Scottish utility SSE and Germany’s innogy claim consumers will be the winners as the competition watchdog approved a merger of two of Britain’s biggest energy suppliers.
Completing its probe into the Big Six deal, the Competition and Markets Authority (CMA) said households would still have “plenty of choice”.
SSE chief executive Alistair Phillips-Davies said there was still much work to be done on the “complex transaction” that will see SSE’s retail arm merge with innogy’s Npower business in the coming weeks and months.
He added: “We’ve always believed that the creation of a new, independent energy and services retailer has potential to deliver real benefits for customers and the market as a whole.
“It is good to see that the CMA has cleared the transaction following what was a comprehensive and rigorous inquiry.”
Innogy chief operating officer Martin Herrmann said: “We will continue to work to complete everything required to create the new company.
“Today’s final CMA clearance is a further step in setting up this new company which will combine the best of what both retail businesses have to offer, and build a better company for customers.”
The CMA had launched a full inquiry into the merger in May after early investigations suggested the tie-up could reduce competition, potentially leading to higher prices for households.
But its initial fears were eased by high levels of customer switching – the highest in a decade – and a drop in the number of people on SVTs.
Expensive tariffs were an area of particular focus for the regulator, whose final report said Perth-based SSE and Npower were “not close rivals”.
Anne Lambert, chairwoman of the CMA inquiry group, added: “With many energy companies out there, people switching away from expensive standard variable tariffs will still have plenty of choice when they shop around after this merger.
“We know that the energy market still isn’t working well for many people who don’t switch, so we looked carefully at how the merger would affect SVT prices.
“Following a thorough investigation and consultation, we are confident that SSE and Npower are not close rivals for these customers and so the deal will not change how they set SVT prices.”
The CMA also said the looming UK Government-enforced price cap would help protect customers on variable deals.
Under the proposed SSE-Npower tie-up, a new company will be listed on the London Stock Exchange.
SSE shareholders will own 65.6% of the business, with innogy holding a 34.4% stake.
The merger will create the UK’s second biggest energy supplier after British Gas, or Scottish Gas north of the border.