HC Deb 16 April 1986 vol 95 cc862-4
5. Mr. Dykes

asked the Secretary of State for Trade and Industry if he will outline the Government's takeover and merger policy in the wake of the recent spate of large-scale takeover and merger attempts by British and foreign companies in the United Kingdom.

The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Paul Channon)

Our policy on takeovers and mergers is that references to the Monopolies and Mergers Commission should be made primarily on competition grounds. This has been our consistent policy since it was announced by my right hon. Friend the then Secretary of State in July 1984 following a review of mergers policy.

Mr. Dykes

I thank my right hon. Friend for that answer. With the recent spate of takeovers, notwithstanding considerations of size, keeping jobs, expanding jobs and the percentage concentrations of products, does he agree that there is a need for further clarification, if possible? Is there not all the difference in the world between genuine takeovers and mergers that are undertaken for reasons of improved management, building up assets, genuine investment and increasing employment and those large-scale financial takeovers that appear to be undertaken only for financial reasons, asset-stripping, or City rapaciousness of one sort or another? Does that not give the whole business a bad name? Conglomerates are getting bigger for its own sake—for reasons of empire-building. Will my right hon. Friend try to guide the House towards providing a more coherent policy?

Mr. Channon

I think that the policy is coherent. We had a review of this in 1984, and I think that it is right. The policy that has been consistently followed is that references to the commission should be made primarily on competition grounds and not inevitably, but nearly always, on the advice of the Director General of Fair Trading. That is the policy that I have followed, as have my two predecessors.

Mr. Benn

Will the Secretary of State consider referring Mr. Rupert Murdoch's empire for examination under the criterion of competition? Mr. Murdoch owns nearly 30 per cent. of British newspapers, The Sun, News of the World, The Times and The Sunday Times. He has acquired American citizenship since he bought those papers to permit him to make a further acquisition in the United States. He then sacked 6,000 print workers, who had made him a profit of £50 million in the previous year. He is able to rely upon hordes of policemen, paid for by the taxpayer, every night to enforce his will, and increase his profits, which he is then able to export abroad. Is that not a case for further investigation?

Mr. Channon

I understand the right hon. Gentleman's views, but he will not expect me to share them. I have no plans for such an investigation.

Mr. Fletcher

Is it not a fact that competition policy has evolved in recent weeks so that companies are now given several bites of the cherry over the prospect of reference to the MMC? If that is the case, will my right hon. Friend explain to the House how companies should react to this new situation, because previously the competition authorities were dealing with merger references in a different way?

Mr. Channon

My hon. Friend has great experience in this matter, but I have to disagree with him. It has always been possible to obtain confidential guidance from the Director General of Fair Trading, in appropriate cases, and, just as when he was dealing with this matter, the decision whether to refer a case to the Monopolies and Mergers Commission is nearly always taken in accordance with the advice of the Director General of Fair Trading, and is almost always, if not always, to do with reasons of competition. Nothing has changed in that regard since my hon. Friend played such a part in this area.

Mr. Wrigglesworth

Does the Secretary of State agree with his hon. Friend the Member for Harrow, East (Mr. Dykes) that the spate of takeovers and mergers that is going on at the moment is offensive to many people and has no logic or justification in terms of benefit to consumers or to those working in the enterprises? Will he consider a change in competition policy to make the machinery much more streamlined than it is, placing the burden of proof for the justification for the merger on those proposing it, and giving individuals and companies the right to take anti-competitive practices to the courts?

Mr. Channon

There is a case for a general review of competition policy that might cover mergers policy as well. I do not accept what the hon. Member says about the recent spate of merger activity. By following the policy that I have outlined, the Government have been consistent and have not, as has been alleged, acted arbitrarily in any way. There has been a consistent policy, which in the long term has been in the interests of all concerned.

Mr. Maples

Regarding a possible takeover of parts of BL, can my right hon. Friend explain what vital national interest is at stake in keeping Land Rover in British ownership?

Mr. Channon

There is another question on the Order Paper about that specific subject. My hon. Friend referred to the Monopolies and Mergers Commission. If there were to be a relevant sale of Land Rover, that would have to be considered by the Director General of Fair Trading, and I would have to consider his advice.

Mr. John Smith

Does the Secretary of State not understand that the public are puzzled at the Government's lax and complacent view as merger mania proceeds apace? Is it not a marked characteristic of the present state of affairs that companies are driven to go for short-term profits, rather than for long-term investment, so as to fob off predators who are after them? As these are mainly takeovers rather than mergers, would not a much tougher takeover policy assist not only wider choice in this country but a much stronger industrial strategy, bearing in mind that the Government do not have one?

Mr. Channon

The right hon. and learned Gentleman will not expect me to agree with that. His case would be stronger were it not for the fact that the volume of total fixed investment in this country has risen to an all-time high. Last year it was a record £60 billion. That included non-oil business investment which rose also by 7.5 per cent. last year to reach an all-time high. So there is no evidence whatsoever that there is insufficient fixed investment in this country.

Mr. Speaker

We are making very slow progress. May I ask for brief questions and briefer answers?