Three cheers for the Tβnaiste, Ms Harney. With one swipe of her mighty pen she has released £500 million (€635 million) into the economy - at a time when it is desperately needed. Her decision not to refer the takeover of Eircom by Valentia Telecommunications - the biggest in Irish corporate history - removed the last obstacle to the deal and payments to 500,000 small shareholders.

The decision, we were told, was taken on foot of her civil servants' advice. They argued that in practice, if not law, a Minister only refers something to the authority if there is a clear competition issue. To do otherwise would leave the Minister and Department open to a legal challenge.

Apparently no such issue arose. The Department sought the views of relevant parties and the only one to flag an issue was the Office of the Director of Telecommunications (ODTR).

The ODTR was concerned about possible conflicts that could arise through Sir Anthony O'Reilly, the non-executive director of Valentia, having an indirect stake in Chorus, the cable operator.

Chorus has a monopoly on cable services in 600,000 homes outside Dublin, including in Cork, Limerick, Shannon, and the outskirts of Dublin. It offers limited telecoms services at present but has the scope be a real competitor to Eircom.

The Department raised the issue with Valentia and obtained some binding legal assurances that Sir Anthony would behave appropriately.

As a result there was no competition issue, and thus no need for a referral to the Competition Authority.

Consequently the deal goes ahead, Sir Anthony gets his telecoms company and the small shareholders get their money in time for Christmas. Everybody wins.

Wrong. In fact, everybody loses. The Department of Enterprise and Employment was technically and legally correct in the conclusion it reached and the advice it gave, but the political decision not to subject the takeover to rigorous scrutiny by the authority was flawed.

Ireland's telecommunications infrastructure is one of the fundamental planks on which the economy is built. A three-month delay to ensure that there are no adverse consequences as a result of its ownership changing hands is not hard to justify.

The Department argues that although a Competition Authority investigation might seem like a good idea, there was no legal basis for referral under law.

The reason being that competition law focuses on ownership rather than influence or control. Sir Anthony owns less than 5 per cent of Valentia, and has an indirect stake of less than 15 per cent in Chorus.

These two holdings do not raise significant competition issues under the current legislation. It is not enough apparently for the Tβnaiste to refer the takeover because of general concern about the concentration of control and influence over the largest media group and the dominant distribution platform.

Sir Anthony's involvement in Chorus is in many ways a red herring. The real area of concern is that he controls Independent News & Media, the largest media organisation in Ireland and now the door has been opened to him to take control of what is expected to become the largest media distribution platform.

One of the more alarming aspects of the approval granted last week is that there now appears to be no bar on Sir Anthony and his associates taking control of Eircom. Sir Anthony can increase his stake to 25 per cent without any further scrutiny and any of his associates can take separate 25 per cent stakes without a referral to the Competition Authority being triggered.

If Sir Anthony is not alive to the significance of this, he should get himself some new lawyers.

There is now a very real prospect that the largest media organisation and the largest telecommunications company will be controlled by the same individual or individuals.

If the Tβnaiste is not alive to the significance of this, she should get a new job.

This is all very interesting - if not a little paranoid - says the Department, but the reality is that the telecommunications industry is very heavily regulated.

It does not matter whether Eircom is owned by Sir Anthony or Osama bin Laden, the company must submit to the rulings of Ms Etain Doyle, the telecoms regulator, whose job it is to ensure that there is competition in the market. She would also be in a position to block any attempt by Eircom to give preferential treatment to Independent News & Media.

The problem with this argument is that Eircom has made it clear that it has no intention of submitting to regulation, unless it is on its own terms.

The company has challenged the ODTR's attempts to bring the price at which it will allow rivals access to its local network and also its proposed high-speed internet network. In both cases Eircom has instigated legal action against the regulator. There is no reason to expect any change in attitude when Valentia takes over. In fact an ever tougher stance is on the cards given the €2 billion plus debt mountain that Valentia has taken on to finance the deal.

The Tβnaiste may be able to justify her decision to let the Valentia takeover go through, but she has no excuses for not now making the stalled Communications Bill a Government priority. This bill - which is sponsored by the Department of Public Enterprise - will significantly enhance the ODTR's ability to police Eircom and force it to comply with directives.

Amongst other powers the regulator would be able to fine non-compliant companies up to 10 per cent of turnover.

This legislation would go a long way to ensuring that there were no adverse consequences of the takeover of Eircom by Valentia.

Similarly the long awaited reform of takeover and mergers legislation in relation to the media would give added comfort. The proposals would allow for the scrutiny of media business that are controlled by methods other than the purchase of shares.

There is no sign as yet of the new takeover and mergers law. The Communications Bill was due to be enacted at the start of the year, but for some reason it is now not expected until after the general election, during which the endorsement of Sir Anthony's newspapers will no doubt be desired once again by the outgoing Government.

jmcmanus@irish-times.ie