By Nina Chestney
LONDON (Reuters) - British lawmakers called on Monday for a competition inquiry into the proposed merger between SSE (LON:SSE) and Innogy's UK retail energy businesses.
The cross-party committee of members of Britain's parliament said the deal could reduce competition and affect consumers as together with Centrica's British Gas, the combined company would control more than half of the UK market.
SSE and Innogy said last month they would merge and list their British retail units to better compete with smaller rivals and reap badly-need synergies in a market with thin margins.
The deal, which would give SSE shareholders a stake of about two thirds in the combined entity, is expected to be completed by the first quarter of 2019 at the latest.
The committee called on the Competition and Markets Authority (CMA) to look into a merger that would reduce Britain's Big Six energy companies to five.
"(We) would welcome the confirmation of the CMA that it will look in detail at the potential impacts that this merger could have on the operation of the domestic energy market, and undertake a full investigation if there is any risk of a lessening of competition within the sector," Rachel Reeves, chair of the cross-parliamentary Business, Energy and Industrial Strategy (BEIS) Committee, wrote in a letter to the CMA.
The CMA said it would consider all mergers that meet the legal criteria for an investigation under the Enterprise Act.
An SSE spokesperson said the merger will turn 60 energy suppliers into 59, not five, and ultimately offer better value for customers, adding that it will engage with the CMA and any other interested parties as required.
The so-called Big Six energy companies - British Gas, SSE, Iberdrola's Scottish Power, Innogy's npower, E.ON and EDF (PA:EDF) Energy - control around 80 percent of the market, compared to around 99 percent a decade ago.
German energy company Innogy's chief executive Peter Terium said last month he was confident British regulators would approve the deal.