Lawyers working on British Aerospace's (BAe) £7.8bn acquisition of GEC's Marconi are preparing themselves for a long haul as political wrangling over the deal mounts.
The European Commission and the UK Government are sparring about who has jurisdiction over the competition aspects of last week's deal, which creates the world's third-largest defence manufacturer.
Charles ap Simon of Freshfields, acting for GEC, described the looming anti-competitive investigation as "sheer hell".
Sources at the Office of Fair Trading were confident that it would be referred to Europe, based on criteria which included a primary test of worldwide turnover exceeding £4bn.
But one partner involved in the deal said he was confident it would fall within the UK jurisdiction because of Article 223 of the Treaty of Rome, which allows member states to insist on the use of their own regulators – in this case the MMC – for interests of national security. Article 223 was invoked in 1994-95 when GEC acquired submarine builders VSEL.
One source said Article 223 was likely to be applied in BAe's case as the bulk of production would be military-related.
Another potential delay comes from US regulators who also have a say on the competition implications of the merger.
But another source said the fact GEC owns US-based defence manufacturers Tracor indicated that the authorities had given implied consent to the merger.
He added that the argument made by some European-based defence manufacturers that the BAe deal was incompatible with a European-wide defence strategy was "cobblers". He said BAe was not ruling out a possible link with Europe – BAe is still thought to be interested in German defence manufacturer Dasa.