This action follows the ACCC's continued opposition to the multi-billion dollar sale of Loy Yang to AGL and its partners and earlier unsuccessful discussions that were held in an effort to resolve the ACCC's concerns.

"AGL has negotiated with the ACCC in good faith for over seven months and has exhausted all options through the informal clearance process to reach a commercially acceptable outcome for AGL in relation to its proposed minority investment in Loy Yang Power," said AGL managing director Greg Martin.

"Legal proceedings are being commenced in accordance with avenues identified in the ACCC's Merger Guidelines to expedite resolution of the outstanding trade practices issues. AGL remains committed to the transaction and believes this course of action will deliver certainty for all parties involved," Martin said.

Previously the ACCC stated that it remains firmly of the view that the proposed acquisition creates substantial competition concerns which are potentially in breach of section 50 of the Trade Practices Act 1974.

"It would lead to a less competitive and less efficient market structure in Victoria and, potentially, in the National Electricity Market," said ACCC Chairman, Graeme Samuel.

"This is likely to result in higher prices, increased barriers to entry and a resulting substantial lessening of competition.

"Therefore, the ACCC will oppose AGL acquiring an interest in Loy Yang Power," said Samuel.

GEAC entered an exclusive agreement for the purchase of Loy Yang on 3 July 2003 and further to today's developments, GEAC and the Loy Yang Power vendors have agreed to extend the Sale Agreement on exclusive terms to 19 December 2003.

GEAC was formed earlier this year by AGL, the Tokyo Electric Power Company Incorporated (TEPCO) and a group of financial investors led by the Commonwealth Bank.