Comment : This wonderful wheeze was bound to be stopped

Perhaps the biggest surprise about Kenneth Clarke's crackdown on share buybacks is that anyone should have been surprised by it. And yet they were, in the City at least, where for some bizarre reason nobody can ever understand why chancellors should want to call a halt to highly lucrative tax scams of this sort.

In fact, the demise of this wonderful little City wheeze became pretty much inevitable the moment Reuters came out with its own particular mutant version. This was so "in yer face" to the Revenue that it could hardly have been ignored. Reuters wanted to find a way for small, tax-paying investors to share in the tax credit bonanza these schemes mean for pension funds and other non-tax-paying shareholders. What it came up with was certainly clever. But while its motives may have been honourable enough, this was also pretty self evidently the scheme too far and it seems to have killed it for everyone else.

To be fair, Mr Clarke would probably have done something with or without Reuters. According to the Treasury, share buybacks and special dividends linked to takeovers or share consolidations are costing the Exchequer a minimum of pounds 400m a year. What is already a flood was in danger of turning into a deluge, with even the mighty BT rumoured to have been working on something of the sort. That really would have been the mother of them all - the buyback to end all buybacks. Perhaps thankfully, Reuters got there first.

Companies that engage in buybacks generally insist that their tax attractions are merely icing on the cake, that the primary purpose is nothing to do with tax. What it's about, one well meaning executive explained yesterday, is capital efficiency and earnings enhancement. Shareholders demand "focus" in business these days and it is only right that excess capital so generated should be paid back to shareholders. So with the tax break removed, will he be forging ahead with a buyback regardless? Er ...

ummm. Well let's spare him the embarrassment and answer the question for him. Somehow this seems rather unlikely.

While the Revenue was prepared effectively to foot the bill of paying a premium on share repurchases, companies in a position to undertake these things would have been positively failing in their fiduciary duties had they not done so. Now the tax perk has gone, the rationale becomes much more questionable. Companies that can afford to will continue to pay special dividends as a way of distributing surplus capital, but the buyback will vanish like summer snow.

Will the Chancellor go a step further in the Budget and lop another chunk off the tax credits pension funds can claim on dividends? Certainly this is a tempting target for a revenue hungry Government, but it would also be an unpopular one. It is easy to justify yesterday's action, for the target is essentially a City wheeze which though it primarily benefited pension funds, most people would disapprove of. Attack the tax exempt nature of pension funds and you begin to hit people where it hurts. Immediately you are in much more difficult territory.

MMC's North-east fishing expedition

Predatory pricing is a slippery fish. It is notoriously difficult to catch and, even when the offender is caught dead in the water, it is often too late to help the victim. It will be educational, therefore, to see whether the Monopolies and Mergers Commission succeeds in netting the two bus operators, Stagecoach and Go Ahead up in the North-east.

In order to remove their incentive to price in a predatory manner with the aim of killing off the competition, the MMC has decided that any fare reductions and new services they introduce must be maintained for three years. Similar strictures have already been applied to Stagecoach in Lancaster. Stagecoach, which ought to consider setting up a permanent suite in the OFT, is minded to accept. Go Ahead appears less happy.

Now it may be that such undertakings will work in the bus market where the cost of cutting fares to uneconomic levels cannot be borne for any length of time. There again the likes of Stagecoach have deep pockets and, if there is one way to ensure nobody else has the headroom to muscle in on your bus route, it is to keep ticket prices at rock bottom for three years.

Whether such action would work in other sectors of the economy in the intended way is another question altogether. Just imagine what would happen to the nation's independent bakers if the supermarket stores were ordered to keep the price of a loaf at under 19p until the next millennium.

Blenheim resistance is paying off

It seems that Neville Buch, the often criticised chairman of the exhibitions group Blenheim, was right after all to resist offers from the likes of United News & Media and Reed Elsevier. Neither bidder wanted to go anywhere near the 500p-plus level demanded by Buch and his shareholder-directors, who between them speak for about 40 per cent of the company. United and Reed wanted to get the company on the cheap, they insisted, taking advantage of the City's failure to recognise the value of exhibition franchises.

Neither United (best offer 450p a share) or Reed (480p) expected to be wrong-footed by the likes of VNU, whose 500p a share dawn raid yesterday gives it a strategic 15 per cent stake and a place at any negotiating table here on in. Does VNU (and, of course, Blenheim management) know something that has escaped the attention of Reed and United? Just what is the company worth?

Certainly exhibition companies are valued much more highly in the US, home to the world's biggest exhibitions. Softbank, the Japanese-backed group, has been buying up US exhibition companies with wild abandon, and paying top dollar for them. The exhibitions market is highly cyclical, for expenditure of this type is an easy targets for cost cutting in any business downturn. However, when times are good, like now, they can be highly lucrative.

Moreover, there are undoubtedly synergies between publishing and exhibitions, as Reed, in particular, has proved. Exhibition goers can be attracted from among the ranks of specialist magazine readers, for example. Consumer interest in trade shows can also be generated by cross-promoting them through magazines. Mix in the new technologies like CD-Roms and on-line services, which increasingly feature in the trade show and exhibitions market, and there is the likelihood of even firmer growth in the future.

Granted, this is a volatile business which needs tight management controls, something that has been lacking at Blenheim in the past. But when well- managed, the business opportunities are excellent. Buch knows that, and it looks like Reed and United will have to up the ante quite a bit to stay in this game.