SLATER WALKER-HILL SAMUEL(PROPOSED MERGER) (Hansard, 23 May 1973)

§ The Minister for Trade and Consumer Affairs (Sir Geoffrey Howe)
After full consideration, I reached the view that the proposed merger did not raise issues which required investigation and report by the Monopolies Commission. While the merger satisfies the size-of-assets test, since the assets taken over exceed £5 million, it does not satisfy the market-share test. The proposed new company will not account for a third of the market either in merchant banking or in any of its other activities, such as investment management, unit trust management insurance broking, insurance, leasing and credit finance, and property. In most of these sectors there are a number of larger companies involved and the situation in all of them will remain fully competitive.

§ Mr. Davis
Does not the right hon. and learned Gentleman agree that it would have been preferable if a statement had been made to this House before the decision was revealed, somewhat furtively, to the Press yesterday? Where is the Secretary of State himself, bearing in mind the magnitude of this matter and his former involvement with Slater Walker?
What are the private assurances which have been reported in the Press and which are alleged to have been given by Mr. Slater to the Secretary of State, and why have they not been made public? Should not matters of this kind be considered by an independent body, in the open and not behind closed doors, so that the public can understand what is happening and what are its ramifications?
Finally, does not the right hon. and learned Gentleman agree that there is a strong case, particularly following the revelation of events during the last week, for a full-scale public inquiry into our financial institutions?

§ Sir G. Howe
The hon. Gentleman has a capacity for drawing and linking innuendos none of which is justified. I will deal with each of them specifically. He used the rather remarkable phrase that the decision had been disclosed "somewhat furtively". It was announced, as soon as it was arrived at, publicly to the Press yesterday for everyone to know, including hon. Members.

§ Mr. Loughlin
Peter Walker is involved.

§ Sir G. Howe
The hon. Member for Gloucestershire, West (Mr. Loughlin) echoes the second false point made by the hon. Member for Hackney, Central (Mr. Clinton Davis), who asked why my right hon. Friend was not here at this time to deal with the matter. I will give the House the precise reason.
As the House well knows, my right hon. Friend was, until he became a member of the Government, associated with one of the companies involved in this bid. In these circumstances, it was entirely right and proper that he should, on becoming a Minister, first of all, have given instructions that all his financial interests in Slater Walker should be sold and, secondly, have made it clear that, in connection with a matter of this kind, he should play no part whatever in its consideration. It is perfectly plain, and I wish to make it plain, that this matter has been under my consideration and not under that of my right hon. Friend. That is his position.
The hon. Gentleman asked about the private assurances which have been given. In almost every case of this kind, discussions take place between my Department and the companies involved in merger bids. Various inquiries are undertaken, various answers are given and various assurances are given. These companies have confirmed to me that their policy in regard to any substantial shareholding in an industrial company will be directed to the long-term interests of the company and its employees. They have made plain their intention to hold prior consultations with my Department about share purchases, direct or indirect, which in certain circumstances might lead to the control of industrial companies, and to divulge more information in regard to company holdings than is required under 467 the Companies Acts. The precise terms will be made clear in the terms of the offer bid, which is shortly to be made public.

§ Mr. Benn
The House will accept without question that the Secretary of State for Trade and Industry has behaved perfectly honourably throughout this matter. I want to devote myself to a quite seperate question.
The proposed merger has been described by The Times as unique for British financial institutions. It will have gross assets of £1,500 million. First, therefore, why should the House of Commons be denied precise knowledge about the assurances sought by the right hon. and learned Gentleman and given to him before he decided not to refer the bid to the Monopolies Commission?
Secondly, did the Governor of the Bank of England consult Ministers before he indicated his support for the merger, and what assurances did the Governor seek and obtain before coming to his view?
Thirdly, why should the public and the employees, and, for that matter, the City and the shareholders, not know the guidelines or criteria, which could be brought out only by a Monopolies Commission inquiry? Would it not be prudent to refer this matter to the Commission, since both Sir Kenneth Keith and Mr. Clark hold major Government appointments and, of course, Hill Samuel and Slater Walker have both contributed very substantial sums to the Conservative Party in the past?
For all these reasons, will the right hon. and learned Gentleman not now reconsider his decision and allow the Monopolies Commission to do the independent scrutiny which I believe is right in this case?

§ Sir G. Howe
I accept what the right hon. Gentleman said about the position of my right hon. Friend the Secretary of State, and I am glad to have it unquestioningly underlined.
It was because I anticipated that questions as wide ranging as those which the right hon. Gentleman has put might well be raised on this matter—for example, involving contributions to party funds and so on—and because of the importance 468 of a merger of this kind and of this size that I gave the matter the closest possible consideration. It does not necessarily follow that such consideration should lead to the reference of a merger to the Monopolies Commission.
The combined assets will be less than the right hon. Gentleman suggested. They will total about £1,300 million. The Governor of the Bank of England made it clear that his conclusion was subject to any conclusion I might reach.
The right hon. Gentleman asked whether I might not have concluded that it was prudent to refer the matter to the Commission. Of course, because of the public interest involved, I gave that point particularly close consideration. But equally it would be right to bear in mind, when one is concerned with the creation of institutions of this kind, capable of winning great advantage in terms of international banking activities, that while it would be right to refer something if it were concluded that it was necessary so it would be wrong to refer if no case were made out. On these considerations, I reached my conclusion.

§ Sir Harmar Nicholls
Is my right hon. and learned Friend aware that he can ignore the typical political dirt thrown by the right hon. Member for Bristol. South-East (Mr. Benn)?
Looking at this matter in the overall context, my right hon. and learned Friend will remember that I had certain views on the advisability of signing the Treaty of Rome, but now that that is an accomplished fact, will he keep in mind that it is vital that we should have big financial institutions which are capable of standing up to their competitors within the Common Market, and that it is essential that we should join the giants' team if we are to preserve our share of financial leadership in Europe?

