Following the controversial bid by Rupert Murdoch's BSkyB for Manchester United, the politics of mergers has been put under the spotlight.

Now, Mr Mandelson is considering removing any political decision-making in the process.

Under the most radical of proposals, ministers would be totally impotent to wield any political influence over the legality of mergers.

But the decision is a complex one and Mr Mandelson himself has confessed he is far from clear on the best reform.

Competition at all costs

At present, any merger or takeover worth over £70m goes straight to the Director General of the Office of Fair Trading (OFT).

The OFT, an independent government department, must decide whether or not the deal is in the public interest or breaches any competition law.

It encourages competition and investigates anti-competitiveness practice in industry, while rectifying trading practices which might be against the consumer.

The OFT advises Mr Mandelson whether a planned takeover should be referred to the Mergers and Monopolies Commission (MMC).

The Trade and Industry Secretary can either ignore the advice or refer it.

Any referral considerably delays the takeover process and could be costly to the companies concerned.

Mr Mandelson can also over-rule the Commission's verdict unless the MMC advises that a merger can go ahead without conditions.

Green Paper

A Green Paper, or consultation document, is expected to be released in January with the different possibilities of reform.

BSkyB's bid for Manchester United sparked controversy from football fans who did not want to see their team lose its identity.

As final arbiter in the matter, it was Mr Mandelson's links with Elizabeth Murdoch, Sky's Network manager and daughter of the media magnate, which also caused criticism.

After an initial investigation, the OFT, referred the case to the MMC on the grounds that it raised competition concerns for football broadcasters.

Political controversy

Such was the reaction to the BSkyB takeover that 40 Labour MPs, including two aides to Treasury ministers, had signed a Commons motion calling for such an inquiry.

After the BSkyB bid, Mr Mandelson said:- "I want to put everything under the microscope. I want to test whether the way we do things in Britain is the best we can do."

Unlike other countries, the UK has a very high level of political involvement in this process and Mr Mandelson could find himself relinquishing what he no longer wants.

Labour has pledged to reform the competition laws to make them tougher and in order to provide more protection for consumers.