E.ON Next finalized its purchase of Ovo Energy on Thursday following regulatory clearance from Britain’s competition authority. The transaction consolidates the energy supply market, with E.ON Next now holding 25% of the household energy market, comprising 13.45 million gas and electricity accounts. This positions the company as Great Britain’s second-largest energy supplier, behind Octopus Energy at 26% market share and ahead of British Gas at 23%.
The deal represents a significant shift in the energy market structure. The Big Six suppliers that dominated approximately 85% of the market in 2016 have now been reduced to the Big Three, with about 90% of Great Britain’s household energy supply held by only five suppliers when including EDF Energy and Scottish Power. This consolidation stands in contrast to efforts over the past decade aimed at dismantling the dominance of major suppliers to foster greater competition and encourage lower prices.
Regulatory and industry observers have raised concerns about the implications for consumers. A 2016 investigation determined customers were overpaying £1.4 billion to £1.7 billion annually due to weak competition. While E.ON UK’s chief executive emphasized the market remains “fiercely competitive” and highlighted the company’s ability to deliver customer value, analysts have cautioned that fewer suppliers could reduce incentives for price competition and innovation.
The market experienced significant turbulence following a wave of new entrants after 2016, particularly including Octopus, Ovo, and Bulb Energy. However, the sector contracted substantially after 2019 when SSE sold its household supply business to Ovo, and dozens of suppliers exited during the 2021-22 energy crisis. Bulb Energy’s administration in 2022 represented the largest casualty, with Octopus absorbing 1.5 million of its customers. Industry observers note that while larger suppliers provide market stability following the exit of approximately 30 firms, the concentration raises questions about whether households will experience genuine competitive choices or merely variations of similar offerings from dominant providers.
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