Octopus takeover of Bulb challenged by rival firms

Octopus Energy's acquisition of collapsed supplier Bulb could face further delays after rival firms challenged the deal in court.

Bulb, which had about 1.6 million customers, collapsed last year when wholesale gas prices soared.

It was bailed out by the government and is currently being run by the UK's energy regulator Ofgem.

A deal for Octopus to buy Bulb was agreed, but Eon, British Gas and Scottish Power oppose it.

On Tuesday, the three rival firms filed judicial review applications at London's High Court, challenging the government's decision to approve the takeover and to provide funding to allow the deal for Octopus to buy Bulb to take place.

A judicial review is a type of court case that allows the legality of a government decision to be challenged.

Bulb's bailout was the biggest one by the state since the Royal Bank of Scotland collapse during the 2008 financial crisis. The government's official budget forecaster, the Office for Budget Responsibility (OBR), has said the support for the firm will cost around £6.5bn to taxpayers.

The value of the Octopus Energy deal has not been published but the BBC understands the firm paid the government between £100m and £200m. The deal needs to be approved by the High Court to be completed.

Stephen Robins KC, for Scottish Power, said in written submissions that the marketing of the Bulb sale was "defective" and should be re-run to allow for alternative bids.

He said Octopus had effectively received a "cash gift" or "dowry" from the government in relation to the transaction, full details of which rivals had not seen.

Jonathan Adkin, representing British Gas, said in the court hearing there had been an "abject lack of transparency" about the commercial terms of the deal.

Meanwhile, lawyers representing Bulb's administrators urged the judge to set a date for the deal to go ahead, despite the pending legal challenges.

Richard Fisher KC, representing Bulb's administrators from the Teneo consultancy firm, rejected Scottish Power's "highly controversial" version of events and said in written submissions that other energy companies had decided to "walk away" from the sale process.

Judge Anthony Zacaroli said he would give a decision on Wednesday whether to set a date for the deal to go ahead.

Octopus said the company "will continue to work hard to get this resolved as fast as possible", while a spokesperson for the Department for Business, Energy and Industrial Strategy (BEIS) said it could not comment on the legal proceedings.

Bulb was the biggest of more than 30 energy companies that collapsed last year following a spike in wholesale gas prices.

BEIS agreed a deal with Octopus to buy Bulb in October and it was expected to be completed by the end of November.

But the acquisition was delayed after Eon, British Gas and Scottish Power raised concerns earlier this month.