The UK’s Business, Energy and Industrial Strategy (BEIS) Committee has written to the Competition and Markets Authority (CMA) calling for an investigation into the proposed merger between the retail energy businesses of SSE and Npower.
Perth-based energy giant SSE said last month it agreed to demerge its household energy and services business in Great Britain with Innogy subsidiary Npower Group plc to form a new listed UK company.
The combination, if allowed, would create the UK’s second largest energy supplier with around 11.5 million customer accounts, making the new firm second only to Centrica’s British Gas which has more than 14 million customer accounts.
The BEIS Committee said it is concerned that the merger may lessen competition and affect energy consumers.
BEIS Committee Rachel Reeves MP said: “The energy market isn’t working for consumers.
“The proposed merger between SSE and Npower risks damaging the development of a more competitive energy market, reducing consumer choice, and threatening to be a bad deal for energy consumers.
“The CMA needs to look at the potential impacts of this merger and launch a full investigation if there is any risk to competition within the energy market.”
In a letter to CMA Chief Executive Andrea Coscelli, Reeves said: “As you will know, the Business, Energy and Industrial Strategy Committee has considered the matter of energy prices in this Parliament, and will shortly be starting pre-legislative scrutiny of the Government’s draft Domestic Gas and Electricity (Tariff Cap) Bill.
“It is already clear from recent trends that the energy market is still not working for consumers.
“The BEIS Committee welcomes the work of the Competition and Markets Authority following its 2016 energy market investigation and the remedies package intended to improve the energy market through increased competition and better informed consumers.
“In this context, the recent announcement that SSE and npower are proposing a merger, is concerning for the operation of a competitive marketplace for energy customers.
“The merger would reduce the Big Six energy companies to 5, with almost half of the domestic energy share held between British Gas and the proposed SSE/npower merged business.
“The Committee has considered this issue and would welcome the confirmation of the CMA that it will look in detail at the potential impacts that this merger could have on the operation of the domestic energy market, and undertake a full investigation if there is any risk of a lessening of competition within the sector.”