§ The Minister for Trade (Mr. Peter Rees)With permission, Mr. Speaker, I should like to make a statement on the report of the Monopolies and Mergers Commission on the proposed merger between Anderson Strathclyde and Charter Consolidated and my decision not to prevent Charter Consolidated from renewing its bid for Anderson Strathclyde, if it decides to do so.
The MMC submitted its report on 1 December. Since my right hon. and noble Friend the Secretary of State for Trade had a shareholding interest in one of the parties to this merger, he considered that he ought not to take the decision on the report.
The MMC report was a divided one. The commission concluded by a majority of 4 to 2 against the proposed merger. It recommended that it should not be allowed. Where the commission find against a merger, Parliament has left it as a matter of discretion whether a report against a merger should be followed or whether the merger should be allowed.
I have considered carefully both the majority report and the dissenting report of the minority. The dissenting report was no ordinary note of disagreement. On the contrary, it voiced the opinions of the chairman of the commission, and one other member, and represented a root and branch disagreement with the conclusions of the majority.
In considering the majority and minority views, I have also taken account, as I am obliged to do under the Fair Trading Act, of the views of the Director General of Fair Trading. He recommended strongly against preventing the merger. It is common ground that this merger would not lead to any restriction of competition. The sole question therefore was whether the merger would have harmed other aspects of the public interest. While sensitive to arguments based on possible industrial implications in Scotland, I found that the argument that the merger would harm the public interest was too speculative. I therefore decided that it would not be right in all the circumstances of this case to stop the merger. But in leaving Charter free to renew its bid I sought an assurance from it that Anderson Strathclyde would remain a Scottish company with its registered office in Scotland. This assurance has been given me by the company.
§ Mr. Bruce Millan (Glasgow, Craigton)If the House was not rising tomorrow, we would ask for an immediate debate on this matter. Indeed, we want a debate to be held immediately after the recess.
As regards the position of the Secretary of State for Trade, we still question whether what has happened is legally sound. We certainly do not consider it proper. At the very least, there has been a serious error of judgment on the Secretary of State's part. Is not the Minister aware that there has been a complete lack of candour about this issue? It was only by chance that the circumstances were disclosed yesterday. Why did not the Government come clean at the very beginning and explain the circumstances to the House?
However, the merits of the issue are much more important than the Secretary of State's position. Is it not unique that a decision of the Monopolies and Mergers Commission should have been overturned in this way?
956 What is the point of the commission spending six months exhaustively considering the matter if, at the end of the day and for purely arbitrary reasons, the Government overturn its conclusions?
Is it not a fact that the Minister made that decision because he has been got at by City interests, who were extremely upset about what happened over the Royal Bank of Scotland report by the Monopolies and Mergers Commission? Is it not a reaction to that? Is not Anderson Strathclyde being made the sacrificial victim? Is it not true that the decision was taken not on objective considerations but because of spite and political considerations? Is the Minister aware that everyone connected with Anderson Strathclyde—from the Chairman of the company, whom I met today, down to the work force—is opposed to the takeover by Charter Consolidated? They do not want the takeover and they will oppose it. Indeed, the whole of Scottish opinion is on their side.
Is it not a fact that Anderson Strathclyde is a highly profitable company, whose profits in the last financial year increased by no less than 75 per cent. and whose profits increased in the half year to 30 September by a significant percentage? Is it not a fact that the company is technologically advanced, has a good export record, and has excellent management and industrial relations which the majority of the Monopolies and Mergers Commission believed would be prejudiced by the takeover? Is it not a fact that Charter Consolidated can do nothing for Anderson Strathclyde that it cannot do for itself?
Is the Minister aware that the criticism in the minority report concerning technological advance has been categorically repudiated by the company and is factually inaccurate? In addition, yesterday the Prime Minister said that finance was a primary consideration, but Anderson Strathclyde's financial advisers confirmed today that adequate finance was available to the company in the foreseeable future. The assurance that the company will remain a Scottish company registered in Scotland is not worth the paper that it is written on, and the Minister knows it.
