EU may intervene in Octopus Energy bulb takeover deal despite Brexit vote | Science | News News Jani

Lawyers have warned the EU could join Octopus Energy’s proposed takeover of lightbulbs even though Britain is negotiating to leave the bloc in 2020 amid Russia’s war in Ukraine. Following the government takeover, 1.6 million incandescent customers could now be bought out by renewable energy provider Octopus Energy if a takeover deal goes through today.

But according to top competition lawyers, a deal risks violating EU state aid rules, which could mean Brussels “toss in and out” and Britain’s first post-Brexit tax breaks. Intervene in the energy sector.

dr Lee Hencher, senior counsel at US law firm Baker Botts, told City AM: “The argument that the Northern Ireland Protocol could apply to this deal – especially with government funding. The position that it would not fall under State aid rules because it affects domestic retail customers is unconvincing as it owns a heat pump business in Northern Ireland.

“The EU Commission may thwart the bill, but I expect that State aid issues – and the government’s failure to get EU approval – will be dealt with in UK courts.”

As part of the post-2020 Brexit deal, Britain has agreed to introduce domestic rules regulating subsidies that will or could affect trade with the bloc. Under the separate Northern Ireland Protocol to the Withdrawal Agreement, EU state aid rules can continue to apply if UK subsidies affect trade in goods or wholesale electricity trade between Northern Ireland and the rest of the EU. .

State aid, another term for financial support from the state to a company, is generally prohibited when it threatens to distort competition between companies, unless it is not justified by a public interest.

Octopus’ attempted takeover of Bulb, which is said to be worth more than £1billion, involves the alleged provision of state aid to facilitate the sale process. The subsidy is then paid back to the government over time with a profit-sharing arrangement for the 1.6 million consumers of the lightbulb.

But opposition companies argue that the deal would actually distort competition in the UK energy market and could cost taxpayers and households more, claiming that a more transparent sales process would cost taxpayers less. There are costs.

Centrica, the owner of British Gas, has concerns about the deal and is going to court to block the deal. In court documents filed earlier this month, the supplier argued that there were “serious public interest issues” surrounding the deal.

Read more: Energy Secretary says there are no plans to increase the £5,000 heat pump grant

This includes “the UK’s compliance with international obligations under the UK-EU Trade and Cooperation Agreement” and the “Ireland/Northern Ireland Protocol”. Supporters agree that the EU could join the process.

It said that because Octopus owns a heat pump manufacturer in Northern Ireland, while subsidies to Octopus would have an impact on the EU, the EU government should apply the agreement in the same way as national law. May fall on competing suppliers with whom business is done.

Ben Rayment, a lawyer and competition expert at Moncton Chambers, told the Financial Times: “This is one of the most politically charged subsidy cases to come to light since Brexit and Northern Ireland’s mix of demands. Interesting to see Northern Ireland. The /EU dimension is used strategically to exert further pressure.”

And just like Dr. He agreed with Hancher that it would be up to local courts to decide whether subsidies are illegal under UK law post-Brexit, but warned that a bloc permit will be required in EU states if subsidy rules also apply.

Mr Rayment told City AM: “The fact is that although we have left the EU, we have EU state aid rules on trade between Northern Ireland and the Republic under the special rules applicable to Northern Ireland. Groomed.

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“This is not a payment directly related to Octopus heat pumps in Northern Ireland – if it is a subsidy it is indirect… it is certainly not clearly related to Octopus’ heat pump business. This lightbulb is about supporting.”

Andrea Biondi, director of the Center for European Law at King’s College London, said Brussels is likely to keep a close eye on the deal as EU countries discuss measures to affect energy companies as they deal with the energy crisis. Fight for

He told the Financial Times: “At a time when national measures to support energy companies in the EU raise many concerns, the issue is also being closely watched in Brussels.”

The Bulb acquisition is set to be confirmed today as the courts set December 20 for the transfer of the energy company’s customers to Octopus Energy’s books. This puts an end to the years of waiting, as the company has been placed under state administration. However, a hearing is expected in February to review the process.

According to the Office for Budget Responsibility, the estimated cost of the bailout to consumers could reach £6.5billion, or around £200 per household. The Treasury, which is currently taxpayer-funded, is expected to pass the cost onto household energy bills next year.

Express.co.uk has reached out to Octopus and Bulb for comment.