DTI probes leak of go-ahead for pounds 4bn power bids

The Department of Trade and Industry yesterday launched an inquiry into the leaking of a Monopolies and Mergers Commission report recommending that electricity company takeovers worth more than pounds 4bn be allowed to proceed.

The Stock Exchange is believed to have contacted both the DTI and the MMC to ascertain who has had access to information from the report on National Power's proposed takeover of Southern Electric and that of PowerGen for Midlands Electricity.

The Exchange, which declined to comment, is also expected to voice its concerns to the Takeover Panel following massive surges in share prices in the electricity sector.

The leak caused acute embarrassment in Whitehall and prompted a swift attack by the Labour Party. The MMC document, which appears to give the go-ahead to both takeovers with only minor conditions attached, was submitted two weeks ago to Ian Lang, Secretary of State for Trade and Industry - due back on Monday after a trade mission to Japan.

Mr Lang, who is expected to accept the MMC's advice, was not planning to publish the report for at least another week.

John Battle, shadow energy minister, said the event "throws into question the integrity of the relationship between the Secretary of State and the MMC".

He added: "The contents are so market price-sensitive that energy companies' shares are changing hands before the Secretary of State makes a decision on the findings of the report. This is an incredibly dangerous precedent that casts competition policy aside."

The bids by National Power and PowerGen are controversial as they would in effect recreate the vertically integrated structure of the sector which was dismantled before the industry was privatised.

However, Mr Lang had already set a precedent last year by clearing the takeover of Manweb, an electricity distribution and supply company in the North-west, by Scottish Power. The MMC recommendation to clear the National Power and PowerGen bids will also be seen as a blow to the regulator, Professor Stephen Littlechild, who is against vertical integration. A spokeswoman for the watchdog said that they could not comment on an unpublished report.

The DTI said: "The position remains that no decision has been taken." The Secretary of State must accept an unequivocal MMC approval for a merger. But the DTI said that he could block it if the Commission suggested that a merger might in some way be against the public interest. Mr Lang might also decide to give the proposed merger the go-ahead but to impose conditions of his own.

The MMC is thought to have put forward conditions for the bids including the disposal of any generating plants owned by Southern and Midlands.

National Power and PowerGen are also expected to be forced to ring-fence contracts between the companies they are buying and other generators.

A further constraint would be changes to the companies' licence conditions to ensure that Professor Littlechild has access to information needed to regulate effectively.

Shares in Southern Electric surged by 21p to 893p on anticipation of a renewed bid by National Power while those in Midlands rose by 7p to 405p. Shares in the generators also moved up sharply with National Power gaining 14p to close at 492p and PowerGen up by 13.5p at 562.5p. None of the companies was willing to comment on the report, which they are thought not to have seen.

Industry sources said that National Power and PowerGen are concerned that Mr Lang might impose further power plant disposals in addition to substantial plant sales already being forced on the companies by Professor Littlechild.

City analysts believe that the generators could walk away from their bids rather than see their share of the generating market shrink further.

Separately, it emerged that Prudential has a 4.9 per cent stake in Yorkshire Electricity, which has been at the centre of bid speculation in recent weeks,

Comment, page 21

Start your day with The Independent, sign up for daily news emails
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific