Centrica faced ‘discrimination’ in Bulb pursuit

Centrica says it was subject to “discrimination” in the bidding process for Bulb, claiming special administrator Teneo proactively contacted rival Octopus Energy to outline potential government support for the acquisition.

During the first day of a judicial review into the deal, which saw Octopus take on Bulb’s 1.5 million customers last December, the British Gas-owner outlined its case against the government.

In documents submitted to the High Court, Centrica argues that the decision was “arrived at by an unlawful and unfair process”.

The company says joint energy administrators at Teneo proactively sent a text message to Octopus after it had initially left the bidding process, while Luba Kotzeva, managing director at Lazard which handled the sales process, visited the supplier’s HQ.

It says there was a proactive approach by Teneo to discuss “alternative structures” on 12 April 2022 followed by a series of phone calls and a visit by Koteza to Octopus’ headquarters on 13 May.

Centrica alleges that Octopus had formally withdrawn from the process before the end of phase 1 of bidding on 4 April, leaving just Centrica and Abu-Dhabi-based energy company Masdar in the running.

It adds: “Those communications caused Octopus rapidly to engage, to be permitted to re-enter the process and to propose a structure requiring HMG subsidies on 15 May 2022.

“One of the stated bases for such approach was to contact those who had not bid at Phase I ‘…without providing a strategic reason…’ Octopus had provided a list of such reasons but was contacted anyway. No such communications/visits were had with (British Gas).”

Centrica argues that had the sale process been conducted “transparently and fairly” and treated British Gas in the same way as its competitors then there is a “high probability” it would have submitted a formal bid for Bulb.

Octopus is expected to argue that these conversations gave no information or detail about the existence of, nature or level of any potential government support for the deal.

Outlining his client’s case earlier today (28 February) Paul Harris KC, representing Centrica, said: “We say that a transparent, fair, open, competitive process would have been one in which we would not have been discriminated against and we too would have received assurance of availability of government support received by Octopus…but it never happened, it never happened for any one of us.”

The three-day hearing will continue tomorrow and Thursday, with lawyers for the government and Octopus yet to make their case.

Octopus, which has already onboarded a third of the Bulb customer base, will also argue against accusations that the government could have secured a better deal.

It is also set to claim that it now expects the government to make a £1.2 billion profit on the deal.