Norton Rose plays key role as DTI blocks water merger

Norton Rose's legal tactics helped concentrate Trade and Industry Secretary Ian Lang's mind on the general election when he made the groundbreaking decision to block the hostile takeover of Mid Kent Water.

John Cook, Norton Rose's competition head, said legal action he had taken for Mid Kent against the bid had effectively pushed back Lang's decision date from spring 1996 to the last half of January 1997, at most three months before a general election.

The legal and regulatory action also gave British-owned Mid Kent more time to launch a PR campaign against its two French predators, which already own Kent's two other water companies.

When the two French companies, General Utilities (GU) and SAUR Water Services, first made their joint bid in December 1995, Cook brought a High Court action against GU.

He asserted that GU already exerted some control on Mid Kent in breach of a 1990 undertaking to the Monopolies and Mergers Commission (MMC). He lost the case but the action delayed referral of the bid to the MMC.

Once the MMC investigation began, Cook managed to convince the DTI to extend the investigation by 10 weeks. When the commission was about to report to Lang, the British-owned water company used the local press to stir up national feeling against the foreign bidders.

“We chose to wind the French up deliberately by bringing a little bit of Francophobia into it,” said Cook. “During the Conservative and Labour conferences, Mid Kent hired an aircraft to fly over the conferences with a banner reading 'Say N'eau To The French'.”

The campaign struck a nerve with Tory MPs in Kent, who were probably worried about losing their seats, he said.

Lang's decision to prohibit the merger is the first time the government has blocked a bid for a water-only company.

Cook said: “In future it will be much more difficult to do water takeovers that reduce the number of players in the industry.”