Competition watchdog clears SSE-Npower merger

A merger between SSE and Npower's retail operations has been cleared by the UK's competition watchdog.

The Competition and Markets Authority (CMA) said it had given final clearance to the deal after concluding households would still have "plenty of choice" on standard variable tariffs (SVTs).

It found the two providers were "not close rivals" on the tariffs, which offer the most expensive deals.

The merger will create the UK's second biggest energy supplier.

The CMA launched a full inquiry into the merger in May after its initial probe found the tie-up could reduce competition, potentially leading to higher prices for households.

It provisionally cleared the deal in August.

Anne Lambert, chairwoman of the inquiry group examining the deal, said: "With many energy companies out there, people switching away from expensive standard variable tariffs (SVT) will still have plenty of choice when they shop around after this merger.

"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."

Perth-based SSE welcomed the CMA's decision to clear the merger.

Chief executive Alistair Phillips-Davies said: "This is a complex transaction and there is still much work to do in the coming weeks and months.

"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."

RWE-owned Npower and SSE announced in November that their British household energy supply and services businesses would join forces, reducing the Big Six energy suppliers to five.

Under the proposed deal, the new company will be listed on the London Stock Exchange, with SSE shareholders holding 65.6% and Npower owner Innogy holding 34.4%.

SSE said it was "continuing to work towards completion" in the first quarter of 2019.

A spokesman added: "Until such time as the transaction is complete and the new company lists on the stock exchange, SSE Energy Services and Npower remain entirely separate companies and will continue to compete as normal.

"Even with CMA clearance in place, competition law continues to apply while we are separate entities."