MONOPOLIES AND MERGERS BILL (Hansard, 12 July 1965)

HL Deb 12 July 1965 vol 268 cc29-94 29

§ 4.0 p.m.

§ Order of the Day for the House to be put into Committee read.

§ Moved, That the House do now resolve itself into Committee.—(Lord Rhodes.)

§ On Question, Motion agreed to.

§ House in Committee accordingly.

§ [The Lord DOUGLAS OF BARLOCH in the Chair.]

§ Clause 1 [Provisions for enlarging Commission and otherwise expediting its work]:

§ On Question, Whether Clause 1 shall stand part of the Bill?

§ LORD DRUMALBYN
I should like to raise a point on this clause which I think is little more than drafting. The opening words of subsection (4) on page 2 of the Bill read as follows: If a person makes default in complying with a notice … Then there is a provision later where the words "makes default" are used again, but in a rather different sense, as meaning, "fails to comply with a direction of the Board of Trade". In this case, it seems to me that the words "makes default" pre-judge the case, because it 30 may not be within the power of the person to comply with the notice. He may be ordered to produce witnesses who are no longer under his control; or he may be ordered to produce documents that do not exist. I should have thought that it would be better to use a less colourful phrase than "makes default", which, as I have said, rather pre-judges the issue, and say simply, "fails to comply" with the notice, and carry that Amendment through the rest of the subsection.

§ LORD RHODES
I do not think that need worry the noble Lord unduly. After all, subsection (4) empowers the Board of Trade to apply to the court—the High Court in England, or the comparable courts in Scotland and Northern Ireland—for an order requiring a person who fails to comply with a notice given by the Monopolies Commission under Section 8(3) of the 1948 Act to make good such default. I should have thought that this was reasonably clear. Any failure to do so might result in imprisonment for contempt of court.

§ LORD DRUMALBYN
I am sorry, but I cannot leave it there. If the noble Lord will look at Clause 3(10) he will see that it says: If any person makes default in complying with a direction given by the Board of Trade under any provision authorised by subsection (9) above … That is an entirely different matter, where a person is failing to do something which he plainly ought to do. In this case, the use of the words "makes default" pre-judges whether he ought to do it, or even whether he can do it. I will not press this matter, of course, but I would ask the noble Lord to look at it.

§ Clause 1 agreed to.

§ Clause 2 [Extension of principal Act in relation to supply of services]:

§ LORD RHODES moved, in subsection (1), after "services" where that word occurs a second time, to insert: shall include the undertaking and performance by way of business of engagements for any matter other than the supply of goods and". The noble Lord said, I would point out to your Lordships that this is a purely drafting Amendment. It has always been clear from what was said in another 31 place, both on Second Reading and in Committee, that the intention of the Government is that the expression "the supply of services" should cover every sort of industrial, commercial, financial and professional activity, other than the supply of goods. It has been suggested that the word "services" is appropriate only to cases when the person supplying the services does work for somebody else. I am not sure that I myself would put so narrow a meaning on the word, but I am advised that the matter is arguable. We thought it better to put down an Amendment to remove all possible doubt about activities such as those of life insurance companies, unit trusts and the entertainment industry. I hope that the Amendment will commend itself to your Lordships. I beg to move.

§ Amendment moved— Page 2, line 27, after ("services") insert the said words.—(Lord Rhodes.)

§ On Question, Amendment agreed to.

§ On Question, Whether Clause 2, as amended, shall stand part of the Bill?

LORD HAWKE
I wonder if the noble Lord in charge of the Bill can answer this question: how can it be said that there is a monopoly situation if only one-third of any supply is in the hands of one person? As the noble Lord may remember, many years ago in the textile trade there used to be attempts to create price arrangements among suppliers of services—dyers, printers and so on—and these always broke down, not because they could not command one-third of the market, but because some other fellow could cover 10 per cent. of the market. If 90 per cent. failed to be a monopoly in those cases, I cannot quite understand how 33⅓ per cent. can be the criterion for a monopoly nowadays.

§ LORD RHODES
I know that the Rules, or the absence of Rules, in your Lordships' House allow noble Lords to range rather widely, but this is really something much wider than the very narrow limits of the Amendment I am now moving.

LORD HAWKE
I am speaking on the Question, That the clause stand part, and I would point out to the noble Lord that I am entitled to raise anything.

§ LORD ERROLL OF HALE
I suggest to the noble Lord opposite that he should give an explanation to my noble friend on what is, after all, an important point of principle which is quite within the Question, That the clause do now stand part.

§ LORD RHODES
I will gladly do that. The provisions that were laid down in the 1948 Act still apply in this case, and one-third is accepted as the principle on which a monopoly is based. There was, of course, some move when the mergers were brought into it, but there is no alteration in the basis of the 1948 Act.

§ LORD DRUMALBYN
I should like to ask a question or two on this clause. Section 2 of the 1948 Act reads as follows: Where it appears to the Board of Trade that it is or may be the fact that conditions to which this Act applies prevail as respects either—

(a) the supply of goods of any description; or

(b) the application of any process to goods of any description; or

(c) exports of goods of any description from the United Kingdom, either generally or to any particular market,

the Board may, if they think fit, refer the matter to the Commission for investigation and report …. Clause 2 of this Bill extends the application of any process to goods of any description to the supply of services of any description. As I understand it, the supply of goods of any description is limited to the United Kingdom, and I think it would be construed that the supply of services of any description would also be limited to the United Kingdom. I should like to ask whether that is the intention, because, in a sense, at any rate, services, as well as goods, can be exported—services can be rendered abroad. What I am asking is whether this covers, or is intended to cover, the rendering of services abroad.

§ LORD RHODES
Yes, it does. It is general in its application.

§ LORD DRUMALBYN
If I may suggest it again, with respect to the noble Lord, in view of what I have read out from the principal Act, it looks as if there is perhaps occasion for some clarification on that point. However, I will leave it there. If it is intended, perhaps the 33 noble Lord would like to see that the intention is carried out.

§ Clause 2, as amended, agreed to.

§ Clause 3 [Powers of Board of Trade in relation to monopoly situations]:

§ LORD DRUMALBYN
This is purely a drafting Amendment. It looks to me, at any rate, that the subsection is wrongly set out, in the sense that the Amendment which was carried in another place ought to be set out separately on a separate line after paragraph (c), or the words "paragraph (c) above" ought to be amended as I have suggested. I beg to move.

§ Amendment moved— Page 6, line 6, leave out ("paragraph (c) above") and insert ("this paragraph").—(Lord Drumalbyn.)

§ LORD RHODES
May I congratulate the noble Lord on having gone through this Bill with such assiduity? He has spotted a typographical mistake. The words beginning "but the Board shall not" in line 4, and ending with "against the public interest" in line 11, are intended to form part of the general provisions of subsection (4). When the Bill is reprinted these words will start on a new line and from the margin. I hope in view of that explanation the noble Lord will think his Amendment is inappropriate, and that he will accordingly agree to withdraw it.

§ LORD DRUMALBYN
In view of what the noble Lord has said, I willingly withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ LORD DRUMALBYN moved, in subsection (7), after "consideration" to insert to give effect to any recommendation of the Commission,". The noble Lord said: This is an Amendment of rather more substance. As subsection (7) of Clause 3 stands at present, it reads: Where the Board make an order for any purpose mentioned in subsection (6) above, or have the making of such an order under consideration, the Board with a view to the achievement of that purpose may prohibit"— and so on. The first consideration is this. Unless the Commission have made one recommendation or more as to the effect of paragraphs (a) to (f) of subsection (6), there is no likelihood of any 34 evasive action being taken in anticipation of any order of the Board of Trade. Unless the recommendation is there in the Report of the Commission there is no cause for evasive action—there is nothing, apparently, to evade. Therefore, it is unlikely that the Board would have to do anything such as envisaged in subsection (7) while they have the making of such an order under consideration in that case.

§ The second point is this. As it stands, the subsection does not seem to me to make sense, if I may say so with respect, for where the Board of Trade appoint a person to conduct or supervise the conduct of any activities, they can do so only on such terms and with such powers as may be specified or described in the order. This is the only reference to such an order in the subsection, and it must surely mean the order which is under consideration. I do not see how it could mean any other order. I think it would not be right for the Board of Trade to appoint such a person on terms which were only subsequently revealed in the order, since the order has no effect under subsection (11) (a) until it is approved by I both Houses. An order which is made under subsection (7) is made for a purpose mentioned in subsection (6).

