US bid for Energy Group gets go-ahead

The pounds 3.7bn proposed takeover bid for Energy Group by PacifiCorp of the US was given the go-ahead yesterday after the Monopolies and Mergers Commission ruled the deal was not against the public interest. The conclusion is likely to raise new doubts about the government's competition policy.

Margaret Beckett, President of the Board of Trade, had overruled the advice of the Office of Fair Trading and Professor Stephen Littlechild, the electricity regulator, when she launched the surprise MMC investigation in August. The takeover bid would see Eastern Electricity, part of Energy Group which demerged from Hanson earlier this year, become the eighth regional electricity company (Rec) to fall into US hands.

Releasing the report yesterday, the Department of Trade and Industry revealed that the MMC had found Professor Littlechild's existing powers were sufficient to prevent PacifiCorp from milking Eastern's funds to service a $6bn debt burden after the merger.

It was the second time this week that the MMC had endorsed the recommendations of the regulators, despite Mrs Beckett's additional concerns. On Tuesday she approved the takeover of ScotRail and Central Trains by National Express, after the MMC proposed identical conditions to those suggested before the referral by John Bridgeman, director general of fair trading.

The MMC went further in the PacifiCorp case, arguing that the deal could not be expected to operate against the public interest at the outset. Under competition law, Mrs Beckett can only seek to impose extra conditions on a merger if the MMC rules that it would be against the public interest.

John Devaney, chief executive of Eastern Group, said Professor Littlechild must feel "somewhat vindicated" by the MMC report. Energy Group is thought to have spent about pounds 3m on the investigation, while the MMC said its inquiries generally cost between pounds 174,000 and pounds 480,000.

"Unconditional clearance is pretty conclusive. Clearly we're very pleased at the outcome. We were very frustrated at the time it took to get back to where we started," added Mr Devaney.

A senior source at Offer said the report was "a helpful endorsement of steps" the regulator had already taken. Offer, the power watchdog, had proposed extra licence conditions, beyond other US takeovers of Recs, to maintain Eastern's investment grade credit rating and ensure that the Rec's finances would not be hit if PacifiCorp breached its own borrowing covenants.

However DTI sources said they were "rather pleased" with the report and insisted the MMC probe had not been a wasted exercise, given the panel's concern about PacifiCorp's debt burden if the merger went ahead. They said the report had also provided a helpful source for the DTI's review of utility regulation, which is not now expected to emerge until late January at the earliest.

Shares in Energy Group rose 10p to 665p yesterday, still well short of the 690p price of the original bid, as analysts speculated about PacifiCorp's intentions. The agreed pounds 3.7bn offer lapsed with the MMC referral.

Michael Harrison, page 23

Life and Style
A teenager boy wakes up.
life
Life and Style
It is believed that historically rising rates of alcohol consumption have contributed to the increase
food + drink
Voices
The erotic novel Fifty Shades of Grey has already been blamed for a rise in the number of callouts to the fire brigade for people trapped in handcuffs
voicesJustine Elyot: Since Fifty Shades there's no need to be secretive about it — everyone's at it
Arts and Entertainment
Critics say Kipling showed loathing for India's primitive villagers in The Jungle Book
filmChristopher Walken, Bill Murray, Scarlett Johanssen Idris Elba, Andy Serkis, Benedict Cumberbatch, Cate Blanchett and Christian Bale
PROMOTED VIDEO
Life and Style
Playing to win: for Tanith Carey, pictured with Lily, right, and Clio, even simple games had to have an educational purpose
lifeTanith Carey explains what made her take her foot off the gas
Arts and Entertainment
The White Sails Hospital and Spa is to be built in the new Tunisia Economic City.
architectureRussian billionaire designs boat-shaped hospital for new Dubai-style Tunisia Economic City
Arts and Entertainment
You could be in the Glastonbury crowd next summer if you follow our tips for bagging tickets this week
music
Sport
Husain Abdullah returns an interception off Tom Brady for a touchdown
nflLeague has rules against 'sliding to ground on knees'
Life and Style
tech
Extras
indybest
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
food + drink
News
i100
News
i100
Arts and Entertainment
Kylie performs during her Kiss Me Once tour
musicReview: 26 years on from her first single, the pop princess tries just a bit too hard at London's O2
Arts and Entertainment
film
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

Trust Accountant - Kent

NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

Law Costs

Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

SQL Developer (Stored Procedures) - Hertfordshire/Middlesex

£300 - £330 per day: Ashdown Group: SQL Developer (Stored Procedures) Watford...

Day In a Page

Isis is an hour from Baghdad, the Iraq army has little chance against it, and air strikes won't help

Isis an hour away from Baghdad -

and with no sign of Iraq army being able to make a successful counter-attack
Turner Prize 2014 is frustratingly timid

Turner Prize 2014 is frustratingly timid

The exhibition nods to rich and potentially brilliant ideas, but steps back
Last chance to see: Half the world’s animals have disappeared over the last 40 years

Last chance to see...

The Earth’s animal wildlife population has halved in 40 years
So here's why teenagers are always grumpy - and it's not what you think

Truth behind teens' grumpiness

Early school hours mess with their biological clocks
Why can no one stop hackers putting celebrities' private photos online?

Hacked photos: the third wave

Why can no one stop hackers putting celebrities' private photos online?
Royal Ballet star dubbed 'Charlize Theron in pointe shoes' takes on Manon

Homegrown ballerina is on the rise

Royal Ballet star Melissa Hamilton is about to tackle the role of Manon
Education, eduction, education? Our growing fascination with what really goes on in school

Education, education, education

TV documentaries filmed in classrooms are now a genre in their own right
It’s reasonable to negotiate with the likes of Isis, so why don’t we do it and save lives?

It’s perfectly reasonable to negotiate with villains like Isis

So why don’t we do it and save some lives?
This man just ran a marathon in under 2 hours 3 minutes. Is a 2-hour race in sight?

Is a sub-2-hour race now within sight?

Dennis Kimetto breaks marathon record
We shall not be moved, say Stratford's single parents fighting eviction

Inside the E15 'occupation'

We shall not be moved, say Stratford single parents
Air strikes alone will fail to stop Isis

Air strikes alone will fail to stop Isis

Talks between all touched by the crisis in Syria and Iraq can achieve as much as the Tornadoes, says Patrick Cockburn
Nadhim Zahawi: From a refugee on welfare to the heart of No 10

Nadhim Zahawi: From a refugee on welfare to the heart of No 10

The Tory MP speaks for the first time about the devastating effect of his father's bankruptcy
Witches: A history of misogyny

Witches: A history of misogyny

The sexist abuse that haunts modern life is nothing new: women have been 'trolled' in art for 500 years
Shona Rhimes interview: Meet the most powerful woman in US television

Meet the most powerful woman in US television

Writer and producer of shows like Grey's Anatomy, Shonda Rhimes now has her own evening of primetime TV – but she’s taking it in her stride
'Before They Pass Away': Endangered communities photographed 'like Kate Moss'

Endangered communities photographed 'like Kate Moss'

Jimmy Nelson travelled the world to photograph 35 threatened tribes in an unashamedly glamorous style