The Courier & Advertiser (Fife Edition)
Energy firms’ merger is approved by regulator
Tie-up between Npower and Perth-based SSE is given green light
SSE’s multi-billion-pound merger with Npower has been given the green light by competition regulators.
Perth-based SSE’s proposed merger of its household energy and services business with innogy’s GB retail business, Npower Ltd, had faced an in-depth probe by the Competitions and Markets Authority (CMA).
The watchdog specifically examined competition concerns about how the deal would impact standard variable tariff (SVT) prices.
Yesterday the CMA said it had cleared the merger after finding SSE and Npower are not close rivals for customers on these tariffs.
Anne Lambert, chairwoman of the 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.”
Welcoming the news, SSE chief executive Alistair Phillips-Davies said there was a lot of work still to do on the “complex transaction”.
He said: “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 merger will reduce the ‘big six’ energy companies in the UK to five.
Peter Earl, head of energy at comparethemarket.com, said the deal was a “defensive” move by the firms worried about the rise of challenger energy companies.
“They are right to be worried,” he said. “The energy market is changing and for the better.
“The old Big Six business model, which relied on people staying on uncompetitive standard variable tariffs and profiting from this inertia, is finally coming under strain.”
Shares in SSE rose 3.00p to close at 1,137.00p, while Innogy’s shares rose 0.2p to 38.54p.