EDF's expected £11 billion takeover of British Energy will be criticised by MPs this morning, amid complaints that the impending deal could have a devastating effect on competition in the United Kingdom's power market.

Their objection comes as EDF, of France, puts the final touches to its takeover proposal, which is expected to include a basic bid at a little over its original 680p indicative price and the addition of future payments based on future output and electricity prices.

The MPs, in a report by the Commons Business and Enterprise Committee, to be published today, said that the expected takeover threatened to reduce significantly price transparency in Britain's electricity market and to create an overly dominant player that would add to upward pressure on prices paid by consumers.

Peter Luff (Conservative, Mid Worcestershire), the committee's chairman, said that he had “serious concerns” about the impact of the proposed deal, which he said would restrict competition in an already tightly held market with only six big suppliers.

Committee members called for Ofgem and the Competition Commission to scrutinise the deal carefully and to create robust safeguards to “protect current information flows to the market and to ensure no single generator has excessive market power”.

The MPs' report recognised the need to secure investment in new power plants, but said that investment must not come at the expense of competition or market transparency.

The Times reported last week that EDF, which is controlled by the French Government, was on the brink of securing a deal to acquire British Energy, Britain's nuclear generator. A deal could be announced within days.

British Energy's eight nuclear power plants and one coal-fired power plant generate about a sixth of Britain's electricity. It is considered a crucial independent player in a market otherwise largely dominated by the so-called Big Six energy-supply companies — Centrica's British Gas, RWE's npower, EDF, Iberdrola's ScottishPower, Scottish and Southern Energy and E.ON, the German group.

A takeover of British Energy is considered key to the Government's plans to build a new generation of nuclear power plants because most of the plants are expected to be built on existing sites. However, EDF has had to prove willing to sweeten the deal to keep investors on board. Some of British Energy's independent shareholders have argued that rising wholesale electricity prices, driven by the rising cost for oil-fired generation, mean that the generator is worth more than EDF has offered. The mechanism proposed is intended to give investors a residual interest in the company as profits are boosted by the higher prices.

The revised proposal has helped to bring a deal closer. Also, price expectations have been reduced by the recent easing of high oil prices, coupled with the eagerness of the Government, a 35 per cent shareholder in the nuclear generator, for a deal to be done.

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