Citizens Advice has dismissed concerns that the deal between SSE and Npower’s parent company, Innogy, will negatively impact competition in the energy market.
In its written response to the probe into the proposed SSE and Npower merger, the consumer watchdog admitted the £3 billion deal would likely result in some lessening of competition within the gas and electricity markets.
However, it expects this dilution of competition to be limited and unlikely to breach the Competition and Markets Authority’s (CMA) competition tests. Citizens Advice said despite choice being reduced, the introduction of a default tariffs cap will mitigate the scope for consumer harm.
It also dispelled fears the merger would result in less consumers switching energy supplier. Customer switching reached record levels last year with 5.5 million electricity customers deciding to change supplier. Last month, nearly half a million customers switched supplier – a 13 per cent increase compared to May 2017.
SSE and Npower have said the volume of suppliers in the market means there is unlikely to be reduced competition.
In February, the CMA launched a review of the proposed merger which would see Npower and SSE combine to deliver energy services to 11.5 million UK customers.
Following an initial probe, the CMA concluded that the deal warranted “further in-depth” scrutiny” over fears it would reduce competition and increase prices for some consumers. The second phase of the investigation was launched in May.
Speaking to Utility Week, SSE said it welcomed Citizens Advice’s findings and looks forward to further engagement with stakeholders during the review process.
“It’s right that the views of stakeholders are sought by the CMA in this way and we look forward to engaging further through the process to demonstrate to all parties that the proposed merger will deliver benefits for customers and the wider energy market,” said an SSE spokesperson.
“We have a great opportunity to create a more agile, independent and efficient company; however, until the transaction is approved and completed, it’s business as usual and our primary focus remains on delivering for our customers.”