HC Deb 15 January 1987 vol 108 cc413-8 3.45 pm
Mr. John Evans (St. Helens, North)

(by private notice) asked the Secretary of State for Trade and Industry if he will make a statement on his decision not to refer the bid by BTR for Pilkington to the Monopolies and Mergers Commission.

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

I decided, in accordance with the recommendation of the director general of Fair Trading, not to refer the merger between BRT plc and Pilkington Brothers plc to the Monopolies and Mergers Commission under the provisions of the Fair Trading Act 1973.

I accepted the director general's advice that the merger did not raise significant competition issues. Like the director general, I gave careful consideration to concerns expressed about the effect of the proposed takeover on Pilkington's management philosphy and commercial direction. While accepting that these are important issues, I believe that the shareholders of Pilkington are best placed to make a judgment on them.

Mr. Evans

Is the Secretary of State aware that his decision not to refer the bid has been greeted with widespread dismay by the entire Pilkington work force throughout Great Britain? Will he accept that the involvement of Morgan Grenfell in the bid, which is already deeply involved in the Guinness scandal, means that it would have been in everyone's best interest, particularly the right hon. Gentleman's, if the bid had been referred to the Monopolies and Mergers Commission, particularly in view of the 20p surge in Pilkington's share price last night?

The right hon. Gentleman informs the House that there is no competition policy involved. He also states that Pilkington's management philosophy and the commercial direction of the company are best left to the shareholders. Who then speaks for the national interest and for the interests of the work force and its jobs? Pilkington's work force throughout Great Britain intends to step up its compaign against the bid by BTR because it recognises that the bid has no industrial logic. Why cannot the right hon. Gentleman recognise that?

Mr. Channon

I understand and respect the hon. Gentleman's views. Indeed, he came with a deputation to discuss the matter with me and I listened with great care to the arguments that he presented. What I have decided today is entirely consistent with the policy announced as long ago as July 1984 and applied ever since—that references are made primarily on competition grounds. I express no views on the merits of the BTR bid for Pilkington, but I am sure that the hon. Gentleman's influence and the influence of those for whom he speaks will be powerful in convincing people on how to vote.

Mr. Kenneth Hind (Lancashire, West)

Does my right hon. Friend appreciate the disappointment of many of the Pilkington employees in the north-west at the non-referral of BTR's bid to the Monopolies and Mergers Commission? However, some Conservative Members appreciate that there was a major lack of a monopoly element that would have provided him with the major ground to do so. Will he bear in mind that, through research and development and hard work, a loyal work force in Pilkington has made that company the premier glass manufacturer in the world? That loyalty will not easily be transferred to a conglomerate run by BTR? Will he ensure that the Pilkington shareholders will, having seen the impressive profit forecasts and long-term stable investment, be allowed to maintain their investment free from the sort of interference that we saw in the Guinness bid for Distillers in the recent past?

Mr. Channon

I understand my hon. Friend's views, and I know that he has strong feelings about this matter. I am sure that he will make his views widely known. It is now for the Pilkington shareholders to weigh up the arguments. They will have to decide on the best long-term prospects for the future of the company. The whole House accepts what my hon. Friend says about the great achievements of Pilkington. The shareholders have an important decision to take about the best long-term prospects for the company.

Mr. David Alton (Liverpool, Mossley Hill)

Does the Secretary of State accept that this decision is inconsistent with the decisions about the Royal Bank of Scotland and Sothebys which were referred to the Monopolies and Mergers Commission? Does he agree that other factors should be taken into account and that the rules should be changed so that matters of this sort can be considered? This takeover would be a calamity in an area where already one person in five is out of work. Does he also agree that, when a company has made itself vulnerable because of its investment in research and development, it is unacceptable to allow it to be preyed on by a predator like BTR?

Mr. Channon

The cases cited by the hon. Gentleman were before July 1984. I recall that years ago there were many complaints about the unpredictability of reference policy and a wish to have a predictable set of criteria on which one could judge whether cases were likely to be referred. As I have told the House, what I have said today is entirely consistent with the policy announced in July 1984 that references are made primarily on competition grounds. There have been almost no exceptions to that rule.

Sir Anthony Meyer (Clwyd, North-West)

Whatever the difficulties facing my right hon. Friend—and they are real difficulties—is he aware that he, the Government and the Conservative party will bitterly rue the day when they seemed to be washing their hands of the future of a firm so outstanding for its technical achievement, its care for its work force and for its contribution to regional policy?

