Competition and Markets Authority approves merger of npower and SSE

The Competition and Markets Authority (CMA) today issued final clearance of a proposed merger of big six suppliers npower and SSE following a 'thorough review' and consultation.

Big six to become big five

Panel members of the competition watchdog examined concerns around competition, including how this shakeup could impact standard variable tariff prices — known to be among suppliers' most expensive tariffs.

The CMA's statement on this states that customers would still have 'plenty of choice' when shopping around for a better energy deal after this merger, according to the panel's consultation.

Why have the CMA approved this merger?

The decision has been based on a handful of factors that came out of the authority's review:

• The highest number of people switching in a decade has led to the proportion of customers on standard variable tariffs dropping;
• Standard variable tariff costs are mostly driven by wholesale costs but;
• Suppliers do take into account one another's pricing when setting their own prices;
• However, npower and SSE are not close rivals for standard variable tariff customers.

Therefore, a merger of these two big six energy suppliers should not significantly impact standard variable tariff pricing.

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Will this mean better prices for npower and SSE customers?

Around 9 million households could be affected by this merger, states Rik Smith, energy expert at uSwitch.com:

"This merger will create one of the largest energy suppliers in Britain.  SSE and npower have previously said that the proposed company will be different from its traditional rivals.

"In a highly competitive market, around 9 million households could be affected by this merger and will be looking for attractive prices and strong customer service. And with regulatory intervention due to be in place by the end of the year, how will the new supplier engage those customers who are still on poor value standard variable tariffs and get them onto better deals?

“The average big six standard tariff is currently £300 more expensive than the cheapest on the market, so the message to all customers remains to shop around and choose the best possible deal.”

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