The UK's household energy market just completed a structural U-turn. E.ON Next's acquisition of Ovo Energy, cleared by the CMA on Thursday, creates a market where three suppliers — Octopus (26%), E.ON Next (25%), and British Gas (23%) — control roughly three-quarters of all household gas and electricity accounts. Five suppliers now hold approximately 90% of the market. A decade of competition policy has been functionally reversed. The arithmetic is stark. In 2016, the CMA's landmark investigation found that the "Big Six" — British Gas, EDF, E.ON, SSE, Scottish Power, and npower — were overcharging customers by £1.4bn to £1.7bn annually due to weak competition. The policy response was to encourage market entry and break incumbent dominance. It worked, briefly: Octopus, Ovo, and Bulb surged into the market, and dozens of smaller suppliers followed. Then the 2021-22 energy crisis wiped roughly 30 firms off the map, Bulb went into administration, and the survivors began consolidating. E.ON Next now holds 13.45 million gas and electricity accounts, narrowly behind Octopus at 14.3 million and ahead of British Gas at 12.5 million. The deal transforms E.ON from a mid-tier player into Britain's second-largest supplier overnight. Chris Norbury, E.ON UK's CEO, called the market "fiercely competitive" — a characterisation that strains credulity when three firms hold 74% of supply and the next two (EDF and Scottish Power) bring the top-five share to 90%. The consolidation pattern is familiar from telecoms, banking, and airlines: a period of deregulation-driven entry, a crisis that culls the newcomers, and a reconsolidation that leaves fewer, larger incumbents than before — now with the regulatory cover of having "survived" market competition. The Big Six became the Big Three not through superior innovation but through acquisition and crisis attrition. Ovo itself grew by buying SSE's household supply business in 2019; it is now being absorbed in turn. Cornwall Insight's Tom Goswell offered the most honest assessment: larger suppliers bring stability, and after 30 firms collapsed leaving customers stranded, stability has value. But he flagged the core tension — fewer suppliers means less pressure to compete, less incentive to lower prices, and a risk that consumers shopping around will find "three versions of the same thing rather than a genuine range of deals." The CMA's decision to clear the deal despite these concerns is the pivotal regulatory choice. The watchdog effectively accepted that post-crisis consolidation is tolerable, prioritising market stability over the competition principles it championed in 2016. This is not necessarily wrong — but it is a structural concession that the competitive market model failed to survive its first major stress test. The test now shifts to outcomes. If the Big Three compete aggressively on price and service innovation, consolidation may prove benign. If they settle into comfortable oligopoly pricing — as the pre-2016 Big Six did — the UK will have spent a decade and billions in regulatory effort to arrive back where it started, with fewer players and less leverage to force change.
