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Eon and Scottish Power lose court case

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Energy companies British Gas, Eon, and Scottish Power were unsuccessful in their court battle to prevent rival Octopus Energy from purchasing bankrupt supplier Bulb.

The greatest of more than 30 energy companies that failed in 2021 as a result of a steep increase in wholesale gas prices was Bulb, which had around 1.6 million clients.

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After being bailed out by taxpayers, Bulb was sold to Octopus by the government.

Competing businesses claimed the sale was unjust, but the High Court rejected their claim.

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Lord Justice Singh and Mr. Justice Foxton ruled on Friday that the rival suppliers’ claims were not “reasonably arguable.”

The judges said the government could lawfully conclude that the Bulb bidding process was “open, non-discriminatory and competitive”.

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They added that ministers and officials 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”.

The judges 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”.

Following the ruling, Octopus said the High Court’s findings were “clear” in that the firm “paid a fair price for Bulb in an open and competitive process”.

“It’s clear that the case was a desperate attempt by those organisations to defend their waning market positions against a more efficient and customer-focused rival,” the company said.

“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,” added Octopus founder and chief executive Greg Jackson.

Centrica, the parent company of British Gas, said the ruling was “disappointing”, while Eon chief executive Michael Lewis said the company remained “concerned about the amount of taxpayers’ money that has been used to subsidise the deal”.

The three major suppliers previously claimed the government’s handling of an “unfair sale process” led to decisions “to commit billions of pounds of taxpayer money to facilitate the acquisition of a failed business” by Octopus Energy. They also alleged the decision-making process was “flawed and unlawful”.

Both Centrica and Eon said they would consider their next steps, but it was reported that Scottish Power will not seek to appeal against the ruling.

A Department for Energy Security spokesperson welcomed the judgment.

“The court has confirmed the robustness and legality of the Secretary of State’s actions in respect of the sale and administration of Bulb,” they added.

The Office for Budget Responsibility (OBR) originally estimated that the rescue of Bulb could cost tax payers up to £6.5bn – making it the biggest bailout since the bank rescues during the 2008 financial crisis.

In March, the OBR revised this down to £3bn due to wholesale energy prices dropping, but this week a report from the National Audit Office, suggested the government may recoup the costs by Octopus paying back the cash it spent on buying energy for Bulb’s customers.


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