My skepticism remains - the story was generated as a result of the Minister 
getting steamed up about the lack of effective liberalisation in Europe and 
barriers to UK takeovers on the continent.  This is nothing new - the DTI 
have been whinging about this for years (since EDF first arrived) but 
experience has demonstrated that they have little scope to take action if 
there isn't a competition case.   Indeed the report itself recognises this:

"Senior government officials said yesterday: "We are looking at ways of 
holding up European forays into the UK market. It may not be possible but, at 
the very least, we would force Brussels to intervene and impose an 
investigation on competition grounds, holding up the process."

In the past it has been difficult to "force Brussels to intervene" if there 
is no competition case (and I don't think there's a great one here).  The 
only legal option would be to invoke the reciprocity provisions of the 
directive. However, given that part-loading of the interconnector is one of 
the reasons that prices have climbed under NETA, this would be a major own 
goal for the DTI.

We've also confirmed this with DTI officials following the Guardian report.  
The source was Dan Corry who is a "special adviser" - read spin doctor - to 
the Secretary of State.  Conclusion - it's all pre-election hot air from Hain.

Paul







Peter Styles
10/05/2001 18:20
To: Paul Hennemeyer/LON/ECT@ECT
cc: Richard Shapiro/NA/Enron@Enron, Heribert Kresse/Enron@EUEnronXgate, 
Andreas Radmacher/Enron@EUEnronXgate, Paul Dawson/Govt. Affairs/LON/ECT@ECT, 
Richard Lewis/LON/ECT@ECT, Doug Wood/LON/ECT@ECT 

Subject: Re: UK power sector takeovers  

My understanding is that this would be targetted at State-owned enterprises 
and/or those based in countries where market opening is < 100%. Political 
target is France. If State-owned, a provision could be based on the Spanish 
legislation invoked to block control of Hidrocantabrico by EdF through EnBW 
and by EdP. The responsible UK official in DTI thinks that legislation is 
invalid under EU treaty rules. Commission officials probably share the view. 
In any case such a provision would I think require UK parliamentary time to 
get through. The touting of the idea could be just a pre-election puff?




Paul Hennemeyer
05/09/2001 10:59 PM
To: doug.wood@enron.com, Peter Styles/LON/ECT@ECT
cc: Richard Shapiro/NA/Enron@Enron, Heribert Kresse/Enron@EUEnronXgate, 
Andreas Radmacher/Enron@EUEnronXgate 

Subject: 

Oh yee of little faith. Dawson - when can we go to DTI and make big stink??

Solomon Bros reports:

E.ON / POWERGEN - The Guardian reports that the UK government is looking
into ways to block or hold up foreign takeovers of British energy companies.
Separately, E.ON says it now has a majority stake in Sydkraft.