The Competition and Markets Authority has launched an investigation into the planned asset swap deal between RWE and Eon.
The probe will examine whether the transaction will likely lead to a “substantial lessening of competition” in the UK energy market.
According to the terms of the deal announced in March 2018, RWE will exchange its 76.8 per cent stake in Innogy for a 16.7 per cent stake in Eon, as well as Eon’s renewable portfolio and €1.5 billion in cash. Innogy’s renewable division will be returned to RWE.
Innogy owns the big six supplier Npower, which at the time was expected to be merged with the retail arm of SSE. However, the merger has since been cancelled, meaning the deal between RWE and Eon would leave the latter holding two of the big six – both its own namesake supplier and Npower.
Based on the latest figures from Ofgem, they would have a combined market share of 22 per cent for electricity and 18 per cent for gas.
The CMA has invited interested parties to submit comments on the deal by 13 March. It is planning to make an initial decision by 24 April.
On Monday (25 February), the non-ministerial government department published a series of proposals for new powers to better protect consumers.
Proposals include treating the interests of consumers as “paramount” and a new statutory requirement of the authority to conduct its investigations quickly.