In a statement of issues released yesterday, the Australian Competition and Consumer Commission invited submissions on whether the acquisition would reduce competition in the gas market in Queensland and eastern states.

It said its main concern was that the Queensland market is already concentrated and the merger would only work to increase it.

The watchdog said it believed the $5.2 billion PNG pipeline project worked as a “shadow competitor, which influences the competitive tension between existing gas producers”.

“The ACCC has concerns about the likelihood of the PNG Gas pipeline project proceeding in the short-to-medium term and notes that there have been delays with the project,” it said.

“The ACCC is particularly interested in understanding whether an acquisition by Santos of QGC may affect the proposed pipeline project, given media reporting and other indications that the participation by Santos in the project may be an important factor in its prospects and that Santos may be less likely to participate if it acquires QGC.”

In its bidder’s statement released earlier this week, Santos said it believed its acquisition offer is “compelling” for QGC shareholders and would not substantially reduce competition.

The ACCC will be taking submissions on the issue until November 9 and is expected to make a final decision on December 7.