A sale of British Energy to a foreign buyer could lead to "serious damage to price competition", according to Fife-based McKinnon & Clarke, the UK's biggest independent energy consultancy.

A sale of British Energy to a foreign buyer could lead to "serious damage to price competition", according to Fife-based McKinnon & Clarke, the UK's biggest independent energy consultancy.

German newspapers yesterday cited the country's second-biggest utility, RWE, as ready to bid almost £2bn for the government's 35% stake in British Energy.

That followed Monday's disclosure by the nuclear generator that it was in talks with international energy groups which might lead to a takeover.

In addition, French state-owned utility Electricite de France (EdF) is rumoured to be interested in Iberdrola, owner of Glasgow-based ScottishPower, while RWE has also been linked with Scottish & Southern Energy.

British Energy shares yesterday added a further 2.7%, or 17p, closing at 652.5p, following Monday's 11% revaluation.

McKinnon & Clarke says that any further bids for UK energy suppliers should now be blocked by the regulator and the government.

David Hunter, energy analyst at the consultancy, commented: "The UK energy market has consolidated from around 20 suppliers 10 years ago to only six or seven majors now. Both EdF and RWE, through its Npower subsidiary, already have a significant presence in the British market, so any further takeovers would result in serious damage to price competition, not only at the customer level but further upstream' in power station ownership."

Hunter said that if the current spate of takeover stories were to become reality, the UK market would be down to four major players, three of them European, "and this would spell disaster for competition and customer choice".

He concluded: "Instead of the government protecting its consumers, it seems to be backing away, with plans to reduce its own 35.2% stake in British Energy. With energy prices continuing to spiral and no let-up forecast, now is not the time to hand over control to European energy giants."