Too late for Lang to cut off electricity mergers: comment

Poor little Northern Electric. The spirited defence it launched yesterday against its US assailant seems unlikely to do the trick, even though the shares promise to pay out 20 per cent of their value next year with 10 per cent a year promised thereafter. Northern's largest shareholder, the Pru, seems prepared to give it a whirl, but with Labour now fully committed to a much harsher regulatory regime on top of the windfall profits tax, most shareholders are going to just take their 650p a share and run.

Northern's only hope now is of Ian Lang, President of the Board of Trade, stepping in to stop the bid, but even this looks a forlorn one. True, mergers policy under Mr Lang has not been operated on a consistent basis, but even he would be hard pressed to justify the somersault he'd have to perform to refer to the Monopolies and Mergers Commission the latest two American bids for regional electricity companies.

About the only basis he'd have for such action against this and the coincidental American bid for East Midlands Electricity is the loss of comparitors it would involve for Professor Stephen Littlechild, the electricity regulator. When there were 12 separately quoted RECs to compare, this hardly seemed to matter but now we are down to just five it becomes more of an issue. On this logic the two latest bids would be referred as an act of conservation.

Even so, there are few genuine competition issues involved here, nor in truth are these companies such an obviously important part of our national heritage that they need preserving. Having allowed the slaughter to persist largely unchecked thus far, it would ill-become Mr Lang to call a halt now. David Morris, chairman, is going to have to go down fighting after all but it's not a bad epitaph that he can attach to his name. He has a small place in history as the man who demonstrated with his scorched earth defence against Trafalgar House quite how much value there really was within these extraordinary companies, causing a rethink of regulatory policy in the process.

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