Reversing Bulb sale ‘could be chaotic’

A decision to reverse the sale of Bulb to Octopus Energy could lead to a “chaotic” situation with millions of customers left in limbo, a legal expert has told Utility Week.

The three-day judicial review into the deal ended today (2 March), with no indication yet as to when the presiding judge will make his formal decision.

Despite the legal challenge Octopus has already onboarded a third of the Bulb customer base since completing the acquisition of its 1.5 million accounts in December.

Asked about what would happen if the court was to rule against the government Tim Speed, energy partner at law firm Shakespeare Martineau, said that there are two plausible outcomes. First the judge could rule that the subsidy given to Octopus as part of the deal is set aside. Or the judge could rule that the deal is scrapped altogether.

He said: “If the subsidy is set aside, Octopus will be left with all the customers. If the approval of the whole scheme is set aside, then it really is not clear what will happen.

“Octopus has already started onboarding customers, a number would have been transferred since December and they’ll all have their own private contracts now with Octopus, deemed or otherwise. It is not at all clear how any court order would affect these private contracts.

“There will also be customers, presumably, that have been moved from Bulb to Octopus and have subsequently moved elsewhere. Although probably not very many in the current climate, it is not at all clear how these would be dealt with. The whole situation could be chaotic.”

The judicial review is one part of a continuing saga of the collapse of Bulb, which made history in 2021 when it became the first energy supplier to enter the government’s Special Administration Regime.

Following an almost year-long sales process, Octopus’ bid to acquire the retailer was accepted and the government agreed to provide funds to help smooth the transition.

Yet Centrica, Eon and Scottish Power challenged the decision on the grounds that Octopus was offered different terms to other suitors for the nationalised energy supplier and that the secretary of state could have secured a better deal.

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

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

Outlining his client’s case 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.”

Octopus however denies that it was given preferential treatment, and has argued that it was not given any additional information about government support prior to the acquisition.

Meanwhile lawyers representing the government said that allegations made by rival suppliers were all “without merit”.

In legal documents submitted by the Department for Business, Energy and Industrial Strategy – now DESNZ – the government argues that the M&A process, run by administrators Teneo and Lazard, was designed to “elicit the best terms available” from the market for the sale.

It said that the “process placed the onus on bidders to make any proposals for government support, rather than offering it proactively”.

This, it said, was to avoid “leading the market” towards requiring support, or as to the type or the amount of any support.

“Participants in the process were nonetheless aware that they could seek government support, but none were assured that government funding was guaranteed. The claimants ask the court to ‘infer’ that Octopus was given information unavailable to others, but there is no proper basis for such an inference,” it added.