Appealing to the Competition Commission is generally also a futile course

Appealing to the Competition Commission is generally also a futile course.Down in the valleys of South Wales they will be pondering the hardest over what to do. Hyder's Graham Hawker has the choice of appealing or handing back pounds 90 to every household in cheaper water and electricity bills Talk about a rock and a hard place.. Mr McCarthy's pricing formula allows the industry a post-tax return on capital which is even more stingy than that set by the water regulator Ian Byatt.It also assumes annual reductions in operating costs for the next five years on a scale which will keep the personnel departments busy.But history shows that the utilities can take almost anything a regulator can throw at them and still keep the dividends switched on. Second, he has made the price curbs sufficiently onerous to force a handful of the companies to think seriously about appealing to the Competition Commission. There again, Mr McCarthy is a streetwise merchant banker and not an academic. He knows what the appropriate reaction of the markets ought to be if the regulator is doing his job properly and yesterday everything went to plan as share prices across the utility sector got a nasty shock.There is little danger of Mr McCarthy having to revisit this price review within a few months of implementation, as was the humiliating fate of Professor Littlechild in 1995, unless he is presented with a rash of consolidating mergers among distribution businesses.Should that prove to be the case, he will simply squeeze the orange a little tighter once the merger partners reappear on the other side of a Competition Commission investigation.Admittedly, the mathematics behind this latest regulatory assault look challenging for the companies. CALLUM MCCARTHY, the new scourge of the electricity industry, has learnt from the mistakes of his predecessor, Professor Stephen Littlechild. First, he did not let the electricity companies have sight of his draft price proposals until 10.30 on Wednesday night, thus avoiding the risk of the information seeping into the market and upsetting the regulatory applecart.

From now, the Deputy Prime Minister can boast that our merchant navy is sailing under the the Red Ensign in more ways than one Pip, pip!. Henceforth, it will be inclined to look less far afield when having its vessels refitted which is good news for the shipyards too.Lest it be thought Mr Prescott is engaging in unfair tax competition, he is keen to point out that not only has Brussels expressly approved the concept of a tonnage tax but similar arrangements have already been introduced in Norway, the Netherlands, Germany and Greece.Best of all for Mr Prescott, himself a former merchant navy steward of course, P&O is doubling its intake of British cadets This is part of the deal if it wants to qualify for the tax. But that should be more than offset by the reinvigorating effect on the British merchant fleet P&O alone is bringing 50 ships back on to the UK register. The market was still factoring this in yesterday but if P&O retains no more than its existing rating then the shares should have further to travel yet.The cost of the tax change to the Exchequer is some pounds 40m. Treat a mobile industry like shipping badly and it tends to vote with its fleet. P&O, Lord Sterling's company, accounts for nearly half what remains of the British shipping industry and so has most to gain from the Prescott changes, recommended incidentally in a report written by Lord Alexander.Its tax charge will drop from 22 per cent to 15 per cent, boosting after-tax profits and earnings per share by some 9 per cent. In the past two decades, the UK merchant fleet has shrunk from 1,300 vessels to 250 largely, though not exclusively, because of a tax regime which discourages shippers from locating here. Thus, the main beneficiary of the Deputy Prime Minister's new tonnage tax will be a true-blue businessman who once served as special adviser to successive Tory trade secretaries.

The change in the regime for taxing UK shipping companies is long overdue. JOHN PRESCOTT and Lord Sterling of Plaistow make unlikely shipmates, but now that New Labour has thrown most of its old ideology overboard it seems that pretty much anything is possible. The Commerce Department said sales fell by 0.2 per cent in June, rather than rising by 0.1 per cent as estimated.Most analysts still feel interest rates will rise after the 24 August meeting of the Federal Open Markets Committee.. But, even excluding cars, sales were up by 0.3 per cent in July and 7.1 per cent year on year.Yet the markets focused instead on a small downward revision to June's figure. The rise during the month was more than twice as big as expected.A surge in car sales, up by 2.3 per cent to $62.6bn (pounds 39bn), accounted for much of the rise. SPENDING BY US consumers roared ahead in July, but Wall Street shrugged off this latest evidence that the Federal Reserve will need to cool the economy with an interest-rate rise.

The Dow Jones index was 58 points up at 10,846.06 by midday. Its strength helped shares in London gain ground; the FTSE 100 closed up nearly 139 points at 6,153.3. The value of US retail sales rose 0.7 per cent in July, taking spending to a level 9.1 per cent higher than a year earlier. Safeway is also exploring how mobile phones can be used for grocery shopping.. Sainsbury's profits have sunk from pounds 1.25bn in 1995 to just pounds 752m last year.Mr Dennis said: "The gap will continue to grow because Tesco has said it will keep close to Asda on price while Sainsbury's is focusing on choice. It is bound to lose more share."Among other supermarket chains, the IGD's figures show that Somerfield had lost share every year between 1994 and 1997 before its takeover of Kwik Save.Marks & Spencer has also been drifting and accounted for just 2.9 per cent of the grocery market last year, compared with 3.4 per cent at the start of the decade.But while M&S's niche position in the sector has been steadily eroded, Waitrose's figures have held firm with a steady 1.8 per cent share.Morrison's, the Bradford-based supermarket operator, has enjoyed a steady rise in share throughout the decade, growing from 1.4 per cent of the market to 2.6 per cent.t Safeway has launched an office shopping trial for staff at its headquarters building in Hayes.Workers will use handheld devices containing their personalised shopping lists to submit orders via a modem. Sainsbury's share was 12.2 per cent at the end of last year, only marginally higher than its 11 per cent market share 10 years ago.Tesco overtook Sainsbury's in 1995 with a huge jump in its market share, helped by the takeover of William Low.The figures also confirm Asda's meteoric rise, overtaking Safeway in 1996 to end last year with a 8.6 per cent market share compared to Safeway's 7.6 per cent.Mike Dennis, food retail analyst at SG Securities, said Sainsbury's profit performance has been "actually worse than the IGD figures suggest". Their comments came after new industry figures showed that Tesco has increased its share of the UK grocery market by almost 60 per cent over the past decade, while Sainsbury's share remained virtually static. The end-of-year figures for 1998 produced by the Institute of Grocery Distribution (IGD) are a graphic illustration of Tesco's increasingly strong leadership of the sector.The IGD figures, which are produced twice a year, show that by the end of 1998 Tesco had grabbed 15.4 per cent of the grocery market, up from a share of 9.7 per cent in 1990.