SSE’s merger with Npower gets the provisional green light from UK competition watchdog

The Competition and Markets Authority (CMA) has given provisional clearance to the proposed merger between energy firm Npower and the retail arm of SSE.

A further inquiry by the CMA was set up in April after initial concerns were raised as to whether the merger might impact the prices of standard variable tariffs (SVTs), the most common and expensive tariff available to UK households.

The CMA has found that SSE and Npower do not compete closely enough on tariff prices for the merger to warrant further attention. Additionally, households that do choose to switch providers often do not switch between the two firms.

Anne Lambert, chair of the CMA's inquiry group, said while the deal was carefully scrutinised, "our analysis shows that the merger will not impact how SSE and Npower set their SVT prices because they are not close rivals for these customers".

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The deal will take Britain's so-called Big Six providers down to five, as Npower, which is owned by German group Innogy, will combine with SSE to make a new listed company on the London Stock Exchange.

SSE shareholders will hold part-ownership of the business, while Innogy will take a minority stake. 

Since the merger was announced, Innogy's parent group RWE has agreed to sell Innogy to Eon, which has its own UK retail arm.

SSE's chief executive, Alistair Phillips-Davies, said the firm is "pleased" the CMA has provisionally given the merger the go-ahead. He added that SSE remains confident that the formation and listing of the new company is on track for completion by the end of SSE's financial year.

The CMA is expected to publish a final decision on the merger by 22 October.