§ Mr. SpeakerNo fewer than 22 hon. Members are seeking to participate in this short debate, and I appeal for brief contributions from both the Front and Back Benches. I must announce to the House that I have selected the amendment in the name of the Prime Minister.
§ Mr. Bryan Gould (Dagenham)I beg to move,
That this House condemns the failure to refer the Swiss bids for Rowntree to the Monopolies and Mergers Commission; regrets that a matter of crucial importance to the Rowntree workforce and to the local communities affected, and which involves the national interest, is to be decided only according to the narrow interests of institutional shareholders; deplores the fact that an important regionally based enterprise is now likely to be absorbed by a Swiss-based multinational; notes that, unlike Swiss companies. British companies are extremely vulnerable to hostile takeovers; and calls upon the Government to adopt merger and competition policies which allow British industry to prepare effectively for 1992 without the constant threat of predatory takeover bids.We have initiated this debate because we wish to express our disappointment and anger at the Government's failure to refer the bids for Rowntree to the Monopolies and Mergers Commission. That decision represents a betrayal of thousands of people who work in British industry, and a betrayal of all those who wish to see a bright future for that same British industry—particularly given the opportunities which the advent of 1992 and the internal market will present.That failure represents also a missed opportunity to pause and reflect, to make a proper assessment of where the national interest lies, and to take into account the developing circumstances—which mean that, if this bid goes through, there will be a veritable queue of predators waiting to take their chance in the same way.
That failure came as a great disappointment to, and dashed the hopes of, Rowntree's 13,000 employees. To them, it meant a total denial of their interests. They were, typically, the last people to be consulted, the last to be kept informed, and the last to have their interests taken into account. It is typical of the Government that matters of such importance should be left exclusively to nameless and faceless institutional shareholders, and that the interests of those whose livelihoods depend, day by day, on the ownership of Rowntree should be totally ignored.
Rowntree's 13,000 work force has had to be content instead with airy assurances from the Secretary of State for Trade and Industry that their jobs are not at risk.
§ Mr. GouldNo, I shall not give way. I have only just begun, and the hon. Gentleman must be a little more patient.
The work force has had to be content with assurances based on no evidence or information, as far as one can tell, and carrying no certainty, that jobs are not at risk. Yet those people know the truth, because the food and drink industry, more than any other, has been the victim of merger mania. The employees of Rowntree know from bitter experience that when mergers of this type take place, the catchword has almost always been "rationalisation". They know also that rationalisation has proved in almost every case to be a euphemism for job losses, laying off and redundancies.
851 They know that in many cases there have been unmistakeable signs pointing to the need for exactly that kind of slimming down. Where the price offered by a predator is much higher than the market price so that the predator is paying over the odds, it stands to reason, and follows as a matter of logic, that at one point or another the new owners must recoup the premium they paid and get their money back. On almost every occasion in the past, that has meant cutting costs, and it has almost always meant cutting jobs.
§ Mr. John Maples (Lewisham, West)rose—
§ Mr. GouldNo, I shall not give way.
That is why the work force at Rowntree is right to be concerned about jobs and why it is right not to place any reliance on the assurances given by the Secretary of State for Trade and Industry.
§ Mr. GouldI will give way in a moment, but first I want to get into my speech.
The second great disappointment which flows from the failure of the Secretary of State for Trade and Industry to refer this matter to the commission was the blow, which so many Government Members recognised when the original statement was made, to the regional economy. The local authorities are in no doubt about that. They held a quasi-historic meeting in York on the day of the announcement and, to their very great credit, a number of Conservative Members, including the hon. Member for York (Mr. Gregory), made it clear that they, too, recognised the regional significance of what was happening. The hon. Member for York used the telling phrase "regional assassination", which is one we endorse. [Interruption.] Let it be clear to those who groan and show no interest in this point that Rowntree is one of only 13 of Britain's top 100 companies to have its headquarters in the regions. We have seen already what has happened in the regions as a consequence of mergers. Scotland, for example, has lost Bells, Distillers, Britoil and Coats and Paton as a consequence of mergers and takeovers. There are many more instances in other parts of the country. That regional element, of such great importance to the north of this country, will certainly be lost if and when Rowntree becomes simply a satellite of a Swiss multinational corporation.
Let me quote someone who, although he may not cut much ice with my hon. Friend the Member for Halifax (Mrs. Mahon), may persuade some Conservative Members. Sir Hector Laing, writing in The Times less than a week ago, said:
If too many of our major companies are taken over by non-British owners, and free market forces make that more rather than less likely, then the UK will become increasingly a satellite economy, with decision-makers based elsewhere.
§ Mr. Patrick McLoughlin (Derbyshire, West)Would the hon. Gentleman describe a satellite company as one that employs more people in the United Kingdom than in Switzerland? Is it not a telling point that at present Nestlé employs more people in the United Kingdom than in Switzerland?
§ Mr. GouldThat point, which had certainly not escaped my notice, simply demonstrates that we are dealing with a 852 very powerful and widely extended multinational, and that the takeover would not mean decision-making in York or even in London, but decision-making in Zurich or Lausanne. That is what is significant and important.
§ Mr. GouldNo, I wish to finish the point.
That is why the takeover would mean not only economic loss to the region in terms of pounds and pence, but loss in terms of skills and decision-making power. I am sorry that so many Conservative Members seem unaware of that important regional dimension.
§ Mr. John MarshallCan the hon. Gentleman square his comments with the fact that on 13 May, when the European Parliament was voting on whether to have an emergency debate on the bid by Nestlé for Rowntree, British Labour Members of the European Parliament voted against holding such a debate, and Dr. Barry Seal, a prominent member of the British Labour group, said at a press conference that the best hope for Rowntree was a bid by Nestlé?
§ Mr. GouldI had hoped that the hon. Gentleman would recognise more clearly his responsibilities to his own constituency. Let me make it clear that I have no doubt whatever that Labour Members of the European Parliament would vote for the motion we have tabled today.
The failure to refer the bid is a great disappointment to a successful British company. I know that there is always a temptation to treat companies in Rowntree's position as though they were paragons of every conceivable virtue, but the fact is that Rowntree is and has been a profitable, well-managed company with good industrial relations and a good record of investment. It has had great success in building up its brand names. It has shown great marketing flair. It is well poised to take every advantage of the great opportunities, so often lauded by Conservative Members, that are opening up with the advent of the internal market in 1992.
But that company finds that, as a consequence of the Government's irresponsibility, it is denied the opportunity to exploit those advantages. It finds that the Swiss, who have been so much less effective in competing in these markets, have decided to buy what they cannot build. The Swiss have decided, by means of acquisitions, to eliminate a powerful rival and acquire a market share that they could not otherwise obtain.
I believe that that is an indictment of the Government's cavalier attitude towards the interests of successful British companies. If Nestlé acquires Rowntree, the danger is that it will simply dissipate the great achievements which have been worked for for so long by that company. There is the real danger that production will be moved elsewhere. I wonder how many hon. Members are aware that, even under Rowntree's management, major brands in the ownership of Rowntree are being manufactured abroad. For example, Quality Street is being manufactured in Dijon and After Eight in Hamburg. How much greater scope for that diversification and for that removal of manufacturing capacity if the owners are not a York-based company but a Swiss-based multinational.
§ Mr. John Maples (Lewisham, West)The hon. Member keeps saying that the only way that Nestlé can recoup its investment is by dissipating Rowntree's assets. Surely, if 853 one pays more than the assets' book value, one cannot recoup one's investment by dissipating them. The only way one can make them profitable is by bringing the two companies together to make them more profitable than they were individually.
§ Mr. GouldWith respect to the hon. Member, I did not say that Nestlé would recoup its outlay by dissipating Rowntree's assets. I said that it would reduce Rowntree's costs and would therefore lay off jobs. It can retain the benefits and assets by manufacturing elsewhere.
§ Mr. Quentin Daviesrose—
§ Mr. GouldI have given way often enough. This is a short debate, in which many others wish to speak.
I will pursue the theme of disappointment, because, not least among those disappointments, as a consequence of the Secretary of State's decision, was the disappointment of those people who hoped that at last we might obtain some sign from the Government of a constructive and coherent competition and mergers policy. Those hopes have been gravely dashed by this decision.
In 1984, the former Secretary of State, the right hon. Member for Chingford (Mr. Tebbit), said that the essence of competition policy was competition. One might have thought that that was not the most helpful indicator of where the Government's policy was leading us. However, there were then some wobbles. Elders' bid for Allied Lyons and the Kuwaiti shareholding in BP were referred. The criteria seemed to become more complex. There was at least some hope that the Government were at last prepared to take proper account of the public and national interest.
The problem is that, with this decision, we are back to a situation in which the only element that appears to weigh with the Secretary of State is how he feels when he gets up in the morning. We have little guidance from the Secretary of State as to what criteria he will use in making essential decisions. The danger is that he does not appear to have recognised the growing European dimension. There is every sign that the Government, in their naive enthusiasm for 1992, are losing sight of the fact that, even in that context, there remains an identifiable British national and public interest which it is the Government's responsibility to protect.
The confused state of merger policy, as a consequence of this decision, is not just a matter of substance. It is also a matter of the procedures that are followed. There will be sympathy on both sides of the House for the Rowntree board's complaint that, as a consequence of the time that was taken and the uncertainty that arose between 26 April and the decision not to refer to the Mergers and Monopolies Commission, the Swiss predators were able to build up their shareholding from 21 per cent. to 43 per cent., in circumstances in which Rowntree were powerless to resist.
That happened because shareholders knew—given that there was a chance that a reference would be made—that they had to move swiftly to accept an offer that might not survive. That meant that, in the intervening four weeks or so, Rowntree was unable to stop the rot. Far from confronting a minority shareholding, it confronted the fact that Swiss predators had virtually obtained control before the matter could be decided.
§ Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)I have been following the hon. Gentleman's 854 argument closely. Will he agree that one of the problems is that we are talking about 1992 and mergers policy? Rowntree and Cadbury might well have wished to merge in the United Kingdom, but would have been considered a British monopoly. Under the 1992 policy, they would not have been a European monopoly. Therefore, a great opportunity has been lost for those two great companies to get together. It is now too late and, unless the policy changes, it will be too late for other companies as well.
§ Mr. GouldI suspect that the situation of Cadbury is worrying from a different viewpoint. Many people fear that, as a consequence of this decision, the next victim being lined up is indeed Cadbury.
The problem is that the decision not to refer this bid is not only a source of disappointment to all the groups I have identified, but also a cause of unease as to what it portends. That unease is widely shared in the House. Again, I pray in aid Sir Hector Laing, who in that same article said:
It seems that in the present climate, any and all of British industry is for sale if the price is right. `Prostitution' is not a pretty word. I am sure we will not sell ourselves cheap, but at any price it is still prostitution.Even in the face of that stinging rebuke from one of the grandees of the Conservative party, the Government persist in placing their faith entirely in market forces. They glorify market forces as the only arbiter—virtually a moral arbiter—and as the rewarder of those who are virtuous and the penaliser of those who deserve nothing better. The Government take the view that, right or wrong, whatever the market does, however much it cuts across the public or national interest, it must nevertheless prevail. The irony is that the evidence that the Government surveyed in their paper on merger policy lends no support to the view that mergers are in the companies' interest or in the national interest. In fact, the reverse is true.That paper concluded the appendix on the academic evidence by saying:
Evidence on post-merger performance … supports the earlier findings of disappointing or inconclusive performance. Indeed, the consistency of the results of the various studies and the wide range of approaches used tends to reduce the force of the methodological limitations and to increase the robustness of the findings.Those findings were that, far from improving their performance, companies involved in mergers were less efficient than the average of those in other countries.What is true of individual companies is also true of the entire economy. Merger mania reinforces the short-term-ism of which even the Chancellor of the Exchequer has on occasion complained. It reinforces the emphasis on short-term liquidity and performance. It militates against the kind of long-term investment that is so essential to our industrial performance. It also militates against the essential spending on research and development and on training on which our industrial future so closely depends.
As the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) pointed out, all of that will become a more pressing problem as we approach 1992. We are already a more open market than any other in Europe. By virtue of our open stock market, the market for what is now fashionably called corporate control is freer here than it is anywhere else. Whereas in our country virtually any public listed company can be bid for and obtained if the price is right, in countries such as Germany and 855 Switzerland that is not possible. Hostile bids are virtually unknown, because the way in which industry is financed is different.
The close nexus between banks and financial institutions on the one hand and industrial ownership on the other makes it virtually impossible for a hostile bid to succeed in those countries. Our successful companies have no protection because of the way in which they are structured. Their only protection rests with the law—the Government. The Government are responsible for maintaining the public interest and protecting that interest. If that is not done, then our companies are defenceless in a way that does not arise in other European economies.
§ Mr. David Shaw (Dover)rose—
§ Mr. GouldI shall not give way again.
In the case of Rowntree, this decision means that the Government appear deliberately to have turned their back on their responsibility to protect British industry in this way. They have clearly declared that it is open season, that anything goes, that the "for sale" notice is up and that there is a price tag on everything.
The approach of 1992 makes it more likely that the combination of our own openness and the Government's dereliction of duty will mean that huge numbers of British companies will be at risk and that the predators from both within and outside the EC will be queuing up to take their chances. The pity of it is that it is the best and most successful British companies—the companies which have invested, which have good records, which have developed powerful brands in European markets and which are best able to take advantage of the opportunities of the internal market—which will be in the firing line and will be picked off, without the Government lifting a finger to help them.
The Government are bemused and obsessed by their ideological commitment to market forces and their loyalty to international capital. We in the Labour party and those who are concerned about British industry and the regional economy are left to express and fight the case for those interests because the Government clearly have no more concern or interest in such matters.
§ Mr. GouldNo, I shall not give way; I am about to finish.
The worrying thing is that, behind Rowntree, comes Cadbury. I met the unions from Cadbury this morning. They know that the writing is on the wall. General Cinema already has a substantial shareholding and we cannot be sure what its intentions are. We know that predators will be sniffing around. Behind Cadbury are legions of other British companies, every one of which must now be frightened that the Government have abandoned them to their fate. That is the tragedy, the great weakness, the failure and the disappointment of the Secretary of State's decision.
With this debate and motion, we are providing an opportunity to say, "Enough is enough." Some limits must be established to protect British industry where it needs that protection and, above all, to encourage British industry where encouragement will open up the 856 opportunities that we so desperately need. It may be unfashionable, but we shall say loud and clear from the Opposition Benches—we hope to hear some echo from Conservative Members—that there is still an identifiable British interest, which must be sustained, protected and encouraged.
We are not prepared to see British industry sold off to the highest bidder and to become simply a satellite economy with no power to control our own future or the development of our own economy. That is why we tabled the motion and why we believe that the Government's failure to refer the bid is a sign of so much worse to come and of such dereliction of duty. That is why we ask hon. Members of all parties to support the motion, in the interests of British industry and all those whose livelihoods depend on it.
§ The Chancellor of the Duchy of Lancaster and Minister of Trade and Industry (Mr. Kenneth Clarke)I beg to move to leave out from "House" to the end of the Question and to add instead thereof:
'recognises the benefits which inward and outward investment have brought to the British economy: endorses the Government's merger policy as set out in the Department of Trade and Industry's paper on the policy and procedures of merger control published on 3rd March 1988; and supports the decision not to refer to the Monopolies and Mergers Commission Nestle's bid for Rowntree or Suchard's 29.9 per cent. holding in Rowntree, as being consistent with that policy.'I enjoy being shadowed by the hon. Member for Dagenham (Mr. Gould) and am always interested in taking part in debates with him. However, I continue to be startled by the contrast that steadily emerges between the reputation of the hon. Gentleman outside the House for the views that he holds, and the views that he puts forward in the House on behalf of the Labour party. He is alleged and believed to be one of those in his party who is seeking to edge the Labour movement a little nearer to the days of a free market economy and an enterprise economy. Every time that he—[Interruption.] Well, I am probably doing a great deal of good for the hon. Gentleman's reputation in some quarters—[Interruption.] It is relevant. The fact is that every time that he speaks here on a particular issue he belies that reputation.Insofar as the assertions that the hon. Gentleman has made today about monopolies and mergers policy in his approach to takeovers shed light on the policies of the Labour party, they take that party right back to where it was in the 1970s, if not before, and miles away from the present position.
