The UK Competition and Markets Authority (CMA) said that following its preliminary investigation, it has found the proposed merger of SSE Retail and Npower could result in higher prices for some customers.
Image: CMA wants more scrutiny over SSE Retail merger with Npower. Photo: courtesy of Crown copyright.
As a result, the UK’s competition watchdog wants further scrutiny of the all-stock deal that will combine Scottish energy company SSE’s UK retail power and gas business with German energy company Innogy’s Npower.
In last November, SSE and Innogy entered into the deal to merge their retail energy operations in the UK to create a new independent energy supply and services business.
Last month, the CMA launched investigation into the deal, which would result in SSE owning 65.6% and Innogy through Npower holding the remaining 34.4% in the enlarged company.
The investigation was launched by the competition watchdog to examine if the merger could end up in reducing competition in the market.
According to CMA, removal of the competition between large energy firms such as SSE and Npower could result in inflated prices for some customers.
CMA senior director Rachel Merelie said: “We know that competition in the energy market does not work as well as it might. However, competition between energy companies gives them a reason to keep prices down.
“We have found that the proposed merger between SSE Retail and Npower could reduce this competition, and so lead to higher prices for some customers. We therefore believe that this merger warrants further in-depth scrutiny.”
CMA has given a deadline of until 3 May to SSE and Npower to propose steps to address the concerns raised by it. The competition authority said that should the companies fail to offer such undertakings, it will take the proposed merger into a phase 2 investigation.
SSE CEO Alistair Phillips-Davies said: “We remain confident that the proposed merger will deliver benefits for customers and for the energy market as a whole and that we will be able to demonstrate this to the CMA in due course.”