Competition watchdog warns that energy company merger could increase prices for consumers

The planned merger of two of the UK’s biggest energy companies, Npower and SSE, is under new scrutiny following a statement from the competition watchdog claiming that it could lead to higher energy bills. The merger would combine the two companies, creating a new energy company with around 11.5 million customers. This would make it the second largest supplier in the UK, second only the British Gas. It would also reduce the “Big Six” to just five.

Both companies had expected the Competition and Markets Authority (CMA) to approve the merger. However, new reports have shown that the CMA believe it requires further scrutiny as it could damage competition and drive up bills for consumers. In a statement, the agency commented that the move could  “result in a substantial lessening of competition”.

Unless these concerns are addressed, an investigation will take place. This is a process that could take six months. SSE chief executive, Alistair Phillips-Davies, said: “We remain confident that the proposed merger will deliver benefits for customers and for the energy market as a whole and that we will be able to demonstrate this to the CMA in due course.”

Rachel Merelie, the CMA’s senior director, said: “We have found that the proposed merger between SSE Retail and npower could reduce this competition, and so lead to higher prices for some customers. We therefore believe that this merger warrants further in-depth scrutiny.”

Alex Neill, managing director of home products and services at the consumer group Which? said the CMA was right to be concerned. He said: “Given that both of these energy suppliers also struggle on customer service, coming in the bottom half of our satisfaction survey, it’s vital that there is thorough scrutiny of the impact on consumers before allowing any venture to go ahead.” Other consumer and price comparison sites have also welcomed the decision.

Both Npower and SSE had hoped that the merger would be completed and running by the end of 2018  Earlier in the year, Innogy SE, the parent company of Npower said that preparations for the merger were “right on schedule”. However, until the CMA makes its decision, it’s still unclear as to whether they will be able to stick to this timetable.