SSE-Npower merger faces full investigation by competition watchdog

Combined company would be the UK’s second-largest energy provider, with 11.5 million customers, just behind British Gas

The big energy suppliers have been facing stiff competition from smaller rivals (Getty)

A merger between SSE and Npower has been referred for a full investigation by the competition watchdog over concerns it could lead to higher gas and electricity prices for consumers.

The Competition and Markets Authority (CMA) said its initial probe found the tie-up could reduce competition and that it will now mount a full “stage two” investigation which could take around six months.

SSE, which is the second largest of the “Big Six” energy suppliers, and Npower, which is the smallest, did not provide proposals to allay fears that the tie-up could reduce competition.

The CMA will make a final decision on whether to clear the merger by a deadline of 22 October.

The combined company would be the UK’s second-largest energy provider, with 11.5 million customers, just behind British Gas. Iberdrola (Scottish Power), E.ON and EDF make up the remainder of the Big Six.

The larger suppliers have been facing stiff competition from smaller rivals who have been winning increasing numbers of customers. The big companies have also faced heavy criticism from consumer groups and MPs after hiking energy bills for consumers.

Later this year, a government-enforced price cap is set to be introduced on expensive standard variable tariffs (SVTs) paid by millions of customers.

Alex Neill, managing director of home products and services at Which?, welcomed the CMA’s announcement.

She said: “Mergers of big players in essential markets such as energy risk reducing competition and harming consumers.

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

An Npower spokesperson said: “We look forward to helping the CMA in its indepth investigation of our merger with SSE’s retail and energy services business throughout the phase two process.

“We did not put forward measures to address the CMA’s concerns because we firmly believe this merger will be good for competition as it stands.”