Insofar as the hon. Gentleman's arguments led to any view of an overall approach to monopolies and mergers, they not only spoke strongly against any kind of foreign takeover of any British company because that would make us a satellite economy, but the hon. Gentleman was against most inward investment especially if the company had headquarters outside London. On the whole, the hon. Gentleman would rule out mergers that would have any effect on regional companies. By the time the hon. Gentleman finished, it was clear that in most instances he was against the free movement of capital, and against takeovers and mergers.
If the hon. Gentleman were to refer cases on the basis that he put forward, the Monopolies and Mergers Commission would have to acquire several tower blocks to 857 hold the staff to deal with the applications. The hon. Gentleman would also have to change the law dramatically to make the Monopolies and Mergers Commission recognise his view of economics, British public interest and industrial policy and to start turning down some mergers.
§ Mr. GouldI enjoy shadowing the Chancellor of the Duchy of Lancaster, but I cannot let him get away with such a ridiculous failure to distinguish between inward investment and resisting a hostile bid. Will he now admit that such a distinction is important and does exist?
§ Mr. ClarkeDoes it follow from that that the hon. Gentleman is saying that only friendly takeovers will be allowed? I suspect that, in the case of companies based outside London, only friendly takeovers from British companies would be allowed if a London-based company were trying to buy a regional one. Such an approach is wrong. It is important that we begin by clarifying our views on takeover policy and of the situation of one company bidding for another company if the recipient is unwilling to receive the bid—
§ Mr. Quentin Daviesrose—
§ Mr. ClarkeI apologise to my hon. Friend, but I must try—as did the hon. Member for Dagenham—to resist interventions because otherwise I shall take too long.
The Conservative party believes that the greatest national public interest lies in allowing such things to take place within the market place. Such judgments are best taken by shareholders, who make a judgment about the likely performance of the companies in which they have a stake. The free flow of capital, both internally and internationally, leads to the best use of national resources in the longer term.
Regardless of the nationality or the location of the company, the very logic of a takeover bid, if one thinks it through, amounts to a bidder who believes that he can produce a better return than the so-called victim is producing under the existing management. The bidder puts up his own money, or that of his backers, to demonstrate his confidence in that judgment. It is the shareholder who makes the judgment about the prospects of the company in new hands. In a free market economy, and in the opinion of the Government, there is no need to stop that process in the vast majority of cases.
We all know that in almost every instance the management at the receiving end of the uncovenanted bid will not wish it to come in, and normally the work force will not either. We can all understand that if we put ourselves in the position, especially of the managers, but also of the work force of the company at the receiving end. It is disturbing to have such a bid. It is much more satisfactory to hope that it will not take place. However, we believe that that is one of the commercial pressures that managements of quoted companies should be under because it is a spur to efficiency and leads to the improved competitiveness of the economy.
We pay this country's top managers highly and we have reduced their taxation. In part the high remuneration that keeps such managers in this country is compensation for the risks that they run and for the day-to-day commercial pressures that I have described. Those in management in private industry are not entitled to look for jobs for life. 858 They defend their jobs by retaining the confidence of their shareholders by demonstrating the good performance of their company. Everybody benefits if that is the case.
We must appreciate that such cases do not normally justify intervention. Any hon. Member who finds that a company in the locality of his constituency is affected by a takeover bid is usually approached by that company's managers and often by the work force and trade unions, seeking some political defence against the threat. The wariness of managers and their willingness to approach their Member of Parliament to tell the work force and to help them to defend the company has nothing to do with the nationality of the company making the hostile hid. The natural and instinctive reaction of companies at the receiving end of such bids is to resist them.
As the hon. Member for Dagenham said, what is required on the part of the Government is a consistent view of when it is necessary to regulate and to step in because the national interest is genuinely adversely affected by the proposal. That is why we have a clear competition law and the power to refer bids to the Monopolies and Mergers Commission. That is why we take the objective advice of the Director General of Fair Trading. We have set out a policy because it is necessary to be consistent. It is in the Blue Paper to which the hon. Gentleman referred, which showed that he has read it at last. It was not debated seriously when we produced it. That is the consistent policy that we are applying.
All examinations of competition policy have found that, if one wishes to protect the genuine public interest, the key issue on which to concentrate is ensuring that one protects above all the consumer and the customer against monopoly and that one maintains a healthy state of competition in the economy. That is not the only reason. Wider powers are reserved for companies that have some strategic importance to the economy.
We have repeatedly made clear our consistent policy It is wrong for the hon. Member for Dagenham to attack us for lack of clarity. The fact is that the Labour party has not thought through the issues that I have outlined about takeovers and mergers. It is reacting in a populist. ad hoc way wherever it sees political advantage in a particular town by arousing fears about a particular takeover. Let us imagine that we returned to the practices that were adopted at times by the previous Labour Government. Proposals such as the Rowntree takeover would be subjected to delay and scrutiny by politicians and their agencies. Whenever trade union, local or regional lobbies were established, great damage would be done to the free flow of investment in the economy as well as to the economy.
§ Mr. ClarkeNo, I shall not give way.
§ Mr. Beaumont-Darkrose—
§ Mr. ClarkeI always overrun my speeches because I give way too often. I shall follow the lead of the hon. Member for Dagenham and will resist interventions even from my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark), whom I respect so much.
The Government believe that the bid for Rowntree is a perfectly ordinary takeover. We agree with the Director General of Fair Trading that there is no reason for the 859 Government to intervene and nothing to refer to the Monopolies and Mergers Commission. I anticipate that the MMC would find nothing to question about the bid were it ever referred to it. It does not mean that the Government are taking any view about who should own Rowntree. We believe there is no public interest in the case which justifies any suggestion of overriding the judgment of the shareholders. They will determine where they believe the future of the company best lies.
Essentially our critics have made a great issue of this case for two reasons—and for the purpose of an analysis I am aware that I shall simplify the sophisticated arguments. The first reason is that the bid is a foreign one from a country outside the European Community. The hon. Member for Dagenham is always the voice of reason, but, however much he may deny it, if the bid was not a foreign one we should not be bothering with this debate. Chauvinism runs strongly throughout this issue. The second ingenious and interesting argument is that no reciprocal bid could be made by a British chocolate company should it wish to buy a company in Switzerland. I accept both those arguments. Unless the hon. Member for Dagenham is trying to widen this debate against all takeovers, all foreign bids and against the takeover of all regional companies, he is saying that because it is a Swiss bid and because there is no reciprocity it should be referred.
The hon. Member for Dagenham laid great stress on the British interest. I accept that there is enough national feeling in this country for caution to be aroused in the minds of many whenever a foreign bid is made. The British interest should govern what we do and should guide the House in reaching its decisions. I believe that undoubtedly it is in the British interest that we should have the freest possible movement of inward and outward investment. Britain must remain on the side of open international capital markets. In recent years it has become clear that, probably with the sole exception of the United States, we have the most open trading system. That system has worked overwhelmingly to the benefit of the British economy and of British workers.
If we suddenly start to adopt a "little Englander" approach, we shall put behind us recent events that have meant that, second only to the United States, the British are the main acquirers of companies throughout the world. We are the main overseas investors to the great benefit of the British economy. The total accumulated value of British direct investment overseas is double the value of all foreign direct investment in the United Kingdom. The Labour party, provoked by one of my hon. Friends, seems to be against such large-scale British investment overseas.
Let us consider our record. In 1986 the United Kingdom invested approximately £12 billion in overseas markets, making us the world's second largest investor after the United States. That brought total United Kingdom net assets overseas to about £90 billion, or 21 per cent. of our gross domestic product. In 1986 the United Kingdom earned a net £7.7 billion as a result of direct overseas investment. It is forecast that those earnings will increase to £10.8 billion for 1987. We are one of the great overseas investors and the British economy is benefiting 860 greatly by the inward flow of earnings from such investment. Nationalism will, of course, produce retaliation.
§ Mr. Tom Clarke (Monklands, West)From time to time the right hon. and learned Gentleman gives advice that my constituents find unacceptable. He has done it again this afternoon when he talked about the "little Englander" approach. Is he aware that there are jobs outwith England? He gratuitously insulted management in various parts of the United Kingdom. Alas, some of them voted Conservative at the last election, including, unfortunately, some of my constituents. Those people have committed themselves to their industry. Does he believe it is right to deny them the opportunity to express a view about jobs? What is his view and the Government's view about future jobs in this country?
§ Mr. ClarkeThe number of jobs being created in this country now exceeds that for the rest of western Europe. We have had the biggest single fall in unemployment in western Europe: unemployment has been falling at an amazing rate. That has happened because we are a successful free market economy operating an open trading system. The £10 billion in earnings from our overseas investments is contributing to the well-being of the economy. Inward investment brings jobs, and that is another great advantage of our open trading system.
We shall invite retaliation if we start suddenly to become nationalistic about takeovers. The hon. Member for Dagenham said that we run the risk of Britain becoming a satellite economy. The leader of the Labour party has said the same thing. He has said that Britain is for sale abroad and is becoming an offshoot of American and other foreign companies. The reverse is true. We are at the core of the international economy. There is no evidence that we are losing our dominant position. The idea that we are not in the big league is entirely wrong. Of the 500 largest non-oil companies in whe world, 23 are French, 38 are German and 53 are British. We are by no means a satellite economy. We are the major predator of overseas companies.
§ Mr. Beaumont-DarkI am following my right hon. and learned Friend's argument, with much of which I agree. We are an island with a progressive economy and we are taking over many overseas companies. We hold $98 billion worth of investment in America alone. Such investment strengthens our economy and that of the world.
It is important to consider, however, the problems of Rowntree and Cadbury. The other day my right hon. and learned Friend did not like me describing the old monopolies and mergers policy as a shambles, but does he not agree that under that policy Rowntree and Cadbury would never have got together because they would have held more than 50 per cent. of the United Kingdom confectionery industry? They would have been thrown into the hands of the MMC. That means that when Suchard, Nestlé, General Cinema or anyone else comes along our home industries compete with one hand tied behind their back while they are gripped warmly by the throat by foreign competitors. Is it not the job of the Government to say that we have one monopolies and mergers policy that applies to home and overseas takeovers so that British companies can compete on the same basis as foreign companies? That is all we ask.
§ Mr. ClarkeI shall come to the question of reciprocity in a moment. My hon. Friend slipped into somewhat dramatic language because of his local concern for one of the companies. His favourite solution of a merger between Cadbury and Rowntree has never been put to the test. I cannot envisage what would have been the advice of the Director General of Fair Trading or what the MMC would have said.
There is nothing wrong with a competition policy which put in the forefront the protection of the customer against the building of a strong monopoly position in the United Kingdom market, particularly if the commodity which is being traded is one for which there is a particular British taste. What the hon. Gentleman is advocating may protect the management of Cadbury and Rowntree from overseas bids, but if a merger between them were ever suggested we would have to judge whether it was in the national interest and what effect it would have on the customer. The fact that it would be a merger between two British companies rather than between a British and a Swiss company is irrelevant. The same tests apply to all: what is in the interests of the British economy, and what is the advantage to the customer?
In reply to the hon. Member for Monklands, West (Mr. Clarke), may I say that we must not ignore the effects of inward investment. It is running at a much lower level than outward investment as we buy companies from abroad and it brings jobs. In the north-east of England, for example, there is no resistance to Japanese investment. In the past 15 years 80 Japanese companies have produced more than 25,000 jobs. We are not having our British industry taken over by foreigners on a grand scale. The proportion of our work force working for overseas-owned companies steadily drops because there has been an increase in British investment here. In 1979, 15 per cent. of our manufacturing work force worked for overseas-owned companies whereas by 1985 the figure had dropped to 14 per cent.
The nationality of companies is becoming increasingly irrelevant in modern trading conditions. We are obsessed with where companies have their headquarters and the corporate law under which they operate when that has ever less effect. The case was being based on the job consequences of having a company based perhaps in Zurich rather than York. Everybody knows that Nestlé employs more people here than in Switzerland. It has been established here for over 100 years and enjoys a great deal of support from the people in constituencies where it operates.
What is less well known is the position of Rowntree. It is being said that if the company is not based in York it will employ people abroad. Rowntree employs more people outside than inside the United Kingdom. It employs 15,500 people in the United Kingdom and 17,500 abroad. That position has undoubtedly been increased slightly by the acquisition of a French company, Candice Martial, at the end of last year. Therefore, the idea that a headquarters in York means that employment is secure in the East Riding is a mistake. To look at the alleged nationality of a company is chauvinistic nonsense.
Nestlé is described as a foreign predator and it is no use hon. Members denying their emphasis on the foreign aspect. My hon. Friend the Member for Selly Oak got carried away when talking about foreign companies with their hands around the throats of good little British companies.
§ Mr. Beaumont-DarkI was not having a go at Nestlé.
§ Mr. ClarkeI hope that my hon. Friend was not having a go at Nestlé. Not only has it been here for over 100 years but it makes good products such as Worcestershire sauce, Ashbourne water and Branston pickle as well as Nescafé. [Interruption.] Some Labour Members may deride all those products as foreign muck from now on and may organise a boycott of them in the Tea Room, but that will not be of much advantage to them.
I shall leave aside what I regard as nationalist nonsense and address the arguments about reciprocity. When this came to a head, the reciprocity issue caused considerable anxiety in the House. What is the position when a company is at the receiving end of a hostile hid but cannot make a counter-bid because of the capital structure of the company making the bid? That position is not confined to overseas companies. It has nothing to do with British and Swiss law, or anything of that nature.
Swiss law on the subject is similar to our law. Swiss Ministers have less power over these matters than British Ministers. No Swiss Minister can step in to stop a British bid as my right hon. Friend could if he thought that he was jusified in using his powers. It is Swiss practice which differs from ours, but only in degree. It is not unique to Switzerland and unknown in the United Kingdom. Countless British companies have a similar structure for one reason or another. Is anybody saying that no private company should ever be allowed to make an acquisition without a referral? What about Great Universal Stores, Trusthouse Forte, P and O and the National Freight Corporation? Their capital structure is such that. as with the Swiss, it protects them from bids.
What then is this argument that we should make a reference on the grounds of so-called reciprocity" Should we refer to the MMC any bid made by a company which is bid-proof? Does that include all those British companies? I have never heard that asserted, but it would be an interesting proposition and we shall hear whether any hon. Member advocates it. I do not think that that is being asserted. Some of my hon. Friends, understandably influenced by their Yorkshire or Birmingham connections, are saying, "You can't refer them all just because there is no counter-bid, but you should refer them when it is a foreign company that has this structure against which you cannot make a hid." I do not believe that that makes any sense or depicts a rational monopolies picture.
Even when my hon. Friends say, "Of course, we realise that it shouldn't be like that, but it would influence the Swiss position", I do not understand that. The desire to help the Swiss improve the undesirable nature of its stock exchange practice is deeply moving, but not the main motive of those who argue in that way. Underlying that is the belief that somehow we shall influence the Swiss to change their practice if we refer this bid for a chocolate company to the MMC. That rather assumes that if we refer the bid to the MMC it will find some ground for overruling the bid, but neither the director general nor the Government are clear what that would be. The argument is not sustainable when one thinks it through. To react in that way to this particular bid will not have the slightest effect on Swiss practice. It is an extraordinary way to try to go about altering Swiss practice. For those reasons, I do not believe that there is any serious point in reciprocity.
The final major point that will undoubtedly be raised is the European dimension to the problem. So far I have 863 never understood clearly what people think that is. It is certainly true that the approach of 1992 combined with the booming state of our economy makes this look a good place to make money and is attracting inward investment. That is to be encouraged and it must be our aim to acquire a higher share of that than our European partners. It is also true that in the long run we shall no doubt look at a European-wide merger and competition policy as the new market develops. We are not ready for that yet, but we are taking part in the discussions on it.
I trust that no hon. Member will assert that the Common Market will be a protectionist Common Market or that the British should intervene on the European front, saying that non-EC bids should suddenly all be subject to some new restrictive EC policy. That would be a recipe for encouraging the decline of the European economy. We have a strong interest in maintaining and encouraging an open international flow of investment. 1992 will bring more of that to the United Kingdom. If our market is more open than that of the French, the Germans, the Belgians and so on, it will be an advantage to us.
