Salmond raises fresh competition concerns on talk of EDF bid for owner of ScottishPower

FIRST Minister Alex Salmond has issued a fresh warning over the threat to competition posed by a possible takeover of the ScottishPower owner, Iberdrola.

Salmond's new conerns follows reports that French suitor Electricité de France (EDF) will look to merge ScottishPower with its UK electricity arm if a bid is successful.

EDF is said to be a step closer to making a bid for the utility after a series of cross-border talks with Spanish company Actividades de Construcción y Servicios (ACS) about a joint approach.

Owned by the French state and one of Britain's largest energy suppliers, EDF boasts around 5.1 million customers. But Salmond's aides last night said the Scottish Government still had "concerns" over a possible takeover.

Last month, the First Minister warned that he would report the EDF energy giant to UK and Brussels competition watchdogs if a bid was made.

And an adviser to Salmond told The Scotsman yesterday: "There has been speculation about a possible takeover bid for Iberdrola-ScottishPower, including in the weekend business press. Ministers would not normally comment on such speculation, but we want to make very clear that the Scottish Government have concerns, which would need to be addressed if any such bid were made."

Reports yesterday also claimed that EDF and ACS are contemplating a bid for Union Fenosa, the third-largest Spanish utilities company. The two deals together could cost the pair around £70 billion – the biggest transaction in the European energy sector.

It is understood that a merger between ScottishPower and EDF's UK energy arm would result in the French company becoming Britain's number two energy provider – and would cut the number of companies in the market from six to five.

Salmond's adviser said: "We are in an energy market in Scotland and the UK where there are a relatively small number of energy providers. There are already legitimate concerns about the impact of the current market situation on consumers at a time of rising fuel prices.

"If a proposed takeover would reduce the number of companies operating in the market, we would ensure that our concerns were raised with the competition authorities in the UK and, indeed, the European Union."

He added: "ScottishPower is a major employer and contributor to the Scottish economy. We do not want to see any developments which would put that at risk."

Iberdrola has previously stated that it had received no formal approach from EDF. Sources yesterday confirmed to The Scotsman that this was still the case.