Beckett lifts bar to GEC bid for Siemens Defence

GEC's hopes of spearheading the consolidation of the European defence electronics industry were further bolstered yesterday after the Government released the group from undertakings that prevented it from buying Siemens Defence.

Margaret Beckett, President of the Board of Trade, said she had taken the decision on the advice of the director-general of Fair Trading in light of the changing circumstances in the defence industry.

Analysts interrupted the move as not only freeing GEC to bid for Siemens Defence, which consists mainly of the former Plessey radar and military communications businesses, but also as a sign the Government might be more relaxed about defence mergers involving UK firms.

On Thursday GEC announced a deal to merge part of its Marconi defence electronics division with those of Finmeccanica, the Italian state-controlled holding company. The deal came two days after GEC's new managing director George Simpson unveiled a strategic overhaul to catapult Marconi up the ranks of world defence contractors through a combination of mergers and takeovers.

GEC is one of four bidders interested in buying Siemens Defence. The other three are British Aerospace, Thomson-CSF of France and Alcatel Alsthom, which is also French.

Siemens Defence was created out of the break-up bid for Plessey by GEC and Siemens in 1989. At the time, the Monopolies and Mergers Commission voiced concerns about the impact of the deal on competition for defence radar and military communications orders and recommended GEC should not be allowed a stake in or any control over the Plessey divisions.

Mrs Beckett said that it was no longer appropriate to maintain the restrictions although she stressed her decision should not be seen as prejudging any views the UK or European competition authorities might take.