Michael Heseltine, President of the Board of Trade, said in the House of Commons that he has no power to stop Professor Stephen Littlechild, director general of Offer, from referring the matter to the MMC.
Professor Littlechild is concerned that a takeover might reduce his ability to get information on Northern Electric and to regulate the industry effectively. He is in discussion with Trafalgar over changes to Northern's licence. If no agreement is reached, he can refer the matter to the MMC.
Mr Heseltine said: "I have a right to challenge the view of the MMC in the recommendations that it makes, but afterwards. That would be done in public, after public debate."
Mr Heseltine accused Labour of undermining attempts to put together major British companies, adding: "If by any chance the takeover bid goes through - I have no knowledge as to whether it will go through or not - Trafalgar House will then be able to point to its experience of running an electricity company in the United Kingdom as it bids for major world opportunities to install, run and manage electricity facilities internationally."