HC Deb 07 November 1973 vol 863 cc993-6
Mr. Milne (by Private Notice)

asked the Secretary of State for Trade and Industry if he will make a statement on the take-over of the firms of the House of Fraser and Harrods Ltd. by Boots Chemists Ltd.

The Minister for Trade and Consumer Affairs (Sir Geoffrey Howe)

The proposed merger falls within the scope of the merger provisions of the Fair Trading Act 1973. Once I have received advice from the Director General of Fair Trading I will consider whether a reference to the Monopolies and Mergers Commission would be appropriate.

Mr. Milne

Is the right hon. and learned Gentleman aware that there is already evidence from this latest example of City buccaneering of the need for a reference to the Monopolies Commission? Does he not realise that the increase in share prices of 30p to 35p represents a tycoon-type gain, made in something like 30 to 45 minutes and equivalent to the wages of a shop assistant working in the stores I have mentioned? Will he also institute an inquiry into the timing of the announcement about the take-over, because it appears to have given to certain quarters an advantage in shares trading which ought not to have been given at a time when the Minister is trying to enforce a prices and incomes policy?

Sir G. Howe

If there were any evidence of improper dealing in any of the shares that the hon. Member could provide for me, it is something that could be investigated by the Take-over Panel. I would not, however, think it right, as the hon. Member apparently does, to jump to premature conclusions about the desirability or otherwise of a transaction that has only just been disclosed and of a type in respect of which this House has only recently approved investigation machinery in the form of the Monopolies and Mergers Commission.

Mr. Maude

Will my right hon. and learned Friend consider the desirability in the public interest, if there is any doubt in the Government's mind of leaning in favour of an investigation rather than against it, because in the present climate of public opinion people are much more concerned with the interests of customers and consumers than with real estate deals by financiers?

Sir G. Howe

I am conscious of the importance of the matters to which my hon. Friend has referred. I referred to some of them in the statement I made last week. I will bear in mind what he has said.

Mr. Benn

Since the Minister in the current issue of "Trade and Industry" has said that no Government could be expected to see the process of concentration continue unquestioned indefinitely at the sort of pace we have seen over the last decade, may I ask whether this is really a matter which ought to be based upon the advice of the Director General of Fair Trading? Are there not wider policy considerations involved? Can he tell the House whether he does not link in his mind the rise in the cost of living with the large increase in profits by big stores, to which this new merger would add a notable additional monopolistic element?

Secondly, does the right hon. and learned Gentleman not realise that the gearing and motivation for many of these changes is property values, as the hon. Member for Stratford-on-Avon (Mr. Maude) has said? Do the Government accept any responsibility here since Boots earns about £20 million a year from the National Health Service as a result of the supply of drugs and showed a 65 per cent. increase in profits this year? Can he reconcile the statement of Mr. Appleby, the Financial Director of Boots, that it was "like playing poker", according to the Guardian this morning, with the legitimate interests of the workers involved? Is this not now becoming a legalised racket? Will he not act with greater vigour?

Sir G. Howe

I cannot understand how the House can expect me to act with greater vigour in relation to a transaction that has been announced today and in respect of which statutory procedures are laid down whereby the Director General of Fair Trading tenders advice to me. I shall in due course, when I have received advice, consider the matter as the House would expect me to do. I will take account of the several matters that have been raised. It cannot be accepted that every merger or transaction of this kind produces contrary and undesirable consequences on the cost of living. The process of change in the retail trade, as in any other part of our industry, can have beneficial effects or effects that are undesirable. I shall be taking account of all those matters before me. I take rebukes from the right hon. Gentleman about encouraging the process of concentration with little enthusiasm. He was one of the greatest concentrators in the business.

Mr. Gorst

Would my right hon. and learned Friend agree that concern about the take-over of a quaint and rather recherché department store which sells over-priced luxuries owes more to public curiosity than to public interest?

Sir G. Howe

I take note of my hon. Friend's analysis of the situation. It is, however, right to observe that the House of Fraser controls retail outlets in about 90 cities and towns. It is because of that that I take seriously the responsibility laid upon me.

Mr. Dell

Will the Minister ensure that there is advantage to the public interest and not just no detriment before he decides not to refer this to the Monopolies Commision? Has he noted the extraordinary variety of Boots' ambitions, with first a chemical firm and now a large retail organisation as the objects of take-over bids? Will he state what conceivable advantage to the public interest could arise from this take-over?

Sir G. Howe

I have certainly noted the history to which the right hon. Gentleman refers. I also note that it is the function first of myself and in due course of the Monopolies and Mergers Commission to take account of the public interest very widely. That does not mean that I should within 24 hours of the disclosure of the deal be driven to one conclusion rather than another.

Dr. Gilbert

Bearing in mind that Boots has substantial manufacturing interests, will the Minister undertake in his consideration of this case to remember that vertical integration of this type has many more dangers to the public weal than horizontal integration?

Sir G. Howe

I will take into account the whole range of Boots interests.