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.