§ Sir G. Howe
I am particularly grateful to have my hon. Friend's support on that point. That argument, like every other argument in this sort of case, cannot be allowed to be decisive on every question, but it is important to bear in mind that, in the expanding international economic environment, strong overseas representation capable of discharging a wide range of functions is desirable to 469 meet competition from American and European institutions which, in many cases, are larger and perform a wider range of functions than comparable organisations in this country. That was one of the factors I bore in mind in my consideration.

§ Mr. Pardoe
Is the right hon. and learned Gentleman aware that the Secretary of State's personal involvement in this matter is of no consequence in our view? Is he also aware that this is the second time within the past 10 days that the Government have made curious and odd decisions about the effect of monopolies legislation on companies which have donated large sums to the Conservative Party? Further, is the right hon. and learned Gentleman aware that this is an issue of major importance and that the time has come not merely for an investigation by the Monopolies Commission into the affairs of Slater Walker but for a full inquiry into the whole aspect of corporate donations to political parties?

§ Sir G. Howe
The question raised by the hon. Member for Cornwall, North (Mr. Pardoe) does not arise out of this matter. It was the subject of legislation by the last Government. I can assure the hon. Gentleman, so far as these matters are concerned, that it is a matter of total indifference to me in my discharge of my statutory responsibilities under this legislation whether a company subscribes to the Conservative Party, to the Labour Party or even conceivably to the Liberal Party.

§ Mr. Biffen
Did I hear my right hon. and learned Friend aright when he said that certain undertakings had been given to him by the proposed merged company as to how it would conduct itself commercially and industrially in future? If those undertakings were given to him, under what statutory authority could they be exacted? That raises an issue of a more profound character than the exhibitions of envy which have so far marked many of these exchanges. Will my right hon. and learned Friend take an early opportunity of expressing to the House exactly what philosophy lies behind the requirements of these professions of future commercial and industrial behaviour?

§ Sir G. Howe
The position is that, in deciding whether to subject any particular 470 change in industrial organisation to examination by the Monopolies Commission, plainly one needs to satisfy oneself about a number of existing facts and possible future developments in relation to the merged organisation. In doing that one acquires inevitably, and rightly, the House will think, indications and assurances as to the way in which the proposed organisation is likely to see its immediate future. Those assurances are useful indications in reaching a decision about the instant matter. They are also part of the background which can be taken into account if any future question arises as to the consequences of any further decisions which are taken. It would plainly be foolish to disregard an opportunity of getting some indication of the future probable development of a merged organisation of this kind.

§ Mr. Dell
Is it the position, precisely for the reason that the right hon. and learned Gentleman gives—that the merger does not meet the market share criterion —that once the merger has taken place the right hon. and learned Gentleman will not be able to make any future reference of it to the Monopolies Commission, whether or not the assurances are fulfilled?

§ Sir G. Howe
If it were to turn out that the monopoly share of the market test were fulfilled—and I have seen no evidence to suggest that—that would be a matter for further consideration. It is obviously possible for me to consider further evidence of that kind.

§ Mr. Dixon
Would my right hon. and learned Friend consider that where a merger was proposed between two trade unions the mere fact that conceivably one of those trade unions had contributed to the political funds of the Labour Party would of itself give him grounds for referring the matter to the Monopolies Commission?

§ Sir G. Howe
Many interesting questions could arise when we begin to look at the other side of the fence.

§ Mr. Benn
Does not the right hon. and learned Gentleman recognise, without prejudice to whether he is right or wrong in his judgment, that the question to which we are addressing ourselves is whether he is the right person to reach that view and whether it is right that 471 that view should be reached in secret so that, if the assurances are not fulfilled, the House and the country will not be able to judge whether the assurances have been met?
I remind the right hon. and learned Gentleman that when Ford acquired the equity of the Ford Motor Company of Britain his predecessor, the right hon. Member for Barnet (Mr. Maudling), who was then Chancellor of the Exchequer, published the assurances which he had sought from the Ford Motor Company. Thus, we were able to judge the extent to which those assurances had been fulfilled. Surely the public is entitled to judge the criteria. The criteria and the guidelines are in a sense even more important than this issue. In the light of what I have said, will the right hon. and learned Gentleman not now reconsider his decision and ensure that the matter is considered independently so that everyone will know by which criteria matters of this kind are judged?

§ Sir G. Howe
The right hon. Gentleman persists in saying that this is the wrong way in which to judge matters of this kind. The fact is that successive Governments, when considering the pattern, shape and administration of monopolies legislation, have recognised that it is sensible to operate in two stages, with a decision to be arrived at by the Secretary of State, or another Minister on his behalf, as to whether a reference should be made, and a decision to be arrived at by the Monopolies Commission after a reference has been made. No Minister taking a decision of that kind can do so lightly. It is a substantial responsibility to discharge. It would be easier, as a matter of political convenience, to say, "Let it be referred". In that way the responsibility would be lifted from my shoulders.
The right hon. Member for Bristol, South-East (Mr. Benn) and his right hon. Friends reached decisions in favour of substantial mergers in the motor industry, the electrical industry and the banking industry without referring those matters to the Monopolies Commission. They were right to accept that responsibility and to stand up to questioning and criticism, as I do now. It is upon that basis that we recognise that good sense of the two-tier pattern.
472 As to the underlying facts, I have already stated to the House the nature of the answers given to certain questions raised in relation to the merger. The undertakings will be published in the offer documents. It is upon that discharge of these responsibilities that I think that I am entitled to take my stand and to face questions.