(Reuters) - Britain's competition regulator has given its provisional approval to the merger between the retail power units of SSE <SSE.L> and Innogy's <IGY.DE> Npower, judging the two groups do not compete heavily on standard variable tariffs for UK consumers.
The Competition and Markets Authority said it had looked closely at the impact on choice for consumers who shop around less for power deals and found that the two groups were not close rivals for the more expensive standard variable price deals still used by such UK consumers.
"As part of its in-depth review, the inquiry group has provisionally decided to clear the deal after finding that SSE and Npower do not compete closely on SVT prices," CMA added. (https://bit.ly/2ojf6mG)
"The number of people switching energy provider is the highest in a decade and the proportion on SVTs has fallen," it added.
The 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 their tariffs and pressure from smaller rivals.
Combined, SSE and Npower would have 11.5 million customers, making the new company second only to Centrica's CNA.L British Gas, which has more than 14 million customer accounts.
"Looking ahead, Ofgem's price cap is also expected to protect SVT customers," the CMA said.
The decision will now take views and evidence on the provisional decision until Sept. 20 before coming to a final view. The deadline for a final report is Oct. 22.
Both companies welcomed the decision.
(Reporting by Justin George Varghese in Bengaluru; Editing by Sai Sachin Ravikumar)