MPs have called for a full investigation into the proposed merger of SSE plc (LON:SSE) and npower over worries the deal could hurt consumers.
The Business, Energy and Industrial Strategy (Beis) committee wrote to the Competition and Markets Authority to raise concerns that the £3bn tie-up of the two energy suppliers risks damaging the market.
“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,” said Rachel Reeves, an MP and chair of Beis.
“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.”
Under the proposed deal, announced in November, SSE will demerge its household energy and services business and combine it with npower, the UK arm of Germany’s Innogy.
The merger is subject to approval by shareholders and competition regulators in the UK and the European Union.
If approved, the combined company would be Britain’s largest electricity provider and the second biggest household gas supplier after British Gas.
READ: Business secretary urged by union to block merger between SSE and npower
The companies believe the deal will be given the go-ahead by the CMA and will in fact improve competition.
A spokesman for SSE argued that the deal would take the market from "60 competitors into 59, not five" and will offer better value for customers.
He said it will offer customers "a completely new model combining the resources of established players with the agility and innovation of an independent supplier".
Peter Terium, Innogy’s chief executive, said the companies had submitted their plans to the CMA shortly after announcing the deal.
“If we thought it was not possible, we would surely not have entered into this plan,” he said.
The deal comes amid rising competition from new market entrants and ahead of the government's price cap on standard tariffs.