OVO acquisition of SSE approved by CMA

10 December 2019   By Dr Lucy Brown, Editor

Deal for OVO to become a major energy company has been approved by the Competition and Markets Authority (CMA).

Their acquisition of SSE will be completed in January 2020, with all 3.5 million SSE customers then transferring to OVO.

The supplier has stressed there will be no disruption for any customers, and they'll keep SSE customers informed as the sale progresses.

It marks a big step for the energy provider who have been around for a decade, bringing with it some unique challenges.

ovo energy logo
© Ovo Energy

Acquisition approved

The sale of SSE to OVO was announced in September, but it had to clear the hurdle of the CMA before it could be officially confirmed.

As the previously proposed merger between SSE and Npower was approved by the CMA, it was always likely this deal would be approved, and now the transaction with OVO can be formally completed in January.

SSE's 3.5 million customers will be added to OVO's existing customer base of 1.5 million, creating the second largest energy company in the UK behind British Gas.

Read our review of OVO Energy here.

Challenges for OVO

Acquiring so many customers and staff in one transaction comes with its own challenges for OVO, and there have been concerns the company will struggle to adjust to their new status as a major player in the British energy market.

However, they remain committed to offering clean and affordable energy to all customers, something which may appeal to SSE customers looking to move towards more renewable options.

One area where OVO will have to adapt comes in their approach to gaining and keeping customers. Whereas in the past, they've acted as an upstart stealing customers from other suppliers, they now have to ensure they protect their customer base from challengers.

There are also likely to be increased numbers of customer complaints, at least in the short term as OVO adjusts to their new customer base.

Ofgem measures quarterly complaint figures by the number of complaints per 100,000 customers and separates the Big Six suppliers and smaller companies (up till now including OVO) into separate tables.

The most recent figures show SSE is currently the second most complained about of all suppliers with 2,470 complaints per 100,000 customers in Q3 2019.

Conversely, OVO reported 1,467 per 100,000 for the same period, a figure that has been steadily rising over the last year since a low of 687 in Q1 2018.

These figures and trends will be worth keeping an eye on as the transaction is completed and OVO finds its customer base more than trebled overnight, albeit with SSE staff transferred across too to take the strain.

Energy market changes

Although OVO's acquisition of SSE is the biggest alteration to face the energy market in recent years, there have been plenty of other deals going on too.

E.ON has recently acquired fellow member of the Big Six Npower in an asset swap which will result in up to 4,500 job losses for Npower employees as computer systems merge and a major restructure takes place.

Challenger supplier Shell Energy are in the process of acquiring Green Star Energy's 200,000 customers, while Octopus Energy has boosted its own customer base with a buyout of Co-op Energy in a white label deal.

For customers, this means the energy market is constantly shifting, especially with the collapse of more than a dozen small suppliers since the beginning of 2018.

Nevertheless, OVO are so far on course to become the biggest success story of the diverse domestic energy market, and only time will tell what impact this has on their brand.

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