Monopolies and Mergers (Hansard, 10 June 1992)

§ 6. Mr. Watson
To ask the President of the Board of Trade what recent representations he has received on policy for monopolies and mergers within the banking and financial sector.

§ The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Neil Hamilton)
I have received a number of representations on the bid for the Midland bank by the Hong Kong and Shanghai banking corporation, and on the possible offer made by Lloyds bank, which has now been withdrawn.

§ Mr. Watson
The threat of a Lloyds takeover of the Midland bank has now been withdrawn, but had the takeover gone ahead it would have posed a threat to thousands of jobs and, possibly, hundreds of bank branches. Will the President of the Board of Trade take account of his own advice now that he is Secretary of State? According to that advice, in the event of a takeover bid involving a company with more than 500 employees, that company should involve its employees in consultation plans with a view to implementation of the takeover, and the bidder should be required to show that any benefit resulting from the takeover would be in the wider national interest.
Why did the President of the Board of Trade show such interest in takeovers before he returned to government, and why, now that he is back in government, has no Government action been taken on this important matter?

§ Mr. Hamilton
The Government take the national interest into account in all mergers and takeovers. If the Lloyds bid had gone ahead, it would have been examined by the Monopolies and Mergers Commission, which would have considered both its benefits and its disadvantages. The Government's policy is perfectly clear; it is as it always has been. We look to competition, but not exclusively to competition: the national interest may well be wider.

§ Mr. Quentin Davies
I welcome the likelihood that, for the foreseeable future, there will be four rather than three clearing banks in England and Wales. But are my hon. Friend and my right hon. Friend the President of the Board of Trade happy that those four banks should have 90 per cent. of the corporate lending market? Has not that effective oligopoly enabled the banks to achieve a remarkable success in driving through an increase in their margins and charges at a time of falling loan demand, in a recession? Will my hon. Friend ask the Office of Fair Trading to take a thorough look at the whole position?

§ Mr. Hamilton
My right hon. Friend the President of the Board of Trade has asked the Director General of Fair Trading to keep that question under review. My hon. Friend will be aware that, last year, the director general considered whether there was any evidence of collusion, anti-competitive practice or exploitative behaviour by the banks in their relations with small businesses. He concluded at that time that there were no grounds for action under competition legislation, but it is open to him to institute an investigation at any time if he thinks fit.