TEMPORARY RESTRICTIONS ON SHARE DEALING (Hansard, 26 October 1989)

§ Mr. Nicholas Baker (Dorset, North)
I beg to move amendment No. 310, in page 156, line 6, leave out 'any enterprise' and insert 'an enterprise'.

§ Madam Deputy Speaker
With this it will be convenient to consider also the following: Amendment No. 311, in page 156, line 8, leave out 'any such' and insert 'such an'.
Amendment No. 312, in page 156, line 15, after 'relates', insert 'other than the enterprise referred to in paragraph (a) above'.

§ Mr. Baker
I am glad of the opportunity to move these three simple amendments. Clause 139 is designed to prevent a bidding company from acquiring shares in the target while a Monopolies and Mergers Commission investigation is taking place. The effect of the clause as drafted——

§ Mr. Frank Haynes (Ashfield)
On a point of order, Madam Deputy Speaker. Could the conference taking place behind the Chair please be stopped?

§ Madam Deputy Speaker
I am sure that hon. Members are paying attention.

§ Mr. Baker
Thank you, Madam Deputy Speaker. The effect of the clause as drafted is to prevent a member of a group of persons who control the bidder from buying any further shares in the bidder. That does not seem to be what the clause should be aimed at. It goes beyond the original intention of the clause and those which drafted it. I hope that my lion. Friend the Minister will consider favourably my amendments which would put that matter right.

§ Mr. Redwood
The objective of the amendments appears to be to relax the temporary prohibition on share dealings following a reference so that parties on one side of a merger can continue to acquire one another's shares. Although we are not unsympathetic to the reasoning behind that, we consider that it would be a mistake to tackle the issue by amending the Bill rather than by using the Secretary of State's power to issue consents.
Clause 139 makes it unlawful for the duration of the MMC inquiry for any parties to propose a merger which is referred, or to acquire shares or interests in shares in any of the parties, except with the Secretary of State's consent. The prohibition extends to all those covered by the reference and their subsidiaries and associates. This prohibition puts on a permanent statutory basis the standard practice of making individual orders in each case under the Fair Trading Act 1973 to limit the holding which bidders can acquire.
The purpose of the prohibition is to prevent the outcome of MMC inquiry or any action necessary following it from being prejudiced by the merger going ahead in the meantime. The complexity of many merger arrangements has led us to make the prohibition in the Bill a general one which applies to all possible relevant parties to a merger. It would otherwise be very difficult to catch everyone whom we might conceivably wish to catch. Rather than have a complicated——