There were seven in the bed and Beckett said stop

Is Margaret Beckett's mergers policy becoming as capricious as that of her predecessor, Ian Lang? The question arises following her decision yesterday to refer the takeover of the Energy Group, which owns Eastern Electricity, to the Monopolies and Mergers Commission against the advice of both the Director General of Fair Trading, John Bridgeman, and the electricity industry regulator, Professor Stephen Littlechild.

The US bidder, Pacificorp, may feel hard done by, but, if it is any consolation, it is not alone. Mrs Beckett is developing a reputation, for referring anything that moves irrespective of the views of the competition authorities. Since she arrived in Victoria Street, National Express and Capital Radio have both been packed off to the MMC and Bass blocked outright from acquiring Carlsberg Tetley. In the cases of Bass, Capital and National Express, a common thread linked Mrs Beckett's decisions. Each involved a concentration of market power and each was handled in accordance with Mrs Beckett's promise to keep competition considerations at the centre of mergers policy.

In the case of Pacificorp, however, she broke ground in several new areas. First, the deal was not looked at by the Mergers Panel but dealt with at ministerial level, implying an increased politicisation of the decision- making process. Second, it posed no competition issues since Pacificorp owns no other UK electricity interests. What must make the referral all the more galling for Pacificorp and Energy Group is that seven previous bids for regional electricity companies by US utilities have already been sanctioned and completed, leaving more than half the industry in foreign ownership.

Herein lies the clue to the latest referral, which Mrs Beckett justifies on the grounds that it may not be possible to maintain adequate regulatory control over Energy Group's UK electricity businesses once it is subsumed into a larger US parent. One way to read this is as an indictment of Professor Littlechild since he has accepted the assurances given by previous bidders - ring-fencing of their UK businesses, publication of regulatory accounts and the like. Not so for Pacificorp. By referring Pacificorp, Mrs Beckett has in effect asked the MMC to carry out a health check more generally of regulatory controls over the electricity supply and distribution industry. It was now or never since neither Mr Bridgeman nor Professor Littlechild would have instituted one on their own accord.

The problem will come if the MMC turns around in November and concludes that the takeover of Energy group is against the public interest. That would place huge and unwelcome pressure on the Government to unwind the previous seven mergers. Thankfully, nobody in Whitehall expects that to happen: there is a strong presumption that the MMC is unlikely to reach any conclusions that differ radically from those of Professor Littlechild. In other words it is a tidying-up exercise designed to put ministers' minds at risk but not rock the boat too much.

After all, Tony Blair is re-inventing the special relationship with Bill Clinton while British Airways and BT still need formal US approval if they are to proceed with their mergers with American Airlines and MCI. Mrs Beckett is sufficiently seasoned as a politician to face the charge of capriciousness. A bigger question-mark hangs over the future of Professor Littlechild.

Don't underestimate embattled Ayling

Mention of British Airways inevitably brings to mind the predicament of its chief executive, Bob Ayling, who never seems to be referred to these days without the prefix "embattled". What has gone wrong? Mr Ayling's rise through the BA ranks since forsaking a Whitehall career has been nothing short of miraculous. He is young (still only 50), he is clever, he is the embodiment of the modern manager and best of all he is mates with Tony Blair. And yet Mr Ayling has become a hate figure among his staff and BA's shareholders. Vitriol oozed at the annual meeting.

The answer is contained in one five-letter acronym - Bassa or to give it its full title the British Airways Stewards and Stewardesses Association. Conciliation may now be in the air amid talk of a politically-engineered settlement to the cabin crew dispute. But even so Mr Ayling's reputation will take some restoring.

The defining moment was his threat to sack striking Bassa members as if they were some British Leyland-style union-wreckers. The wife of a tennis-playing friend of mine happens to be a senior Bassa official and, while I cannot vouch for all of them, she hardly fits the description. Perhaps half the Tory leader writers in Fleet Street also play tennis with Bassa because they too took it as the cue to turn against Mr Ayling and BA.

I sense, however, that Mr Ayling's spat with Bassa is indicative of a wider problem. He stood his ground against Bassa for legitimate reasons but he was, uncharacteristically, pushed into taking a hard line by his executive managers when other advisers were urging a less confrontational approach.

Why did Mr Ayling allow himself to be manoeuvred into such a position and where was his board when the decisions were being made? I sense a strange, if not strained relationship between Mr Ayling and some members of the BA board. He did not choose them, they chose him. And he is not allowed to forget that. Sir Michael Angus, deputy chairman, told a shareholder last month that Mr Ayling's pay had gone up because he was "on probation" when he began the job. How many other chief executives of Footsie 100 companies are appointed on such terms? Mr Ayling has shown he is a dangerous man to underestimate or patronise. If he wants to cement his position, he may need more of his own men on the board.

NatWest can learn from tale of two banks

There could scarcely be a greater contrast between the fortunes of two banks than that presented yesterday by Lloyds TSB and NatWest Group. By sticking to its knitting, - retail banking and financial services - Lloyds has seen its market value more than double to pounds 40bn in the space of a year. On any measure you care to choose, Lloyds is romping away. As a result it is throwing off surplus cash at the rate of pounds 1bn a year.

By contrast, NatWest's attempt to revitalise NatWest Markets by splitting the business in two, was the dampest of damp squibs. It is hard to see how the reorganisation is anything other than cosmetic, or how it will address NatWest's key problem of improving returns on capital from its foray into investment banking. The only plausible explanation for splitting treasury, foreign exchange, interest rate and money market operations off into a new division must be to make the investment banking rump a saleable proposition. A buyer may come along but it will not be Lloyds chairman, Sir Brian Pitman, who says he would not touch investment banking with "a barge pole" - which sums it up.