Mr. Channon

I understand my hon. Friend's feelings. He must understand that had a reference to the Monopolies and Mergers Commission taken place it would not necessarily have prevented the takeover of Pilkington by BTR. If the commission makes a recommendation that such a takeover is not against the public interest, I have no power whatever to stop it.

Mr. George Park (Coventry, North-East)

Does the decision not to refer the BTR bid to the Monopolies and Mergers Commission indicate a preference for expansion by acquisition rather than growth through good research and development, good industrial relations and good marketing?

Mr. Channon

It shows no preference whatever. All these factors are relevant to the Pilkington shareholders in weighing up what they should now do.

Mr. Mark Carlisle (Warrington, South)

Even if the bid does not come within the narrow confines of a reference to the Monopolies and Mergers Commission, does my right hon. Friend agree that it would be a great pity if a great manufacturing company like Pilkington which has played such a major part in the industrial life of St. Helens and the whole of the north-west should cease to remain an independent company?

Mr. Channon

It would not be right for me to express a view about its merits. It would also be quite wrong for me to express a preference for one of the two courses that are offered. My right hon. and learned Friend has mentioned an important series of issues which the Pilkington shareholders will have to consider. I am sure that they will weigh carefully what he says.

Mr. Eric S. Heffer (Liverpool, Walton)

All hon. Members from the north-west are well acquainted with Pilkington and know about the work that has been done by its workers and management. Will the right hon. Gentleman reconsider his earlier answer? Will he put the interests of the community and the people of the northwest before the rather strange concept that competition must decide everything? Is it not clear that some shareholders may think that it is better to get a financial killing than to take account of the interests of local people?

Mr. Channon

I had to decide whether to refer this matter to the Monopolies and Mergers Commission. I cannot reconsider the decision that I have announced. [HON. MEMBERS: "Why not?"] Pilkington's shareholders must weigh up all these arguments and the strong feeling in all parts of the House and outside. I have not announced today that BTR has taken over Pilkington, or that it is likely to do so. All that I have decided to do is not to refer the matter to the commission.

Mr. Michael Grylls (Surrey, North-West)

Is this not a further example of the merger mania that seems to be rife? I believe that my right hon. Friend has shown wisdom in deciding to have an immediate review of competition policy. It should also consider the preservation of research and development and the future security of many small and medium-sized firms, which are suppliers to the big ones.

Mr. Channon

I agree that it is right to review competition policy in relation to mergers and restrictive trade practices. My hon. Friend's points and the evidence he gives to that review will be of value in helping me to decide on the issues involved.

Mr. James Callaghan (Cardiff, South and Penarth)

I venture a guess that there is a majority opinion in this country, and probably in the House, against the takeover. If the Minister feels that he is under a disability in expressing an opinion about it because of his responsibilities as Secretary of State for Trade and Industry, why cannot the Prime Minister call in the chairman of BTR, tell him what the view is and invite him to withdraw his offer?

Mr. Channon

The House has heard what the right hon. Gentleman has said. Surely he will accept that it would be quite wrong for any Secretary of State for Trade and Industry to express a view from this Dispatch Box as to the merits of one side or another when a bid has been made.

Mr. William Powell (Corby)

Does my right hon. Friend accept that, notwithstanding his decision, it will be greeted with dismay by many thousands of Pilkington workers, including those in my constituency? Does he also accept that the views that have been expressed on both sides of the House make it perfectly plain that it is very much in the national interest that companies with a strong regional base should be allowed to flourish and that companies that put maximum effort into research and development and their long-term future should also be allowed to flourish? Will he take an early opportunity to make it perfectly plain to the Pilkington shareholders and others that the Government have considerations of that kind very much in mind?

Mr. Channon

I agree with my hon. Friend that it is important that companies with a strong regional base should flourish and that it is also important that companies with a strong research and development base should flourish.

Mr. Jim Craigen (Glasgow, Maryhill)

What does the Secretary for State have to say to the 2,500 employees of Barr and Stroud in the Glasgow area whose jobs are geared to research and development and defence contracts? Does he believe that BTR's management philosophy recognises the long-term potential of high-tech as against the short-term advantage of profit?

Mr. Channon

Those involved have to decide. It is not for me to make a judgment between those two management philosophies, if they have been accurately so described by the hon. Gentleman.

Mr. Gerald Bermingham (St. Helens, South)

Does not the Secretary of State agree that there comes a point when the state or the Government have a responsibility? There comes a point when the balance between commercial interests and those of the state has to be taken alto account. Does not the Secretary of State agree that we have here a takeover bid which makes little or no industrial sense? I agree that it is not a competition point, but it is certainly a point in the public interest. Does he not feel that he has some duty to interfere in this apparently competitive situation so as to ensure that an independent company which has both local and regional interests should be given some protection from the predators that now exist in our industrial society?

