UPDATE 2 — The UK’s Competition and Markets Authority (CMA) said on Thursday it will investigate whether OVO Energy’s £500 million deal to buy Perth-based energy giant SSE’s retail arm will lessen competition in the sector. 

The deal would create the UK’s second-largest energy supplier with around five million household customers, behind Centrica’s British Gas.

SSE said it was confident the merger was in the best interests of customers and the company. 

SSE CEO Alistair Phillips-Davies told Reuters: “We have long believed that a dedicated, focused and independent retailer will ultimately best serve customers, employees and other stakeholders.

“And this is an excellent opportunity to make that happen.”

SSE said on September 13 it agreed to sell its energy retail arm SSE Energy Services to Ovo Group for an enterprise value of £500 million comprising £400 million cash and £100 million in loan notes.

The sale would allow SSE to focus on infrastructure, networks and renewables.

All of SSE Energy Services’ 8,000 employees would transfer to Ovo.