Last month, the Competition and Markets Authority’s phase 1 investigation found that the tie-up could reduce competition, potentially leading to higher prices for some bill payers.
It offered SSE and Npower the chance to provide some remedies and ease its concerns but said today that the two companies failed to do so.
A final decision on the merger will now be due on October 22.
The two energy giants announced back in November that they would merge their businesses to form a new, publicly-traded company.
The combination of SSE and Npower, owned by Germany’s Innogy, would reduce Britain’s Big Six energy suppliers to five.
SSE shares were flat at £13.95.