An excellent Scottish company is being taken over by outside interests that have no interest in the economic prosperity of Scotland. This is another example of a Scottish company—although there are parallels in other United Kingdom regions—being taken over by a multinational conglomerate whose financial record has not been nearly as good in recent years as that of Anderson Strathclyde. The conglomerate is controlled from abroad, and is ultimately controlled from South Africa. The Minister has made an appalling and disgraceful decision, which we shall fight to the best of our ability. When the House returns after the recess, we shall debate the issue and vote on it. In the meantime, Charter Consolidated would be well advised not to go ahead with a revised bid.
§ Mr. ReesThe right hon. Member for Glasgow, Craigton (Mr. Millan) has launched a tirade but has raised few questions that deserve serious answer.
As to whether my right hon. and noble Friend was entitled to delegate responsibility in this case, the right hon. Gentleman need only turn to his right hon. and learned Friend the Member for Warley, West (Mr. Archer), who was a Law Officer in the previous Administration, to be informed about the significance of 957 the Cartona case and the case of the Queen v Skinner, which demonstrates that it is a perfectly legally sound matter.
The right hon. Gentleman said that there was lack of candour in this matter. I cannot think of a more candid statement of the Government's case than that put out recording the decision. That is the practice that has been followed in all cases until now, including cases in which the Labour Administration were involved. It is true that this is the first time that a Minister at the Department of Trade has not followed the view of a majority of the Monopolies and Mergers Commission. However, it is clear as a matter of law and practice that a Minister is entitled to exercise his judgment, except when the Commission decides that the merger should go through. The right hon. Gentleman, who is an accountant by training, should know that. If it is the first time that a Governmnt of the day has not chosen to follow the majority report, that is because it is the first time that there has been such a powerful dissenting minority opinion.
§ Dr. Jeremy Bray (Motherwell and Wishaw)Rubbish.
§ Mr. ReesThe hon. Gentleman may well catch your eye, Mr. Speaker, but to shout "Rubbish" when it is quite clear that there was a powerful dissenting minority—
§ Mr. SpeakerOrder. It is absurd not to listen to the argument that is being advanced. I hope that the Minister can now complete his answer.
§ Mr. ReesThe minority included the extremely experienced chairman of the Monopolies and Mergers Commission.
The suggestion that I was got at by City interests is a cheap sneer that may be characteristic of the right hon. Gentleman, but I hope not. As to his suggestion that we acted through spite, that may have characterised some of the activities of the right hon. Gentleman's Government but it does not characterise this Government's activities.
I am not here either to praise or to blame the two companies involved. I am concerned simply to determine whether a decision to allow the merger to go ahead would adversely affect the national interest. That is my role, and I have decided that it would not. On that basis, I decided that the merger should be allowed to proceed.
§ Mr. Anthony Grant (Harrow, Central)Is my hon. and learned Friend aware that Conservative Members consider that my right hon. and noble Friend the Secretary of State for Trade behaved with absolute and total propriety in this matter? Is he further aware that majority decisions of the Monopolies and Mergers Commission are not holy writ and need not be followed slavishly as though it was the repository of all wisdom?
On the merits of the matter, is it not a fact that the strong financial position of Charter Consolidated will enable Anderson Strathclyde to develop, especially in providing coal mining equipment to overseas markets, so that it can create new jobs, which one would have thought would be welcomed by Opposition Members who are continually whining about unemployment?
§ Mr. ReesIt is not for me to forecast whether the merger would be advantageous. I must consider only whether it would adversely affect the national interest. It is perfectly true that a comparison of the two balance sheets suggests that Charter Consolidated might be in a 958 position to inject capital and to expand Anderson Strathclyde's operations, and so job prospects in Scotland. However, it is not for me to decide that, nor can I make that point to the House.
§ Mr. Jack Straw (Blackburn)Is the Minister aware that when the House was given a statement on private interests of Ministers of the Crown, following revelations about Mr. Ernest Marples' firm of Marples Ridgway, when it obtained contracts from the Crown, Mr. "Rab" Butler said:
There may also be exceptional cases where, even though no controlling interest is involved, the actual holding of particular shares in concerns closely associated with a Minister's own Department may create the danger of a conflict of interest. Where a Minister considers this to be the case, he should divest himself of the holding."—[Official Report, 28 January 1960; Vol. 616, c. 373.]Is it not as plain as a pikestaff that in this case there was a direct connection between the shareholding and the Minister, who should have divested himself of the shareholding although it might be only a minority shareholding?
