Merger is expected to create the market leading electricity supplier

The competition watchdog has been urged by MPs to launch an investigation into the proposed merger between SSE and Npower.

The House of Commons BEIS (business, energy and industrial strategy) select committee, which is carrying out pre-legislative scrutiny of the government’s draft energy price cap bill, has called on the Competition and Markets Authority (CMA) to probe the tie-up between the second and sixth largest energy suppliers.

The merger would create the market leading electricity supplier and the company with the second biggest number of gas customers behind only Centrica.

Rachel Reeves, the committee’s chair, described the merger as “concerning for the operation of a competitive marketplace for energy customers” in a letter to Dr Andrea Coscelli, chief executive of the CMA.

She writes that if the merger takes place almost half of the domestic energy market will be shared by British Gas and the new SSE/Npower business.

The committee calls on the CMA to conduct a detailed examination of the potential impacts the merger could have on the operation of the domestic energy market.

And it urges the watchdog to undertake a full investigation if the merger risks a lessening of competition within the sector.

Reeves said: “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”.

A spokesperson for SSE said: “The merger will improve competition by offering customers a completely new model combining the resources of established players with the agility and innovation of an independent supplier – turning 60 competitors into 59, not five, and ultimately offering better value for customers.

“This is, naturally, subject to the appropriate regulatory approvals and we will engage openly with the CMA, the BEIS select committee and any other interested parties as the process goes on.”
Last month, the trade union GMB asked business secretary Greg Clark to block the proposed merger of SSE and Npower.

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