Monopolies and Mergers Commission (Hansard, 17 May 1989)

§ 10. Mr. Darling
To ask the Chancellor of the Duchy of Lancaster what are his present criteria for referring a bid to the Monopolies and Mergers Commission.

§ Mr. Maude
The Government's policy remains as set out on 3 March 1988. The review, the results of which we announced at that time, concluded that the effect of a merger on competition in the United Kingdom should continue to be the main criterion in deciding whether a merger should be referred to the Monopolies and Mergers Commission.

§ Mr. Darling
In the light of the Scottish and Newcastle referral, is it not clear that competition is by no means the main criterion applied by the Department? Does he recognise that there is considerable uncertainty in British industry as to what exactly the British Government's policy is? Is he aware that this is resulting in companies keeping up share prices to ward off hostile bids, instead of investing? In view of the present state of British industry, would it not be better to revise once again his competition policy so that we can see what it is, and stop cutting to pieces the British industrial base?

§ Mr. Maude
As the level of investment in business in this country is at extremely high levels, the basis of the hon. Gentleman's question is tendentious. My noble Friend and I were advised by the Director-General of Fair Trading that the Scottish and Newcastle matter should be referred to the MMC on the basis of the competition issues outlined, and the MMC concluded, on the basis of the competition issues, that it would be against the public interest. It was on the basis of those two bodies' conclusions that we decided to take the steps that we took.

§ Mr. Tredinnick
Can my hon. Friend confirm that the role of the MMC is to ensure that companies do not engage in price fixing, and to stop monopolies coming about? Will he also confirm that it is not the job of the MMC to tell industries how to run themselves? Is there not a danger that the MMC is going down this road, as evidenced by a number of recent and pending reports?

§ Mr. Maude
The role of the MMC when matters are referred to it is to decide whether, in the case of a monopoly reference, a monopoly is in existence and if it decides that it is, it makes recommendations to which the Government have to respond.

§ Mr. Morgan
Is not one of our endemic problems that industry is run for the benefit of takeover bidders rather than on the basis of creation of real assets? Is not one of the tragedies of the last week the announcement by Plessey, under the pressure of a take-over bid, that it will close down its gallium arsenide microcircuit business at Towcester in Northamptonshire, which will also have tragic implications for the attempts in this country, led by university college, Cardiff and the Welsh Development Agency, to build up expertise in gallium arsenide, one of the principal materials for succeeding silicon chips as a way of processing microcircuits that are faster than those produced by silicon? On silicon, we have lost out to the Japanese and now we are losing our main chance to get in with the next generation.

§ Mr. Maude
The purpose of business is to provide goods and services for customers, and not to build up real assets, nor to run companies for the benefit of takeovers. If companies cannot provide the goods and services that customers want, they will go out of business. It is for businesses to take commercial decisions and rely on their judgment. It is not for Government to try to second-guess them.