Return papers, DTI tells editor

THE Government set itself on a collision course with Britain's most influential business magazine yesterday by demanding that the Economist return a confidential document or face High Court action.

Ian Lang, President of the Board of Trade, threatened to take out an injunction against the weekly journal if a Monopolies & Mergers Commission report on the electricity industry was not back in government hands by 3pm tomorrow.

Full details of the document, which recommends that National Power's pounds 2.8bn bid for Southern Electric, and PowerGen's pounds 1.95bn bid for Midland Electric, should be allowed, were leaked in the current edition of the Economist.

Adam Raphael, author of the article exposing the merger go-ahead, said of the ministerial demand: "We are not prepared to do that."

The Department of Trade and Industry said in a letter to Bill Emmott, Economist editor, that the magazine had unexcised versions of the document which include commercial evidence given in confidence during the MMC inquiry. The letter, signed by Paul Salvidge, head of the DTI's Consumer Affairs and Competitition Policy Directorate, warns that the copies "are the property of the Secretary of State" and must be returned.

He also required assurances that no other copies had been made, and an undertaking not to disclose any information obtained from reading the reports.

Mr Emmott replied that the Economist had already published a full report based on the document, and the information was now in the public domain. "I am not prepared to give an undertaking not to repeat this information," he added.

Mr Raphael argues that the mergers of electricity producers and distributors will diminish competition and act against the interests of customers, particularly domestic consumers.

If the government application for an ex parte injunction is granted, the Economist will almost certainly appeal, drawing Mr Lang into an embarrassing and potentially lengthy legal action over the MMC papers.

The Commission's decision to wave through the "vertical alignment" of two giant electricity companies was taken against the advice of a wide range of industrial interests and opinion, the Independent on Sunday has learned.

Sir Bob Reid, chairman of London Electricity, opposed the mergers, along with the influential Cambridge economist Professor David Newbery, ICI, Northern Electric and the Chemical Association of Great Britain. Professor Stephen Littlechild, the electricity regulator, said the mergers would make his job more difficult.

Keith Kew, senior economist at the Chemical Association, said: "We spelt out our concern that it should be the customers, not the producers, who gain from privatisation."

The five-member panel chosen to conduct the inquiry came down four to one in favour of the mergers. The dissenter, Patricia Hodgson, wrote a minority report, arguing that the mergers would give the two giants a captive market for their electricity.

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