Labour call for REC bids to be referred
Wednesday 30 August 1995
Ian Lang, President of the Board of Trade, is due by the end of this week to deliver his verdict on the pounds 1.1bn takeover of South Western Electricity by Southern Electric International of the US, which was agreed on Friday. There is a growing expectation that he will rule simultaneously on the pounds 2.5bn agreed offer for Eastern Electricity by Hanson, but may delay a decision on the pounds 1bn hostile bid for Manweb by Scottish Power.
The bid for Manweb is considered the most likely to be referred since it was the first within the industry and the Office of Fair Trading's formal advice on it was delivered only yesterday to the Department of Trade and Industry. Offer, the industry watchdog, is thought to favour an MMC investigation of the plans by Scottish Power, which already has electricity supply business south of the border and is also a major generator of power.
Brian Wilson, Labour's trade and industry spokesman, said last night: "Each of the three bids should be referred on a case by case basis. Each raises different questions and could have an impact on customers. An investigation of all three is a minimum safety net."
He said that his demand for action does not pre-judge the outcome of any inquiry and does not mean he is ultimately against the takeovers going ahead.
"I am no defender of the privatised utilities, that is not my job. But none of this is happening with the consumer as a high priority. Unless the Government are deaf and blind they must realise the political sensitivity of all this."
Some City analysts who had been predicting clearance of the agreed bids for Sweb and Eastern now say that mounting political pressure could swing Mr Lang towards referrals. Scottish Power has argued that to single out its offer for Manweb would not be right and that any reference should be of all bids or none.
The entire electricity industry is braced for the decision: it will be the first major statement by Mr Lang on the industry since he took over at the helm of the DTI and is likely to dictate takeover activity for the forseeable future. Several other foreign groups, including Houston Industries of the US and RWE of Germany, are thought to be poised to swoop on a regional electricity firm if the signals are positive.
Earlier this year Michael Heseltine, Mr Lang's predecessor, cleared a bid for Northern Electric by Trafalgar House, which subsequently lapsed.
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