§ Mr. ReesThe hon. Gentleman's point is entirely spurious. My right hon. and noble Friend behaved with perfect propriety, because once it became apparent that he might have to take a decision on the commission's report on a company in which he had a tiny interest he immediately distanced himself from both the report and the decision. I did not consult my right hon. and noble Friend about my decision. He did not try to influence me in any way and he was not concerned with the outcome of the commission's report. Therefore, I repeat that my right hon. and noble Friend has behaved with scrupulous propriety throughout.
§ Mr. Russell Johnston (Inverness)In dealing with the several points made by the right hon. Member for Glasgow, Craigton, (Mr. Millan), the Minister inadvertently omitted to deal with his assertion that the assurance given to the Minister that Anderson Strathclyde would remain a Scottish company was not worth the paper on which it was written. Perhaps the Minister could comment on that and tell the House what guarantee he has obtained.
§ Mr. ReesThe undertaking is in very precise terms and it was given to me in writing. I have no reason to believe that it will be broken.
§ Mr. Tony Marlow (Northampton, North)Is not the low truth behind this totally synthetic issue the fact that the Labour Party has a consistent vendetta against South Africa? Is not the whole thing motivated by spite and nothing else?
§ Mr. ReesI note what my hon. Friend says, but I cannot speculate on the motives of Opposition. Members. However, a matter of fact that is recorded in the report is that Charter Consolidated carries out a considerable amount of business in black Africa.
§ Mr. Tony Benn (Bristol, South-East)To revert to the point made by my hon. Friend the Member for Blackburn (Mr. Straw), was the Minister of State's attention drawn to the procedure for Ministers issued by the Prime Minister and published in the House on 20 March 1980, in which the rules laid down by Mr. Butler that have been quoted were reaffirmed for present Ministers? It states:
Where … the actual holding of particular shares in concerns closely associated with a Minister's own Department 959 may create the danger of a conflict of interest: where a Minister considers this to be the case, he should divest himself of the holding".—[Official Report, 20 March 1980; Vol. 981, c. 293.]There is no reference to asking another Minister to do the job for him. Why did the Minister and the Secretary of State disregard the Prime Minister's procedure for Ministers that he should have received on his appointment?
§ Mr. ReesI did not need to have that passage drawn to my attention, and it does not bear the absurd and strained conclusion that the right hon. Gentleman is trying to put on it. Carried to its logical conclusion, it would mean that Ministers in most Departments, because most Departments come in contact with quoted companies, would, before taking office, have to divest themselves of all quoted shares in case at any time in the future their Department might affect the conduct of that company. That is an absurd proposition that I am perfectly confident has never characterised the actions of Labour Ministers or of Conservative Ministers.
§ Mr. Teddy Taylor (Southend, East)As reports of the proceedings in the House will undoubtedly cause much concern and anxiety among working people in Scotland, will the Minister make it clear that, apart from all the political exchanges, Charter Consolidated wishes to buy the firm to make it prosper, grow and succeed, not to ruin it?
§ Mr. ReesThat can be inferred from the evidence given to the commission, which is contained in its report. My hon. Friend's point is perfectly sound. I know of very few cases where a company takes over another in order to destroy it or its job opportunities.
§ Mr. George Foulkes (South Ayrshire)Will the Minister concede that most of the representations to the commission were against the merger? He has admitted that this is the first time that a recommendation of the commission has been overturned. Does he think that we believe that he is doing anything other than his master's bidding and looking after the interests of the Secretary of State? A junior Minister must be aware that he must live and work with the Secretary of State.
§ Mr. ReesIt is true to say that numerically the weight of representations was against the merger, but I must consider the broader issues. I am not bound to accept that evidence. I entirely reject the absurd proposal that I do anyone's bidding when exercising this discretion.
