SSE-Npower merger approval receives mixed reaction

There has been a mixed reaction to the news that the Competition and Markets Authority (CMA) gave the green light to the proposed merger between SSE and Npower.

The move, which will see the creation of a new energy provider, was approved yesterday (10 October) after the CMA reviewed competition concerns around how the deal would impact standard variable tariff (SVT) prices.

It found the two companies are not close rivals for customers on these tariffs and the deal was given the go-ahead.

Alistair Phillips-Davies, chief executive of SSE, said there is still much work to do in the coming weeks and months.

He said: “We are very pleased that the final report of the CMA’s investigation confirms its provisional findings that the proposed merger of SSE Energy Services and Npower does not raise any competition concerns.

“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.”

Stephen Murray of MoneySuperMarket said: “So the big six becomes the big five but that doesn’t mean a shrinking energy market or less choice for consumers.

“Regardless of whether it’s a big five or emerging supplier, households seeing [the] news should use it as an opportunity to check their energy bill and lock in their prices for this winter and possibly next by switching to a fixed rate tariff today.

“Both winter and the price cap are coming but if you switch now you could save £250 and give yourself peace of mind that your bills won’t be affected by any market changes.”

But the news has not been as well-received by all.

Matt Clemow, chief executive of Igloo Energy, accused Npower and SSE of providing a “lacklustre service”.

He said: “I’m surprised to see the CMA giving Npower and SSE the all clear to merge considering both providers have notoriously given customers a lacklustre service alongside some of the highest tariffs.

“The big six have now become the big five and bill payers may think that this will lead to less competition within the energy market leading to them getting an even worse deal. This doesn’t have to be the case though.

“With the rise of challenger brands offering consumers a fairer rate away from the traditional tease and squeeze model, now is the time for bill payers to vote with their feet and put an end to the big five ruling the roost.

“But be sure to move sooner rather than later. Previous experience shows that the big six don’t have the best track record in merging IT systems and so this could end up being a costly migration process for all involved.”

Following on from yesterday’s decision SSE has said it is “continuing to work towards completion” of the merger in the first quarter of 2019.

A spokesperson 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.”

Npower’s parent company, Innogy, said preparations for the new retail company “are progressing” and parties have achieved important milestones in recent months including the transaction being backed by SSE shareholders.

Katie Bickerstaffe, the designate chief executive of the new company, which is yet to be named, is now in place along with designate chief financial officer Gordon Boyd and designated chairman Dr Martin Read.