Where does that leave us in this case? It is a straightforward takeover bid and it should be decided as all others are—by the shareholders considering the best interests of Rowntree. The fear that has been aroused among the work force is wholly misplaced. Some hon. Members have already intervened to point to the absurdity of claiming that a company will go to this length to acquire a major manufacturing base in the United Kingdom simply to close it down. The idea that rationalisation is more likely in the case of an acquisition by a foreign company that has rather different products, albeit chocolate, than by a British company operating in the same market with many more similar products is misplaced. All these are absurd arguments which are raising needless fears.
Earlier the hon. Member for Dagenham was not so certain. He asked why the bid should not have been referred to the Monopolies and Mergers Commission to be tested. That would have caused delay, uncertainty and rising alarm. At one point he was complaining about the effect of delay. He said that waiting for the advice of the director general allowed the share price to go up because people thought that there might be a reference to the MMC. Who raised the bogey of the reference to the MMC? It was being urged by Rowntree and by the Labour party. If it had the effect on the share price that the hon. Member for Dagenham claimed, it was caused by those like himself who were agitating for a reference to the MMC. To duck the issue and say that we should have referred the bid to the Monopolies and Mergers Commission just in case is absurd.
The advice of the hon. Member for Dagenham is not as bad as the appalling investment advice given by the leader of his party to Rowntree workers. It was unattractive that the Leader of the Opposition should lecture Rowntree workers about whether they should sell their shares. The reaction of the trade union and of the work force in York, Halifax and elsewhere has been more sensible than that of the Labour movement. The unions are discussing the matter seriously. They are putting their views to those making the bid and they are making representations to the shareholders. That is how the matter should be resolved. 864 We should leave it to take its course. I do not believe that there is any case for taking a political decision to refer this to the MMC in the belief that a response to the kind of lobbying to which the hon. Member for Dagenham has been victim is a more sensible way of sorting out the problem.
§ Mrs. Alice Mahon (Halifax)The rather arrogant contribution of the Chancellor of the Duchy of Lancaster, which trivialised a serious debate affecting 3,000 of my constituents, exposed the Government's total lack of a coherent policy for industry. It equalled in callousness only the refusal of the Secretary of State to intervene or to do anything to allay the fears of people in my constituency. The message came across loud and clear that the Government could not care less about British industry and the people who work in it. The message has been clear—shareholders' greed and short-term interest rule. In the near future, we will see a repeat of what happened in the early 1980s, when in my constituency thousands and thousands of manufacturing jobs were thrown away.
I should like to take the Chancellor up on his latter remarks about the unions. The trade union members who decided to plead for a friendly takeover were doing so out of sheer desperation. They were not trying to accommodate the Government or big business.
The disgraceful statement by the unelected Secretary of State for Trade and Industry that he did not see any reason to be concerned about jobs will be long remembered. If that cannot be used as a criterion to protect jobs in all constituencies, I wonder what the Secretary of State thinks should be a criterion. It is ironic that just over 12 months ago I made my maiden speech on manufacturing. I pleaded with the Government to formulate a policy and to take a responsible attitude to the thousands of people who work in manufacturing. We have had the answer in recent weeks.
This is the tip of the iceberg. I am in the unfortunate position of representing a constituency where takeover and merger have already reared their heads. With respect to my hon. Friend the Member for Dagenham (Mr. Gould), I cannot think too kindly of Sir Hector Laing and his utterances, because the events of recent weeks have shown that he is not a friend to industry. The Chancellor of the Duchy talked about inward investment. Sir Hector Laing and United Biscuits have singularly failed to make inward investment in Halifax. We are faced with the imminent closure of a factory and the loss of 1,000 jobs in KP Foods due directly to the fact that United Biscuits feels that because of 1992 it has to slim down to be more competitive. Yet the factory in Halifax increased its profits last year; it is a profitable factory and there is no good reason to close it.
However much the Chancellor of the Duchy trivalises the matter, from hard and bitter experience we are concerned when the headquarters of a company move out of the country. We know that, in any period of contraction, the so-called branch factories in other countries are the most vulnerable, and it becomes a case of out of sight, out of mind. The Chancellor of the Duchy should tell the House what his policies are for manufacturing.
Jobs will disappear not just in towns like Halifax, which the Government seem to have abandoned totally, but also 865 in the so-called golden triangle of the south-east, as 1992 approaches. The Minister should tell the House what he intends to do about it. It will cost him dearly because that is where much of the Government's majority comes from.
I have talked to trade unionists and to people who work in the industries which will be adversely affected. People are beginning to understand the shallowness of a Government who allow a free market to decide whether they will have a right to work or whether they and their families will have to exist on benefit, without the right to work in the foreseeable future.
Then there is the almost cavalier way in which the City talks about this devastating decision. The aggressive term "dawn raider" is understood now in Halifax, because two more companies will shortly he shedding labour. The Reliance hosiery factory, which is part of the Corah group, is holding its breath. In Leicester, 600 jobs are to go and there will be up to 60 more redundancies this summer in the factory in my constituency. Coloroll is breathing down the neck of one of the last carpet manufacturers in Halifax. This is all because of the merger madness of a few wealthy people who want to make a lot of money and who do not care about anyone else.
All this is happening in spite of the fact that Halifax tried to drag itself up. We have been held up by Conservative Members as a model of ingenuity and entrepreneurial spirit. The Prime Minister praised us to the hilt recently when she paid a visit—albeit a clandestine one—to Halifax. She did not inform anyone that she was coming, but sneaked in and out. She held up Halifax as the focus of the long-term partnership of business with the community, launched with royal patronage and embraced with enthusiasm by everyone. We feel betrayed. Some of us were not taken in, but the vast majority will not be taken in again by candyfloss schemes and people like Sir Hector Laing who profess to care about the community.
The Secretary of State and the Chancellor of the Duchy could have helped. They could have taken their responsibilities seriously. God knows, they are paid enough and they have enough privilege in their position. But they have decided not to do anything. The Chancellor of the Duchy has decided to abandon industry. He says that there is no hope. All he did this afternoon was try to score cheap party political points.
§ Mr. BerminghamDoes my hon. Friend agree also that the Chancellor of the Duchy was perhaps a little economical with the truth when, in outlining the openness of British policy, as well as not allowing anyone to intervene, he refused to explain why the Treasury Solicitor was briefed to try to warn off the trustees of the Rowntree trust who seemed to oppose the bid?
§ Mrs. MahonIt seems to fall very much in line with everything that the Government do. I thank my hon. Friend for his intervention, which is now on the record.
In view of his performance in this debate, and because of his totally irresponsible attitude towards the work force, the Chancellor has forfeited any right to continue to hold his high office. He should do the honourable thing and resign.
§ Mr. Conal Gregory (York)For several reasons, Rowntree is an important company. First, it is a vital part of the manufacturing base in York. About 5,500 people 866 are employed there and that is one third of the city's manufacturing jobs. That is significant when one considers the reduction in jobs at British Rail Engineering Ltd. and the closure of Redfearn Glass in 1983, which once employed 1,000 people.
Secondly, Rowntree is important to the economy of Yorkshire. In that context, one looks not only at York but at Calderdale and Castleford. At Calderdale, 2,500 to 3,000 people are employed, depending on the season, and that represents an investment by Rowntree of over £20 million. Rowntree is the largest employer in Castleford, with 650 employees. The company has invested there in the largest chocolate-making factory in Europe and further development is likely.
Thirdly, the company makes an important contribution to the local economy. Rowntree has always encouraged its managers to participate in local affairs, whether in chambers of commerce, enterprise agencies or local schools. It maintains local charitable donations which are an example to any company. Specific examples could include the help for applied biology at York university and the Calderdale partnership of Business in the Community. Many examples could be given of Rowntree's commitment and philanthropy to the local community.
Fourthly, Rowntree has its world headquarters in the north of England and is one of six companies of similar size that are based there. Together, Rowntree and Cadbury account for just under 30 per cent. of world trade in confectionery. Finally and significantly, Rowntree employs just under 13,000 people in the United Kingdom confectionery industry. For those reasons if for no other, it is vital that we fully debate the Swiss bids for the company.
Referral of this case would have given a chance for these new issues, especially reciprocity and Rowntree's place in the market, to be given very careful thought. Secondly, it would have given time to review this test case on merger policy ahead of 1992, a matter to which my right hon. and learned Friend the Chancellor of the Duchy has still not fully addressed his mind. It would have given the Government an opportunity to sign the EC directive on mergers. These public issues have been raised by some of my hon. Friends and especially by the Community Member for York, Edward McMillan Scott, who is an example to his colleagues in the European Assembly. The Government continue to shy away from these issues.
In the short time available to me, I should like to speak about mergers and reciprocity. This is the first case that shows the European Community's vulnerabilty in promoting 1992 before it has the necessary framework.. I believe strongly in Europe and in Britain's place in it. It is an integrated trading bloc that is a natural market, and 1992 poses a challenge. Some British companies, such as Rowntree, are ready for it but some Governments are not. Britain has a useful strategy on mergers within the United Kingdom, but our nation has been slow in pushing for a European Community strategy.
If we are to remove the tariff barriers and other obstacles to free trade in the EC, our commitment must be mirrored by good bargaining. Aggressive bidders know that they are unlikely to succeed elsewhere in the European Community. The Swiss are particularly hostile because of their concern about exclusion from the Community. If we do not have a clearly defined policy on mergers that takes account of the size of companies, their share of the market and especially their potential for brands, then good 867 European companies will fall prey to further hostile Swiss bids. The picking off of a major confectionery company will be but the first of the British ripe cherries; pharmaceutical companies and others will follow suit. Today it is confectionery—the Polos and the Smarties—but tomorrow it will be pharmaceutical brands. Despite good brands and good staff and its enviable record on research and design, Rowntree has become vulnerable to the Swiss.
The answer to the problem lies partly in the European Community, which has a proposed regulation on mergers. It would require prior vetting of mergers where global turnover was in excess of £700 million and where the market share in the Community exceeded 20 per cent. Two states, Britain and France, have resisted that mergers policy. For five years, both have resisted a wider merger policy. If such a policy had been in place before these hostile bids occurred, the competition policy and reciprocity could have been examined by the Commission.
That brings me to the second vital area—reciprocity.Britain has a tradition of free and fair competition. We are a trading nation founded on free trade and not on one-sided cricket. We are still waiting to see examples of United Kingdom companies that have succeeded with a hostile bid in Switzerland. I would be quite happy to accept an intervention by my right hon. and learned Friend if he can give one example of a United Kingdom company that has succeeded with such a hostile bid. I shall be more generous and invite him to give an example of any European company that has succeeded with a hostile bid in Switzerland. I see that his special advisers are singularly unoccupied in scribbling an answer to that question, because there is no answer. They cannot find an example of a company that has succeeded in such a bid.
§ Mr. Kenneth ClarkeWould my hon. Friend say that any company which is proof against a hostile bid should not be allowed to take over another company? Would he apply that logic to companies such as Trusthouse Forte, P and O, Great Universal Stores and so on? Would he apply it to companies of any nationality? How does he imagine that the Monopolies and Mergers Commission would deal with the flood of work that would result from referring every such case?
§ Mr. GregoryIn cricket, there are certain rules and regulations which the two teams use when they go out to play. If my right hon. and learned Friend will bear with me, he will see that in this case we are playing with different rule books and are not comparing like with like. I can find no instances of such bids succeeding in Switzerland; that is partly because it is almost impossible for a United Kingdom bidder in Switzerland to have shares registered by the Swiss banking fraternity.
The Swiss have recognised their one-sidedness in this matter. To their embarrassment, they brought forward in February 1983—at about the time when we were looking at European merger policy—a Bill to restrict Swiss companies from blocking foreign shareholdings and hence foreign bids. That legislation is still lurking in the Swiss legislature. Why were these wider issues not considered by the Office of Fair Trading on the referral of the Nestlé bid for Rowntree?
868 I would be less than honest with the House if I did not address the question why the Labour party has tabled the motion. The Labour party has been diversive and unhelpful in this discussion, and I shall give two illustrations. The citizens of York have experienced the appalling effrontery of a Socialist Front-Bench spokesman coming to our city to urge Rowntree to throw in the towel. York needs no lectures from the Socialists. It was incredible that such a call should have been made, particularly when the work force were on holiday.
Furthermore, the Socialists in Europe chose to vote down a debate on Rowntree and instead discuss the subject of the middle east. That shows the polarity on this matter and shows that the Socialists are using the example of Rowntree, yet are not consistent in their arguments.
§ Mr. Eric Martlew (Carlisle)rose—
§ Mr. GregoryLet me move to another issue that should be addressed, that of small shareholders, many of whom have inherited shares or earned them as a result of their work for Rowntree. I received a letter from Edinburgh which said:
A takeover will have … substantial effects on a family which we do not want and are not in a position to take planned action within normal tax legislation following the sale of shares i.e. liabilities to capital gains and subsequent inheritance tax. These arise because the main contenders are Swiss and are unable due to Swiss legislation to offer voting shares to the value of their offers. The cash received by my father on compulsory sale will therefore be liable to capital gains assessment and as a result of his age the remainder of the family will suffer by the imposition of inheritance tax as the added sale value arising from the bid increase may just take his estate above the exempt limits.It therefore appears to the family that the Government has a vested interest in the success of a bid from the Swiss in raising substantial amounts of additional taxation from long term pensioner interests. On a rough calculation, in my father's case, a bid of £10 could be worth as little as £6 a share. The Government taking £4.Those remarks were made with some concerned detail about an individual pensioner on behalf of his family.Finally, now that Suchard has made a bid for Rowntree, will the Government recognise the wider implications and refer the matter to the Monopolies and Mergers Commission? The breathing space would allow Britain to sort out its true mergers policy, its long-term considerations to the north of England as a site for manufacturing headquarters and its commitment to this country as the capital fount of major industry rather than to allow a major firm to become the satellite of a Swiss raider.
§ 5.2 pm
§ Mr. Malcolm Bruce (Gordon)The hon. Member for York (Mr. Gregory) has put his finger on a number of pertinent issues relating to the bids for Rowntree. He, I and many others still find it incomprehensible that no reference has been made to the Monopolies and Mergers Commission so that the issues can be examined.
It is worth referring to the Blue Paper that the Chancellor is so proud of because it helps us to develop an argument as to why a referral should have been made. Under the Fair Trading Act 1973, the enhancement of market share by a takeover and merger is a factor. The paper specifically states: 869
Actual or proposed mergers (including partial shareholdings) qualify for consideration under the Act if they create or enhance a 25 per cent. market share or if the value of the assets taken over exceeds £30 million".Rowntree currently has 26 per cent. of the United Kingdom confectionery market, so it seems that there is justification for referring any bid by any other confectionery company based in the United Kingdom, the European Community or elsewhere. The Nestlé or the Suchard bid would raise the share of the combined company to between 28 per cent. and 29 per cent. of the United Kingdom market.The hon. Member for York was right to point out that that is the only area in which the Government have an established policy. They have been trying to block any development of a European-wide mergers policy, while at the same time using an expensive advertising campaign to tell businesses to be ready for 1992, but not listening to their own propaganda. Clearly the Government have no intention of preparing a policy for 1992. If Suchard were to take over Rowntree, its combined share of the EC market would be 24 per cent. A merger with Nestlé would produce a share of 20 per cent. Both would be over the agreed limit for referral under the European rules, which the Government have refused to support. That is an immediate sign that under rules currently being discussed within the European Community that bid would be referred, yet the Government have refused to do so.
The Secretary of State cannot hide behind the fact that the Office of Fair Trading has no grounds for referral—as he has tried to do—because the legislation makes it absolutely clear that:
The decision whether or not to refer a qualifying merger to the Monopolies and Mergers Commission for investigation is the Secretary of State's.He does not have to take the advice of the Office of Fair Trading.In the Blue Paper the Government stated that those people who believe that other issues such as employment, regional issues, research and development, highly leveraged bids and foreign takeovers including reciprocity should be taken into account should be heeded. Nevertheless, they concluded;
Normally, therefore, the decision should be left to the market.Clearly, that is the line that the Government are taking, as the Chancellor of the Duchy has told us today. When the Secretary of State announced that there would be no referral, he said that the shareholders should be left to decide the issues raised.That position represents an abject surrender to the stock market, and a refusal by the Government to accept responsibility in such affairs. Shareholders cannot be expected to decide whether the headquarters of a company in York is a critical factor, nor can they be expected to decide about employment practices or any other factors. They are certainly not interested in whether the bid will be in the consumers' interest. Their interest is how much money they will make on the deal, and that is all they can be expected to consider. The Government are refusing to accept their responsibility and have shown a failure to understand that their commitment to free enterprise is not valid unless they are also committed to ensuring that it is fair.