§ I would add that, under Section 10 (1) (b) of the principal Act, the powers of the section can only be exercised where the reference to the Commission is not so framed as to limit the investigation and report to the facts. So there is no occasion for the Board of Trade to take action under subsection (7) where the report is so limited, because again there is no likelihood of evasion. Since I can find no Parliamentary control of Board of Trade action under subsection (7)—that is to say, no power of control while the Board of Trade have the making of an order under consideration—it seems wrong to empower them to impose such I prohibitions, restrictions, obligations or control except where the recommendation has been made by the Commission for action which might be frustrated by anticipation. It seems to me that to permit the Board of Trade to impose such restrictions without the control of Parliament, as it were clandestinely where the Commission have definitely recommended no action of a nature covered by the paragraphs I have mentioned in the previous subsection, would clearly be 35 wrong. Therefore, I beg to move that the words in my Amendment be inserted.

§ Amendment moved— Page 7, line 3, after ("consideration") insert the said words—(Lord Drumalbyn.)

§ LORD SHEPHERD
I am most grateful for the way in which the noble Lord has moved this Amendment. I am particularly pleased with the narrow limits within which he has moved it, because when I first saw the Amendment I was wondering whether he was striking out the whole principle of the standstill orders which will arise under subsection (7). I think there is general agreement that we should look into the position of mergers; and certainly where a merger is quite contrary to the public interest, as reported by the Monopolies Commission, the Government of the day should have the right to take the necessary action. Subsection (6) gives a power to the Minister which is subject to the approval of Parliament or, at least, Parliamentary procedure. Subsection (6) does not in any way give a power to the Government or the Minister to prevent any frustration by the companies involved in the inquiry. Subsection (7) provides the standstill operation. We feel this is necessary because an order which is the final order for the break-up may be very complicated.
As we have said before, the Government do not envisage using these powers without consultation with the companies involved to see whether some satisfactory agreement can be arrived at. This may take some time, and there is a fear—and, I think, a justifiable fear—that companies who have received an adverse report from the Monopolies Commission may well anticipate from that report that an order will eventually be made by the Government, and may start to sell a factory, equipment, machinery, and the like, so that it may be impossible satisfactorily to break up the merger which has been contrary to the public interest, because there is little to break up. That is the reason the powers have been taken in subsection (7), particularly the one enabling the appointment of persons who could manage the business until the final order was made.
As to whether subsection (7) can operate without an order and is again subject to the Parliamentary procedure, 36 I would assure the noble Lord that this is the case. The powers under subsection (7) will be subject to a Statutory Instrument which itself will be subject to the Negative Resolution procedure of either House. It must expire not later than 40 days after the Monopolies Commission Report had been laid before Parliament, unless continued in operation by an order made under full powers described above.
I have also been referred to Clause 3(1) and the last words of the first paragraph: may by Order (whatever the recommendation, if any, made by the Commission) exercise all or any of the powers conferred by subsections (3) to (7). My noble friend has already congratulated the noble Lord on having studied this Bill closely, but if the noble Lord is still not satisfied and thinks this is not perfectly clear I will certainly look into the matter again. From the advice I have received I can assure the noble Lord that subsection (7) could not be used without the Parliamentary procedure. I hope those few words will convince the noble Lord and that he will withdraw his Amendment.

§ LORD DRUMALBYN
I am not quite convinced, I am afraid. In the first place may I suggest to the noble Lord that the meaning of subsection (7) would be clarified considerably if in line 4 and in line 6 after the word "may" in each case the words "by order" were inserted? That takes a good deal of the sting out of my Amendment, but not all.
The noble Lord was good enough to deal with the case—and I think I quote him correctly—of the justifiable fear that the companies which have received adverse reports from the Commission would be tempted to anticipate the order by evasive action. I quite agree with that, and of course my Amendment would cover it, but I have doubts whether it is right to allow orders to be made where there is any such adverse report—that is, where the Commission are reporting merely on the facts, or indeed where the Commission specifically report that there should be no such action taken as is considered in subsection (6) but where nevertheless the Board of Trade feel that they ought to consider making the Order. That is why I seek to add the words or for the making of such an Order under consideration to give effect to any recommendation of the Commission. 37 As I have argued, there would be little likelihood of evasive action where the Commission had made no such recommendation, because there would be nothing known for the company to anticipate or evade. Therefore it seems not unreasonable to insert those words. Otherwise the first intimation that anybody would have of any intention or recommendation would be when the Board laid the order prohibiting or restricting the doing of things, or putting in somebody to run the affairs of the company. I am dealing with the case where there is no recommendation of the Commission. In that case, the first that would be known about it would be this order. All I am asking is that the Government should look at this matter again and see whether they think that could arise in any circumstances, and whether it would be necessary to have that particular power to take action where the Commission have not made any recommendations for action—that while considering the action to be taken, the Board of Trade should make this order. That is what I am questioning. I entirely agree with the noble Lord that some form of standstill is required.

§ LORD SHEPHERD
I am sure the noble Lord will agree that both the Board and Parliament may feel it right to take action in the case of a merger even though the Monopolies Commission do not make the recommendation. As the noble Lord is aware, the Commission are not required to make recommendations; they can do if they so wish. I think the point which obviously disturbs the noble Lord is that an order might be laid before the Commission have reported—

§ LORD DRUMALBYN
Adversely.

§ LORD SHEPHERD
Or in fact have reported at all. Suppose we have sent the case to the Monopolies Commission for consideration. If it should come to the knowledge of the Board of Trade that a company is taking action in anticipation of an adverse report and is taking such action as would frustrate any order that might be made, assuming that an adverse report was likely, then I should have thought it to be right for the Government and for Parliament to say that this should stop; that the situation should be maintained very much as it was before 38 the merger started. I think there is no dispute between the two of us in principle, and I would certainly undertake to look at the words, although I have been assured that all aspects have been covered.

§ LORD DRUMALBYN
I might just say that we are not yet dealing with the merger clause; we are dealing with the monopolies situation; but I agree that much the same sort of thing is required. I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ On Question, Clause 3 agreed to.

§ Clauses 4 and 5 agreed to.

§ Clause 6:

§ General provisions about mergers

§ 6.—(1) Where it appears to the Board of Trade that it is or may be the fact that—

(a) two or more enterprises, one at least carried on in the United Kingdom or by or under the control of a body corporate incorporated in the United Kingdom, have, not earlier than six months previously, ceased to be distinct enterprises; and,
(b) either—

(i) as a result, the following conditions prevail, or
(ii) the value of the assets taken over exceeds five million pounds;

the Board of Trade may, if they think fit, refer the matter to the Commission for investigation and report and, if they do so, shall publish the reference in such manner as they think most suitable for bringing it to the notice of the persons affected:

§ Provided that paragraph (b)(i) above shall not apply where the prevalence of the conditions in question is expressly authorised by or under any enactment, other than the enactments relating to patents and trade marks.

§ (5) Where a reference is made to the Commission under this section, it shall be the duty of the Commission to make their report on the matter referred within such period, not exceeding six months, from the date on which the reference is made as may be specified by the Board of Trade in the reference or within such further time, not exceeding three months, as the Board of Trade may allow; but the Board shall not extend the time beyond the period specified in the reference except on representations made to them by the Commission and on being satisfied that there are special reasons why the report cannot be made within the six months, and if a report is made after the time allowed by this subsection, it shall not be published and no further proceedings shall be taken on it.

§ 4.29 p.m.

§ LORD DRUMALBYN moved, in subsection (1), at the beginning of paragraph 39 (b), to leave out "either". The noble Lord said: Perhaps it would be convenient if we were to take at the same time Amendment No. 5. This is by way of being a probing Amendment. We have been told that the main purpose, or at any rate a main purpose—and I think I said at an earlier stage that it was the most plausible purpose—of paragraph (b)(ii), that is, the inclusion of the words the value of the assets taken over exceeds five million pounds is to deal with the case where a foreigner or a foreign company is intending to merge, or has merged—in this particular case within the past six months—with a British company.

