E.ON Next finalized its purchase of Ovo Energy on Thursday after receiving clearance from Britain’s competition regulator, marking a significant consolidation in the country’s energy supply sector. The deal, while drawing regulatory approval, has intensified concerns about the state of market competition and consumer choice in household energy provision.
Following the transaction, E.ON Next will serve approximately 13.45 million gas and electricity accounts, representing 25% of the household energy market and positioning it as Great Britain’s second-largest supplier. Octopus Energy maintains the leading position with a 26% market share, while British Gas holds the third position at approximately 23%. The four million households currently supplied by Ovo will continue service without immediate changes.
The consolidation represents a notable setback for efforts spanning the past decade to reduce the dominance of major energy suppliers and foster increased competition. A decade earlier, six large suppliers controlled roughly 85% of the market. A 2016 competition investigation warned that weak market competition was costing consumers between £1.4 billion and £1.7 billion annually in overpayments. When including EDF Energy and Scottish Power, the five largest suppliers will now control approximately 90% of the market.
Market dynamics shifted significantly following an initial wave of new entrants after 2016, led by companies like Octopus, Ovo, and Bulb Energy. However, the landscape contracted substantially after 2019 when SSE divested its household business to Ovo, and the 2021-22 energy crisis triggered numerous supplier failures. Bulb Energy’s 2022 administration, during which Octopus acquired 1.5 million customers, exemplified the market turbulence.
While company executives emphasize competitive pressures and operational benefits from scale, industry analysts note the trade-off between supplier stability and competitive incentives. Reduced supplier numbers may diminish pressure to maintain low prices and differentiated offerings, though larger suppliers possess greater resources to provide customer choice.
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