British regulator lays out scope of SSE/Npower merger inquiry

LONDON (Reuters) - Britain's competition regulator on Tuesday set out more detail about what it intends to examine in its investigation of the tie-up between the retail power units of energy companies SSE (SSE.L) and Innogy’s (IGY.DE) Npower.

The Competition and Markets Authority (CMA) said earlier this month it had launched in-depth investigation into the tie-up between the companies, saying it may reduce competition and increase prices for some households.

On Tuesday, the CMA said it would consider the impact of the merger on the supply of gas and electricity to customers in Britain.

The CMA will also consider any implications arising from plans for a larger asset swap between Innogy’s parent company RWE (RWEG.DE) and E.ON (EONGn.DE), which also has a British retail energy business.

The CMA will also look at the potential impact on British independent energy supplier Utility Warehouse, which has around 600,000 customers and relies on Npower for is gas and electricity supplies.

"This theory of harm considers whether the Merged Entity would have an incentive to raise SVT (standard variable tariff) prices to increase its wholesale prices to Utility Warehouse," the CMA said.

The SSE/Npower merger would create Britain's second-largest retail power provider and reduce the "Big Six" dominating the market to five companies when they are already facing political scrutiny for high prices.

The CMA is expected to issue a final report by Oct 22.

(Reporting by Susanna Twidale; Editing by Mark Potter)