HC Deb 30 January 1962 vol 652 cc895-904
The President of the Board of Trade (Mr. F. J. Erroll)

With permission, Mr. Speaker, I would like to make a statement about the merger which I.C.I. has proposed with Courtaulds.

Each of the companies concerned, in respect of the production of man-made fibres, already has a sufficient share of the market to bring it within the terms of the Monopolies and Restrictive Practices (Inquiry and Control) Act, 1948. Their merger, however achieved, would bring about a combination of exceptional size by the standards of this country. There have been no grounds hitherto for contemplating a reference to the Monopolies Commission of any sector of the production of man-made fibres, and the merits or demerits of a monopoly cannot, in the view of Her Majesty's Government, be fairly judged on grounds of size alone.

It has been the policy of successive Governments in this country to judge monopolies, using the word in the sense of the 1948 Act, by their actual effects in practice, and not to attempt to reach conclusions on the possible effects of any particular monopoly before it has come into existence and there has been experience of its working. The 1948 Act is based on this policy.

Her Majesty's Government have, on consideration, come to the conclusion that the circumstances of the offer which I.C.I. has announced its intention of making to the shareholders of Courtaulds, are not such as to justify them in departing from this well-established policy. They are satisfied that the advantages or disadvantages of a merger of the two companies, however it is achieved, can only be judged by results—[HON. MEMBERS: "Oh !"]—and that there are no grounds for concluding in advance that the effects would be such as to require them to intervene on grounds of injury to the national interest. In reaching this conclusion they have had in mind the great and increasing competitive power of other countries in this field, and, in addition, the fact that there will be competition from units in this country which, though small in themselves, are subsidiaries of very large foreign companies. They have also had in mind the rights of users, either of primary materials or of finished products, to apply at any time for reductions in the level of the tariff.

If the merger takes place, and if it operates in such a way that it appears to me to be acting against the public interest, then I would immediately make a reference to the Monopolies Commission—[HON. MEMBERS: "Oh !"] If, after considering the report of the Monopolies Commission, the Government were to decide that it was necessary for them to intervene, they would ask Parliament for any additional powers that were required. The Government recognise the importance of the problems which surround the general subject of mergers, monopolies and restrictive practices. Certain aspects of this are already being considered by the Committee on Company Law which, I understand, will shortly be submitting its report. I am not going to anticipate the conclusions of Lord Jenkins and his colleagues.

On the wider issues, I had already put in hand a general review of policy in the light of experience gained in the five years since Parliament passed the Restrictive Trade Practices Act in 1956. This is a very large and complex subject and the review will clearly take some time. It will, naturally, have to cover the growth in recent years in the number of mergers and the implications of this development for the future health of the economy.

In response to requests made by several hon. Members, I am arranging for copies of this statement to be available in the Vote Office.

Mr. Jay

Does not that statement, following the repeated changes of mind by the President of the Board Trade, reveal a condition—exceptional even for this Government—of confusion, vaccillation and cowardice over this matter? If the Minister had no more to say to us today than he said before Christmas, why did he promise us a week ago that he would make a new statement? Can he now tell us what he said to the chairman of I.C.I. and of Courtaulds when he saw them a fortnight ago? If the Government recognise, as the right hon. Gentleman says they do, that it would be within the terms of the Monopolies Commission now, before the merger, to refer to the Commission either of those companies, what are the reasons, which he did not give, for the Government having decided to do nothing at all?

Mr. Erroll

The Government have decided to adhere to their existing policy—[HON. MEMBERS: "Oh."] There have been no repeated changes of mind on my part, as suggested by the right hon. Gentleman, who has, as usual, been deluded by unnecessary Press speculation. I have made a statement this afternoon because of general public interest in the matter, and to meet the known requests of hon. Members opposite.

I did not meet the chairman of I.C.I. and of Courtaulds a fortnight ago; I met them more recently than that. The talks were confidential and I do not intend to give any indication of what I said to them or they said to me. As to the fact that both companies are already technically monopolies, the supply of the materials concerned has not been referred to the Monopolies Commission because the two companies have not hitherto been acting contrary to the public interest.

Sir H. Butcher

Bearing in mind the many thousands of shareholders there are in I.C.I., did my right hon. Friend have a word with the chairman of Imperial Chemical Industries to satisfy himself about the resources of management existing there, which the company's previous record hardly seems to show in public?

Mr. Erroll

I must make it plain to the House that the talks were primarily for the purpose of obtaining facts and information, and the details must properly remain confidential, as the chairmen agreed with me.

Mr. Grimond

Assuming that the President of the Board of Trade comes to the opinion that the matter should be referred to the Monopolies Commission, does he think that, from experience, the Commission would either act quickly enough or have sufficient powers to deal with it? Does not the experience with the tobacco companies show that once these things have taken place it is extremely difficult to undo them? Does he not think that it is time that there was provision for consulting the staffs of firms concerned in these takeover bids?

