The Competition Authority is a "quango" whose members are bent on unwarranted "empire building", according to Department of Enterprise, Trade and Employment officials. The views are contained in an internal document, released under the Freedom of Information Act, vehemently opposing the ceding of new powers to the authority.

The protestations were in vain and last month the Tanaiste, Ms Harney, who is also the Minister for Enterprise, Trade and Employment, gave the authority responsibility for approving mergers in all sectors of the economy apart from the media.

The internal paper, prepared by officials working in the competition section of the Department, highlights the poor relationship between the authority and the Department as well as the low esteem in which they appear to hold each other.

"The ceding of power by An Tanaiste to a quango in this sensitive area would be seen as a serious devolution of power and an indication of her confidence in the authority in sharp contrast to the recent findings of independent research," according to Mr Barry Harte, the principal officer in the competition policy section of the Department. "Most of the pressure to `give mergers to the authority' arises from `empire building' on their behalf when they have yet to fully prove themselves," he continued.

The memo also suggested there was a risk that it would appear the authority was being given a greater say in the debate than other interested parties such as IBEC or the Law Society.

The Tanaiste made her decision to give the Competition Authority extra powers on foot of the report of the Competition and Mergers Review Group, chaired by Mr Michael Collins SC, which reported to her earlier in the year.

The group recommended that the Tanaiste and the Competition Authority should share power in this area, while the authority sought to become the sole decision maker. The Department wanted to retain the status quo, under which the Minister made decisions on mergers but could refer matters to the Competition Authority for an independent opinion.

A less combative assessment of the Competition Authority's position was prepared by Mr Brian Whitney, the assistant secretary in the Department responsible for competition. In a memo to Mr Paul Vickers, the private secretary to the Tanaiste, he explains that the essence of the Department's argument was that the Competition Authority could only consider mergers on the basis of competition law and that the Government should reserve the right to take other issues into account, in particular Government policy.

Mr Whitney argued for maintaining the status quo on the basis that it worked well and gave the Minister freedom to manoeuvre. He also used the opportunity to take a few pot-shots at the authority. "A number of lawyers, with whom we most frequently deal, have often, privately, contrasted the flexibility and co-operation they experience in their dealings with the Department to the bureaucratic and legalistic response they have come to expect from the authority," he said.

Mr Whitney's memo accompanied a position paper from Dr John Fingleton, the chairman of the Competition Authority. In it, he was scathing of the Department's record. "The existing case record is not a shining example of best practice . . . there are shortcomings with the existing approach that will not be solved by minor modifications," he said.

The chairman also criticised the transparency of the Department's decision making. "At present, the level of written reasoning that accompanies decisions is far less detailed than that provided by the Competition Authority . . . Thus it is not clear at all by what standards cases are sorted into easy and difficult or what determines whether a referral is made to the Competition Authority, he argued.

Dr Fingleton also pointed out that the transfer of power over mergers to the authority would make merger policy politically independent, while still leaving the authority accountable to the Oireachtas and the Minister. It would also be similar to the US approach, which is considered best practice.

Last month's decision by the Tanaiste will give Dr Fingleton the power he seeks in all areas other than media mergers.