The UK’s Competition and Markets Authority (CMA) said it opened an investigation into whether the proposed merger of SSE Retail and Npower “could significantly reduce competition in the supply of energy to domestic customers in the UK.”

Perth-based energy giant SSE said in November 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 CMA has been discussing the deal with SSE Retail and Npower since it was announced,” said the CMA.

“Now that the companies have provided the information necessary to start an investigation, the CMA has launched its review.

“The CMA will investigate the merger on competition grounds, in line with its merger guidance.”

The deadline for the initial decision is April 26, 2018.