Would the right hon. Gentleman consider referring to the Jenkins' Committee the position of company chairmen making statements in these conditions? As I understand, if one puts out a prospectus one has to be extremely careful what one says in it. Either one or the other of the statements made by Courtaulds' directors must be to a great extent misleading, and might have very serious effects upon employment and upon the behaviour of Courtaulds' shareholders.

Mr. Erroll

The Monopolies Commission has powers only to report and to make recommendations to Her Majesty's Government. It is for the Government to implement those recommendations as they think best. The right hon. Member for Battersea, North (Mr. Jay) had a Question for Oral Answer today on the Imperial Tobacco-Gallahers matter, and I hoped that that Question would be reached. As it has not been reached, I will not comment on that matter until I know whether the right hon. Gentleman will allow the question to be replied to by Written Answer tonight, or whether he wishes it to be deferred to next Tuesday.

With regard to the staff, both companies have good records as employers. The Jenkins Committee is, of course, studying what I might call the technique of mergers and takeovers, and I would ask the right hon. Gentleman to await the appearance of the Committee's Report.

Mr. Carr

While welcoming my right hon. Friend's major decision, may I ask him whether he is aware of the concern that mergers of this kind create and, therefore, of the need to have a Monopolies Commission which is both somewhat awe-inspiring in its influence and quicker in its action than the Commission is at present? Will he, therefore, as he says, make the review of policy in this field as urgent as he possibly can?

Mr. Erroll

Yes, Sir. I had already initiated this review before the present matter came to the public, and I can assure my hon. Friend that we shall press on with the review of this complex subject as rapidly as possible.

Mr. Callaghan

To return to the question of Courtaulds and I.C.I., does the President of the Board of Trade remember telling me before Christmas, when I raised the question of public interest, that the public interest was best served by the mergers selling their products as cheaply and efficiently as possible? As both of those criteria are challenged—one by Courtaulds and the other by the users of their fibres—can the right hon. Gentleman tell us what it is in the public interest, to which he has now referred, which leads him to the conclusion that he need not intervene?

Does not all this point to the very simple need for a public inquiry to go into these disputed matters both between users and manufacturers and between the two firms concerned, so that the public interest can be genuinely and independently considered by someone not affected, as the Minister is?

Mr. Erroll

These are matters which relate to the future. No one can tell what the price structure will be in the future, whether or not this merger takes place, and no body of experts, however expert, could be expected to give reliable opinions and recommendations relating to events—whether they be prices or technological changes—which have not yet taken place.

Mr. B. Harrison

Can my right hon. Friend say whether he had any consultations with the Minister of Labour on this matter? Is he aware that Courtaulds has produced four or five new fibres whereas I.C.I. has failed to produce one successful synthetic fibre since the war? Is not this take-over of the dead hand of I.C.I likely to be very serious on the research of Courtaulds?

Mr. Erroll

I am not going to comment on the merits or demerits of that argument because that, also, relates to the future as well as to the past. As regards any suggestion that I.C.I. is a dead hand, one has only to look at that company's record.

Mrs. White

As the right hon. Gentleman has said that we should look at the record of I.C.I., is he aware that that company's record relating to man-made fibres in the last two years is lamentable, while the record of Courtaulds, by contrast, in the research and development of synthetic fibres, has been exceptionally good? Is he satisfied that it is in the public interest that the whole of the man-made fibres manufacture and research in this country—or most of it—should be put into the hands of I.C.I., which has a record in which the research workers of Courtaulds have no confidence whatever? Will he take the same attitude if I.C.I. goes in for paints and fertilisers? Are we to have a vast monopoly in these products without question by the Government?

Mr. Erroll

Both I.C.I. and Courtaulds are interested in paint manufacture and thus there is no question of them entering this field.

On the wider issue, I think that the hon. Lady should recollect, as came out before Christmas, that discussions between the two firms for some sort of amalgamation or merging of their interests had been in progress for a considerable time. Disagreement arose over the terms and conditions.

Sir C. Osborne

Will my right hon. Friend look at this matter again? I ask him to do so because Courtaulds' latest factory is in my constituency and I can look at the matter from both the workers' and the consumers' point of view. Is he aware that I.C.I. is charging for caustic soda—one of the basic raw materials-50 per cent. more in the last ten years, while German prices came down by 10 per cent. in the same period? The company is charging 65 per cent. more for chlorine than European prices and recently, for Courtelle—which is the most successful of all the man-made fibres and which is made in my constituency—I.C.I. has been charging double what Courtaulds can now buy it for from other competitors. Is there not a danger in giving I.C.I. a monopoly in supply? Will my right hon. Friend look at this from the national point of view and not from the Stock Exchange point of view?

Mr. Erroll

I said earlier that both companies have good records as employers.

I think that my hon. Friend was taking some of the points he raised from the statement furnished by Courtaulds to all hon. Members. It is perfectly open to I.C.I., if that company wishes, to produce a statement for all hon. Members giving its own side of the story.

Concerning the final part of my hon. Friend's question, when he talked about a danger in the future, there may be a danger and there may not be. The important point is that a public inquiry, even by experts, could not decide authoritatively on events which have not yet taken place.