§ Mr. LeighDoes the hon. Gentleman agree that, with United Kingdom listed companies deriving some 45 per cent. of their profits from foreign operations, there is 870 nothing for this country to gain by indulging in economic nationalism? If the answer to that is yes, how does the hon. Gentleman equate his comments with the traditional stance of the Liberal party on such matters?
§ Mr. BruceI believe that an open market is a desirable proposition that should be encouraged, but it is important that the same criteria apply to all the players in the market. The hon. Member for York made that point quite effectively. The argument that I shall develop is that equal opportunity to participate on the same basis is not available.
The next issue that must be tested is what motivates a takeover in the first place. The DTI's own paper shows that the motivation is very often that of unsuccessful large companies seeking to take over their irritatingly successful competitors, which are often smaller and more vulnerable. Submissions from Rowntree prove that point, as its brand shares are increasing and Nestlé's brand shares are declining dramatically within the United Kingdom market. There is plenty of evidence. Research carried out by the DTI reveals that, even in terms of improved profitability after merger, the general performance was poor. It makes the final point that that is
a weak test of efficiency gains because mergers may produce higher profits through the exploitation of increased market power.In other words, very often the attempt to secure a degree of monopoly is the prime motivation for mergers, and that is why a reference to the Monopolies and Mergers Commission is normally desirable for mergers on such a scale.The DTI paper acknowledges one factor that is highly relevant in this case—the issue of reciprocity. The paper says:
One consideration that may be relevant in some cases is the extent to which United. Kingdom companies have reciprocal freedom to acquire companies based in the home country of the prospective acquirer.The Chancellor of the Duchy and the Secretary of State have chosen to dismiss that argument as not proven and not even worth investigating. The Government stand indicted in that respect.There is no doubt that Swiss companies are not open to hostile takeovers as are United Kingdom companies. The Chancellor of the Duchy acknowledged that the practice is different because the structure of the two economies is fundamentally different. Switzerland is outside the EC. It does not contribute to the EC, but it is anxious to participate in our single market after 1992. It operates a system that makes it extremely difficult for us to take a stake in its economy.
I shall quote somebody who may have more authority with the right hon. and learned Gentleman—Lord Plumb, the President of the European Parliament. He said:
I met the chairman of Rowntree plc and I was most concerned by what he had to say. Trans-national mergers will become much more common in the next few years, a fact well recognised by Rowntree's directors, but it must be remembered that Switzerland is not part of the EC and does not itself entertain hostile bids from abroad for its companies.It appears that the Government are at odds with Lord Plumb on this issue.The House should dwell on the simple fact that Switzerland is essentially a banking economy. Manufacturing is not its life blood. It invests in overseas companies and uses the banking community. [HON. MEMBERS: "Provide evidence."] It is in the interests of the 871 Swiss, having made such investments, to ensure that they are protected. That is why they restrict the voting rights on shares—it makes sense for them.
Because the Swiss attract so much in deposits from overseas, they have access to investment funding which is not so readily available to British or EC-based companies that must ensure that they have shares with which to raise money on the stock market. The two economies therefore follow divergent paths.
There may not be conclusive proof, but there is sufficient evidence to warrant closer investigation into the extent to which the partnership is equal. This affair, and one or two other recent ones, such as the merger of British Airways and British Caledonian, which was badly mishandled by the Government and disgracefully handled by the MMC, suggest that it is time that rather more thought was given to what criteria should be applied when takeovers are proposed.
The Department of Trade and Industry's evidence shows that the motivation for merger is often the desire to acquire insulation from competition, not the desire to exploit it. The criteria for a reference to the MMC should therefore be changed so that, when there is a hostile bid, the onus is on the bidder to prove that the merger is in the consumers' interest. At the moment, the company being bid for has to prove that the merger is anti-competitive. That is always much harder to prove.
The Chancellor of the Duchy dismissed regional considerations in a cavalier fashion, but they are important in United Kingdom and EC terms. The right hon. and learned Gentleman could at the very least acknowledge that, after referral, even if the bid goes ahead, it must do so on the basis of assurances about Rowntree retaining its corporate headquarters in York and substantial financial autonomy.
I find it extraordinary that, in this modern and diversified age, the Government still insist that the shareholder is sovereign. When a company of this size is involved, the work force should be taken into account. I have consistently argued that workers are entitled to be consulted on strategic considerations. If a company that wants to take them over cannot persuade them that there is an attractive and positive future, that should be taken into account.
The fact that the Swiss are making the bids and that they are outside the EC is relevant. It is not right that they should be able to sit behind the barricades and pick ripe cherries. By failing even to refer the matter so that it can be evaluated properly, the Government are advertising to the world the fact that there are ripe and juicy pickings in Britain just waiting to be plucked.
An open market brings benefits, but it is vital that stall holders and customers know that there are rules of fair competition and that they will be enforced effectively. Reciprocity must be comparable. The onus should be on the predator to prove that there is an advantage to the consumer from merger, and regional considerations and the rights of the work force should be taken into account. I am not saying that any one of those issues should block a bid, but they should be taken into account. The fact that the Government have brushed them all aside and are letting shareholders, the market, the City and institutions 872 decide shows that they are unaware of their responsible role, which is to ensure that the market operates freely, fairly, honestly and openly.
§ Mr. Michael Grylls (Surrey, North-West)I hope that hon. Members will not challenge my free market credentials. I do not want to waste the time of the House going through them, as this is a short debate.
We have to consider some of the wider issues and the paradox of how to regulate a market to ensure that, while it is not a total free-for-all, it is relatively free and fair. All Conservative Members believe ultimately in the free market, but we recognise that there has occasionally to be regulation, even when we are deregulating when regulation is unnecessary. It is a difficult hurdle, but we must cross it.
Few hon. Members would say that there should be a free-for-all and absolutely no regulation in competition policy. I hope, however, that we all agree that there should be a minimum of regulation to establish as fair a market as possible. That must apply to Britain and to the EC.
The debate is not about challenging international investment, which is clearly good for countries in the free enterprise system. As my right hon. and learned Friend the Chancellor of the Duchy said, Britain has benefited enormously, is still benefiting and will continue to benefit from investments we have made in countries such as the United States and in Europe.
I hope that we are not challenging whether there should be foreign investment here. It is obvious that we have benefited from jobs and wealth creation which are the result of overseas firms investing here. Our firms have gone into Europe and created wealth and jobs.
My hon. Friend the Member for York (Mr. Gregory) has understandably put up an honourable defence of an important company in his constituency. Few hon. Members who try to look after what they perceive to be the interests of their constituents would criticise him for that. Nevertheless, I must say with the greatest possible respect that, bearing in mind the wider interests, the issue of Rowntree is not really about regional policy or even about creating jobs, because one can make a strong case, on the basis of Nestlé's record, suggesting that jobs in York will not be damaged.
My right hon. and learned Friend said that ultimately the issue was competition. It is the duty of a Secretary of State for Trade and Industry to consider the effect of any proposed merger on competition in a market. That must be the balance of his judgment. On the facts presented to him, it probably was not possible to make a sound case for referring the merger of Nestlé and Rowntree, as it had such a minimal effect on the increased concentration of the confectionery market in Britain.
We should be thinking about how we deal with concentration in the EC market, consistent with wanting, encouraging and believing in foreign investment. The United States has an anti-trust policy. Many of our companies wishing to invest in the United States have had to get round it. Many have failed because, under the anti-trust legislation, the Americans have said no to British or foreign investment that was against the interests of competition policy.
The Japanese have no tradition of company takeovers. There have been few examples of overseas firms buying into Japan, but no doubt that will happen in the future and 873 Japan will have to consider its competition policy. The third industrial bloc in the world, the EC, will, as we approach the magic date of 1992, have to think about concentration in each of its market sectors. We cannot buck that issue.
My hon. Friend the Member for Amber Valley (Mr. Oppenheim) has mentioned 1992 and the fact that we are now in the Common Market. We must try to ensure that each market sector is not so dominated by giants that it becomes difficult for new entrants to keep the market sector alive.
§ Mr. Phillip Oppenheim (Amber Valley)I realise that the mere mention of 1992 elicits knowing nods from everyone, but I do not see what it has to do with the Rowntree takeover. Surely the European confectionery market has been liberal and relatively free for some time. One does not have to acquire an EC confectionery company to gain access to EC markets.
§ Mr. GryllsI do not necessarily disagree with my hon. Friend. I was trying to broaden the debate—the terms of the motion are fairly broad—into competition policy of the EC as a whole and what we must do in each market sector.
The confectionery sector in the EC is already fairly concentrated. Six major firms—three from Great Britain and three from the continent—control 70 per cent. of the confectionery market. I am not saying whether that is right or wrong, but there is room for judgment whether six companies controlling 70 per cent. of the market is excessive concentration. We shall have to think about that matter in future, as mergers take place. If the Rowntree merger takes place, there will be not six but five firms controlling 70 per cent. of the market. We must ask, should that be allowed?
Ministers will have to consider a merger directive when they attend a meeting of the Council of Ministers on 22 June. I detect—I congratulate the Government on this—a movement from the rather negative attitude that earlier British Governments, including this one in their early years of office, took to the merger directive. They said, "We want to run it our way and do not want anything to do with a European directive." That change of attitude is welcome and sensible.
The Economic and Social Committee of the European Community has given its opinion of the latest edition of the merger directive that has been laid by Mr. Peter Sutherland. I shall quote from it because it clearly spells out what we must consider if we are to maximise competition and achieve success in the market. The opinion of the Economic and Social Committee says:
In the Community itself the interdependence of economies which has developed makes it necessary at least to consider the European dimension of markets in assessing planned concentrations. In its Opinion on the Commission's 15th Report on Competition Policy the Committee stated that `The continued existence of national economic areas is an anachronism when it comes to achieving a sufficient degree of real competitiveness'. The Committee continued: 'The smallest possible geographical yardstick is now the Community, and even then the world dimension cannot be disregarded.'''I passionately believe that there must be maximum competition in the different sectors of the EC in which our businesses operate. Indeed, it is vital to the success of the 874 European Community as a market that that should happen. We should not allow over-concentration in any market sector.If I might be so bold as to leave my right hon. and learned Friend with a message. it is that we must consider this matter in a European way. We must consider each market sector and avoid excessive concentration. If not, it will militate directly against the successful work that the Government, above all, have done in encouraging the creation of new businesses and jobs. If the market is over-concentrated, new businesses will not start up. That is not only my view but that of most people in the European Community.
The economies that have been most successful in the past, such as Germany and France, have been conscious of avoiding over-concentration. Germany, partly because of her history, took a strong view after the war that she did not want concentration of her industry. Since the war, Britain has seemed to go the other way. We have allowed growth by acquisition rather than organic internal growth in our companies. I hope that that will change, but we must watch it and consider every market sector.
If economic progress is anything, it is surely the process of selection from alternatives. We must ensure that there are sufficient alternatives in each market for the public to have a choice. I hope that, when our Ministers attend the Council of Ministers' meeting on 22 June, they will have an open and constructive mind and try to agree a merger directive. It is no good going to the meeting half-heartedly and saying, "We want what we have always had in this country." That will not do. We must look anew at the Community as a market and ask how we can maximise competition. If Ministers do that, we shall achieve the right directive and strengthen the European Community business market for the good of future generations.
§ Mr. Doug Henderson (Newcastle upon Tyne, North)I am grateful for the opportunity to take part in the debate. I have a strong constituency, union and, I confess, consumer interest in this matter.
Other Labour Members have referred to reciprocity and competition, so I shall not say anything further about them. I should like to discuss employment. When we initially debated this issue on 25 May, the Chancellor of the Duchy of Lancaster said there were no employment grounds that justified a reference in this case. He has repeated that today. It is disingenuous of the Chancellor to argue that case because, in answer to the private notice question on 25 May, he said that open markets were best. I put it to the Chancellor—I think that some of his colleagues have already started to put it to him—that the real position of the Government is that they believe that there are no employment grounds in any case that would justify a reference to the Monopolies and Mergers Commission.
If the right hon. and learned Gentleman believed that the implications for employment were a legitimate reason for a reference, he would recognise that there are 13,000 jobs at risk in the industry, mainly in the north of England. There are 1,000 people in my constituency, managers arid workers alike, who believe that the takeover bid by Suchard or Nestlé would put their jobs at risk. The right hon. and learned Gentleman would also recognise that all those people have been left out in the cold.
875 I can clarify the latest union position. The main union, the General and Municipal Boilermakers and Allied Trades Union, and the union in Halifax, the Transport and General Workers Union, take the same view. They want Rowntree to run its existing production plants in the United Kingdom. They feel that they have been sold down the river by the Government. They have an obligation as a trade union negotiating committee to continue to discuss and negotiate with every potential buyer of the company. That has not changed in the past week, and it has been the union position throughout. All the potential bidders have been asked whether they can guarantee the jobs and a headquarters in the north of England. Those bidders have not been able to give such a guarantee.
I hope that the Chancellor will recognise the importance of a reference to the Monopolies and Mergers Commission. He said that there is no need to refer the issue, because the decision of the commission would be to endorse a possible takeover. He should put that to the test. All the workers in the industry want that to be put to the test.
§ Mr. Keith Vaz (Leicester, East)Will my hon. Friend give way?
§ Mr. HendersonI cannot give way to my hon. Friends, because I do not intend to give way to Conservative Members. I must be fair.
Surely the workers have a right to put their case. Is it not their efforts, skill and expertise that have made Rowntree plc a strong company, with strong products, high productivity and improving profitability? It has doubled the profits in Europe in the past year and is now a sitting duck for all foreign predators. Workpeople in manufacturing companies up and down the country must be wondering whether it is their turn next. We need new legislation to give workpeople a say.
Clearly the threat to competition from increasing monopoly does not count with the Secretary of State. The same is clearly true in relation to the asset value, mentioned by the hon. Member for Gordon (Mr. Bruce). Where either of those conditions are met, in relation to the proportion of market share or in relation to asset value, the workers should have additional rights. Workpeople should be able to initiate a ballot among themselves to decide whether they should have a chance to have their case heard by the Monopolies and Mergers Commission. If it is good enough for workpeople to be compelled to have a ballot when industrial action is contemplated, it is good enough for workpeople to have a ballot when capital action is threatened, as in this case.
I want to make it clear that I am not arguing a syndicalist case. It is not a question of the workers having a right to determine what happens ultimately, but their case should be heard.
There is no doubt that the Government have misjudged public feeling. The workpeople are against the takeover. The president of the Confederation of British Industry, Mr. Banham, has stated publicly that he believes that there is a need for an investigation so that all parties can put their case. Consumers, in their correspondence to local newspapers up and down the country, are clearly in favour of a reference so that the arguments about competition 876 may be heard. Also, 60 Conservative Members have signed an early-day motion saying that they believe that there is a need to have all the arguments out in the open.
I urge the Government to bury their dogma, recognise the depth of opposition to what they are doing and give all parties a chance to put their case to the Monopolies and Mergers Commission.
§ Mr. Neil Hamilton (Tatton)I listened with care to the hon. Member for Dagenham (Mr. Gould) when he opened the debate. Unfortunately, he has just nipped out for a Kit Kat but I am sure that as soon as he sees my name on the screen he will be back. He had quite a nerve to castigate the Government for a lack of clarity in their competition policy. We had no guidance from him as to what criteria the Labour party, if in government, would employ in deciding whether to refer a case to the Monopolies and Mergers Commission. We know that the hon. Member for Dagenham is the architect of the perestroika within the Labour party at present and the only certainty about its policy is that what was policy yesterday is not necessarily policy today and what is policy today may not be policy tomorrow.