§ The reason I have put this Amendment down is that preventing a foreigner or a foreign firm from taking over a British firm in circumstances where a monopoly, within the meaning of the Bill, would not result hardly seems to be within the scope of the Monopolies Commission. I should have thought that if it is to be one of the functions of this Monopolies Commission to look into such takeovers, certainly it should be described as a Monopolies and Mergers Commission. I would suggest that to the Government. It may well continue to be called the Monopolies Commission for short, but if we are to have a Commission which will deal not only with monopolies, as such, but with other aspects as well, and in particular mergers, it would be as well to say in its name what it is dealing with, particularly as the Bill itself is titled, "Monopolies and Mergers Bill".

§ What I am rather more concerned with is the tests which the Monopolies and Mergers Commission, as I hope it will be called, will have to apply when it comes to examine a case such as I have in mind. I suggest that there should be a specific addition to the considerations to which the Commission must have regard under Section 14 of the 1948 Act I think this is of such importance that I ought to refresh your Lordships' memory what that section says. It says: In determining whether any conditions to which this Act applies or any things which are done by the parties concerned as a result of, or for the purpose of preserving, any conditions to which this Act applies, operate or may be expected to operate against the public interest, all matters which appear in the par 40 ticular circumstances to be relevant shall be taken into account and, amongst other things, regard shall be had to the need, consistently with the general economic position of the United Kingdom, to achieve—

(a) the production, treatment and distribution by the most efficient and economical means of goods of such types and qualities, in such volume and at such prices as will best meet the requirements of home and overseas markets;
(b) the organisation of industry and trade in such a way that their efficiency is progressively increased and new enterprise is encouraged;
(c) the fullest use and best distribution of men, materials and industrial capacity in the United Kingdom; and
(d) the development of technical improvements and the expansion of existing markets and the opening up of new markets."

§ Of those, only paragraph (d), it seems to me, is likely to have much relevance to the taking over of a British firm by an American firm. As we know very well, in many cases the Americans, for example (I quote the Americans because this is most commonly done), allow their British subsidiaries, in some cases, to export in competition with their own parent company in the United States, and in others to compete in nearly every market in the world, sometimes North America being excepted. These are quite common provisions, so that I think even paragraph (d) is of limited application.

§ I did not myself try (because I know how difficult it is) to frame a criterion by which the Commission would judge whether such a merger would be detrimental to the public interest. I think it would be desirable to add to these considerations another consideration to which the Commission should have regard, with particular relevance to what the Government have in mind; that is, the possibility that the British firm may be merged with a foreign firm. It does not seem to me that it is enough to leave so important a consideration to the omnibus phrase, "amongst other things", as would be done if there were no specific reference.

§ If it is to be part of the Commission's function to make recommendations as to whether or not a particular merger, where a foreigner proposes to take over, or has taken over, a British firm should be permitted, I feel that it should be given some general criteria by which to judge; for example, that other foreign firms already 41 controlled at least, say, X per cent. of the industry in question. But it seems to me that there must be some fairly specific criterion, such as the test in paragraph (b)(i) itself, the test of monopoly, or one of the criteria in Section 14 of the principal Act. That is the purpose of my moving this Amendment in this form, so that we can direct our attention particularly to this aspect of the matter. First, is it really appropriate that the Monopolies Commission should deal with mergers; and, second, if it is, then it should be made to appear appropriate by having the terms of reference and the criteria of tests to be applied by the Commission in line with the intention. I beg to move.

§ Amendment moved— Page 10, line 4, leave out ("either").—(Lord Drumalbyn.)

§ LORD BROWN
I wonder if I might say a word about this matter. I find myself in considerable sympathy with the noble Lord, Lord Drumalbyn, but I disagree with him on this point of laying down certain criteria for dealing with this desperately important matter of the situation when a foreign firm may wish to take over a British firm; because one is dealing there with a situation where the considerations which may be present, and which may have to receive the attention of Her Majesty's Government, are very diffuse indeed. I personally am dissatisfied with the use of this criterion of assets exceeding £5 million. I can think of cases where the proposed take over of a British firm with assets below that figure might be a matter that should come under the consideration of the Board of Trade. But the situation is so fraught with difficulty that when I read this Bill I realised the difficulty of introducing criteria, and I thought that the rough-and-ready test was that figure of £5 million, large as it is, because it may represent turnover up to £20 or £25 million. Unsatisfactory as the criterion is, I do not think the Bill would be improved by any attempt to state in detail the criteria which ought to be brought into play for this consideration to be given to a proposed merger. If one attempts to state criteria, I think one gets deeper and deeper into detail, and the cases we want to catch will not be caught.

§ LORD RHODES
If I may say so to the noble Lord, Lord Brown, that was precisely what happened in another place. They had great difficulty in framing a satisfactory alternative. The noble Lord, Lord Drumalbyn, quoted at length from Section 14 of the principal Act, but I would point out that there was nothing about mergers in that original Act. The mergers are in this Bill. I would say to him that the Commission are left free to take anything relevant into account in determining the public interest. But Section 14 has nothing to do with what we are talking about. What this Amendment really does is to remove from the Bill altogether the test based on the size of assets.
This question was debated at length in another place, not only on principle, hut also as to whether or not the £5 million mark was the best; and we should be left with only a weakened Bill if we accept this Amendment, which we cannot do. The size of assets test was attacked in another place and has been attacked here, on two grounds. First, it has been suggested that, in principle, the legislation should not cover mergers which have nothing to do with monopoly, since this suggests that there is something suspect about size—as such "bigness is badness", and so forth. Secondly, it has been suggested that the test in the Bill is not in any case a fair or appropriate measure of the significance of a merger.
I remember that on Second Reading the noble Lord most eloquently described the serious difficulties and disadvantages, as he saw them, in the £5 million criterion. But this test does nothing more than bring mergers of that description into the field. It is merely a qualifying test. The noble Lord may suggest that in some cases a merger which has satisfied the test may be of no great intrinsic value in the interests of the industry concerned. The word "beneficial" was used many times during the debate in another place. But we have emphasised over and over again that mergers will not be referred unless they appear to be potentially detrimental to the public interest; and doubtless the majority of mergers which satisfy either test for reference will not be referred to the Commission.
43 The noble Lord mentioned the question of the takeover of British firms by American firms. It has been said that we are against this. We are nothing of the sort. I personally believe that this sort of thing will go on in every country as world economy develops on the lines on which it is developing now. But clearly his quoting of Section 14, the monopoly conditions, could not apply in the case of foreign firms taking over firms in this country. I am advised that it would be only in an accidental and unusual combination of circumstances that the monopoly test would stand. We believe that if the law is to provide effectively for the investigation of such takeovers, then some other test is essential. It has not come from the noble Lord that there should be other methods than the one we are suggesting, which is the £5 million test; they did not come in another place either. All I can say is that we think that this criterion, although it may be arbitrary, is the best one that can be arrived at in the circumstances, and I should like the noble Lord in consequence to withdraw his Amendment.

§ 4.43 p.m.