Mr. M. Foot

Does not the Minister's statement confirm the statement made, roughly in these words, by Mr. Chambers of I.C.I.: that he did not give a fig What was said by the politicians? Does he not think that it is grossly out of conformity with the dignity of this House that we should have to adopt such a grovelling attitude to giant corporations which direct the economic destinies of this country? Why should we not take them into public ownership?

Mr. Erroll

The hon. Gentleman's party proposed to take about 500 companies into public ownership in 1959. The public decisively rejected those proposals at the ensuing General Election.

Mr. Nabarro

While congratulating my right hon. Friend on the decision he has reached—

Mr. Emrys Hughes

How many shares does the hon. Member have in I.C.I.?

Mr. Nabarro

Not too many—may I ask my right hon. Friend to recognise that undue Government interference every time there is a proposed amalgamation or lateral or vertical combination in industry designed to improve efficiciency and increase competitive power would have a disastrous consequence on our export trade and make us, in the long run, far less competitive than we are today?

Mr. Erroll

I fully endorse what my hon. Friend has said and that is why, after consideration, the Government decided to adhere to their present policy despite the size of the present proposals. The whole question of mergers and amalgamations—whether lateral or vertical—is, nevertheless, forming part of the review which I had initiated in my Department before this matter became public.

Mr. Gaitskell

Is it not perfectly obvious that it is exceptionally difficult to break up a merger once it has taken place and that it is very much easier to prevent it taking place should it be against the public interest that it should take place? Does the right hon. Gentleman really think that a public inquiry in this case is not necessary in order to clear up the conflicting points of view expressed even in this House today? Why should not the public have all the facts set out before them, with a judgment, so far as it goes, by impartially-minded people—with the Government, certainly, to make the decision in the end? What is there against this? Cannot the right hon. Gentleman reconsider this matter so that this merger shall not be allowed to go through until we are satisfied that the interests of the consumers and the workers and the nation generally are properly safeguarded?

Mr. Erroll

We have considered this matter and I have been very much criticised by some of the right hon. Gentleman's hon. Friends for taking a little time in which to do so. We have reached the conclusion, which we intend to sustain, namely, that the changes to which the right hon. Gentleman refers are not facts but probabilities relating to the future and no impartial inquiry could do justice to events which are yet to take place—unless all members of the inquiry were possessed of a remarkable clairvoyant sense.

Several Hon. Members


Mr. Gaitskell

Mr. Speaker—

Mr. Speaker

I feel that there is some difficulty in discussing this matter by way of question and answer. I will allow one more question to the Leader of the Opposition.

Mr. Gaitskell

Is the right hon. Gentleman aware that, in view of his very unsatisfactory replies and the general attitude of the Government to monopoly at present, we shall have no option but to put down a Motion on the subject?

Mr. Nabarro

Send a Whip to my hon. Friend the Member for Louth (Sir C. Osborne). He will vote with the Opposition.

Mr. S. Silverman

I desire to ask leave, Mr. Speaker, to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a definite matter of urgent public importance, namely the refusal of the Government to prevent the imminent creation of a giant monopoly against the public interest by a merger of I.C.I. and Courtaulds.

Mr. Speaker

The hon. Member asks leave to move the Adjournment of the House under Standing Order No. 9 for the purpose of discussing a definite matter of urgent public importance, namely, the refusal of the Government to prevent the imminent creation of a giant monopoly against the public interest by a merger of I.C.I. and Courtaulds. For a variety of reasons, I cannot think that that falls within the Standing Order. As far as I know, the Government have no power in the present circumstances to prevent such a merger and to give them power would involve legislation which could not be discussed on an Adjournment Motion. Quite apart from that matter, there is the question of the necessity of the House discussing this matter this day on an Adjournment Motion as opposed to a Motion of the kind suggested by the Leader of the Opposition.

I confess that I do not know much about the facts, but we were told that the distribution of documents of invitation in this connection would take something like three weeks. That was a week ago, and I suppose that some period is allowed for acceptance. On the whole, I think it difficult to get it within the Standing Order on the ground of urgency. Accordingly, I cannot accede to the hon. Gentleman's request.

Mr. S. Silverman

I am sure that the House will be very grateful to you, Mr. Speaker, for explaining on this occasion why the matter is not within the Standing Order. May I direct your attention to one point?

You said that the Government had no power to prevent it and that for them to obtain powers would require legislation. There are many ways in which a Government can intervene to prevent a damaging and evil thing for the nation without having actual powers to direct that it shall not take place. For instance, they could easily persuade these people to postpone it and have the public inquiry for which my right hon. Friend the Leader of the Opposition has asked. This might very well have the result of preventing it without the exercise of powers or legislation.

Mr. Speaker

I understand the force of what the hon. Gentleman says. I should not regard powers of the Government of that kind as permitting me to allow the matter to be discussed upon a Motion for the Adjournment.

Sir C. Taylor

On a point of order, Mr. Speaker. As the Leader of the Opposition has given notice that he will raise this matter at an early date, presumably on a Supply day—[HON. MEMBERS: "No."]—or whenever it will be raised—are we in order in discussing it further?

Mr. Speaker

We are not going to discuss it any further.