The hon. Gentleman is desperate to create a voter-friendly Labour party to bring it back into government. We know that there is a sort of Boston tea party of dogmas being ditched overboard. Before the previous election the Labour party had to accept that it would still have to support the sale of council houses. There were certain trade union reforms that it could not repeal and it had to accept that nationalisation was a dead letter. I believe that it has now announced that our tax cuts will not be substantially reversed and that its unilateral policy has been dumped. Also, in spite of the hon. Member for Dagenham's remarks about British sovereignty being lost, the Labour party has now been forced to accept that we will remain within the EEC. Who knows? It may come to believe in a free movement of capital and inward investment, like the Labour party in New Zealand.
The hon. Member for Dagenham is in a slightly delicate position. He based his speech on the complaint of foreigners coming to Britain to take over cherished national institutions. It so happens that the hon. Gentleman was born far from these shores and I believe that he may have some designs on taking over the Labour party. He certainly wants to try to improve its performance and make its product more saleable. The list of changes in policy that I have just given shows the benefit of the hon. Gentleman to the Labour party in the intellectual free flow of capital. That is exactly the sort of argument we are employing in relation to this bid and the policy in regard to takeovers by foreign companies. I doubt whether the hon. Member for Dagenham could make the Labour party as palatable to the British electorate as Rowntree's products are to me.
I wholly endorse the decision of my right hon. and learned Friend the Chancellor not to refer the proposed takeover to the Monopolies and Mergers Commission. That decision is a welcome stand against arbitrary political interference in industry for chauvinistic reasons. I welcome the emphasis on competition that has now succeeded in our merger policy. It is certainly a great change from the disasters we have seen in the past. It is not long ago that Labour Members were doing everything they could to 877 encourage mergers and industrial reorganisation, co-operation and so on during the 1960s. Big was certainly better in those days. We learned something from our disastrous experience then. It is equally wrong for the Labour party to take the dogmatic view that it now takes.
The Government have been quite correct to listen to the Director General of Fair Trading, Sir Gordon Borrie, who is certainly not one of our friends in the City or a political confederate of this Government. Indeed, Sir Gordon Borrie is on record as saying that he doubts the value of mergers in the first place because they do not
necessarily bring about the most efficient deployment of and development of the assets which … shares represent.In spite of Sir Gordon's political views, which may be different from ours for all I know, and in spite of his doubts, he has not seen fit to advise the Secretary of State to refer the proposed merger to the Monopolies and Mergers Commission.As has been announced, there are no competition grounds for referring the bid. The hon. Member for Dagenham was quite wrong to say that Nestlé sought to eliminate a powerful rival in confectionery. The figures belie that assertion. Cadbury has 30 per cent. of the market, Rowntree 26 per cent., Nestlé only 3 per cent. and Suchard only 2 per cent. How can Nestlé's 3 per cent. constitute a powerful threat to Rowntree or vice versa? Of the 40 leading brands of chocolate and confectionery, Rowntree has 11 and Nestlé and Suchard have only one each. Given those figures, how can the powerful rivalry referred to by the hon. Member for Dagenham arise?
The truth is that Nestlé is a broadly based food product company whereas Rowntree is principally a confectionery company. Those two elements—to some extent contrasting elements—fit neatly together. I express no views on the likelihood of the merger taking place or as to whether it would be good or bad for the shareholders or employees of the company because I do not know enough about it. I would merely say that the Nestlé company has been in this country for about 120 years and operates with considerable responsibility. It employs 10,000 people in this country—some of them, I believe, in the constituency of the hon. Member for Great Grimsby (Mr. Mitchell), who is sitting on the Opposition Front Bench.
Let us consider the regional argument. I understand that Nestlé has just over 4,000 employees in the south, nearly 4,000 in the north and more than 1,000 in Scotland, so the majority of Nestlé's employees are not in the south but in the north. Why should we fear for jobs if Nestlé is successful in its takeover bid? As an hon. Member representing a constituency in the north-west, I have no fear of multinational companies. Thousands of new jobs have been created in the north-west—in the county of Cheshire in particular—with Marks and Spencer, Shell and Barclays bank all coming to our part of the world because they know that the quality of life is better and that one can have a higher standard of living because one does not have to spend so much on property.
The brands that Nestlé sells in this country are well known to everyone, although people may not know that Nestlé owns them. Findus, Crosse and Blackwell, Sarson's, Libby's and Carnation are all well-known brands. On the basis of Nestlé's experience in this country, there is no reason to believe that if it succeeded in taking over Rowntree it would close down operations or move factories and products elsewhere. Being one of the most advanced and successful capitalist economies in the world, 878 Switzerland has very little unemployment. Therefore, I fail to see how one can argue that jobs would move to Switzerland; there are no unemployed people to take on the new jobs. I hope that in due course we shall overtake Switzerland as one of the most advanced capitalist economies in the world.
If hon. Members had to choose a drinking water to consume, would they choose Perrier or Ashbourne? If one took the chauvinist view of Opposition Members, one would choose Perrier because Perrier is owned by a British company. One would not choose Ashbourne water because, with due respect to my hon. Friend the Member for Amber Valley (Mr. Oppenheim), it is owned by a foreign company, Nestlé. That shows the absurdity of Labour Members' chauvinist arguments.
As for the argument about reciprocity, we know very well that Ministers in Switzerland do not have the powers that the Secretary of State for Trade and Industry has to block mergers and prevent takeovers. It is true, as a matter of practicality, that companies in Switzerland by and large protect themselves against hostile takeover bids. Most European countries erect barriers against hostile and unwelcome takeover bids. I believe that the Leader of the Opposition is erecting barriers against unwelcome and hostile takeover bids at the moment. I believe that shortly one will have to have 25 per cent. of the voting shares in the Labour party in this House before one can have the temerity to stand in an election for the leadership. That shows the hypocrisy of Labour Members.
§ Mr. HamiltonMy hon. Friend the Member for Watford (Mr. Garel-Jones) points out that the Leader of the Opposition is foreign but, as we are all three Welshmen, we all suffer from that disability.
Takeovers and the threat of takeovers are a vital part of the competitive process and can be a significant part of the engine of growth of a capitalist economy. We have been seduced by the arguments that came out of the Cambridge school of economics in the 1930s about perfect competition and the static equilibrium analysis. We have been led up a blind alley by that. Markets are a dynamic discovery process, as Professor Hayek and the Austrian school have pointed out. If monopoly profits exist, they are essentially temporary because if there are no legal barriers to entry into the market there is a stimulus to imitation and improvement. The threat of takeover, even if it is not realised, is another discipline leading to efficiency. Nearly all companies, regardless of their size, are susceptible to takeover bids, except perhaps the big oil companies or companies of the size of British Telecom. With reverse takeovers, even the large companies are no longer immune to the threat of being taken over.
I know that the hon. Member for Gordon (Mr. Bruce) speaks with some feeling about mergers and brings to the House a special and rather painful experience. In his experience, not all mergers are successful; they do not all live up to the prospects held out for them. I do not dissent from that. The hon. Member for Dagenham devoted considerable time to that point in his speech. He observed that not all takeovers increase efficiency and drew attention to a number of academic analyses to prove it. But that is not the point. Most important are the unobservable and immeasurable gains that come from the 879 threat of takeover as a spur to efficiency—the submerged iceberg of generalised efficiency gains in companies kept up to the mark by the existence of takeover bids.
In conclusion, I make three brief points. First, in competition policy generally, we should move away—I say this with respect to my hon. Friend the Member for Surrey, North-West (Mr. Grylls)—from the rather crude indicator of size of market and size of company towards a system that reflects the European practice of cracking down on an abuse of a dominant position rather than simply objecting to that dominant position. The use made of power rather than the nature of the power itself is the essential element on which we should concentrate.
Secondly, I believe that the Government in general are incompetent to devise—[HON. MEMBERS: "Hear, hear."] Labour Members had considerable experience of incompetent Governments when they were in office. Things have changed somewhat since. We recognise our limitations and, as Labour Members know, we are trying, so far as possible, to abolish government.
The Government are incompetent to devise a correct market structure for successful business. Markets are not perfect but they are less imperfect as controlling forces than government. Markets correct more reliably the imperfections in the economy. There is no evidence of which I am aware that the Office of Fair Trading, the Monopolies and Mergers Commission or the Government generally have made better decisions than would have been made if matters had been left to the market. We have had a huge collection of changing criteria underlying monopoly policy over the years. One minute the criterion is competition, the next it is reciprocity, then it is a regional consideration. Sometimes the criterion has to do with the person taking over. I object to people like Robert Maxwell, who is not averse to setting up barriers to taking over his company, which is based not even in Switzerland but in Liechtenstein. I do not hear much criticism of that from Labour Members.
My third and last point—[HON. MEMBERS: "Hear, hear."] I am listening to myself and I like what I hear, which is more than I can say when Opposition Members are on their feet. Notwithstanding the general point about the value of the threat of a takeover, companies should be allowed to defend themselves against takeover if the shareholders are willing to pay the price—something that happens in Switzerland. My hon. Friend the Member for Surrey, North-West made a good point about that the other day when my right hon. and learned Friend the Minister of Trade and Industry made his statement.
There can be a problem when a short-term drop in profits results from investment in research and development and in improving organisation and efficiency, the rewards of which may not be felt until some future time. At that stage, it is possible for a predatory takeover and the rewards of effort and entrepreneurship may not fall to those who deserve them. All manner of exotic devices have been invented to avoid that—golden parachutes, shark repellent, pacmac defences, greenmail and so on. I do not have time to explain that, but shall leave it to my hon. Friend the Member for Darlington (Mr. Fallon) who is more of a details man than I am.
Companies are restricted by the takeover code during the bid period. The inhibitions upon the takeover 880 mechanisms have some cost to society and to the economy in general, although that is justifiable. Contracts providing for substantial delayed compensation for managers are very much the vogue, which has been hugely to the advantage of Britain. People such as Sir Ralph Halpern can earn enormous amounts of money on the back of creating vast amounts of wealth to be generally distributed throughout the country. Indeed, I see a large number of Burton suits on Opposition Members. It would be wrong for such rewards to be seized by predators. If shareholders are willing to pay the price, we must ensure that uncertainty does not reduce the incentives.
The Government have made a correct decision. The concentration on competition is the essence of the case and the Government are absolutely right to reject the hysteria, chauvinism and xenophobia of the Opposition's economic criticisms.
§ Mr. Denis Howell (Birmingham, Small Heath)I shall not attempt to follow the speech of the hon. Member for Tatton (Mr. Hamilton), who was extremely selfish in the amount of time that he took.
I wish to declare a few interests because each of them is an aspect of the Rowntree case. I am a trade union-sponsored Member of APEX. All the staff of Rowntree and Cadbury Schweppes are members of that union, of which I was president for 12 years. Continuing consequences of great importance for Cadbury Schweppes arise from the debate that we are supposed to be having about Rowntree, but to which few hon. Members have addressed themselves. I am president of the European Movement and chairman of the Labour Movement for Europe. Serious criticisms of the Government can be made from that standpoint, although many of my hon. Friends will not share my enthusiasm for the European cause.
The Minister's speech was one of the most disappointing that I have heard for a long time. I can best describe it as a speech with a hole in the middle—the hole in the middle where we should have heard all the considerations that we expected him to deal with, but which he singularly failed to address. Other than financial considerations, he had nothing to say about the interests of the work force, the consumers or the national interest generally. He actually had the impertinence to say that the Labour party was taking the country back into the last century and, by implication, that the Government were concerned with the wider interests. In fact, the opposite is true.
A century ago, all that mattered in industry was the ability to make a profit, and everything was judged by that criterion. Over the intervening 100 years, Parliament has had to decide, in almost every conceivable way, that the interests of the work force should be protected by legislation and that it would be fundamentally wrong to allow the interests of the shareholders unrestricted dominance over the interests of the work force. Many of those who have held office in the trade union movement tried to achieve a partnership between the interests of capital and the interests of the work force. Those who invest their working lives in industry are as important as those who invest their capital.
The Prime Minister, on one of her high moral days, tried to tell us that the ability to create wealth was most important. Wealth is created by the work force applying 881 themselves to the tasks that they are employed to carry out. I do not object to the Prime Minister's comments, because I know that it is the working people who create the wealth, and they have done so for as long as most of us can remember.
The protective legislation that I mentioned must be examined during any takeover bid. Section 309(1) of the Companies Act 1985 states:
The matters to which the directors of a company are to have regard in the performance of their functions include the interests of the company's employees in general, as well as the interests of its members.The Government appear to be saying that during no part of the takeover process should someone have to prove that he intends to abide by the legislation of the land. The Terms and Conditions of Employment Regulations 1981 make it clear, especially in regulation 10, that there is a clear duty to protect the interests of working people during a transfer or takeover. I am not suggesting that Nestlé or any other company will not do that, but it must show that it intends to do so before any takeover is allowed.I accept that the Monopolies and Mergers Commission might not be the appropriate body to examine the takeover—that is certainly the Government's case. However, they cannot simply say that the considerations of the work force and the consumers cannot be examined by the MMC and will not be the subject of any statement or consideration by the Government. Their attitude is that the only criterion to be considered is the sale or the transfer of shares. I understand that, on the continent, takeovers do not arise from the transfer or sale of shares—the purchase of the company is the essence of continental legislation. That is much more sensible than the Government's policy. It recognises wider issues than simply the sale of shares. As the hon. Member for Surrey, North-West ( Mr. Grylls) said, competition policy is important and we should know what is happening.
Speaking as a long-committed European, I have some prejudice against Switzerland or any other country outside the EC trying to obtain the best of both worlds. They are trying to have it both ways, which is fundamentally wrong and something to which I object. It is the Government's dury to address that question.
I know all about 1992, and I share the Government's view of getting ourselves geared up for the single market. However, I am totally opposed to gearing ourselves up to compete in Europe in 1992 by allowing countries which will not accept the obligation of EC membership all the advantages of membership from a trading point of view. Yet that is the very situation which the Government appear to be allowing in this instance.
Many other Governments would not allow such a thing to happen. This morning, I was told by Mr. Dominic Cadbury, chief executive of Cadbury Schweppes, that when his company recently bought a firm in France, Cadbury was subjected to considerable questioning as to whether it would, as a British company, remain in membership of the EC. The French were concerned about the hostile bid to which Cadbury had been subjected succeeding, the point being that if the control of Cadbury Schweppes were to move from this country, as a member of the EC, to the United States, the French Government would have intervened in order to protect European interests. That is something our Government have not even considered, and of which they do not take great 882 account. The Minister's statement on the question of reciprocity was almost irresponsible, so far as British interests are concerned.
It is essential that the takeover be referred to someone, to examine the situation in this country in respect of mergers, monopolies, and hostile bids within the scope of expanding European policies, 1992, and world corn-petition policy; as we know, the world is, from a business point of view, shrinking all the time.
The Minister has said nothing about Rowntree. It is entitled to an explanation. Rowntree is a special kind of company. Over the years, it has given over much of its profit to the social benefit of the local community. Will that practice be continued? Are the Government saying that they will not consider even that aspect? If so, it is incredible and disgraceful.
I refer also to Cadbury. The hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) has, as is often the case, made common cause with hon. Members for Birmingham constituencies on this side of the House, in the interests of that city. The money from the Bourneville Trust, as with Rowntree, has been controlled by people who have looked beyond their own self-interest to the local community and to society as a whole. That is a major factor and one that ought to be exercising our minds. However, it has not been mentioned once by the Minister today. Apparently, he does not consider it to be of any importance how Rowntree's profits are distributed and what relationship it has with the local community and the wider world.
The chairman of Cadbury Schweppes has told me, as he has no doubt told other hon. Members, that if the Government permit Nestlé's takeover of Rowntree, Cadbury will then be the only major confectionery company remaining open to acquisition by anybody. All the others are under private control or enjoy protection by virtue of the legislation in their own countries. Britain, which provides no such protection, risks losing the ownership of almost its entire chocolate confectionery industry and the No. 1 soft drinks company in the United Kingdom, which is the No. 3 company worldwide. No other Government would allow such a sacrifice without an investigation, without some reference being made, and without the predator being asked to give guarantees. The Government are behaving in a blatantly irresponsible and disgraceful manner.
