A £7 billion deal which saw the defence arm of GEC-Marconi sold to British Aerospace could be at risk, it was feared today.

The deal between BAe and Marconi, which has bases in Witham and Chelmsford, could hit the rocks because of competition concerns.

It was announced last month BAe was to buy the Marconi Electronics arm to create the world's third biggest aerospace company, called New BAe.

The deal, announced on January 19, would affect 4,500 peple throughout Essex. Marconi bosses said the deal would safeguard existing jobs but said redundancies could come from areas which overlapped.

But now Euro chiefs have hinted the deal could spark problems and have a knock-on effect on competition policy throughout the European Union.

A top civil servant from the EU's competition commission has suggested the deal could cause problems for other companies which are involved with supplying components and parts to defence companies.

The deal has not been finalised and the Office of Fair Trading will have to decide whether to recommend the move to the Monopolies and Mergers Commission.

Today a spokesman for GEC-Marconi said that as with all such deals there were problems at the beginning.

But it said it agreed with comment made by John Weston, BAe Chief Executive.

Mr Weston commented: "Brussels has a perfect right to examine aspects of the deal."

Converted for the new archive on 19 November 2001. Some images and formatting may have been lost in the conversion.