§ LORD DRUMALBYN
I am afraid that I cannot have made myself clear in moving this Amendment. The purpose of my Amendment is this. If one is going to have the kind of case to which I was referring, where monopoly is not involved at all, and where you are bringing an entirely new element into the monopolies legislation, and if one is going to have this examined, is it wise to leave the field absolutely open? Is it possible? And if you are not going to leave the field open, the only thing to do is to lay down criteria similar in character to those that are already laid down in Section 14. As I understand it, this Bill will be at one with what is now the Monopolies Act, 1948, on monopolies and restrictive practices. As I understand it, the words In determining whether any conditions to which this Act applies, or any things which are done by the parties concerned", and so forth, will still apply. And therefore, as the thing stands, whether or not the noble Lord thinks that these tests are appropriate to mergers, they will be in the Act as tests to be applied to mergers as well as to monopolies.
44 What I am suggesting is that there should be an additional test, or one or more additional tests, introduced that will apply to this particular kind of case in which the public interest will be confined or defined in some way, so as to focus the attention of the Commission on the points for which they have to look out. Of course, it is true that the Government will not refer a case such as I have in mind to the Commission unless, as the noble Lord put it, it seems to be "potentially detrimental to the public interest"—I think I quote his words accurately. Of course, that is true; but in the case of monopolies we have all these tests here. When a case is referred to the Monopolies Commission in respect of monopoly—this case could arise, of course, in the case of monopoly as well—they have all these tests here.
What I am querying is whether words that will introduce a completely new test, a test of the amount of the assets, the £5 million test, should be introduced, as I understand it, almost wholly, if not wholly, simply to catch the case that I am referring to. And if a test is introduced for that purpose, what I am suggesting is that there should be some kind of definition. I did not leave this entirely in the air, because I did say that it might be a definition of the amount of an industry that foreign capital should be allowed to control, just as in the case of a monopoly it is the amount of the supplies of goods which one supplier may be allowed to control without coming within the purview of the Monopolies Commission.
This is the sort of test that can be a guide as to the public interest because, frankly, I do not see how, even if it is called the Monopolies and Mergers Commission, it is going to have any idea of how to judge of the public interest in a case like this. This is a Governmental function, or it is a function for Parliament. But just to throw this kind of burden on the Monopolies Commission, and expect them to be able to make recommendations about it, seems to me most extraordinary. Undoubtedly, they can unravel and present the facts. But I do not understand on what criteria they are going to be able to give any guidance to the Government unless they are given some test of the public interest.
The reason for introducing this Amendment at all is that it seems to be wrong 45 in principle to have a test such as this at large in order to catch a particular case without at the same time giving good guidance as to how to deal with the public interest in that case. In my view, rather than to do that, it would be better to leave out this test altogether. That is not to say that I do not think that the matter of foreign capital taking over British firms may not be important and ought not to be dealt with in some way. But if it is going to be dealt with by a Monopolies and Mergers Commission then either it has to be dealt with on the criteria of monopolies, or some new criteria for mergers of this character have to be laid down. I hope I have made my meaning clear.

§ LORD BROWN
As I understand the noble Lord, he seeks to rely on the criteria in the 1948 Act. Those criteria are not definitive, objective tests, but are matters of judgment. Therefore, if one excludes the £5 million limit, one is thrown back entirely on matters of judgment. This means that the field is open, without any limitation of the £5 million sort, for investigation of any merger whatever.

§ LORD DRUMALBYN
There are two things which have to be clearly distinguished. One is the test under which a reference can be made, and the second is the test of whether or not the conditions are conducive to or against the public interest. Those essentially are matters of judgment. My point is that if there is no guidance in the Bill, the Commission will be at a loss as to how to judge them. In the same way as criteria are set out to judge whether monopolies are or are not against the public interest, so should the criteria to be observed in relation to mergers be set out. If they are not so set out the Commission will have no guidance at all as to how to exercise their judgment in the public interest.

§ LORD CHORLEY
I should have thought that there was a considerable difference between cases of monopoly and many of the cases which concern mergers. I do not know very much about the monopoly side of the question, but in my experience as a commercial lawyer I have seen a good deal of company law. The matters which come into these 46 cases are infinitely various. The danger of setting out such matters in an Act of Parliament is that, in effect, one tends to limit the matters which have to be borne in mind by the determining authorities. I should not have thought it at all sound to establish limits of that kind. The people who have to judge these matters are knowledgeable men; the judges are men of great experience in commercial work, and those who work with them have considerable experience and knowledge of business affairs. Surely it would be better to leave these infinitely variable factors to be judged by them, rather than that they should be tied down in an Act of Parliament.

§ LORD DRUMALBYN
I am not trying to tie them down or limit them. I am trying to give them criteria—which means that there will be tests by which they can exercise their judgment.

LORD HAWKE
There are two questions here—first of all, the criteria by which the Board of Trade have any power to refer the question of a merger to this body; secondly, the question whether it is a proper body to which to refer the question of mergers. In my mind, it is an entirely wrong body. It is not the business of a Commission of this sort to decide what is the public interest. The public interest has been involved again and again in Acts of Parliament throughout the last twenty years, and the public interest is a political decision. Its decision has to be taken by a Minister and is the responsibility of the Government. I should have said that the only people who are really competent to advise on a take-over of a British company by a foreign company are the Treasury and the Chancellor of the Exchequer, working in conjunction with the Board of Trade. Frankly, I think that this Bill is a whole lot of nonsense in sending it to a Monopolies Commission.

§ LORD RHODES
I would say to the noble Lord that in making his comment that the Bill is a whole lot of non-sense he is going against a good 90 per cent. of opinion, which is in favour of the Bill. Much play has been made on the question of criteria. I think it would be much wiser to leave it to the Commission to take into account anything relevant. It is surely impossible 47 to define "public interest". In fact, I challenge anybody to give such a definition. The final decision whether to let the merger go on or not has to rest with the Government. It is, in my opinion, as simple as that, and I am afraid I cannot say much more about that particular point.

§ LORD ERROLL OF HALE
I think the noble Lord has perhaps not thought the subject through as fully as he might have done. After all, there are clear criteria laid down in the case of monopolies, and my noble friend has read out to the Committee the relevant parts of the principal Act. It is not unreasonable that there should be similar criteria for looking at merger situations which do not involve a monopoly. That is what we are seeking to establish. The situation is further complicated by the fact that it may be a foreign company which seeks to take over a British company. There, again, criteria ought to be established and laid down in the Act. If criteria can be established in the principal Act in regard to monopoly situations, then surely they can be established in regard to merger situations. A typical case which one has in mind at the moment, about which the noble Lord was good enough to give me an answer this afternoon, is the case of Showerings' attempt to take over Harvey's. How are the Commission to decide whether or not such a take-over is in the public interest? There are no criteria, no past experience to guide them at all. Indeed, it would be of great advantage to British industry and commerce if criteria concerning merger investigation were to be written into the Bill, even at this late stage. I hope that the noble Lord will undertake to look at the matter more fully between now and Report stage.

§ LORD SHEPHERD
I am quite sure my noble friend will look at the matter again. We have had an interesting debate. I rise merely to deal with the point put by the noble Lords, Lord Drumalbyn and Lord Erroll of Hale, in regard to the criteria in the 1948 Act. The 1948 Act set up a new body, a body which is unique in our commercial history. I presume that the Parliament of the day thought it was necessary to have guide-lines in the Bill for the benefit of 48 the Commission. The Commission have become broadly acceptable to all parts of industry. I do not know of any criticism of the manner in which the Commission have conducted themselves, or the manner in which they have made their reports. They have now built up a tremendous amount of experience and knowledge.
We are asking in this Bill that this same Commission, with all their experience, should look into the question of monopolies and advise—and this is really what they do, because in their Report they are not called upon to defend a conclusion, although they can do so; they are not even called upon to make a recommendation, although they can—and investigate and make a report. Whatever may come out of that report, any action decided upon will be taken by the Minister and by Parliament. I should have thought it was unnecessary at this stage, with all the Commission's wealth of experience, for us to go into the very difficult matter of writing in criteria. I think one of the greatest mistakes which we should make if we put in criteria would be to put in something and leave out something else, so that the Commission, if required to take something into account, might find that it was not part of their criteria and therefore they were prevented from making an examination.
When I sat on the other side, I heard it argued many times that it was dangerous to put certain things into a Bill and not put everything in. I should have thought that, in giving powers and duties to the Commission in respect of mergers, the Government were right to leave it to them, with their good common sense and, above all else, their vast experience, to produce a report after proper investigation for the Minister and Parliament to decide upon.

§ LORD DRUMALBYN
Of course, I was not suggesting that criteria should be entirely comprehensive. Indeed, the criteria in the 1948 Act are not comprehensive; the Commission are merely invited to take certain considerations, among other things, into account. What I was suggesting was that this mergers' side is a new function, with particular reference to takeover by foreign firms and value of assets, and that it might not be a bad idea to add to the criteria already 49 in the Act something related particularly to that. I leave it at that.
My own personal view, as I said before, is that there is a case for the Government having powers of this description where foreign capital intends to take over a British industry. Whether it is appropriate to have that done under this Bill is much more open to doubt. If criteria had been inserted into the Bill which would have enabled them to understand what they were about, I should have been much more ready to refer that kind of case to the Commission than I am. But this is only the Committee stage and I think we can well leave it at that. I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ LORD DRUMALBYN
Amendment No. 6 is rather complex. In point of fact, I think I would rather not move it but will raise the matter on the Question, Whether the clause shall stand part of the Bill?