The Government are in this instance operating a something-for-nothing policy. When it comes to defence matters, the Government say that we should never give up anything unless we can be sure of getting something in exchange. However, when it comes to industry takeovers, the Government are standing their own philosophy and policy on their heads.
The Minister claimed that the Labour party is making a political football out of this matter. I am against that happening, but if the Government refuse to offer any protection to the legitimate interests of British industry, the Labour party will not only be right but will have a bounden duty to make that a political issue in the next general election in 1990 or 1991. It will go to the country with the issues of poll tax, the National Health Service and social security, and will also say, "Vote Conservative and you will lose all your protection and your basic industries." When the Prime Minister visited Cadbury Schweppes in the course of the last election to see what was happening there and to win votes, she did not say then to 883 the work force, "If there is an offer for this company, I will allow it to go ahead without protecting your legitimate interests." If the Government do not come to their senses, it will be the duty of the Labour party to raise the issue nationwide at the next general election.
§ 6.6 pm
§ Mr. John Greenway (Ryedale)I confess to mixed feelings in approaching this debate. I am glad that the House is again being given an opportunity to consider the future of Rowntree. The House may recall that I initiated an Adjournment debate on this matter shortly before the House rose for the Whitsun recess. In the event, it did not begin until about 5.30 in the morning. I am pleased that on this occasion we are debating the matter at a more sociable hour, and I am sure that my hon. Friend the Under-Secretary of State for Corporate Affairs endorses that remark.
I have mixed feelings because of my deep distrust of the motives of the Labour party in bringing this issue before the House today. It is noticeable that, since my right hon. and noble Friend the Secretary of State for Trade and Industry announced that he did not intend to refer the Rowntree bid. to the Monopolies and Mergers Commission, what had been a matter of all-party consensus developed into a major party political argument. This debate is not about Rowntree and its future but gives an opportunity to the Opposition to attack the Government—[Interruption.] I have listened to this debate from the start and it has provided plenty of evidence to support that remark.
We have also seen Labour party heavyweights coming into the York area to make their views known.
§ Mr. Denis HowellWho are they?
§ Mr. GreenwayI shall mention their names in a moment.
At first glance, the motion expresses many of the points which Government Members have made. But we all know, and the comments that we have heard today prove conclusively, that that is not what the Labour party really believes. Behind that is a much more sinister motive, and comments made in York over the past week confirm it.
First, the shadow Leader of the House, the hon. Member for Holborn and St. Pancras (Mr. Dobson), came to York to complain of institutions making use of northerners' savings. I was not sure from the comments reported in the paper what the hon. Gentleman meant, but the implication is clear: it suggests the direction of investment strategy that any future Labour Government would put in place. When the hon. Gentleman talks about northerners' savings and complains about institutions, he forgets that many institutional firms in Great Britain are managed from the north and from Scotland.
Then the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) came to York, and talked about proof of a public-interest requirement for mergers and a social ownership policy. That underlies what any future Labour Government would do, and there is no doubt that it would be damaging and unhelpful to our economy. I regret to say that the Labour party has attacked my right hon. Friend the Prime Minister for her attitude to the north. Such attacks are disgraceful and 884 entirely unjustified, given my right hon. Friend's concern and her commitment to inner-city action and, particularly in the north—not far from my constituency—the personal interest that she has taken in the Teesside development corporation.
The motion talks of adopting policies, but what policies would Labour advocate? It is significant that the motion fails to address the most important aspect, to which hon. Members have referred in the debate—the future of the draft European Community directive. Labour Members now say, thanks to some persuasion by the hon. Member for Dagenham (Mr. Gould), that they need to be European—but they do not think European. Their policies would have obstructed Rowntree in the European investment that it has already made. The hon. Member for Dagenham, I believe, referred to the factory in Hamburg purchased by Rowntree. There is no doubt that Rowntree, as a multinational company, is much fitter and better able to compete in the world because of its investments overseas.
I cannot escape the conclusion that the Rowntree issue will spur member states to ratify the European Commission directive with far more urgency than they might have if the issue had not come before us in the past six weeks. We debated reciprocity in my Adjournment debate. Before I forget, I must say to my right hon. and learned Friend that I do not feel that the answers that he has given today entirely address the problem. Leaving that aside, however, I believe that the European Commission directive is the real reason why the bid should have been referred. I cannot but feel that because of what has happened there will be a ratification, and a policy from which companies such as Rowntree may be able to benefit, in the not-too-distant future. In my view, the Government could have been a little more devious in helping to protect Rowntree's interests.
It is debatable whether at this late stage Rowntree's future as an independent company can be saved, and whether there may be a political solution. My hon. Friend the Member for York (Mr. Gregory) referred to the initiatives of our friend the Member of the European Parliament for York, Mr. Edward McMillan Scott, to persuade the French and German Governments to consider the implications of the Nestlé and Suchard bids for Rowntree. I feel, however, that it would be far better if in the time left tonight we looked at the future and tried to address some of the lessons that Parliament, we as politicians and the community at large may be able to learn from what has happened.
The main reason why I object so strongly to what Labour Members have said today is their attempt to apportion all the blame for Rowntree's position to the Government.
§ Mr. Geoffrey Lofthouse (Pontefract and Castleford)It is true.
§ Mr. GreenwayIf the hon. Gentleman will listen, he will realise that it is patently obvious that that is not the case. I believe that both the management of the company and the institutions must share some of the responsibility. Suchard first made approaches to Rowntree some four years ago, at the time of the publication of the Nestlé offer document. It was made clear at the press conference that Suchard had approached Rowntree a year ago, and the company did not appear to respond to those approaches.
885 A certain feeling is emerging among the work force in the constituency of York and in my constituency. While I have responsibility for a large rural part of north Yorkshire, part of the Rowntree factory complex is in my constituency, along with many hundreds, if not thousands, of the work force. I feel that the company could have been more ready to respond to the bids that have been made. I am slightly mystified about why the defence from Rowntree was not published as soon as possible after the publication of the Nestlé offer document, rather than Rowntree's waiting to see whether the bid was referred.
As for the institutions, I think that they could have had much more discussion with the management about how they saw the company's future. This is a slightly offensive point, but we have heard some implied criticism of the stand that we have taken, as though this were just a little local difficulty. That is not the case: it is an important national issue. It highlights the fear that some of our better businesses will fall to predators outside the European Community. As local politicians we certainly should not interfere, but recognising what has happened to Rowntree we should perhaps take more of an interest.
As I have said, I feel that the Government could have been more devious. They could have helped Rowntree by referring the bid and giving a spur to the debate which must come in the next two weeks, on 22 June, to ratify the European Commission directive. The people of York feel that the Government have let them down, and I must respect that view by abstaining in the vote tonight.
§ Mr. Geoffrey Lofthouse (Pontefract and Castleford)I agree with many of the points that have been made by the hon. Member for York (Mr. Gregory). The Government should have given serious consideration to the possible spin-off of job losses as a result of this takeover bid. They have the power to do so, regardless of Sir Gordon Borrie's recommendations. It is obvious that the Government are not giving sufficient protection to British industry, especially when the companies concerned are based in the north. In my area, Rowntree is a well-respected company, where the work force is happy and proud to work. Six hundred and fifty employees are based in the Castleford area, where during the past four or five years the Government have deliberately run down the job opportunities. Recently in a meeting in this place, the chairman of Nestlé could give no guarantee whatsoever that there would be no job losses arising out of this takeover.
§ Mr. VazMy hon. Friend the Member for Pontefract and Castleford (Mr. Lofthouse) has mentioned the possibility of job losses in the north. I hope that he will note that there is a Rowntree factory in Leicester. It is a Fox's Glacier Mint factory. When I visited the factory last week, there was widespread anxiety shown by the work force, especially as this is the third takeover that it has been subjected to in the past 10 years. Will he agree that nothing that the Chancellor of the Duchy of Lancaster has said will reassure those workers in Leicester about potential job losses?
§ Mr. LofthouseI agree with my hon. Friend the Member for Leicester, East (Mr. Vaz). We can expect job 886 losses if we take into account the track record of previous takeover bids. However, I sincerely hope that my interpretation is wrong.
I feel that the Government should have had the bid investigated. There is more to it than strict rigid guidelines for the Secretary of State and, indeed, Sir Gordon Borrie. If they are so rigidly bound to the guidelines, I suggest that the law needs changing. I would hope that any Government—where there is a threat to jobs at major British companies and takeover bids resulting in British companies being controlled by foreign companies—would always be keen to conduct a thorough investigation of the social and job loss consequences.
I am not surprised at the treatment that many parts of the north have received. I disagree with the hon. Member for Ryedale (Mr. Greenway) who said that the Government had not disregarded many areas of the north. If the hon. Gentleman lived in my area where the Rowntree factory is situated, he would have a different opinion.
I am sorry that the Chancellor of the Duchy of Lancaster has left, because I have some messages for him. In four years, 10,000 jobs have been lost arising out of direct Government action. His own Department has not done one stroke to encourage further industry in that area. I am now talking about the small area that includes the town of Castleford.
After persistent pressure, meetings with Ministers, speeches in the House and correspondence, we have still not convinced the Minister that there should be some assistance for the north. Many of my constituents who work at the Rowntree factory are the wives of the miners who have been thrown out of work, and will probably never work again. Do Conservative Members not think that there is anxiety in the area? Do Conservative Members not think that the bid should have been investigated thoroughly to ascertain what might be the social consequences? I think that any really responsible Government would have wanted that.
It appears to me that all that the Government want to do is continue their policy of sending our companies abroad at the expense of the British workers. When I visited the Rowntree factory the workers were 100 per cent. against this takeover bid. They do not want to be working for some faceless people in Europe. They trust and respect the people that they work for now. Have we no pride left? Should not the Government assist locally and nationally established companies with a major success record like Rowntree? I hope that any Government would do so. I believe that the Government have an obligation to refer this takeover bid even at this late stage. I hope that they will.
§ Mr. Graham Riddick (Colne Valley)One of the matters that has most concerned me about his whole issue is the way in which many fears have been generated in towns like York and Halifax. Those are fears which I regard as unnecessary. There are fears that jobs will be lost and that factories will be run down. Those points of view, mainly of the Opposition, will, I fear, lead to the general opinion that it is bad to have foreign investment and that foreign takeovers are bad for Britain. That is a general premise that I challenge from my own experience.
887 Before I became a Member of the House, I was in industry. I worked for an American company; I worked for a British company; I worked for a British company that was taken over by an American company; and I worked for an American company that went into partnership with a British company. Having worked for companies which were owned by foreign companies, I would say that, generally speaking, they are a force for economic good. Their investment in this country has contributed significantly to prosperity and jobs.
I was hoping to have time to go through some of the machinations which went on during my time in those companies, but time is short. The last thing that I or my company would have wanted would have been to have the Government interfering and trying to alter the decisions that needed to be taken. Overseas investment and takeovers are part and parcel of an open world trading. We cannot pick and choose which ones we approve of and which we do not. With our now thriving exporting companies and exporting tradition, we are the last country that should be stifling free international trade. We should not be erecting barriers of any kind, be it in trade or investment. As we know, internal investment in the United Kingdom from overseas is good for Britain. It is part of the exchange of ideas and approaches. It brings expertise, investment, jobs and prosperity into the United Kingdom.
We should not forget that Britain, too, is playing its role. In the first four months of this year, British companies have made takeover bids for about 68 companies in Europe. However, the most certain way for public companies to protect themselves against unwelcome takeover bids is to ensure maximum efficiency, maximum competitiveness and continuous investment and planning.
§ Mr. LofthouseIs the hon. Gentleman saying that Rowntree has not done that?
§ Mr. RiddickI am saying that the premium that the hon. Member for Dagenham (Mr. Gould) says can be squeezed out after takeover bids is not there. Therefore, it is up to British companies to ensure their competitiveness. If British companies do that, their share prices will reflect all those factors and their shareholders will be satisfied. It would make it far more difficult for outside companies to mount successful takeover bids. One need consider only companies such as ICI, Marks and Spencer and Trusthouse Forte, which have not been on the end of takeover bids.
The hon. Members for Dagenham and for Halifax (Mrs. Mahon) both referred to the employment implications of the takeover bid and suggested that the Swiss predator would threaten employment prospects at Rowntree. I do not know whether that is true, but I think that Opposition Members would be quite happy if a British company were making a bid for Rowntree. If, say, Hanson Trust, which has a reputation for squeezing every last ounce of efficiency out of every company, were making a bid for Rowntree, fears for jobs might be far greater.
I regret that I have not had the time to develop those points as I would have wished. We, in this country and in this Government, cannot afford to risk the inward and outward investment which has served this country 888 extremely well over the past eight years and which has brought increasing prosperity and jobs to this country. That is why I shall vote against the motion.
§ Mr. John Garrett (Norwich, South)In my constituency there is a Rowntree factory which employs about 1,100 workers. It is a long-established employer in a city that has lost much of its manufacturing industry during the past decade. The business was founded in 1883 by Albert Caley. It was taken over by Mackintosh in 1932, and Mackintosh merged with Rowntree in 1969.
We have no illusions in Norwich about Rowntree, but we have even fewer illusions about outside predators which appear to be proof against takeovers. When the Norwich factory was taken over by Rowntree, it employed 2,000 workers. We have had major redundancies in 1981, 1984, 1986 and 1988 and there has been much concern about its rundown. Two important lines were closed this year, although we understand that new products are to be brought forward in the factory. The company has issued a statement committing itself to its existing manufacturing plant. It is a modern, efficient and profitable plant and its return on assets is as good as that of any other plant in the group.
§ Mr. Tom ClarkeIn relation to my hon. Friend's point about manufacturing, does he accept that in Scotland in the three major locations of the industry, in Glasgow, Girvan and Coatbridge, the work force and the management are arguing that the company's policy on investment, training and development has meant that less capital has been available and, because the shares are therefore not valued as highly as they might otherwise have been, they are being penalised for that investment?
§ Mr. GarrettI hope to come to that point in the remaining few minutes available to me. However, I thank my hon. Friend for his useful intervention.
Our motion simply condemns the Government for their failure to refer the bid to the Monopolies and Mergers Commission and calls for a policy on monopolies and mergers. From the attack on chauvinism and xenophobia from the Chancellor of the Duchy of Lancaster, one would never have known that that was all that we were asking. Our point about referral relates not so much to this case as to the principles involved. Referral would have committed an informed analysis and a public debate about the national interest in such bids because several questions of national interest are raised by it.
Lord Young seemed to show remarkable naivety when he said that a foreign bidder would not acquire Rowntree simply to close substantial parts of it. Rowntree was valued at about £4 per share before the bid-the latest offer is £9.50. What accounts for the difference? It is the valuation that the Swiss place on the decades of investment by that company and on brand names, but brand names hardly show up in the balance sheet. Therefore, Rowntree's vulnerability has nothing to do with economic performance, but relates to the kind of business that it is and the short-termism of the City which persistently undervalues that kind of investment.
Brand names are portable. Years ago I worked as a consultant for the Rowntree group when it was producing a famous brand of foreign chocolate. A successful bidder could produce products with the same labels anywhere.
889 Employment is not necessarily tied to the product. Without an undertaking to maintain employment in Rowntree plants in Britain, a successful bidder could well transfer production and act significantly against the national interest. Why do not the Government seek an undertaking from the bidders about their plans for future employment? A company which is paying £10 or more per share for a company with assets of under £4 per share is likely to want to cut costs and to realise assets.
A reference to the Monopolies and Mergers Commission would also enable some thought to be given to the single market in 1992. We have heard a lot about reciprocity so far as the Swiss are concerned, but, of course, it applies also to the West Germans. While the shares of British companies are freely traded and are largely held by institutions which have no conception of the national interest, British firms will be sitting ducks for takeovers. We can see from the development of monopolies and mergers policy in the EEC that the likelihood is that EEC law will embody an EEC preference if it is not to give an open door to predators from outside the EEC or require some kind of reciprocity on the part of companies that are outside the EEC. There is no evidence that the Government have considered that problem.