§ Mr. Neil Thorne (Ilford, South)Can my hon. and learned Friend confirm that our right hon. and noble Friend did precisely what the Prime Minister wished and divested himself of responsibility in the shares? Therefore, he does not have any direct interest in the shares.
§ Mr. ReesI understand that to be the case. More importantly, I reiterate that at no point did my right hon. and noble Friend concern himself with the conclusion or the decision that I have taken.
§ Mr. William Hamilton (Fife, Central)Can the Minister name any political party or any other organisation throughout Scotland which supports the decision that he has announced today? Is he aware that Anderson Strathclyde has a major factory in my constituency? Both management and men have an excellent record in 960 industrial relations and in every other way. There will be nothing but despair and incomprehension at this decision, and as has been said by others in other contexts, it will be seen as the unacceptable face of capitalism.
§ Mr. ReesI did not concern myself, and am not concerned, with party political considerations in this decision. I am unmoved by the political rhetoric of other parties in this matter. It is not my concern to denigrate the excellent labour relations at Anderson Strathclyde. I hope that they will persist if Charter Consolidated takes over the company. The hon. Gentleman is quite right when he says that its operations are predominantly in Scotland, but three of its factories are south of the border.
§ Dr. M. S. Miller (East Kilbride)Is the hon. and learned Gentleman aware that it is quite evident the Conservative Party has written Scotland off politically? The Scottish public will see this matter not in the way that he portrayed it this afternoon, because nothing he said has allayed the fears of Labour Members. In addition to the way in which the decision has been taken, we fear that Charter Consolidated will suck the Scottish company dry and toss it aside in the same way as other multinationals have done in Scotland.
§ Mr. ReesNeither I nor my right hon. Friends have written off Scotland or Anderson Strathclyde. The Opposition rhetoric will not benefit Anderson Strathclyde. The assertion that Charter Consolidated is a multinational that would suck the Scottish company dry and discard it is pure speculation dreamt up by the fevered brain of the hon. Gentleman.
§ Mr. Bill Walker (Perth and East Perthshire)Does my hon. and learned Friend agree that many Scottish companies have acquired interests when taking control of companies outside Scotland with the objective of improving the performance of those companies? It is nonsense to suggest that someone from outside will take over a company simply to destroy it.
§ Mr. ReesMy hon. Friend speaks with authority, and I confirm what he says. I am staggered by the lack of confidence in Scottish prospects, and the prospects of Scottish companies, shown by Labour Members.
§ Dr. BrayI apologise if my outrage earlier at the remarks of the Minister of State moved me to expostulate in the way I did.
Is the Minister of State aware that the capricious behaviour in the Department of Trade has led the Department to refuse to refer three cases to the Monopolies and Mergers Commission which it was recommended to do by the Office of Fair Trading? It has referred one case against the advice of the Office of Fair Trading. It has now refused to act on a report by the Monopolies and Mergers Commission. Does this not make absolute nonsense of any coherence of policy on the part of the Government? Is the Minister aware of the suggestion that industrial relations in Anderson Strathclyde are gravely damaged by a South African company? The suggestion that that is merely a possibility is utterly naive. I invite the hon. and learned Gentleman to meet the Anderson Strathclyde shop stewards to be informed of the facts of life.
Did the Minister of State know which company the Secretary of State had an interest in? Why was there no declaration of interest? What approaches were made to the Minister of State and his officials by lobbyists or others by 961 or on behalf of Charter Consolidated? Does he expect this House to have confidence in the judgment of Ministers on the merits of the bid when they have lacked judgment on the handling of the declaration of interest?
§ Mr. ReesEach case is decided on its merits, and that is the way it should be.
I am at a loss to understand at what point a declaration should have been made. It was made clear at the time of the press statement that announced the decision why my right hon. and noble Friend had distanced himself from the report on the decision.
I assure the House that I was lobbied by no one on the decision I took.
