Watchdog gives green light to Ovo’s £500m SSE deal
The competition watchdog has allowed Ovo Energy to break into the top flight of energy suppliers by buying the retail arm of SSE, one of the traditional Big Six players.
The Competition and Markets Authority (CMA) said it will not open a second-phase investigation into the £500 million acquisition, a major milestone for the industry.
The Big Six, which used to have a practical monopoly on the industry, have been facing increased pressure from challenger suppliers such as Ovo, Octopus and Bulb over recent years.
After encouragement from the regulator dozens of new energy companies set up, often offering more attractive deals than the slow-moving incumbents.
They have now built a significant foothold on the market, pushing down SSE’s market share to 13% in the second quarter of this year, from 20% in the beginning of 2011. In the same period Ovo has been founded and grabbed 4% of the market.
“We are very pleased that the CMA has cleared the proposed sale of SSE Energy Services to Ovo Group,” said SSE boss Alistair Phillips-Davies.
The deal will still see SSE, formerly Scottish and Southern Energy, hold on to its electricity generation arm and its grid operations. It plans to treble its production of renewable energy by 2030, to around 12 gigawatts.
“This underlines our long-held belief that a dedicated, focused and independent retailer will ultimately best serve customers, employees and other stakeholders. With the required regulatory approvals now in place, we can make the final preparations for completion, expected around mid-January 2020,” Mr Phillips-Davies said.
SSE had been looking for something to do with its retail arm for a long time, and was dealt a major blow around a year ago when it was forced to scrap a planned merger with Npower amid a challenging market.
Late last month Npower, that was later sold to Eon, announced it would restructure, with sources telling the PA news agency that it could cut up to 4,500 jobs.
Ovo chief executive Stephen Fitzpatrick said: “We’re delighted with the CMA’s decision and look forward to bringing SSE into the Ovo family.
“There is a lot of work to be done, but we’re excited about the challenge ahead and the opportunity to help even more customers on the journey to zero carbon.”