Mr. Channon

It is very difficult to reach a decision in a case of this kind. I had to weigh all the factors involved before coming to the decision that I took. It was wholly consistent with decisions taken over many years—that references should be made primarily on competition grounds. It is only reasonable and right that there should be some element of predictability and consistency in these decisions, and I am satisfied that what I have done today is in accordance with that, and is right.

Mr. Speaker

I made a mistake in calling in succession two Members from the Opposition Benches, so I will call two on the Government Benches.

Mr. Tony Favell (Stockport)

Will my right hon. Friend beware of the call from Socialists for control over every takeover bid because that is the first step to bureaucratic control over the City and over the country's savings? Having done so, will my right hon. Friend point out to investment managers that they have a responsibility beyond what is described by my right hon. Friend the Chancellor as "short-termism" and have to look to industry, the community and the country when considering whether to back a bid? Will he also point out to the newspapers that by not referring a bid such as Simons only last week to the Monopolies and Mergers Commission he is not giving the green light to those seeking to take over the company?

Mr. Channon

I agree with everything that my hon. Friend says, and I am grateful to him for pointing out these facts. It is now up to the shareholders of Pilkington to weigh up all the arguments put in front of them and to come to a decision as to their best course for the future.

Mr. Anthony Nelson (Chichester)

Does my right hon. Friend agree that it is a very dangerous route for any Secretary of State to use the mechanism of referral to the Monopolies and Mergers Commission for seeking to frustrate a takeover bid for reasons other than the national interest, as clearly defined in the Fair Trading Act 1973? Should there not continue to be a clear presumption that shareholders know best how to dispose of their assets?

Mr. Channon

I entirely agree with my hon. Friend.

Mr. Robin Cook (Livingston)

Surely the dominant share of the glass market that Pilkington at present enjoys is itself a ground for referring on grounds of competition policy any bid to take over the ownership of that company. Does the Secretary of State accept that large parts of British industry these days will regard as outstandingly naive his view that shareholders take any other than the short-term view of what affects their share price?

Does the right hon. Gentleman appreciate that Pilkington provides many jobs in regions where the Government have created large numbers of unemployed and that it has a proven track record in developing high technology? It is his job to protect British jobs and British technology. Why, then, is he standing aside to let a predator pounce—a predator with a proven track record of selling off British technology to foreign companies?

May I press the Secretary of State on the point made earlier by my hon. Friend the Member for St. Helens, North (Mr. Evans) that the market plainly knew about his decision yesterday? Is it not clear that, despite the brave talk of his colleague about stamping out insider dealing, his Government have not yet succeeded in stopping the leaks from his own Department?

Mr. Channon

As to the latter part of the hon. Member's question, I have no evidence of that whatsoever. If he has evidence of it, of course I will look at it and refer it to the inspectors.

As to the earlier part of the question, of course I recognise—the whole House does—that Pilkington's record on high technology is extremely good. I also recognise that the company employs a large number of people in the north-west. It is for the shareholders to decide what is in the best long-term interests of the prosperity of Pilkington. I am sure that they will bear very much in mind the excchanges in the House.

Mr. Norman Atkinson (Tottenham)

On a point of order, Mr. Speaker.

Mr. Speaker

Arising out of questions?

Mr. Atkinson

Yes, Mr. Speaker. I should like your advice. You will recall that, in answering questions about Guinness, the Minister of State, in answer to a point put to him by the hon. Member for Edinburgh, Central (Sir A. Fletcher), who asked him to look after the interests of the shareholders of Guinness, nodded approval. Similarly, the Secretary of State, throughout his answers on Pilkington, has replied in a similar way by agreeing that he and, indirectly, the House have a responsibility to ensure the integrity of shareholders' interests——

Mr. Speaker

Order. I am not responsible for movements of the head or for questions or answers given from the Back Benches or the Front Benches.

Mr. Atkinson

Indeed, Mr. Speaker. I am seeking your advice as to what responsibility the House has when it comes to guaranteeing anything to shareholders. It is under no obligation to them whatsoever, and the Minister of State ought to reconsider the nod that he gave.

Mr. Speaker

I have no doubt that there will be debates on this matter and that these are legitimate points to raise, but they are not matters of order.

Mr. Bill Walker

On a point of order, Mr. Speaker. In my question I suggested that the Leader of the Opposition had supported Guinness. I should have referred to the leader of the Liberal party.