Monopolies and Mergers Commission (Hansard, 19 July 1989)

§ 3. Mr. Riddick
To ask the Chancellor of the Duchy of Lancaster whether there have been any changes in the role of the Monopolies and Mergers Commission in recent years.

§ The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Francis Maude)
The principal role of the Monopolies and Mergers Commission has not changed, but its role has been extended over recent years by certain provisions in the Telecommunications Act 1984, the Airports Act 1986, the Gas Act 1986 and the Water Act 1989.

§ Mr. Riddick
Does my hon. Friend agree that the primary function of the Monopolies and Mergers Commission should be to identify and prevent possible monopolies from being created and to stop price fixing in industry? Does he think that the MMC has been extending its functions in recent years by proposing how industry and markets should be structured and run? Is my hon. Friend aware that as a direct result of an MMC diktat on how the gas industry should be run, the textile industry in my constituency will face a massive increase in its gas bills? Does my hon. Friend think that the fact that my right hon. and noble Friend the Secretary of State had to alter significantly the MMC proposals on the brewing industry illustrates that he believes that the MMC has overstepped the mark?

§ Mr. Maude
No, Sir. I do not agree with my hon. Friend. The Monopolies and Mergers Commission carries out functions given to it by Parliament. It investigates matters that are referred to it either by the Director General of Fair Trading or by my right hon. and noble Friend the Secretary of State. It makes findings and recommendations. It is within the commission's powers to make the recommendations that it has made. We have implemented those that we think it proper to implement, in the way in which we think it proper to implement them.
Where the MMC finds monopolies, as in the case of the breweries and British Gas, it is entirely within its powers to recommend action to rectify the public interest detriment. That is what the MMC did and we responded to it.

§ Ms. Short
Does the Minister agree that we need a complete review of our monopolies and mergers legislation? In Britain, it is possible to have short-term raiding to break up companies and extract money and to detract from long-term investment in the productivity of our economy. That contrasts with what happens in West Germany and Japan, and it means that our industrial future is being destroyed in the interests of short-term takeovers. We need a new framework of law to encourage long-term investment.

§ Mr. Maude
The hon. Lady is wrong if she believes that Government action prevents such things from happening elsewhere——

§ Ms. Short
It is the framework of law.

§ Mr. Maude
It is not. The hon. Lady is wrong if she thinks that it is the framework of law. We are talking about the way in which markets operate and how companies are structured elsewhere. The hon. Lady is talking about interfering with the right of individuals and companies to sell their shares to a willing buyer. One should not do that unless it is in the public interest. I seem to remember that not all that long ago Opposition Members were complaining about the growth of conglomerates; now they seem to be complaining about conglomerates being broken up.

§ Mr. Nicholas Bennett
Does not the increase of between 8p and 10p in the price of beer announced by the brewers yesterday illustrate the importance of the Monopolies and Mergers Commission investigating the brewing industry and of the action that the Government proposed in their statement last week?

§ Mr. Maude
It was right for us to respond to the report in the tough way that we did and to take the steps that we proposed, which will allow 11,000 more public houses to buy their beer at the cheapest price and from whoever they want. I urge pub customers to look round and find the best price for the beer that they want to buy. Not every brewery has increased its prices, by any means. There is a market and I hope that people will look for the cheapest beer that they can find.

§ Mr. Clelland
Will the Minister advise the Monopolies and Mergers Commission that it would save Government time, and save it much effort in making its recommendations if it took into account company donations to the Tory party?

§ Mr. Maude
The MMC might also want to take into account letters such as that written by Norman Willis, the general secretary of the TUC, to my right hon. and noble Friend the Secretary of State, in which he urged that all the recommendations of the MMC should be completely ignored. No doubt that was motivated by his well-known concern for Conservative party funds.

§ Mr. Andrew MacKay
Does my hon. Friend share the widespread concern about highly leveraged bids? If so, would it not be desirable for the Hoylake bid for BAT to be referred to the Monopolies and Mergers Commission, especially bearing in mind what the MMC said about the Elders IXL bid last year, which was similarly highly leveraged?

§ Mr. Maude
The House will not expect me to express a view about that case. The Director General of Fair 328 Trading is considering what advice he should give to the Government on whether the bid should be referred to the MMC and while we are waiting for that advice, it would be quite wrong for us to comment.

§ Mr. Gould
In the light of today's news on beer prices, might not the Monopolies and Mergers Commission be forgiven for concluding that its major role today is to provoke powerful monopolists to raise their prices so that the public has to pay the costs of successfully campaigning against the MMC's recommendations? Will the Minister at least reassure the MMC that it does have a continuing role? Will he think of saying something like, "I am minded to implement any recommendations that the commission makes in future if my party's paymasters will let me"?

§ Mr. Maude
The hon. Gentleman should have a word with his party's paymasters who have been lobbying extremely vigorously for us to ignore every one of the MMC recommendations. The TUC, and the Transport and General Workers Union, have been lobbying heavily. When the MMC finds that there is a monopoly operating against the public interest we must take action, and that is what we have done. Even if we had done everything that the MMC recommended that could not have affected what the breweries decided to do in the meantime.