§ 5.3 p.m.

§ LORD ERROLL OF HALE moved, in subsection (1)(b)(ii), to leave out "five" and insert "ten". The noble Lord said: The purpose of this Amendment is twofold. First of all, I consider that the figure of £5 million is too low. Companies' assets are constantly enlarging in these days, and as the value of the pound depreciates so a company appears to be bigger in terms of pounds although its assets may not have grown proportionately. I should like to suggest that the figure of £10 million is more appropriate than the figure of £5 million.

§ The second purpose of this Amendment is to try to elicit from the noble Lord. Lord Rhodes, why the Board of Trade selected the figure of £5 million. It is such a round figure that I have the feeling that it was a case of just thinking of a number and putting it in. It does not seem to be the sort of figure which would result from a careful, scientific, modern, purposive look at the subject, such as we should have been led to expect from members of the present Government. It seems to me that the proper course would have been for the Board of Trade to examine the books of all public quoted companies, and of all non-exempt private companies, to see what were the values of their assets and to see roughly where the line should be drawn.

§ Is it the case that there is a very large number of companies whose assets are just over £5 million, so the line was drawn at £5 million; or is it the case that there is a very large number of companies whose assets are, say, £4¾ million or less, going down to, say, £1 or £2 million, and that the line was therefore drawn at £5 million so as to exclude them from the purview of this Bill in the event of individual firms of that size or less being subject to a takeover bid? I should like to think that there had been a thoroughly systematic appraisal of the assets of British companies along the line that I have suggested, and I should be much reassured if the noble Lord could tell me so. But, in any case, I hope that the noble Lord will consider raising the figure from £5 million to £10 million so as to limit to some extent the sweep of the Bill; and I should also be glad to be reassured on the question of the systematic approach. I beg to move.

§ Amendment moved— Page 10, line 22, leave out ("five") and insert ("ten").—(Lord Erroll of Hale.)

§ LORD RHODES
I must say that on looking at this for the first time I thought that seven might have been a better figure than five, but after reflection and considering the figures I decided that five was better. The noble Lord suggested on Second Reading that we had thought of a number and doubled it. I may say that we have been a little more meticulous than that; we have not drawn the number out of a hat. We decided that this figure should be pitched high enough to leave out take-overs of smallish firms. I do not think there will be any disagreement that to have cluttered up the proceedings with considerations about smaller firms would have been against the general objective. We did not want there to be a waste of time by the Board of Trade having to scrutinise and decide on all manner of small companies. This test is a qualifying test only, and it is more important not to draw the line too high than to draw the line too low. The Board of Trade need not refer a merger merely because the test is satisfied, and in the majority of cases there is no reason to suppose that references will be made.
With these considerations in mind, the Board of Trade studied the statistics 51 available to them about the takeovers by quoted companies of quoted companies with total assets of £1 million or more which had occurred in each of the last four years. I think the noble Lord will agree that that is going back quite a way. Taking industrial and commercial companies only, it may be of interest to noble Lords to know that in 1964 there were 18 acquisitions of companies with total assets of £5 million or more; in 1963 the figure was 9; in 1962 there were 11, and in 1961 there were 13. That is to say, over the last four years the test in the Bill would have brought 51 of these mergers within the field of scrutiny.
It would not be right to discuss specific cases, but it is fair to say that when one comes to examine the firms involved in these mergers there is nothing to suggest that £5 million is drawing the line too low. This does not, of course, imply that if the Government had had the powers conferred by this Bill they would have thought it right to refer to the Monopolies Commission all, or most, of these mergers. But many of them had features which the Government would have wished at least to consider before deciding not to make a reference. If, as the Amendment suggests, the line were drawn at the £10 million level, about half of those mergers would have been withdrawn from the field of scrutiny. We do not think that would have been right, and we advise the Committee to leave it as it is. I hope that, in the light of what I have said, the noble Lord will be pleased to withdraw his Amendment.

§ LORD ERROLL OF HALE
I am most grateful to the noble Lord for an interesting explanation, and for providing material, which I do not think has hitherto been made available, regarding the number of mergers over the last few years. There is just one point about which I was wondering if the noble Lord could help the Committee. How many of those which he mentioned were foreign companies taking over British companies? I wonder if he could give me that information.

§ LORD RHODES
That I cannot say, but I will let the noble Lord know.

§ LORD BYERS
Before the noble Lord withdraws his Amendment, may I ask the noble Lord, Lord Rhodes, whether, 52 when he gave us those figures, he included both mergers and takeovers? We seem to be using these two words fairly loosely. But do the figures he gave include the case where there is a takeover and the unit becomes 100 per cent. subsidiary, as well as the case where two corporations merge together? Because these are two separate situations.

§ LORD RHODES
They include both.

§ LORD ERROLL OF HALE
I am grateful to the noble Lord for saying that he will furnish information of foreign takeovers, and, in view of the figures which he has supplied to the Committee, I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ 5.13 p.m.

§ LORD ERROLL OF HALE moved to add to subsection (1): () The Board of Trade may by order at any time raise the figure five in subsection (1)(b)(ii); and any such order shall be subject to annulment in pursuance of a resolution of either House of Parliament.

§ The noble Lord said: I beg to move Amendment No. 8 standing in my name on the Order Paper. Although this afternoon we have had a useful explanation as to why the Board of Trade have selected a figure of £5 million in sub-paragraph (ii), the time may well come when they would prefer to have a different and higher figure; indeed, the noble Lord himself said that, on first looking at the matter, he thought that a figure of £7 million would have been more appropriate than £5 million. That may well be the case in a few years' time, and it would be unfortunate if a higher figure could not be adopted merely because a figure of £5 million had been written into the Bill in the year 1965. The purpose of my Amendment is therefore to enable the Board of Trade to raise the figure of £5 million at any time by order—subject, of course, to its annulment in pursuance of a Resolution of either House of Parliament—so as to have a more realistic figure at any time it wishes, without the necessity of amending legislation. I hope that the noble Lord will be able to accept my Amendment, or at least the principle of it. I beg to move.

§ Amendment moved— Page 10, line 31, at end insert the said subsection.—(Lord Erroll of Hale.)

LORD HAWKE
I also hope that the Government will be able to accept at any rate the principle of this Amendment, because in an inflationary age a power to vary the limit would seem quite unexceptionable.

§ LORD BROWN
There is a point about this Amendment which I should like to explore for a moment. The figure of £5 million has been chosen on the basis described by my noble friend on the Front Bench, but as the main purpose of this provision is to catch the foreign company that is out fishing for "plums", if I may put it in that way, in this market, and as we are well aware that many of the companies with technological inventions of very great importance for the future may he well below the figure of £5 million (and there have in the past been examples of companies that have developed or owned patents being acquired by foreign companies, to the detriment of this country), then I see no reason why, if leave is given by order to increase this figure, leave should not be given by regulation to decrease it. I think that, as the battle which is developing at the moment—the battle for international integration of various businesses, particularly those concerned with advanced technological development—develops still further, we are going to see some extremely surprising things happen in industry.
The Committee know that I stand as one who has suggested that there is need for the Government to encourage more mergers of the right sort, and I do not want to be mistaken for a "Little Englander" who is either against mergers or against the acquirement of British firms, at times, by foreign firms. I do not want to be seen in that way. But there are attacks at important points in our economy against which safeguards ought to exist. Therefore, I would urge my noble friend, if he is going to consider this Amendment at all, to put it in such terms as will allow this limit to be reduced as well as increased, because the situation may arise where that becomes necessary.

