Britain’s Big Six energy suppliers are about to become the Big Five after a deal to merge Perth-based SSE and Npower’s retail operations was given the all-clear by competition officials.
The Competition and Markets Authority (CMA) said its decision to give final clearance to the tie-up came after a probe concluded households will still have “plenty of choice” on standard variable tariffs (SVTs).
It found the two providers are “not close rivals” on the tariffs – the most expensive deals that had been an area of particular concern for the regulator. A provisional thumbs up had been given by the CMA at the end of August.
SSE welcomed the decision to give the merger the green light, which will create the UK’s second biggest energy supplier after British/Scottish Gas.
Under the 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. The merged group will serve some 11.5 million customers.
Alistair Phillips-Davies, chief executive of SSE, said: “This is a complex transaction and there is still much work to do in the coming weeks and months.
“However, we’ve always believed that the creation of a new, independent energy and services retailer has potential to deliver real benefits for customers and the market as a whole and it is good to see that the CMA has cleared the transaction following what was a comprehensive and rigorous inquiry.”
The CMA had launched a full inquiry into the merger after its initial investigation found that the tie-up could reduce competition, potentially leading to higher prices for households.
The regulator added that the incoming UK government-enforced price cap would also help protect customers on variable deals. Anne Lambert, chair of the CMA inquiry group, said: “With many energy companies out there, people switching away from expensive standard variable tariffs will still have plenty of choice when they shop around after this merger.
“But we know that the energy market still isn’t working well for many people who don’t switch, so we looked carefully at how the merger would affect SVT prices.
“Following a thorough investigation and consultation, we are confident that SSE and Npower are not close rivals for these customers and so the deal will not change how they set SVT prices.”
Victoria Arrington at comparison site Energyhelpline said: “Even with the SSE-Npower merger going ahead, the energy market is still large and varied.
“A competitive market with lots of quality players is what can help keep energy prices low for consumers.
“With more than 80 suppliers to choose from, consumers have loads of opportunities to seek out a great energy deal,” she added.