational” decisions after being advised that the offer from Octopus represented “the value that the market is placing on Bulb in the current sector environment”, they added.

The judges said the government could lawfully conclude the Bulb bidding process was “open, non-discriminatory and competitive” and that it could “treat the only bid which had emerged from the process as a fair reflection of the value which the market placed on Bulb’s business in the prevailing circumstances”.

They also said it was open to ministers to find that “other options were inferior to proceeding with the Octopus bid, involving significant execution risks and higher forecast costs”.

‘Original bailout was unnecessary’

A spokesperson for British Gas owner Centrica said state bailouts for energy companies put a “burden” on UK taxpayers and are “avoidable”.

“We felt the original bailout of Bulb was unnecessary and the National Audit Office report this week concluded there were risks and uncertainties in recovering these funds from Octopus,” they said.

“The decision to bring this case was made after failed attempts to obtain transparency on the terms of the transaction and the level of state bailout being offered to Octopus/Bulb.

“We believe that the way the deal was structured creates serious risk for taxpayers and energy consumers and will distort the energy market.”

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Michael Lewis, chief executive of Eon UK, said they would look more closely at the ruling and consider their next steps.

“A huge amount of public money has been used to subsidise this transaction and it’s absolutely correct that any use of public money to help a private company grow in this way should be thoroughly scrutinised,” he added.

It is understood that Scottish Power will not seek to appeal the ruling.

Octopus accuses rivals of ‘desperation’

A Department for Energy Security spokesperson welcomed the judgment, saying it had confirmed the “robustness and legality” of the government’s actions.

Meanwhile, Octopus said it had paid a “fair price for Bulb in an open and competitive process” and that the case was a “desperate attempt” by its rivals to “defend their waning market positions against a more efficient and customer-focused rival”.

The company’s founder and chief executive Greg Jackson said the legal action “smacked of desperation” but “fair play won”.

“After more than a year of uncertainty, it’s a huge relief for Bulb’s employees and customers and good news for taxpayers,” he said.

This article was originally published by Sky.com. Read the original article here.