Conservative Members have made great defences of Nestlé and of its investment in Britain. Nestlé has bought several brands in Britain, but in the past six years its share of the market has halved in the cases of Findus and Ashbourne and more than halved in the cases of Crosse and Blackwell and Libby. The company has substantially cut its employment in Britain. If we apply that record to Rowntree's success the outlook is not very encouraging. Nestlé has been widely criticised worldwide for selling its milk products in the Third world. It is constantly a target for boycotts. It would be ironic if Rowntree, with its history of social conscience, were at the receiving end of boycotts as a result of being tied to Nestlé's policy of selling milk in Africa.
Rowntree is a victim of short-termism and of no thought being paid to the national interest. The Government have no concern for the matter. The people of Norwich will know who to blame if there are job losses. They will blame Lord Young and his finger puppet, the Chancellor of the Duchy of Lancaster.
§ Sir Giles Shaw (Pudsey)I shall take up only a few seconds of the House's time but I should like to put three brief points to my right hon. and hon. Friends on the Front Bench.
First, when my right hon. and learned Friend the Chancellor of the Duchy of Lancaster opened the debate for the Government, he once again made it clear that he was not prepared to consider issues such as the European dimension as suitable to be referred to the MMC in the context of the Rowntree-Nestlé case. It is ludcrous for his Department to send out various signals, including those in the Secretary of State's interview on "The Money Programme" on BBC2 and in The Observer on 8 May, when he referred to the possibility of changes, including the possibility of larger conglomerations in the United Kingdom market, if at the same time he is not prepared even to consider that such issues deserve three weeks' or 890 even three months' examination by the Monopolies and Mergers Commission. That is absurd. We must have a clear signal about what the future will hold.
Secondly, this issue is not about competition. It is about the acquisition by two Swiss companies of a major confectionery company holding a major slice of the European market. Rowntree plus Nestlé would have a 27 per cent. share of the French market. Is that or is that not a competitive matter? It should be, in relation to the EC. Those issues must be addressed.
Thirdly and finally, the interest, anxiety and commitment shown by all the people who are associated with the Rowntree company suggest that that company, which for between 50 and 100 years has established millions of satisfied consumers with its brands and which has rates of sale running at millions per week, is a company to be proud of, and that we should seek to assist it.
§ Mr. Tony Blair (Sedgefield)This has been a short but important debate. Two weeks ago, the Government had a choice. They could refer Nestlé's bid for Rowntree to the Monopolies and Mergers Commission for objective scrutiny as to whether the bid was in the public interest, or they could leave the issue of Rowntree's independence solely to the subjective assessment of its day-to-day shareholders. The Government chose the latter. We believe that decision to have been wrong for Rowntree but, moreover, we believe that it will have the most profound and adverse consequences for all United Kingdom industry. In advance of 1992 and the single European market, it will signal that Britain, uniquely among EC countries, is prepared to put its industrial future in the hands of market forces. As the slogan says, history may be in the making, but it will be made by the whim of the market rather than the will of the people.
There are several obvious reasons for a reference and much has been said in favour of them today. There is, of course, the interest of the work force. I find extraordinary the degree to which the Government are prepared to put faith in the institutional shareholders to come to a rational decision about the company's future, but they seem to count for nothing the views of the work force. Those workers have been employed by the company for years and have created the profit upon which the institutional shareholders depend.
§ Mr. MartlewI am grateful to my hon. Friend far giving way and I am sorry that I was not called to speak because I was a manager for Nestlé and worked for that company for 21 years.
My hon. Friends the Members for Pontefract and Castleford (Mr. Lofthouse) and for Newcastle upon Tyne, North (Mr. Henderson) mentioned a meeting we had with the managing director of Nestlé, Mr. Maucher, in the House on 9 May. My hon. Friends are right to say that no assurance was given at that meeting about employment I am sure that my hon. Friends will recall, however, that I asked the managing director whether the company would keep the headquarters in York. Mr. Maucher said that the company would not be subservient to Croydon, but would be answerable to Switzerland. That decision will not only save the jobs at the York headquarters, but will save the jobs of the sales force and those in distribution, about which my hon. Friends expressed concern.
891 I accept that assurance on the basis of my experience of takeovers carried out by Nestlé. If Nestlé had decided to amalgamate the companies and move the headquarters to Croydon, all the jobs would have been lost. If I was the mayor of York I would have the Hansard record of this assurance blown up and put in the council chamber to remind Nestlé of the assurance that their managing director gave hon. Members in this House.
§ Mr. BlairThat is one reason why it is absolutely right to refer the bid to the MMC, so that that undertaking can be properly tested.
The second obvious reason for reference is the importance of the industry to the region. The third obvious reason is that we cannot look at Rowntree without considering the fate of Cadbury. The two are linked because, the day after Nestlé launched its bid for Rowntree, General Cinema said that it would no longer remain a passive investor in Cadbury, and that it had set aside $1 billion for acquisitions. There is an obvious risk that that company will make a bid for Cadbury and, if successful, will sell off the confectionery part of Cadbury to whoever loses the bid for Rowntree.
In this debate we are talking about not just the 12,000 jobs at Rowntree or about the importance of Rowntree to the region, but the importance of an entire manufacturing sector to the United Kingdom. Those reasons alone would have justified reference to the MMC.
We have heard a great deal about reciprocity, but it is worth reminding hon. Members that the word came from the mergers document published by the Government in March. The Government have put reciprocity on the agenda. The reason why the Government believe that reciprocity should be a factor—they are right to think it—is not due to some tit-for-tat retaliation against firms that do not offer reciprocal facilities, but because lack of reciprocity is an element in unfair competition.
Ministers may say that there is no formal legislative bar on British companies taking over Swiss companies, but by the operation of the commercial code in Switzerland and as a result of the recommendations of its largest self-regulating financial body, the Bankers Association, no hostile bid by our companies or any other company could be mounted in Switzerland. I will give way to the Minister if he can tell me when such a hostile bid has been made. The truth is that no hostile bids are possible. If that is the case, it is clearly a further factor that should be considered.
When I first considered this matter, I thought that Switzerland was perhaps in a unique position vis-a-vis other EEC countries and that it had unique barriers against hostile takeover bids. It is Britain, however, that is in the unique position, because it has an open season for foreign hostile bids. In case anyone believes that that is not important, it is clear as we approach 1992 and the single European market that cross-border merger activity will increase. In 1987 there were more than 1,000 such acquisitions and that, excluding United States companies, represented an increase of almost 40 per cent.
The Minister said that the United Kingdom has made acquisitions in Europe, and in 1987 the United Kingdom made 134 such acquisitions. The total value of those acquisitions, however, comes to less than half the value of the Nestlé and Suchard bid for Rowntree. That puts such acquisitions in context. More importantly, in the research 892 that I have made I have been unable to discover a single hostile bid from the United Kingdom—I shall gladly give way to the Minister if that is not the case. They were all agreed bids.
The Minister has said that 1992 is relevant, but I believe that difficulties lie ahead. We know that cross-border activity is on the increase. We also know that Britain has a unique open system that is not available in the rest of Europe whether that is West Germany, France, Belgium, the Netherlands or even outside the EC in Japan. All those countries have effective financial and corporate structures that prevent hostile takeover bids. When corporate activity increases, foreign predators will look for an outlet in the EC. They shall decide what companies they seek to acquire. The danger is that, if they are prevented from taking over companies elsewhere in the EC, they will come to Britain. The danger for Britain is that it will become uniquely open for predators.
It simply will not do to say that reciprocity is simply about Switzerland or about some type of nationalist protection. I do not believe that Ministers have understood the case that has been made by British industry. British industry is not asking for special favours, it is not asking for unfair protection or for the playing field to be sloped in its direction. It is asking for a level playing field. It is asking for our Government to do no more in relation to our industry than other EC Governments do in relation to theirs. If the Government fail to act, Britain will have a uniquely open system. When Britain's doors are open for business, the doors of other EC countries will be closed, and therefore the queue will come to our door.
Perhaps the Government think that that threat can be taken lightly. In the past few weeks I have scoured the financial pages to discover the types of company that the financial press now believe will be put into play as a result of the Rowntree decision. It is not the Labour party that has said this, but the financial press, and it has been confirmed by the article by Sir Hector Laing to which reference has already been made. We already know about Cadbury, but the other companies at risk are United Biscuits, Tate and Lyle, Rank Hovis McDougall, Allied Lyons, Dalgety, Unigate, Northern Foods, Boots, Reckitt and Colman, Fisons, and Beecham Group. [AN HON. MEMBER: "So what?"] I will tell the hon. Gentleman so what. If the entire structure for decision-making within United Kingdom industry passes outside United Kingdom control in the aftermath of 1992 there will be no guarantee that we shall control our industrial future. Conservative Members may say that that is an unreal fear, but the country must decide whom to believe. Do they believe the representatives of industry and the CBI? Do they believe the Sir Hector Laings of this world who support the Conservative party, or do they believe Conservative Members? The truth is that the Government have decided simply to leave these matters to market forces. Who are these great rational decision-makers in the market? Who are these people in whom the Government put such touching faith as coming to decisions in the interests of British industry?
My hon. Friend the Member for Dagenham described exactly what will happen to the share price of Rowntree during the last few weeks. Is it seriously being suggested that all institutional shareholders are considering what is in the long-term interests of Rowntree employees, the company and the region? Are they sitting wondering how United Kingdom manufacturing industry will fare under 893 this new regime? They are interested only in the share price, and that is not a temptation but a duty. When the Government say that this is all about a view of the long-term performance of the industry, they are talking nonsense. Shareholders are merely seeing what the day-to-day share price is; when it doubles in more than two months, naturally they will feel obliged to sell. We are saying that we cannot allow decisions of this importance simply to be left in the hands of those institutional shareholders.
In their merger policy published in March, the Government said that there were public interest matters that had to be taken into account; some of the issues mentioned were employment, regional economic development, research and development, and even foreign takeovers. They went on to say:
The Government's view is that none of the matters mentioned … is one where the public interest typically diverges from the interests of private sector decision-makers.That is the theology that says that the private market and the public good naturally coincide, but the Rowntree issue has proved that that view is wholly out of date. This Government have turned their hack on industry and it must now look to Labour.
§ The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Francis Maude)These debates that we have from time to time about specific mergers and merger policy allow us to discuss important fundamental issues, and the hon. Member for Sedgefield (Mr. Blair) has touched on some of them. But they all boil down to the fact that the Opposition have a deep hatred and fear of the free enterprise system. Mergers, essentially contested mergers, are the most obvious manifestation of the free enterprise system which they hate and fear. That is why they use these debates to mount an attack on the system. If there is one thing that they hate and fear more than United Kingdom free enterprise it is foreign free enterprise, and a great deal of this debate has been about good old-fashioned chauvinism wrapped up in a disreputable fig leaf. Many of their arguments have been disreputable and have done them no credit.
Any hostile or resisted bid for a well-known local company arouses anxieties in the region, and it is bound to. It is unsettling and no one knows what the future will hold, so it is natural that those involved should make representations to their local Members of Parliament. I know well the genuine anxieties of some of my right hon. and hon. Friends about this. They, properly, consider it their duty to make representations on behalf of those local interests. When something causes anxiety in this way politicians seek to take action and the only action available to them or the Government is to seek a reference to the MMC. That is what my hon. Friends have properly done. The Government took the view that in this case a reference was an inappropriate use of that instrument of Government policy for reasons which I shall come to.
I resent assertions from Labour Members that our merger policy is in some way unclear. We state clearly in the document from which the hon. Gentleman quoted that competition is the principal consideration, and nothing could be clearer than that. What emerges from the debate is that the Opposition want our policy to be less clear, and want many other considerations also to be taken into account. They want us, in unknown and unstated mergers, 894 to give way to employment and regional considerations, and nothing could be less clear than that. That would be to muddy the waters and make it less easy for those who seek to know exactly what our policy is.
The hon. Member for Newcastle upon Tyne, North (Mr. Henderson) and others said that employment should he a consideration, and that no guarantee of job security has been given by the bidders. No guarantee of job security exists under the present management, nor could it possibly do so. There is not a single company in the country under public sector, private sector, United Kingdom or foreign ownership which can give an absolute guarantee of job security. The complaint that a bid is made without any absolute guarantee of job security is absurd and the hon. Gentleman must know that. There is absolutely no reason to suppose that jobs are any more at risk under Nestlé and Suchard than under the present management. Suchard has said in terms that if it were successful—I have no idea whether it will be—it will move its headquarters of the whole confectionery business to York.
Our policy is clear, consistent, fair and as apt to deal with the considerations of the single market in Europe as with purely United Kingdom mergers. The underlying complaint seems to be that the policy is not slanted to protect United Kingdom companies from foreign takeover. We believe that open markets and the freedom of money and investment to move across frontiers has been beneficial to the United Kingdom, and that flow has been predominantly by United Kingdom companies making investments overseas. There is now twice as much United Kingdom investment overseas as foreign investment in the United Kingdom. The policy of open markets has benefited us and we propose to continue with it.
Labour Members seem to think that it is bad news when foreign companies invest in the United Kingdom and equally when British companies invest overseas. They want an old-fashioned siege economy. They do not understand that times have moved on. We now live in an age of the international economy. No single economy can exist on its own. There will be cross-investment. The whole concept of a national company does not exist.
§ Mr. MaudeI shall not give way because we are short of time and I have a few further points to make.
My hon. Friend the Member for Surrey, North-West (Mr. Grylls) asked about a draft EC mergers regulation. It is thought that some sort of mergers regime will automatically solve all the problems, but there are different and conflicting concerns, and a single draft mergers regulation cannot resolve them all. I assure him that on 22 June when this is discussed at the Council of Ministers we shall approach this positively and consider carefully how to take it forward. But we do not now know how the draft regulation will end up. Many matters remain unclear—not just drafting problems, but fundamentals. There remain several alternative formulations within the draft and the wording is by no means clear. Several of the fundamentals are left unsettled. Certainly we are not saying that we are against this but we want to make sure that the form in which it emerges is suitable.
Shareholders are best placed to make the decisions. There have been some unsavoury remarks during the debate about the institutional shareholders who have to make some of the decisions. Institutional shareholders are 895 not for the most part holding the shares on their own account. They are running pension funds, and they have a moral and legal obligation to pay pensions and to ensure that investors get a proper return on their money. So they have to ensure that they make the right decisions on behalf of the individuals who have entrusted their money to them. The upshot of the Opposition's remarks is that individuals who have invested money in pension funds would be short-changed by Government intervention, causing the return on their investment to be reduced. It is as simple as that. A pension fund, which has to provide pensions in future, has, above all institutional investors, an obligation to look to the long term. Institutional investors do not deal simply with short-term interest.
The time has gone when it is appropriate for companies resisting bids to look to the Government as their first line of defence. It is for them to persuade shareholders that their management offers the best hope. So I have no hesitation in commending to my right hon. and hon. Friends the Government's amendment and in urging them to reject the Opposition motion.
§ Question put, That the original words stand part of the Question:—
§ The House divided: Ayes 203, Noes 301.
