- The two ‘Big Six’ providers have not been able to address CMA’s concerns
- The pair had been given until May 3 to put forward proposals
- The results of the investigation will be published on 22 October
The merger between energy giants Npower and SSE will undergo a full investigation as it could lead to higher bills for some households, Britain’s competition watchdog has said today.
The Competition and Markets Authority said it was referring the deal for a full-blown investigation because the two Big Six providers had not addressed its concerns.
The pair had been given until May 3 to put forward proposals. The results of the investigation will be published on 22 October, the regulator said.
Npower and SSE failed to address concerns, the competition watchdog has said
It comes as the CMA’s initial inquiry found the reduction in the number of large players in the UK energy market caused by the merger could hit competition and leave some customers worse off.
The Npower and SSE merger was revealed last November. It would mean the so-called ‘Big Six’ would be reduced to the ‘Big Five’.
Alex Neill, managing director of home products and services at Which?, welcomed the CMA’s decision to investigate the merger further.
She said: ‘Mergers of big players in essential markets such as energy risk reducing competition and harming consumers.
‘As both these big suppliers struggle with providing good customer service, coming in the bottom half of our satisfaction survey, it’s only right that the competition authorities investigate further before allowing any venture to go ahead.’
Under the proposed deal, the new company will be listed on the London Stock Exchange with SSE shareholders holding 65.6 per cent and Npower owner Innogy holding 34.4 per cent.
SSE, formerly known as Scottish and Southern Energy, is Britain’s second biggest energy supplier and the merged group will serve around 11.5 million customers.
Centrica, Iberdrola (Scottish Power), E.On and EDF make up the remainder of the Big Six.
The deal has come as the UK energy market is already under pressure amid concerns over unfair tariffs, with a government-enforced price cap set to be introduced on standard variable tariffs (SVTs) later this year.
The Domestic Gas and Electricity (Tariff Cap) Bill would allow Ofgem to limittariffs until 2020, with the option to extend the cap annually until 2023.
A 2016 report found consumers were paying £1.4billion a year over the odds via energy company SVTs.