§ LORD RHODES
Before we go any further, may I say that I should not like it to be thought that these provisions have been drawn up solely to combat any effort by foreign firms to enter this country 54 and acquire firms—not at all. In answer to the noble Lord, Lord Erroll of Hale, I would say that the figure of £5 million was selected after careful consideration, as I tried to show during the debate on the last Amendment. Generally speaking, it seems adequately to distinguish mergers which ought to come within the field of public scrutiny from other mergers—and, having the figures in mind, I think the Committee would agree. However, we may find, in the light of experience, that £5 million is too low a figure—and, of course, we shall get more experience as we go on. Throughout the whole of the proceedings in another place we tried to make it clear that we were prepared to reconsider certain things in the light of experience gained. Experience may show that it is too low a figure, and that in practice it is never necessary to refer an acquisition where the assets transferred are less than, say, the figure that I mentioned, £7 million. Alternatively, it may be found that £5 million is too high, and that the test does not permit reference of particular mergers into which it is generally agreed that an inquiry would be desirable.
I agree that flexibility on the matter of this figure is desirable, but I think the noble Lord will agree that flexibility is sometimes desirable both ways. This Amendment, however, gives flexibility only one way, upwards. It would possibly never be necessary to go below the £5 million, but the noble Lord may not have appreciated that, as the Amendment stands, if a higher figure were substituted for £5 million, that figure could not subsequently be reduced again to £5 million or to some intermediate figure. I agree with the noble Lord that there should he full flexibility, and if the noble Lord will withdraw his Amendment I will undertake to nut down a suitable Amendment on the Report stage.

§ LORD ERROLL OF HALE
In view of what the noble Lord has said, for which I should like to thank him very much, I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ LORD ERROLL OF HALE moved, in subsection (5), to leave out "six", where that word first occurs, and insert "three". The noble Lord said: It might be convenient to the Committee if I were to 55 take Amendments Nos. 9 and 10 together. Essentially, they deal with the same point. The Monopolies Commission, which I hope will be renamed the Monopolies and Mergers Commission, will, by subsection (5) of the clause, be allowed a period not exceeding six months within which to make their report on a matter referred to them. I think that this is really rather too long a period. I know that possibly the views of Ministers at the Board of Trade may have been coloured by the lengthy deliberations of the Monopolies Commission on monopoly and restrictive practice investigations which have been referred to them in the past, and that it may have been felt that a period of six months would not be too long. But we have now had experience of a reference to the Prices and Incomes Board, which Board has been able to report very quickly on extremely complicated matters.

§ LORD SHEPHERD
But it was an interim report.

§ LORD ERROLL OF HALE
Admittedly, it was an interim report; nevertheless, it was a very important and useful one. In the case of the Monopolies Commission dealing with similar matters, there will be a report to the Board of Trade who will then decide whether to take action or not. It should be possible for the Monopolies Commission to make their report to the Board of Trade within a period of three months rather than six months. For my part, and on behalf of my noble friends, I should like to see the shorter period of three months inserted in the Bill. I beg to move.

§ Amendment moved— Page 11, line 26, leave out ("six") and insert ("three").—(Lord Erroll of Hale.)

§ LORD RHODES
The noble Lord, in his usual engaging manner, has made out quite a case for the Amendment; but I am afraid I cannot accept it. The need for getting on with the job of speeding up the reports of the Monopolies Commission was known to everybody in both Houses, in business circles and everywhere else. It culminated in the 1962 investigation which eventually was brought out in the 1964 White Paper. We agree about the need for speed. But for many years we did not care very much about either the speed or the num 56 ber of cases that were put to the Monopolies Commission; they gradually declined over the years. Because of the Amendments in the House of Commons, the Bill now provides for a period not exceeding six months. We have made it clear that we want the Monopolies Commission to deal with these things as speedily as possible and we shall expect them to do so. It may be that every merger investigation will not take six months; it may be that it will take considerably less time. It was reported in another place that the provisions in the Bill as introduced might have encouraged the Monopolies Commission to take six months on every investigation; but that will not be the case. There will be many opportunities to get reports out in much less time than six months; though in some cases six months may be required.
It was agreed, after much debate in another place, that a further period of three months could be granted. We have gone into the matter very carefully; and from the figures and time-tables that have been available to us we find we could not possibly safely specify a shorter period than six months. We have also taken into consideration evidence from other countries which have similar Commissions. All these investigations confirmed that in most cases we could not safely impose a shorter maximum period if we are going to do what we set out to do: that is to make a thorough and reliable investigation of a merger. There is nobody in this Committee who would say that matters like this ought to be rushed. The investigations ought to be expedited and given all the help that can be given to them; but they should not be slipshod; they should be thorough.
It is true that in the case of a newspaper merger the Bill provides that the standard period for investigation shall be three months; but a newspaper merger is a different thing altogether. The limited issues on a newspaper merger should be quite evident to anybody. I share the noble Lord's anxiety that these merger investigations should not be carried out over too long a period; and I am hoping that we shall he able to do what everybody wants to do: that is, to speed them up. But I think this period of six months is the right period.

LORD HAWKE
If the noble Lord is really serious in thinking it is going to 57 take six months to investigate these mergers, the position is going to be intolerable for the parties concerned. In fact, it is a very strong argument for my case that this is not at all the right tribunal to which to send considerations of mergers. The two parties who want to merge, one of whom, perhaps, wants to take over the other, are doomed to wait for six months after the papers get to the Commission. I am not sure about this; but I think the period runs from after the papers are received by the Commission. They will perhaps have been for some time in the Board of Trade before reaching the Commission. They will have to spend over half a year wondering possibly whether they are going to be allowed to merge their businesses. I agree with the noble Lord, Lord Brown, that what we want are more mergers and bigger and better businesses in this country. It is not the right way to encourage this process if the firms have to wait for six months to discover whether they are going to merge at all.

§ LORD RHODES
I think the noble Lord is under a misapprehension. He is assuming that every merger is going to be referred. That is not so. That is why the criteria are established. Very few mergers will be referred to the Commission. If a merger is proposed which is obviously in the public interest it will not be referred at all. It will have the blessing of the Board of Trade—or as near to it as we can get.

§ LORD DRUMALBYN
I understand that the noble Lord fully appreciates the need for the utmost speed in these investigations of mergers; but I wonder whether he fully understands how great the inconvenience is going to be to the firms which are proposing to merger, especially if a ban has been put on dealing in their shares in any way in the meantime. As I said earlier, I think the most likely result of any such investigation is that the merger will come to nothing. At any rate, after the period it will have to be reopened entirely and renegotiated. But of course, the shorter the period, the less the inconvenience. What I was going to ask the noble Lord was this: is there any way in which the period can be reduced? We mentioned in the course of the Second Reading debate the possibility that some additional members of the Commission should be appointed 58 whole-time for the period. What I am asking him is: would that substantially reduce the period of investigation? Obviously, the amount of work that has to be done by the permanent staff remains the same. There are limits beyond which the period cannot be reduced.
The noble Lord has made reference to comparable investigations abroad. Can he say how many of these investigations were carried out by people not only whole-time but doing nothing else but that investigation; because it may be that you have people permanently engaged on this kind of work but not actually doing the particular work; they may be doing other investigations at the same time. But supposing you had a section of the permanent staff doing nothing else but this investigation, and you had whole-time members of the Commission doing nothing else but this, how long would it take? I am sure the noble Lord agrees with me that if by that means we could reduce the period to three months it would be worth while. I am sure this is what my noble friend had in mind.

§ LORD RHODES
I can give an unqualified assurance that we will do all in our power to speed-up these investigations. But may I say publicly now, so that it can be reported, it is in the hands of the firms, as well as the Commission, to speed up investigations. It is not just a matter of whether the Commission is taking a lot of time. It could very well be that the firms could speed up matters by their own actions. With regard to appointing full-time members of the Commission, we do not see how that would work at the moment. There are powers in the Bill to do so, if it is desired. At the moment it appears that it might well he disadvantageous to have more full-time members, but it is open to the Board to make appointments on whatever basis is thought fit. I can assure the noble Lord that if it is necessary to take any of these actions to speed up the rate of progress, we shall do it.

§ LORD ERROLL OF HALE
In view of what the noble Lord has said, I should like to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ 5.31 p.m.

§ LORD RHODES
During the Report stage in another place, the Government 59 accepted a group of Opposition Amendments which had the effect of providing that the period during which the Commission must report on a merger inquiry was to be such period, not exceeding six months, as the Board of Trade specified in the reference, with power for the Board in special cases to extend the period so specified by a further period not exceeding three months. Previously the initial period provided by the Bill was six months. The Amendments in question were incomplete because the reference to six months in line 33 should have been correspondingly changed. The present Amendment rectifies this omission.

