AGL failed to address wholesale competition concerns - ACCC

Feb 19 (Reuters) - AGL Energy Ltd , Australia's second largest power company, failed to address concerns it would hurt competition if it bought New South Wales state-owned Macquarie Generation, Australia's competition regulator said on Wednesday.

The NSW government has said it wants to sell MacGen to AGL for A$1.5 billion ($1.35 billion) and use the proceeds to help build a A$11.5 billion motorway scheme for Sydney's western suburbs. The government said it would not accept rival offers from Brisbane-based ERM Power Ltd and Japan's Marubeni Corp.

The Australian Competition and Consumer Commission had previously said it was concerned about the impact on the retail and wholesale energy markets in the states of NSW, Victoria and South Australia if AGL bought MacGen. It called for industry submissions on the sale which closed on Monday.

But two days later the ACCC said AGL made a submission which proposed an undertaking to address concerns about its impact on retail competition. But the AGL undertaking "does not seek to address the ACCC's preliminary concerns in relation to the wholesale supply of electricity", the ACCC said.

The ACCC said it would take the unusual step of publishing AGL's proposed undertaking for market consultation until Feb. 25.

The regulator would still make its final decision by the existing deadline of March 4. ($1 = 1.1071 Australian dollars)

(Reporting by Byron Kaye; Editing by Eric Walsh)

((byron.kaye@thomsonreuters.com)(+61293731815))

Keywords: AGL/