§ Mr. Joseph Dean (Leeds, West)Is the Minister aware that, as reported in Hansard on 8 April, c. 1086, I questioned the Prime Minister about the desirability of appointing a noble Lord from another place to the sensitive post of Secretary of State for Trade, bearing in mind the debacle that had just occurred by the Foreign Minister not being answerable to this place but being answerable to the other place? I questioned whether the Secretary of State for Trade ought to be in another place and not answerable to this Chamber. Have not subsequent events proved me right?
§ Mr. ReesMy right hon. and noble Friend is a dedicated, scrupulous and intelligent member of the Government. No doubt Opposition Members would have made the same bogus points had he been a member of this House.
§ Mr. Bob Cryer (Keighley)Do not the rules governing ministerial appointments apply precisely to give the public confidence that there will not be any conflict of interest? Do not those rules require a divestment of interest? Does not the legislation under which the Minister operates refer to the Secretary of State? Is not the Minister of State always operating on behalf of the Secretary of State? Do not the rules governing the appointment of Ministers also make it absolutely clear that junior Ministers act with the authority and under the guidance or control of Secretaries of State? Would not the conduct that has recently been revealed in the Department of Trade be outlawed in local authorities, and why should we have lower standards than them?
§ Mr. ReesThe hon. Gentleman may have lower standards, but I am not conscious that there are lower standards on the Conservative Benches. I may have been acting under authority, but I was not acting under the guidance or control of my right hon. and noble Friend in this case. There was no conflict of interest because the decision was taken by me and I had no shareholding or other interest in the two companies.
§ Mr. Michael English (Nottingham, West)On a point of order. Does that answer the reason why the Government rejected the Expenditure Committee and Treasury proposals—
§ Mr. SpeakerOrder. I am not answering for the Minister.
§ Mr. EnglishOn a point of order—
§ Mr. SpeakerOrder. The hon. Gentleman does not have a point of order.
§ Mr. EnglishI do, Sir.
§ Mr. SpeakerMr. Tom McNally.
§ Mr. Tom McNally (Stockport, South)Is the Minister aware of the concern in Scotland? Is he also aware that the points raised by the hon. Member for Blackburn (Mr. Straw) and the right hon. Member for Bristol, South-East (Mr. Benn) are of genuine public concern? In the light of what has happened, will the hon. and learned Gentleman guarantee that the Prime Minister will redefine the Butler guidelines to Ministers? Unless she does, the public concern will remain.
§ Mr. ReesThe hon. Gentleman should not be so arrogant as to assume that he articulates public concern. My right hon. Friend the Prime Minister will no doubt judge how spurious the points are and will take her own course of action.
§ Mr. Peter Archer (Warley, West)The hon. and learned Gentleman was kind enough to refer to me in relation to the lawfulness and propriety of the Secretary of State's delegation of the duties imposed on him by the Act. Does he appreciate that the words of Lord Greene in the Carltona case do not confer a blanket authority on the Secretary of State to delegate every decision, whatever its importance, nor do they affect the propriety of doing so without declaring publicly at the outset the reasons that led to the delegation? Were the Law Officers consulted before the delegation? For some reason the Secretary of State decided not to delegate the decision either to the Minister for Consumer Affairs, who normally deals with these matters, or, perhaps more appropriately, to the Secretary of State for Scotland. Was that because they were both lobbied by Charter?
§ Mr. ReesIt is perfectly proper in this kind of situation for any Secretary of State to delegate authority within his Department. For the right hon. and learned Gentleman, with his experience of these matters, to suggest that a category of decisions cannot be delegated is a total misreading of the law. As far as I am aware, the Law Officers were not consulted—[HON. MEMBERS: "Oh".] If I am wrong, I shall write to the right hon. and learned Gentleman. In this situation I do not believe that the Secretary of State for Scotland, warm though my regard is for his abilities, would have been the proper person to whom this decision should have been delegated—[HON. MEMBERS: "Why?"] Because it was clearly within the responsibilities of the Department of Trade. As I have said, my hon. Friend the Minister for Consumer Affairs chose to distance himself because he felt that there had been certain lobbying.
§ Mr. Englishrose—
§ Mr. SpeakerOrder. If the hon. Gentleman still feels that he has a point of order, I shall take it after hearing the application under Standing Order No. 9.