SSE merger with npower should be blocked by government, says union

The business secretary, Greg Clark, has been urged by the GMB union to block the merger of two of the UK’s biggest energy companies over fears the plan would create a private cartel and reduce competition.

The proposed merger of npower and SSE would see “big six” that dominate the energy market to shrink to the big five, a move the GMB said would exacerbate the market’s current failings.

The plan is subject to approval by shareholders and clearance from the UK and EU competition watchdogs, and is regarded by experts as far from being a done deal.

If the UK watchdog, the Competition and Markets Authority, fails to initiate an investigation, the GMB told Clark that he should use his powers under the Enterprise Act 2002 to block the merger.

Justin Bowden, the union’s national secretary for energy, said the consolidation risked creating a chokehold on the market.

“The merger between SSE and npower is a test of … duty [to keep energy secure, cheap and clean] and until there is a settled energy policy, we risk a private cartel if the merger is given approval,” he said.

“GMB urges the secretary of state to exercise existing powers to prevent yet more needless price hikes that are the penalty for a dysfunctional energy market.”

The intervention goes significantly further than other unions, including Prospect and Unite, which have expressed concern over job losses.

Earlier this week, npower’s German parent company warned that it could only maintain its current business outlook with further “efficiency measures”.

In a letter to Clark, the GMB said it feared jobs would be shed during the merger. “This is an obviously worrying time for SSE and npower employees, who will be concerned that job cuts will inevitably follow a merger,” the union wrote.

SSE is the UK’s second biggest energy supplier and npower the sixth biggest, but together they will have more domestic electricity customers than the market leader, British Gas, and will be second only to British Gas for gas customers.

On Thursday, both firms came near the bottom of a mystery shopping exercise testing how long customers had to wait on the phone to energy companies.

The research by consumer organisaton Which? found SSE was third slowest with a wait time of 8 minutes and 18 seconds, and npower fourth worst at 7 minutes and 36 seconds. The fastest was Bulb, one of the small challenger firms, on 10 seconds.