The competition authority said that as the two companies did not offer remedies to address the concerns raised by it, merger deal has been referred to further probe. Earlier, CMA had given a deadline of until 3 May to the two companies to come up with steps that would ensure that their merger would not impact competition.

CMA, in a statement, said: “A decision on the merger will now be made by a group of independent panel members supported by a case team of CMA staff. The deadline for the final report is 22 October.”

The decision from the competition watchdog comes after its findings from the initial phase 1 investigation released last month, which revealed that the merger may bring down competition. As a result, the CMA said that the SSE Retail and Npower merger could possibly lead to inflated prices for some bill payers.

SSE CEO Alistair Phillips-Davies said: “We look forward to continuing to work constructively with the CMA as it undertakes its detailed investigation.

“A Phase 2 referral is a well-established process for transactions of this nature and we remain confident that the proposed merger will deliver benefits for customers and the energy market as a whole.”

Phillips-Davies added that the formation and listing of the new company continues to be on schedule for completion in the final quarter of 2018 or the first quarter of next year.

As per the all-stock deal announced in November 2017, Scotland-based energy company SSE agreed to combine its UK retail power and gas business with German energy company Innogy’s Npower.

The combination of the two companies’ retail energy operations in the UK is expected to create a new independent energy supply and services business. It will comprise SSE’s household energy supply and services business in the UK and the household and business energy supply and services business of Npower.

As per the deal, SSE would own 65.6% in the new business with Innogy through Npower holding the remaining stake of 34.4%.

CMA had launched its preliminary investigation in the proposed merger in March to assess the potential impact it could have on competition on the energy supply to the UK domestic customers.