Proposed Sse/npower merger deal referred for in-depth investigation

● Regulator says that companies have failed to satisfy worries on competition

The proposed merger of Ger‑ man‑owned Npower and Scot‑ tish Hydro‑owning SSE’S retail businesses has been referred for a full investigation after the two energy giants failed to address competition con‑ cerns, the top regulator said yesterday.

The Competition and Mar‑ kets Authority (CMA) said the mooted deal would now face a more rigorous stage two in‑ depth inquiry after the CMA’S initial probe deemed the tie‑ up could reduce competition and lead to higher prices for households.

It said Npower, owned by Innogy, and SSE had failed to offer measures to address its competition fears, having ear‑ lier set a deadline of 3 May for the pair to put forward pro‑ posals.

A decision on the merger will now be made by a group of independent panel mem‑ bers, with a deadline for their final report of 22 October.

The two companies dropped a bombshell in November with the announcement that their UK household energy supply and services businesses would join forces, crucially reduc‑ ing the Big Six energy suppli‑ ers, which also include Scot‑ tish Gas‑owning Centrica and Scottishpower, owned by Iber‑ drola of Spain, to five.

The CMA said late last month its initial inquiry found the reduction in the number of large players in the UK energy market caused by the merger could restrict competition.

Alex Neill, the managing director of home products and services at consumer group Which?, welcomed the regu‑ lator’s decision yesterday. Neill said: “Mergers of big players in essential markets such as energy risk reducing competi‑ tion and harming consumers.

“As both these big suppliers struggle with providing good customer service, coming in the bottom half of our satis‑ faction survey, it’s only right that the competition authori‑ ties investigate further before allowing any venture to go ahead.”

If approved, the new compa‑ ny would be listed on the Lon‑ don Stock Exchange, with SSE shareholders holding rough‑ ly two‑thirds of the business, and Npower owner Innogy the remaining third

SSE, formerly known as Scot‑ tish and Southern Energy, is Britain’s second biggest ener‑ gy supplier and the merged group would serve 11.5 million customers.

Other members of the Big Six are German‑owned E.ON and French‑owned EDF.

The UK energy market faces intense pressures including concerns over unfair tariffs, with a government‑enforced price cap set to be introduced on standard variable tariffs (SVTS) later this year.