Merging SSE’s retail supply arm with Npower could lead to higher prices for some billpayers, the Competition & Market Authority (CMA) has warned.

The watchdog’s initial investigation found that the proposed deal could lead to higher consumer energy bills and said it requires further scrutiny.

Rachel Merelie, Senior Director at the CMA, said: “We know that competition in the energy market does not work as well as it might. However, competition between energy companies gives them a reason to keep prices down.

“We have found that the proposed merger between SSE Retail and Npower could reduce this competition, and so lead to higher prices for some customers. We therefore believe that this merger warrants further in-depth scrutiny.”

In-depth study

SSE and Npower have until 3 May to present measures to ease the CMA’s concerns – if they don’t then the regulator will launch the second phase of its investigation.

Alistair Phillips-Davies, Chief Executive of SSE, responded: “We remain confident that the proposed merger will deliver benefits for customers and for the energy market as a whole and that we will be able to demonstrate this to the CMA in due course.

“We look forward to continuing to work constructively with the CMA and other interested parties.”

> See the CMA's statement