898| Division No. 343] | [7.01 pm |
| AYES | |
| Abbott, Ms Diane | Cunliffe, Lawrence |
| Adams, Allen (Paisley N) | Cunningham, Dr John |
| Allen, Graham | Dalyell, Tam |
| Alton, David | Darling, Alistair |
| Anderson, Donald | Davies, Rt Hon Denzil (Llanelli) |
| Archer, Rt Hon Peter | Davies, Ron (Caerphilly) |
| Armstrong, Hilary | Davis, Terry (B'ham Hodge H'l) |
| Ashton, Joe | Dewar, Donald |
| Banks, Tony (Newham NW) | Dixon, Don |
| Barnes, Harry (Derbyshire NE) | Dobson, Frank |
| Barron, Kevin | Doran, Frank |
| Battle, John | Douglas, Dick |
| Beckett, Margaret | Duffy, A. E. P. |
| Benn, Rt Hon Tony | Dunnachie, Jimmy |
| Bennett, Nicholas (Pembroke) | Evans, John (St Helens N) |
| Bermingham, Gerald | Ewing, Mrs Margaret (Moray) |
| Bidwell, Sydney | Fatchett, Derek |
| Blair, Tony | Fearn, Ronald |
| Blunkett, David | Field, Frank (Birkenhead) |
| Boateng, Paul | Fields, Terry (L'pool B G'n) |
| Boyes, Roland | Fisher, Mark |
| Bradley, Keith | Flynn, Paul |
| Bray, Dr Jeremy | Foot, Rt Hon Michael |
| Brown, Nicholas (Newcastle E) | Foster, Derek |
| Bruce, Malcolm (Gordon) | Foulkes, George |
| Buchan, Norman | Fraser, John |
| Buckley, George J. | Fyfe, Maria |
| Caborn, Richard | Galbraith, Sam |
| Campbell, Menzies (Fife NE) | Galloway, George |
| Campbell, Ron (Blyth Valley) | Garrett, John (Norwich South) |
| Campbell-Savours, D. N. | George, Bruce |
| Canavan, Dennis | Godman, Dr Norman A. |
| Clark, Dr David (S Shields) | Golding, Mrs Llin |
| Clarke, Tom (Monklands W) | Gordon, Mildred |
| Clay, Bob | Gould, Bryan |
| Clelland, David | Graham, Thomas |
| Clwyd, Mrs Ann | Griffiths, Nigel (Edinburgh S) |
| Cohen, Harry | Grocott, Bruce |
| Cook, Frank (Stockton N) | Harman, Ms Harriet |
| Cook, Robin (Livingston) | Hattersley, Rt Hon Roy |
| Corbett, Robin | Heffer, Eric S. |
| Cousins, Jim | Henderson, Doug |
| Crowther, Stan | Hinchliffe, David |
| Cryer, Bob | Hogg, N. (C'nauld & Kilsyth) |
| Cummings, John | Holland, Stuart |
| Home Robertson, John | O'Neill, Martin |
| Howell, Rt Hon D. (S'heath) | Orme, Rt Hon Stanley |
| Howells, Geraint | Patchett, Terry |
| Hoyle, Doug | Pendry, Tom |
| Hughes, John (Coventry NE) | Pike, Peter L. |
| Hughes, Robert (Aberdeen N) | Powell, Ray (Ogmore) |
| Hughes, Roy (Newport E) | Prescott, John |
| Hughes, Sean (Knowsley S) | Primarolo, Dawn |
| Illsley, Eric | Quin, Ms Joyce |
| Ingram, Adam | Radice, Giles |
| Janner, Greville | Randall, Stuart |
| John, Brynmor | Rees, Rt Hon Merlyn |
| Jones, Barry (Alyn & Deeside) | Reid, Dr John |
| Jones, leuan (Ynys Môn) | Richardson, Jo |
| Jones, Martyn (Clwyd S W) | Roberts, Allan (Bootle) |
| Kaufman, Rt Hon Gerald | Robertson, George |
| Kennedy, Charles | Robinson, Geoffrey |
| Kirkwood, Archy | Rogers, Allan |
| Leadbitter, Ted | Ross, Ernie (Dundee W) |
| Leighton, Ron | Rowlands, Ted |
| Lestor, Joan (Eccles) | Ruddock, Joan |
| Lewis, Terry | Salmond, Alex |
| Lloyd, Tony (Stretford) | Sedgemore, Brian |
| Lofthouse, Geoffrey | Sheerman, Barry |
| Loyden, Eddie | Shore, Rt Hon Peter |
| McAllion, John | Short, Clare |
| McAvoy, Thomas | Skinner, Dennis |
| McCartney, Ian | Smith, Andrew (Oxford E) |
| Macdonald, Calum A. | Smith, C. (Isl'ton & F'bury) |
| McFall, John | Smith, Rt Hon J. (Monk'ds E) |
| McGrady, Eddie | Snape, Peter |
| McKay, Allen (Barnsley West) | Soley, Clive |
| McKelvey, William | Spearing, Nigel |
| Maclennan, Robert | Steel, Rt Hon David |
| McTaggart, Bob | Strang, Gavin |
| Madden, Max | Straw, Jack |
| Mahon, Mrs Alice | Taylor, Mrs Ann (Dewsbury) |
| Marek, Dr John | Taylor, Matthew (Truro) |
| Marshall, David (Shettleston) | Thomas, Dr Dafydd Elis |
| Marshall, Jim (Leicester S) | Turner, Dennis |
| Martin, Michael J. (Springburn) | Vaz, Keith |
| Martlew, Eric | Wall, Pat |
| Maxton, John | Wallace, James |
| Meale, Alan | Walley, Joan |
| Michael, Alun | Wareing, Robert N. |
| Michie, Bill (Sheffield Heeley) | Welsh, Andrew (Angus E) |
| Michie, Mrs Ray (Arg'l & Bute) | Welsh, Michael (Doncaster N) |
| Millan, Rt Hon Bruce | Wigley, Dafydd |
| Mitchell, Austin (G't Grimsby) | Williams, Rt Hon Alan |
| Moonie, Dr Lewis | Williams, Alan W. (Carm'then) |
| Morgan, Rhodri | Wilson, Brian |
| Morley, Elliott | Winnick, David |
| Morris, Rt Hon A. (W'shawe) | Wise, Mrs Audrey |
| Morris, Rt Hon J. (Aberavon) | Worthington, Tony |
| Mowlam, Marjorie | |
| Mullin, Chris | Tellers for the Ayes: |
| Nellist, Dave | Mr. Frank Haynes and Mr. Ken Eastham. |
| Oakes, Rt Hon Gordon | |
| O'Brien, William |
| NOES | |
| Adley, Robert | Body, Sir Richard |
| Amery, Rt Hon Julian | Bonsor, Sir Nicholas |
| Amess, David | Boswell, Tim |
| Amos, Alan | Bottomley, Peter |
| Arbuthnot, James | Bottomley, Mrs Virginia |
| Arnold, Jacques (Gravesham) | Bowden, Gerald (Dulwich) |
| Arnold, Tom (Hazel Grove) | Bowis, John |
| Ashby, David | Boyson, Rt Hon Dr Sir Rhodes |
| Aspinwall, Jack | Braine, Rt Hon Sir Bernard |
| Atkins, Robert | Brandon-Bravo, Martin |
| Baker, Rt Hon K. (Mole Valley) | Brazier, Julian |
| Baker, Nicholas (Dorset N) | Bright, Graham |
| Baldry, Tony | Brooke, Rt Hon Peter |
| Batiste, Spencer | Brown, Michael (Brigg & Cl't's) |
| Bellingham, Henry | Browne, John (Winchester) |
| Bendall, Vivian | Bruce, Ian (Dorset South) |
| Biggs-Davison, Sir John | Buchanan-Smith, Rt Hon Alick |
| Blackburn, Dr John G. | Buck, Sir Antony |
| Blaker, Rt Hon Sir Peter | Budgen, Nicholas |
| Burns, Simon | Heathcoat-Amory, David |
| Burt, Alistair | Heddle, John |
| Butcher, John | Hicks, Robert (Cornwall SE) |
| Butler, Chris | Hind, Kenneth |
| Butterfill, John | Hogg, Hon Douglas (Gr'th'm) |
| Carlisle, John, (Luton N) | Holt, Richard |
| Carlisle, Kenneth (Lincoln) | Hordern, Sir Peter |
| Carrington, Matthew | Howard, Michael |
| Cartwright, John | Howarth, Alan (Strat'd-on-A) |
| Cash, William | Howarth, G. (Cannock & B'wd) |
| Chalker, Rt Hon Mrs Lynda | Howell, Rt Hon David (G'dford) |
| Channon, Rt Hon Paul | Howell, Ralph (North Norfolk) |
| Chapman, Sydney | Hughes, Robert G. (Harrow W) |
| Chope, Christopher | Hunt, David (Wirral W) |
| Churchill, Mr | Hunter, Andrew |
| Clark, Dr Michael (Rochford) | Hurd, Rt Hon Douglas |
| Clarke, Rt Hon K. (Rushclitfe) | Irvine, Michael |
| Colvin, Michael | Irving, Charles |
| Conway, Derek | Jack, Michael |
| Coombs, Anthony (Wyre F'rest) | Jackson, Robert |
| Couchman, James | Janman, Tim |
| Cran, James | Johnson Smith, Sir Geoffrey |
| Critchley, Julian | Jones, Robert B (Herts W) |
| Currie, Mrs Edwina | Jopling, Rt Hon Michael |
| Curry, David | Kellett-Bowman, Dame Elaine |
| Davies, Q. (Stamf'd & Spald'g) | Key, Robert |
| Davis, David (Boothferry) | King, Roger (B'ham N'thfield) |
| Day, Stephen | King, Rt Hon Tom (Bridgwater) |
| Devlin, Tim | Kirkhope, Timothy |
| Dickens, Geoffrey | Knapman, Roger |
| Dicks, Terry | Knight, Greg (Derby North) |
| Dorrell, Stephen | Knight, Dame Jill (Edgbaston) |
| Douglas-Hamilton, Lord James | Knowles, Michael |
| Dover, Den | Knox, David |
| Dunn, Bob | Lamont, Rt Hon Norman |
| Durant, Tony | Lang, Ian |
| Dykes, Hugh | Latham, Michael |
| Eggar, Tim | Lawrence, Ivan |
| Emery, Sir Peter | Lawson, Rt Hon Nigel |
| Evans, David (Welwyn Hatf'd) | Leigh, Edward (Gainsbor'gh) |
| Fallon, Michael | Lennox-Boyd, Hon Mark |
| Farr, Sir John | Lester, Jim (Broxtowe) |
| Favell, Tony | Lightbown, David |
| Fookes, Miss Janet | Lilley, Peter |
| Forman, Nigel | Lloyd, Sir Ian (Havant) |
| Forsyth, Michael (Stirling) | Lloyd, Peter (Fareham) |
| Forth, Eric | Lord, Michael |
| Fowler, Rt Hon Norman | McCrindle, Robert |
| Franks, Cecil | McCusker, Harold |
| Freeman, Roger | Macfarlane, Sir Neil |
| French, Douglas | MacKay, Andrew (E Berkshire) |
| Fry, Peter | Maclean, David |
| Gale, Roger | McLoughlin, Patrick |
| Gardiner, George | McNair-Wilson, M. (Newbury) |
| Gill, Christopher | McNair-Wilson, P. (New Forest) |
| Gilmour, Rt Hon Sir Ian | Madel, David |
| Goodhart, Sir Philip | Major, Rt Hon John |
| Goodlad, Alastair | Malins, Humfrey |
| Goodson-Wickes, Dr Charles | Mans, Keith |
| Gorman, Mrs Teresa | Maples, John |
| Gorst, John | Marlow, Tony |
| Gow, Ian | Marshall, John (Hendon S) |
| Grant, Sir Anthony (CambsSW) | Marshall, Michael (Arundel) |
| Griffiths, Sir Eldon (Bury St E) | Martin, David (Portsmouth S) |
| Griffiths, Peter (Portsmouth N) | Maude, Hon Francis |
| Grist, Ian | Maxwell-Hyslop, Robin |
| Ground, Patrick | Mayhew, Rt Hon Sir Patrick |
| Grylls, Michael | Mellor, David |
| Gummer, Rt Hon John Selwyn | Miller, Hal |
| Hamilton, Hon Archie (Epsom) | Mills, Iain |
| Hamilton, Neil (Tatton) | Miscampbell, Norman |
| Hanley, Jeremy | Mitchell, Andrew (Gedling) |
| Hannam, John | Moate, Roger |
| Hargreaves, A. (B'ham H'll Gr') | Monro, Sir Hector |
| Hargreaves, Ken (Hyndburn) | Montgomery, Sir Fergus |
| Harris, David | Moore, Rt Hon John |
| Haselhurst, Alan | Morrison, Hon Sir Charles |
| Hawkins, Christopher | Moss, Malcolm |
| Hayes, Jerry | Mudd, David |
| Hayward, Robert | Neale, Gerrard |
| Needham, Richard | Stewart, Andy (Sherwood) |
| Nelson, Anthony | Stewart, Ian (Hertfordshire N) |
| Neubert, Michael | Stokes, John |
| Newton, Rt Hon Tony | Stradling Thomas, Sir John |
| Nicholls, Patrick | Sumberg, David |
| Nicholson, David (Taunton) | Summerson, Hugo |
| Nicholson, Emma (Devon West) | Tapsell, Sir Peter |
| Onslow, Rt Hon Cranley | Taylor, Ian (Esher) |
| Oppenheim, Phillip | Taylor, John M (Solihull) |
| Owen, Rt Hon Dr David | Taylor, Teddy (S'end E) |
| Page, Richard | Tebbit, Rt Hon Norman |
| Paice, James | Temple-Morris, Peter |
| Patnick, Irvine | Thatcher, Rt Hon Margaret |
| Patten, John (Oxford W) | Thompson, D. (Calder Valley) |
| Pattie, Rt Hon Sir Geoffrey | Thompson, Patrick (Norwich N) |
| Pawsey, James | Thome, Neil |
| Porter, Barry (Wirral S) | Thornton, Malcolm |
| Porter, David (Waveney) | Townend, John (Bridlington) |
| Portillo, Michael | Townsend, Cyril D. (B'heath) |
| Powell, William (Corby) | Tracey, Richard |
| Price, Sir David | Tredinnick, David |
| Redwood, John | Trippier, David |
| Renton, Tim | Trotter, Neville |
| Rhodes James, Robert | Twinn, Dr Ian |
| Riddick, Graham | Vaughan, Sir Gerard |
| Ridley, Rt Hon Nicholas | Viggers, Peter |
| Ridsdale, Sir Julian | Waddington, Rt Hon David |
| Rifkind, Rt Hon Malcolm | Wakeham, Rt Hon John |
| Roberts, Wyn (Conwy) | Waldegrave, Hon William |
| Rost, Peter | Walden, George |
| Rowe, Andrew | Walker, Bill (T'side North) |
| Rumbold, Mrs Angela | Walker, Rt Hon P. (W'cester) |
| Ryder, Richard | Waller, Gary |
| Sackville, Hon Tom | Walters, Dennis |
| Sainsbury, Hon Tim | Ward, John |
| Scott, Nicholas | Wardle, Charles (Bexhill) |
| Shaw, David (Dover) | Watts, John |
| Shephard, Mrs G. (Norfolk SW) | Wells, Bowen |
| Shepherd, Colin (Hereford) | Wheeler, John |
| Shepherd, Richard (Aldridge) | Widdecombe, Ann |
| Shersby, Michael | Wiggin, Jerry |
| Sims, Roger | Wilshire, David |
| Skeet, Sir Trevor | Winterton, Mrs Ann |
| Smith, Tim (Beaconsfield) | Wolfson, Mark |
| Soames, Hon Nicholas | Wood, Timothy |
| Speller, Tony | Woodcock, Mike |
| Spicer, Sir Jim (Dorset W) | Yeo, Tim |
| Spicer, Michael (S Worcs) | Young, Sir George (Acton) |
| Squire, Robin | Younger, Rt Hon George |
| Stanbrook, Ivor | |
| Stanley, Rt Hon John | Tellers for the Noes: |
| Steen, Anthony | Mr. Robert Boscawen and Mr. Tristan Garel-Jones. |
| Stern, Michael | |
| Stevens, Lewis |
§ Question accordingly negatived.
§ Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 30 (Questions on amendments), and agreed to.
§ Mr. Speaker forthwith declared the main Question, as amended, to be agreed to.
§
Resolved,
That this House recognises the benefits which inward and outward investment have brought to the British economy; endorses the Government's merger policy as set out in the Department of Trade and Industry's paper on the policy and procedures of merger control published on 3rd March 1988; and supports the decision not to refer to the Monopolies and Mergers Commission Nestle's bid for Rowntree or Suchard's 29.9 per cent. holding in Rowntree, as being consistent with that policy.
§ Mr. Nigel Griffiths (Edinburgh, South)On a point of order, Mr Speaker. You may be aware that today the South African authorities attacked the British Broadcasting Corporation and its coverage of events in 899 South Africa. They have done so in writing. Is it not in order for the Home Secretary to repudiate this unwarranted interference in the affairs of the BBC and to come to the House and explain his and the Government's response?
§ Mr. SpeakerThat is not a point of order. I am sure that what the hon. Gentleman has said has been heard by Ministers on the Front Bench.
§ Mr. Paul Boateng (Brent, South)Further to that point of order, Mr. Speaker—
§ Mr. SpeakerIt was not a point of order. This matter could properly be raised tomorrow.