Energy mega-merger probe begins

The UK competition watchdog has launched a probe into the proposed multi-billion-pound combination of household energy suppliers SSE Retail and Npower.

The merger of the two companies – which would see the UK’s Big Six energy suppliers become the Big Five – was first announced in November.

The combined group would be a new powerhouse in the UK domestic supply sector with almost 13 million customers.

Last month, Perth-headquartered SSE said it expected to complete the spin-out of the new unit within the final quarter of this year or the first three months of 2019.

It also added it had been and Npower owner innogy SE had been in prenotification discussions with the Competitions and Markets Authority (CMA) in relation to their merger.

The CMA yesterday opened its investigation into the proposed merger.

“SSE Retail and Npower propose to create a new company to serve their combined domestic retail customers,” the CMA said in its notification of its investigation.

“The Competition and Markets Authority will now assess whether this deal could significantly reduce competition in the supply of energy to domestic customers in the UK.

The CMA has been discussing the deal with SSE Retail and Npower since it was announced.

“Now that the companies have provided the information necessary to start an investigation, the CMA has launched its review.

“The CMA will investigate the merger on competition grounds, in line with its merger guidance.”

The process begins with an invitation to third parties to make comment on the proposed deal.

That comment stage will close on March 14 and the deadline for a phase 1 decision – which will determine if the proposed tie-up is to be the subject of a full blown merger inquiry – is due on April 26.

Shares in SSE moved marginally lower in morning trading following the CMA’s declaration yesterday.

They closed down 16.00 (-1.29%) at 1,225.00 last night.

SSE Retail and NPower are hoping to merge to create a new UK supply giant.