MPs call for investigation into proposed merger between SSE and Npower

The deal would make the new company the country’s second largest energy provider behind Centrica's British Gas

The transaction is expected to be completed by the last quarter of next year or the first quarter of 2019 (Getty)

MPs are calling on the competition watchdog to launch an investigation into a proposed merger of the UK retail operations of energy companies SSE and Npower, warning a deal could reduce competition and be a bad deal for consumers.

SSE and rival Npower, which is owned by Germany’s Innogy, announced that they intend to merge their British retail energy businesses last month, reducing the Big Six down to five.

MP Rachel Reeves, who chairs the Business, Energy and Industrial Strategy Select Committee, wrote in a letter to the Competition and Markets Authority that the deal was “concerning” for the competitiveness of the energy market.

“The energy market isn’t working for consumers,” she 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,” she added.

“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.”

The deal would give the combined new company a customer base of around 11.5 million, making it the country’s second largest energy provider after Centrica’s British Gas.

The select committee said the move would result in almost half of the domestic energy share being held by British Gas and the new business.

A spokesperson for SSE defended the deal, saying: “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,” the spokesperson said.

A spokesperson for Innogy said: “The transaction will create a new, strong and independent British retail energy supplier, which will provide a better deal for consumers and help deliver the Government’s plans for more competition in the market.”