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SSE/npower merger could 'lead to higher prices'

By James Sillars, Business Reporter
The proposed merger between household energy suppliers SSE and npower is feeling the heat from competition regulators.
The Competition and Markets Authority (CMA) said on Thursday it would refer the deal for an in-depth investigation, unless the firms offered remedies to address its concerns that the tie-up could force up bills for some customers.It gave them until 3 May to offer such measures.The merger, first announced last November, would see the household supply businesses operated by SSE and npower join forces - reducing the industry's dominant "big six" firms to a "big five".::MPs demand probe into planned energy mergerThe CMA said on Thursday its initial Phase 1 investigation had found the rivalry between the large energy companies, including SSE and npower, is an important factor in how they set tariffs.
SSE/npower merger could 'lead to higher prices'

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"The removal of such competition could therefore lead to higher prices for some customers," it said.CMA senior director Rachel Merelie added: "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."The update on the CMA's investigation was released as energy bills creep up again ahead of a looming cap on so-called default charges being imposed by the Government.
SSE/npower merger could 'lead to higher prices'

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The sector insists competition is healthy with dozens of new suppliers in recent years.Npower recently reported its third annual loss in a row.SSE chief executive, Alistair Phillips-Davies, 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."Rachel Reeves, who chairs the Business, Energy and Industrial Strategy Committee of MPs, commented: "The energy market isn't working for consumers.
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"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."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."
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