THE COMPETITION watchdog has provisionally given the green light to Perth-based SSE and the owner of Npower to merge their operations to create a new energy supplier in the UK.
The Competition and Markets Authority (CMA) had raised concerns that the tie-up could reduce competition in the market, which would likely lead to higher prices.
A watchdog investigation found that the two firms did not compete closely for customers on default tariffs which most people are on. Few people switched between the pair, it added.
The merger would see SSE and Npower's parent company, Germany's Innogy, merge their household energy supply and services business in Britain, turning the Big Six energy suppliers into five.
The CMA had been carrying out a review into the proposed tie-up amid fears it would weaken competition in the market.
The watchdog took comfort from improved levels of provider switching - at their highest level for a decade - and evidence many households are switching to firms away from the current big six players which also include Scottish Power, British Gas, E.ON and EDF.
READ MORE: SSE and Npower press ahead with merger
It pointed to the existence of more than 70 energy providers in the UK market.
Anne Lambert, chair of the CMA inquiry, said: “Many people don’t shop around for their energy.
"So, we carefully scrutinised this deal, in particular how it would impact people who pay the more expensive standard variable prices.
“Our analysis shows that the merger will not impact how SSE and Npower set their SVT prices because they are not close rivals for these customers.”
SSE, formerly known as Scottish and Southern Energy, is Britain's second biggest energy supplier and the merged group would serve around 11.5 million customers.
SSE said it was pleased by the CMA’s finding. “The planned transaction presents a great opportunity to create a more agile, innovative and efficient company that really delivers for customers and the energy market as a whole,” said Alistair Phillips-Davies, the firm’s chief executive.
Consumer group Which? said it would be “watching closely” to see whether households faced higher energy prices as a a result of the merger going ahead.
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