The AGL Energy Limited (ASX: AGL) share price is edging lower on Monday following some potentially bad news.
In morning trade, the energy company's shares are down slightly to $9.35.
This compares very unfavourably to the performance of the ASX 200 index, which is currently up 1.2% following a strong end to the week on Wall Street.
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What's going on with AGL share price?
The AGL share price is underperforming today after the company revealed that it has been hit with class action proceedings filed in the Federal Court of Australia.
According to the release, the proceedings allege breaches of section 46 of the Competition and Consumer Act 2010 (Cth) in relation to bidding in the South Australian Region of the National Electricity Market (NEM).
The NEM is a regulated wholesale electricity market operated by the Australian Energy Market Operator, with the Australian Energy Regulator undertaking compliance monitoring and enforcement.
AGL advised that it takes its compliance obligations seriously and intends to vigorously defend the proceedings.
What is section 46?
According to the ACCC, section 46 relates to the misuse of market power. It explains:
Section 46 now prohibits a firm with a substantial degree of market power from engaging in conduct that has the purpose, effect or likely effect of substantially lessening competition in a market.
The ACCC adds:
Preventing firms with a substantial degree of market power from engaging in conduct that has the purpose or effect of substantially lessening competition is now a central limb of Australia's competition laws. Where it considers s. 46 has been contravened, the ACCC will take action to protect the competitive process and address consumer harm.
Given how high energy costs are and how they are contributing to the cost of living crisis, this certainly isn't a good look for AGL. Though, it will of course be given its chance to defend itself in court at a later date.
