The Competition and Markets Authority (CMA) has launched an inquiry into the proposed acquisition of SSE’s energy supply division by OVO.
The inquiry is to determine whether the transaction will led to a relevant merger situation, and whether this would significantly lessen competition in the sector.
The acquisition was announced in September, and is expected to consist of £400 million in cash and an additional £100 million in loan notes. If completed, OVO will become the second biggest energy supplier in the UK, with only Centrica’s British Gas having more household customers.
The CMA is concerned that the move will reduce customers options in the energy supply sector, and could ultimately lead to increases in bills.
SSE, however, remains confident that the deal is in the best interest of its 3.5 million customers, all of whom would be transferred to OVO.
Alistair Phillips-Davies, SSE Chief Executive, said: “We have long believed that a dedicated, focused and independent retailer will ultimately best serve customers, employees and other stakeholders – and this is an excellent opportunity to make that happen.
“OVO shares our relentless focus on customer service and has a bold vision for how technology can reshape the future of the industry. I’m confident that this is the best outcome for the SSE Energy Services business and customers.”
OVO did not respond to requests for comment at the time of publication.
SSE has been trying to move away from the supply sector for a while, with the OVO acquisition coming after a failed merger with Innogy in 2018. Following the announcement of Ofgem’s cap on standard variable tariffs the two companies were unable to reach successful terms.
It had then concluded that the merger would not be “in the best interests of customers, employees or shareholders”.
The CMA will now be accepting comments till 6 November about the OVO/SSE merger.