Competition Authority launches formal investigation into proposed part-merger of SSE and Npower

The Big Six energy providers combined account for around 80% of the UK market
The Big Six energy providers combined account for around 80% of the UK market – a share which would not change even if the SSE- Npower semi-merger is approved.

British regulators have launched an in-depth investigation into the proposed tie-up between the retail power unit of SSE  and Npower, owned by Germany’s Innogy, over fears that it may reduce competition and increase energy prices.

Combined, SSE and Npower would have 11.5 million customers, making the new company second only to Centrica’s British Gas, which has more than 14 million customer accounts.

The merger would create Britain’s second-largest retail power provider and reduce the “Big Six” dominating the market to five companies  at a time when they are already facing political scrutiny for their tariffs and are under pressure from smaller rivals.

The British market is dominated by British Gas, SSE, Iberdrola’s Scottish Power, Npower, E.ON and EDF Energy, which account for about 80 percent of the retail electricity market.

The move also comes as German energy giants RWE and E.ON plan to carve up Innogy. The deal would make E.ON, another of the “Big Six”, the parent company of Npower. Analysts have said that may complicate the SSE-Npower merger.

The Competition and Markets Authority (CMA) warned at the end of April it would launch a deeper probe, which typically lasts 24 weeks and can be extended, unless the two companies propose solutions that would lift its concerns.

A Competition Authority spokesman said: “SSE and Npower did not offer measures to address our concerns, and so it has referred the merger for a more in-depth, Phase 2 investigation.”

The deadline for the final report is 22 Oct 2018.

9 May 2018

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