The proposed merger between two of the Big Six energy companies, SSE and Npower, has been referred for further investigation by the competitions regulator.
The Competition and Markets Authority’s (CMA) decision today follows its initial Phase 1 investigation, which found that the deal could reduce competition.
SSE and Npower have not offered to introduce any measures to address the CMA’s concerns.
In Phase 2, a group of independent panel members along with a team of CMA staff will investigate further.
A spokesperson for innogy, Npower's parent company, says: “We look forward to helping the CMA in its in-depth investigation of our merger with SSE’s retail and energy services business throughout the Phase 2 process.
"We did not put forward measures to address the CMA’s concerns because we firmly believe this merger will be good for competition as it stands. It will create an independent, customer-focused company, offering customers a more efficient, improved service - and bring benefits to the wider market as well.”
Alistair Phillips-Davies, chief executive of SSE, adds: “We look forward to continuing to work constructively with the CMA as it undertakes its detailed investigation.
"A Phase 2 referral is a well-established process for transactions of this nature and we remain confident that the proposed merger will deliver benefits for customers and the energy market as a whole. The formation and listing of the new company remains on track for completion in the last quarter of 2018 or the first quarter of 2019.”
Claire Osborne, energy expert at comparison site uSwitch.com, says that the focus should be on getting the best deals for consumers.
She says: “It's completely right that the CMA gives the SSE/Npower merger appropriate care and attention. If the deal goes through, it could potentially create the biggest energy supplier in the UK and be the first major contender to British Gas.
“It's crucial that any deal preserves competition and results in better tariffs for customers. The UK energy market is now in a position where over 60 suppliers are fighting for customers and the Big Six now only have a 79% market share – down from 99% in 2004. We need to keep the focus on the quality of competition to deliver better outcomes for consumers.”
The deadline for the final report is 22 October.