British Gas owner Centrica would still have lost its legal challenge over Octopus Energy’s takeover of fallen rival Bulb if it had submitted arguments on time, court documents show.
The energy giant teamed up with EON UK and Scottish Power to push for a judicial review, challenging the government’s decision making processes.
It argued that Octopus had received special treatment over the subsidies it was offered to complete the deal – and that there were severe flaws in the subsidy process which granted Octopus government support.
This came in the form of hedging loans for buying Bulb out of special administration last year.
However, both Judge Rabinder Singh and Judge David Foxton chucked out the case last Friday – revealed that the application was refused due to “undue delay,” as the proceedings were not brought promptly enough.
Legal action was not brought against the government until nearly a month after Octopus was announced as the winning bidder for Bulb in late October.
The judges said: “Each of the claimants issued an application for urgent consideration by the High Court stating that it was first appreciated that an urgent application might be necessary only on 24 November 2022. We regard that as disingenuous.”
The judges argued that the concerns over subsidies would have gone to judicial review without the delays, but would have subsequently rejected “those grounds on their merits.”
Following last week’s verdict, Centrica told City A.M. the judgement was “disappointing,” warning that the deal structure for Octopus’ takeover of Bulb distorts the energy market and “creates serious risk for taxpayers and energy consumers.”
A Centrica spokesperson said: “Both Ofgem and the National Audit Office have concluded that this deal is not without risks to taxpayers. We think state bailouts for energy companies puts a burden on the UK taxpayer and is avoidable.
“We felt the original bail out of Bulb was unnecessary and the National Audit Office report this week concluded there were risks and uncertainties in recovering these funds from Octopus.”
Last week, the head of the NAO warned that “risks remain” with the takeover deal, regarding the retrieval of funds from Octopus for the £3bn government loan.
Centrica is now mulling over whether to appeal the verdict, confirming that it will “review the judgement carefully and consider our options.”
Bulb collapsed in 2021 when wholesale prices spiked above Ofgem’s energy price cap – forcing it to sell energy at a loss, with the company exposed by a lack of hedging.
It was then propped up on life-support for nearly a year – supported by regular transfusions of public funds.
Octopus was eventually declared the winner of an extensive bidding process, taking over the company and absorbing its 1.6m customers.
The deal makes Octopus the third biggest energy supplier in the UK, home to nearly five million customers.
Following the verdict, Greg Jackson, chief executive and founder of Octopus, argued that “fair play won,” and that the decision was a “huge relief for Bulb’s employees and customers”, and also “good news for taxpayers.”
He said: “The judgement couldn’t be clearer: Octopus paid fair value for Bulb through a transparent and competitive process, giving the best available deal to taxpayers. There were no improper subsidies and the case brought by British Gas and their stablemates was entirely without merit.
“This belated and expensive court action has always smacked of desperation – and today’s finding confirms that. Octopus worked hard to find a solution, while others chose not to bid.”