HC Deb 25 February 1987 vol 111 cc262-4
9. Mr. Peter Bruinvels

asked the Secretary of State for Trade and Industry if he will introduce legislation to empower the Monopolies and Mergers Commission to order a company whose takeover bid has been judged to be against the public interest to reimburse any reasonable costs incurred by the company or companies which were the subject of that takeover bid; and if he will make a statement.

Mr. Howard

I have noted my hon. Friend's suggestion, which will be considered in the work of the Department's present review of law and policy on mergers and restrictive trade practices.

Mr. Bruinvels

Does my hon. and learned Friend accept that there has been a substantial increase in the number of takeover bids, both hostile and against the public interest? Does he agree that something must be done to help companies which are fighting hostile bids and which are cramped in their style in terms of taking on staff or of promoting their products because they must fight back through the national media? I cite especially Allied-Lyons.

Mr. Howard

There has been an increase in contested bids, although they are not necessarily against the public interest. My hon. Friend's point will be taken into account in the context of the review, but it is important not to overlook the advantages that can follow takeovers.

Dr. Godman

Would it not be a good idea to recover some of the costs from the predator? For example, now that the Secretary of State has rejected Ferruzzi's bid for the British Sugar Corporation, why should not that Italian company pay some of the costs of its predatory activities in Britain?

Mr. Howard

This point will be considered in the context of the review. When we talk about proposed takeovers of British companies by foreign companies, we should remember that companies from Britain are frequently engaged in similar activities overseas.

Mr. Nicholas Winterton

Will my hon. and learned Friend confirm that I have written to him in connection with the future of the Manchester Ship Canal Company and the hostile bid for that company from Highams and Mr. John Whittaker, who in my view are involved in unacceptable commerical practices, not least share splitting, in seeking to overrule the long-established articles of association of the company, which were set down to aid and promote the long-term interests of the small shareholder? Will he treat this matter with great urgency, bearing in mind the fact that Highams has sought an extraordinary general meeting on Friday to oust the directors of the Manchester Ship Canal Company and to impose its own? It has little or no interest in the long-term future of the company as a whole, only in its land and assets.

Mr. Howard

I certainly confirm that my hon. Friend has written to me on this matter. Indeed, I hope that by now he has received my reply. I am happy to assure him that the matter is the subject of urgent consideration in my Department.

Mr. John Smith

Does the Minister not yet fully understand that the spate of takeovers that have been permitted in recent months and years has led to chronic "short-termitis" in British industry, which means that companies will not make long-term commitments to capital development, research and development or education and training? Despite all this evidence, why do the Government stick to only one criterion— that of competition? Why do we have to keep reviewing policy? Should it not simply be changed to take account of the industrial realities of Britain today?

Mr. Howard

I do not accept that the consequences of takeovers are as the right hon. and learned Gentleman suggested. It is important not to overlook the beneficial consequences that can flow from takeovers, which can frequently lead to sleepy management being given a shake-up and the assets of the target company being used more productively than would otherwise be the case. Nor is it correct to say that competition is the only criterion on which references are made to the Monopolies and Mergers Commission. However, these matters are under review and all aspects are being considered in the context of that review.

Mr. Bill Walker

Does my hon. and learned Friend agree that a hostile takeover that concludes in an unsatisfactory manner, which may be unlawful and against the rules of the takeover panel, must eventually, if it damages the locality, be against the public interest? Is that not an area that is new to us and one that we must examine carefully?

Mr. Howard

I agree with my hon. Friend that these matters must be carefully examined, but I am not certain that I can accept his proposition that such a situation will always necessarily be against the public interest.