§ Amendment moved— Page 11, line 33, leave out ("six months") and insert ("period so specified").—(Lord Rhodes.)

§ On Question, Amendment agreed to.

§ LORD BYERS moved to add to the clause: () Wherever a reference is made to the Commission which affects one or more companies with publicly quoted shares the Board of Trade shall consult with the Commission and the Council of the Stock Exchange to determine the policy to be followed concerning share transactions during the period during which the merger is under examination.

§ The noble Lord said: I apologise that to some extent this Amendment overlaps the debate we had on one or two previous Amendments. I raised this matter on Second Reading and I wish to return to it at this stage. I think that we are mainly agreed that some mergers are not only beneficial but ought to be encouraged. These are the mergers which would make for greater efficiency and are required for rationalisation. The bias in this Bill—to use a phrase of the Chancellor of the Exchequer—is against mergers. I think that on the whole there is a good deal of feeling in the country that mergers should be scrutinised, and it is a perfectly reasonable bias, but I am afraid that the result will almost certainly be to deter potential mergers whether or not they are in the public interest. This is my fear.

§ It could be extremely important, from the point of view both of economic developments in Europe and of strengthening our own efficiency against foreign competition here, that we should not put unnecessary obstacles in the way of a 60 merger which could be useful and in the national interest. As we move closer to Europe I believe it will be in our interest to get mergers going here and with foreign firms.

§ The provision under the Bill that the Commission may take up to six months, as has been said, to determine the merits or the demerits of a particular scheme will be a major obstacle in the way of beneficial mergers to companies with publicly-quoted shares. Uncertainty surrounding proposed negotiations is bound to have an effect on what is proposed. I am afraid that it may deter people from coming to a conclusion on a useful merger. One thing which any responsible board of directors have to guard against is speculation in the shares of their own concern or the undertaking with which they propose to merge. A period of uncertainty could do only damage. should like, therefore, to suggest to the Government that, perhaps at a later stage, they might table Amendments to give some effect to overcoming this uncertainty.

§ It might be, in the first place, that it could he made clear that if both parties to a merger approached the Board of Trade in confidence, and it was found that the matter was in the public interest, they could obtain prior clearance, subject, of course, to the shareholders of both concerns giving their consent. If concerns felt that they could get such prior clearance in confidence, having put their cards on the table, I think it would lead to a number of concerns being quite willing to contemplate mergers which otherwise they might feel would be very difficult to undertake.

§ The second point is that if the Board of Trade did not feel it could give prior clearance immediately, either because the matter was complicated or because the Board might wish to refer it to the Commission, provision could be made for allowing the merger to proceed to the point of being approved by the shareholders at a general meeting subject to the approval of the Commission. This again would remove some, but not all, of the uncertainty. Normally it would take five to six weeks to call a meeting of shareholders and one would hope that at the same time the Board of Trade and/or the Monopolies Commission 61 would in such cases undertake to give priority to considering the facts and trying to pronounce a verdict as soon after the meeting of shareholders as possible. It is difficult to overrate the disadvantages which would occur from uncertainty surrounding such transactions. I wish to ask whether the Government have anything in mind with regard to suspending share dealings for any time during which the Monopolies Commission or the Board of Trade may be considering the matter. Would it not be worth while to consult the Council of the Stock Exchange on the matter?

§ One further point. What is the position if a third party should come in with another bid after the first bid has been referred to the Commission and is still under examination? Might some confusion not arise in such circumstances? I am merely trying to point out to the Government, without in any way undermining the principle of the Bill, that here there are serious administrative considerations. The problem, in brief, is: how can we encourage good mergers in the public interest while promulgating a measure designed to prevent mergers which may have monopoly circumstances or in some way are against the public interest? I put down the Amendment in the hope that the Government will be able to enlighten us on this aspect.

§ Amendment moved— Page 13, line 12, at end insert the said subsection.—(Lord Byers.)

§ THE EARL OF IDDESLEIGH
With great respect to the noble Lord, Lord Byers, is it correct to refer to the "Stock Exchange"? I have no doubt that the noble Lord intended to refer to the London Stock Exchange, but there are Stock Exchanges in Manchester and Birmingham.

§ LORD BYERS
I am grateful to the noble Earl, Lord Iddesleigh, for correcting me. In my Party we make a great feature of regionalism and I hope I shall be forgiven. I am grateful for the correction.

LORD HAWKE
I listened to the speech of the noble Lord, Lord Byers, with great interest. He has brought out and magnified my objection to referring these mergers to this tribunal. He has shown that the situation will be admini 62 stratively quite impossible, if there is a takeover bid for a firm and, as soon as that goes to the Board of Trade and gets to the Monopolies Commission, another firm comes along with another bid. Which is the Commission going to consider?—because it does not know which the shareholders are going to accept. In the Commission's opinion, the merger with one firm might be very much in the public interest and the merger with the second not in the least in the public interest, but they do not know which will be accepted, if either, by the shareholders. I am afraid that the Government, in choosing these takeovers and mergers, are going to get into an appalling administrative mess.

§ 5.41 p.m.

§ LORD RHODES
I must say to the noble Lord that I do not think we shall. We have the benefit of tremendous experience and advice coming from all quarters. We have had advice from the noble Lord, Lord Byers. Often I am able to go with him, because I admire his perspicacity. I am sure that in the event of two firms going to the Board of Trade to ask for advice they would get it so far as the Board were able to give it but that must not cloak the fact that, having given the advice, the Board of Trade would not be prevented from taking action within the following six months.
The noble Lord has directed his Amendment to those companies whose shareholders will be in a state of suspense. I should like the Committee to consider this point. The merger first arrives at a stage where everything is confidential. Sometimes that is the stage when the parties consult the Board of Trade Perhaps a basis of agreement has been worked out between the boards of the companies concerned. Or perhaps the proposal is more one-sided, and one company may think that it will be profitable to take over the other before the "victim" is aware of what is happening. Rumours that plans of this sort are being worked out can, of course, have an effect on share values, whether these reports of mergers are true or not. Who does not know this, who has any dealings whatever on the Stock Exchange? Everybody who has been investing during the last few years knows all about this. Many people have been able to take care of the rise 63 in their cost of living by doing just that. A mass of people in the class of shareholders are affected, who know what they are at and are aware of the effect on share values.
For me to stand here and talk to people of experience in investment on the Stock Exchange is a mere pretence. We all know what happens. There is no secret about it. But I do not think that the enactment of this Bill is relevant to the question of secrecy. I know what the noble Lord has at the back of his mind. It may be that there will be rumours of an inquiry or an investigation taking place, but I would back the Board of Trade in keeping their counsel.

§ LORD BYERS
I should not like the noble Lord to misunderstand me. I have not suggested anything of the sort against the Board of Trade. In fact, I asked whether it was possible to get from them a prior clearance, in confidence, because I have confidence that they will respect confidentiality better than business.

§ LORD RHODES
I thank the noble Lord. I am perfectly certain his views coincide with mine, and if I misjudged him as thinking that there was any chance of secrets being divulged, I apologise. At the stage when the merger is confidential, people may come to the Board of Trade and try to get guidance on whether their proposal may be referred to the Monopolies Commission or not. At that time rumours might arise that somebody had been to see the Board of Trade; but this is neither more nor less likely to happen than the sort of rumours which already arise that mergers are being planned. The Board of Trade, for their part, would take every precaution to see that approaches were kept confidential.
Next comes the stage contemplated by this Amendment, when the offer had become public knowledge and the Board of Trade had decided to refer the proposed merger to the Commission. At this stage there is no question of secrecy. The problem then, if there is one, is one of uncertainty as to the outcome of the investigation. A Monopolies Commission investigation into a merger would admittedly mean that over a period of some months there might be uncertainty about the future ownership of a company, 64 but this would be only one of the many uncertainties which the market would have to take into account. If I may say this to the noble Lord, the one thing the market is used to doing is taking account of uncertainties.
I cannot see what useful function the Board of Trade or the Commission could discharge in this matter. This is something which can, and should, be left to the Council of the Stock Exchange. If any good could come of consultation between the Stock Exchange and the Board of Trade, I am quite prepared to say that it would be done. It is relevant that in the United States of America, where there have been for some years procedures of this description for the investigation and unscrambling of mergers, there has been no occasion for any special public regulation of share dealings during anti-trust proceedings. I think that the noble Lord would agree that a free market is capable of taking more than this in its stride. It is surely significant that we have received no representations whatever from the Council of the Stock Exchange. In the circumstances, I cannot advise that the Amendment should be accepted.

