Monopoly fears knock electricity shares

Regional electricity shares dropped sharply yesterday as concern grew about a monopolies reference for all or part of the industry.

Ian Lang, the President of the Board of Trade, asked for more time to consider whether to refer the pounds 1bn bid for South Western Electricity to the Monopolies Commission. The market took the request as confirming that a reference was a serious possibility and that ministers were agonising over what to do.

The fall in share prices followed an announcement that the Office of Fair Trading is to allow the DTI an extra three weeks to decide on whether to refer the bid for South Western by the US utility Southern Company. The OFT said the delay was at the request of ministers.

South Western shares, which have been driven well above the pounds 9 a share bid price by speculation that a white-knightcounter-bid is imminent, fell 28p to 916p.

Although one suggestion was that the delay was because Mr Lang and Jonathan Evans, the corporate affairs minister, were on holiday, the DTI said the holidays were not a factor.

There was one rumour that the delay was caused by the emergence of a counter-bidder for South Western, but this was not taken seriously. Most were disappointed both that the rumoured counter-bidders have failed to appear and that a widely-touted bid for London Electricity appears to have evaporated.

London Electricity appointed Michael Kersey as group chief executive, replacing Roger Urwin, who will join National Grid as director of operations - a move which some took to confirm that a bid for London was unlikely.

Shares in London fell 27p to 803p, Norweb was down 19p to 807p, Seeboard slipped 20p to 485p, and Eastern, which is being bid for by Hanson, fell 9p to 918p. Manweb, the target of a bid from Scottish Power, fell 6p to 889p.

The OFT's advice to Mr Lang on the South Western bid went in last Friday, and it is not thought to have found any serious competition problems.

Professor Stephen Littlechild, the electricity regulator, is certain to have demanded that a series of conditions be met to ensure transparency of the accounts of South Western once it is taken over, with clear separation from the new foreign owner. There has been speculation that he will give it the green light once conditions are met.

However, the delay on the South Western decision could be linked to behind- the-scenes moves for a general reference to investigate changes under way in the industry. Scottish Power's bid is most vulnerable to a referral on public-interest grounds because it involves vertical integration between a generator and a distributor.

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

SThree: Talent Acquisition Consultant

£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

Recruitment Genius: Experienced Financial Advisers and Paraplanners

Negotiable: Recruitment Genius: This extremely successful and well-established...

Guru Careers: FX Trader / Risk Manager

Competitive with monthly bonus: Guru Careers: We are seeking an experienced FX...

Day In a Page

How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

How to stop an asteroid hitting Earth

Would people cooperate to face a global peril?
Just one day to find €1.6bn: Greece edges nearer euro exit

One day to find €1.6bn

Greece is edging inexorably towards an exit from the euro
New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

'Iron Man' augmented reality technology could become reality

Holographic projections would provide extra information on objects in a person's visual field in real time
Sugary drinks 'are killing 184,000 adults around the world every year'

Sugary drinks are killing 184,000 adults around the world every year

The drinks that should be eliminated from people's diets
Pride of Place: Historians map out untold LGBT histories of locations throughout UK

Historians map out untold LGBT histories

Public are being asked to help improve the map
Lionel, Patti, Burt and The Who rock Glasto

Lionel, Patti, Burt and The Who rock Glasto

This was the year of 24-carat Golden Oldies
Paris Fashion Week

Paris Fashion Week

Thom Browne's scarecrows offer a rare beacon in commercial offerings
A year of the caliphate:

Isis, a year of the caliphate

Who can defeat the so-called 'Islamic State' – and how?
Marks and Spencer: Can a new team of designers put the spark back into the high-street brand?

Marks and Spencer

Can a new team of designers put the spark back into the high-street brand?
'We haven't invaded France': Italy's Prime Minister 'reclaims' Europe's highest peak

'We haven't invaded France'

Italy's Prime Minister 'reclaims' Europe's highest peak
Isis in Kobani: Why we ignore the worst of the massacres

Why do we ignore the worst of the massacres?

The West’s determination not to offend its Sunni allies helps Isis and puts us all at risk, says Patrick Cockburn
7/7 bombings 10 years on: Four emergency workers who saved lives recall the shocking day that 52 people were killed

Remembering 7/7 ten years on

Four emergency workers recall their memories of that day – and reveal how it's affected them ever since
Humans: Are the scientists developing robots in danger of replicating the hit Channel 4 drama?

They’re here to help

We want robots to do our drudge work, and to look enough like us for comfort. But are the scientists developing artificial intelligence in danger of replicating the TV drama Humans?
Time to lay these myths about the Deep South to rest

Time to lay these myths about the Deep South to rest

'Heritage' is a loaded word in the Dixie, but the Charleston killings show how dangerous it is to cling to a deadly past, says Rupert Cornwell
What exactly does 'one' mean? Court of Appeal passes judgement on thorny mathematical issue

What exactly does 'one' mean?

Court of Appeal passes judgement on thorny mathematical issue