CMA publishes detail on SSE-Npower merger phase 2 investigation

The Competition and Markets Authority (CMA) has outlined more detail with regard to its further examination of the tie-up between the retail power units of SSE and Npower.

The competition regulator said earlier this month it had launched an in-depth investigation into the tie-up between the companies, saying it may reduce competition and increase prices for some households.

Now the CMA team conducting the second phase of the investigation, who are entirely different from those who undertook the first phase, in line with protocol, have published their initial findings.

It has now added it will consider the impact of the merger on the supply of gas and electricity to customers in Britain, as well as any implications arising from plans for a larger asset swap between Innogy’s parent company RWE, and Eon, which also has a British retail energy business.

The CMA will also look at the potential impact on British independent energy supplier Utility Warehouse, which has around 600,000 customers and relies on Npower for its gas and electricity supplies.

It said in a statement: “This theory of harm considers whether the merged entity would have an incentive to raise SVT [standard variable tariff] prices to increase its wholesale prices to Utility Warehouse.”

In response to the news, an Npower spokesperson, said: “This merger seeks to combine the best of the old with the benefits of the new in a way that will meet evolving customer expectations and further increase competition in the energy market. We therefore look forward to working with the CMA to address the issues that the CMA has set out.”

The SSE-Npower merger would create Britain’s second-largest retail power provider.

The CMA is scheduled to issue a final report by 22 October.