THE proposed £623 million sterling takeover of Manchester United by BSkyB hit a hurdle yesterday as the British Trade and Industry Secretary, Mr Peter Mandelson, referred it to the Monopolies and Mergers Commission (MMC).

He referred it to the MMC after advice from the Office of Fair Trading which raised questions of competition for football broadcasters, more general broadcasting competition issues and wider "public interest" grounds.

The MMC will now consult the public and interested parties, and report to Mr Mandelson by March 12th, 1999.

Mr Mandelson has come under pressure to refer the bid from rival broadcasters, the public and parliamentary colleagues.

Both Culture Secretary Mr Chris Smith and Sports Minister Mr Tony Banks are believed to have urged further investigation of a takeover.

Waving the bid through would have created problems for Mr Mandelson, who is already under scrutiny due to his close friendship with Sky Networks managing director, Ms Elisabeth Murdoch - daughter of Sky's main shareholder, Mr Rupert Murdoch. By referring the deal, he has effectively put it out of his hands, although he will still make the final decision.

City analysts said yesterday that the MMC was likely to approve the deal but lay down some strict public interest provisos to Sky. Those are expected to cover its exclusive deal to broadcast Premiership football, due to be renegotiated next year.

A variety of partisan responses greeted Mr Mandelson's announcement yesterday. One senior BSkyB insider said the referral was due to a vociferous anti-Murdoch campaign in the media.

Despite Sky's optimism, the DTI's announcement was greeted with rejoicing by Manchester United's Independent Supporters' Association and its Shareholders United Against Murdoch group.