SSE’s merger with Npower gets the all-clear from UK competition watchdog

The merger of two major energy firms in the UK has been given final clearance by the Competition and Markets Authority (CMA), paving the way for SSE Energy and Npower to join together as a newly listed company on the London Stock Exchange.

The CMA published its final ruling this morning, after the merger was given a provisional green light from an independent inquiry group made up on CMA panel members in August.

Following consultations, the CMA decreed that SSE and Npower are not close enough in rivalry for customers to receive a distinct loss in choice when choosing to switch away from standard variable tariffs (SVTs).

"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," said the inquiry group's chair Anne Lambert.

"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."

Read more: SSE's merger with Npower gets the provisional green light from UK watchdog

Research conducted by the CMA found the number of UK consumers switching energy providers once they fall onto SVTs is the highest in a decade, with the number of customers sitting on SVTs falling.

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.

Henry de Zoete, chief executive and founder of energy auto-switching service Look After My Bills, warned on the news: "The Big Six becoming the Big Five is not good news for consumers. It reduces choice and competition in the market so it’s a bizarre decision from the Competition and Markets Authority.

"What’s more the Big Six are notoriously bad at big internal changes such as new billing systems so it’s odds on that a merger this big will not go smoothly and cause major problems for existing customers of Npower and SSE."

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SSE's chief executive Alistair Phillips-Davies said he was pleased with today's decision.

"This is a complex transaction and there is still much work to do in the coming weeks and months," he added. 

"However, 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."