Depth competition probe for Big Six energy tie-up

The CMA said that the two energy suppliers had not offered any undertakings to address competition concerns

The UK's competition authority has said it will launch a full investigation into the proposed merger of energy firms Npower and SSE, after the firms failed to address concerns about the impact on competition and prices for consumers.

It comes as the CMA's initial inquiry found the reduction in the number of large players in the United Kingdom energy market caused by the merger could hit competition and leave some customers worse off.

Npower and SSE believe the new company, in which SSE will hive off its supply business but remain in energy networks and power generation, will be more focused, more agile and have the economies of scale to offer competitive deals.

SSE, formerly known as Scottish and Southern Energy, is Britain's second biggest energy supplier and the merged group will serve around 11.5 million customers.

The tie-up would reduce the number of dominant companies in United Kingdom energy supply from a "big six" to a "big five" and has prompted demands by MPs for a full CMA probe.

A deal announced in Germany in March that will see npower's current ownership pass to E.On - another Big Six supplier - has added complication to the deal because of the possibility it could further narrow the market.

The plans come amid sustained political pressure over the issue of customers overpaying for their gas and electricity usage.

The companies appear to have factored in the likelihood of a deeper, six-month investigation, as they have always said the merger would likely complete in the final three months of 2018, or the start of 2019.

The deal has come as the United Kingdom energy market is already under pressure amid concerns over unfair tariffs, with a government-enforced price cap set to be introduced on standard variable tariffs (SVTs) later this year.

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