§ LORD AIREDALE
Would not the Minister agree that when he mentioned general market uncertainties and said that of course investors and the Stock Exchange are well used to taking uncertainties into account, he is talking about general uncertainties which affect companies over a very wide field? The uncertainties which we are talking about now are uncertainties which affect two or three companies in particular to a great extent, and that is a very different, sort of market uncertainty to take into account, possibly over an extended period, while something is being referred to the Commission.

§ LORD RHODES
I cannot plead guilty to misunderstanding it at all. It was obvious what the noble Lord had in mind; but I am sorry I cannot help him.

§ LORD BYERS
I will, of course, withdraw the Amendment, and I am grateful to the noble Lord for the statement he has made. However, there are just one or two things that I should like to say. First of all, I was not approaching this 65 matter in any way from the point of view of the Stock Exchange. I have no connections with the Stock Exchange: I am not a "City saboteur", or whatever the phrase is. I was approaching this much more from the point of view of rationalising business, and the fact that the more obstacles one puts in the way, and the more confusion is likely to arise, the less chance there is of go-ahead mergers taking place.
I was grateful to the noble Lord, Lord Rhodes, for the lesson he gave us in the use of speculation in safeguarding one's position against the cost of living. This may be what he does on the Stock Exchange, but it is not the way in which ordinary British business is conducted. I should not like to give the impression that this has anything to do with speculation on the Stock Exchange. I feel that this is going to be an important factor administratively and in every other way when the Bill becomes law. I am sure that at some stage the noble Lord and the Board of Trade will have to make a clear statement as to how people wanting to carry through mergers should behave in the confidential and the non-confidential period. It is not so easy as the noble Lord thinks. I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ On Question, Whether Clause 6, as amended, shall stand part of the Bill?

§ LORD DRUMALBYN
There are one or two questions that I should like to ask on this clause, which is perhaps the most important in the Bill. First of all, I would direct the attention of your Lordships to subsection (8), which deals with the case where the Board of Trade have not been informed about a merger—or, at any rate, where it has not come to their attention—and more than six months has elapsed since the merger took place, and which, in spite of subsection (1) (which limits the Board of Trade to make references only where mergers have taken place within the last six months), allows references to be made to the Commission.
What worries me about this provision is that, unless there is an obligation on the firms to inform the Board of Trade, one cannot really blame either side if the Board of Trade do not know anything about it. It seems to me that, as there 66 is nothing in the Bill which requires notice of a merger, or an intended merger, to be given to the Board of Trade, there ought at least to be given notice to the Board of Trade when a firm whose takeover is being investigated receives another takeover bid. That is one case I should like to mention. I think I am right in saying that there is no obligation to inform the Board of Trade of a merger or an intended merger.

§ LORD SHEPHERD
But the noble Lord will be aware of the words in subsection (8): without those facts being so published as to be generally known or readily ascertainable". Obviously what the Government have in mind here is things that are done behind the closed doors of boardrooms without giving any reasonable indication to the general public or to any persons interested in what is taking place. I thought I should direct the noble Lord's attention to those words.

§ LORD DRUMALBYN
I am obliged.1 am, of course, well aware of those words. But the same thing still applies. It is perfectly possible to make such arrangements; it is perfectly possible, indeed, to take over control and simply have one nominee director on the board—nobody will know he is a nominee director—who controls the majority of the shares. I submit that the best way of catching this case would be to make it mandatory on everyone to inform the Board of Trade of a merger or a proposed merger. If that were done, then it would be easy for the Board of Trade to say: "You have done this, and now we are going to investigate you." It seems to me that it is not reasonable to have the affairs of companies investigated long after the merger has been completed, when the egg has been thoroughly scrambled—I do not think that there is any other way one can describe it. In such circumstances, it will be virtually impossible to take any of the actions which the Board of Trade are empowered to take, with the consent of Parliament. Therefore, it seems to me that it would be much wiser to make it mandatory on the parties to a proposed merger to notify the Board of Trade, so that the Board of Trade can then decide whether to have an investigation. In that case, the point raised by the noble Lord, Lord Byers, 67 would not arise. That is the first point I wish to raise.
The second point is this. This may happen where a merger has already taken place, before the Act comes into force—it may have been years earlier. What I would ask the Government is whether it is their intention that references can be made in such circumstances. Obviously, they will not do it in every such circumstance, but is it the intention that, if it comes to light, or comes to the attention of the Board of Trade, that there has been a merger some long time ago (I am not talking of the period between the time when the Bill is introduced and the time when the Bill becomes law) it will still be possible for the Board of Trade to investigate? I should have thought that the Bill ought to make it clear that where the merger had taken place before the Bill was even introduced, whether or not it had come to the attention of the Board of Trade, and it was more than six months earlier, in such a case it would not be right to investigate the merger, at least as such. Of course, if the merger were also a monopoly, it would always be possible to investigate the monopoly. Perhaps the noble Lord could deal with that matter.
The third point concerns the powers in subsection (10), which seem to be very wide powers. I wonder whether some action could be taken to cover the second of the points which the noble Lord, Lord Byers, had in mind; that is to say, the question of rival takeover bids being made after a reference of the first takeover bid had already been made to the Commission. As my noble friend Lord Hawke said, this is liable to give rise to considerable administrative trouble. I wonder whether it is possible to deal with that matter under subsection (10). Here again I should have thought that all that is required is for notice of any such intention to make a takeover bid, or of merger, to be given to the Board of Trade. Again, I think that would cover the point.
I should like to revert to subsection (1). I think noble Lords on the Front Bench opposite will appreciate that I withdrew my Amendment because I found subsequently that it was covered in a later part of the Bill. But it is quite a long time later, and I wonder whether it would 68 not be possible to cross-reference the value of the assets as defined in subsection (8) of Clause 7. I think it would be a convenience in the drafting of the Bill.
The last point I should like to mention is this. It is a point which I know has been discussed in another place, but I want to know what the Government's attitude is to it. The clause as drafted makes it possible, where a firm is taken over and where the assets exceed £5 million, for the takeover to be referred whether or not the assets taken over are situated in the United Kingdom. The difficulty I feel about this, quite apart from the question whether it would be right to make a reference of that character where the assets are situated outside the United Kingdom, is that I do not see how the Board of Trade can do anything about it if the merger goes on, especially where the assets are taken over by a firm itself situated abroad. By that time, no doubt, the assets that are situated abroad would be taken over by a company located abroad, and I do not see how the Board of Trade could do anything about it.
I do not quite understand how it is proposed to catch that case; nor am I clear whether it is intended to catch it. I should have thought it would be better to define the case by excluding assets located overseas, and limiting the assets referred to those mentioned in paragraph (b)(ii)—that is to say, making the stipulation if the value of the assets "in the United Kingdom" taken over exceeds £5 million. I know this has been debated in another place, but not quite from the angle where the concern taking over is itself a foreign company. Also, I am not at all clear that where there is no real question of monopoly of supply in this country it really is worth while including the assets situated abroad in the £5 million limit. Those are all the points that I wanted to raise.
May I say in general on this clause that I entirely agree with my noble friend Lord Hawke that there are going to be many administrative difficulties which will emerge. I should hope that it would become compulsory to give notice to the Board of Trade, although I am bound to say that I do not believe the Board of Trade could express a definite opinion as to whether a merger should be allowed 69 to go forward or not. I do not think the noble Lord, Lord Rhodes, dealt with the point raised by the noble Lord, Lord Byers. I do not see how they could commit themselves. They might give a strong indication that it should be referred.

§ LORD BYERS
Why cannot they commit themselves? This Bill is permissive. It says that the Board of Trade "may". Surely they can say, "We do not intend to proceed under this Act".

§ LORD DRUMALBYN
For the very good reason that they will not have full knowledge of the facts at the time. The whole purpose is to investigate, and they might consider that the matter should be investigated.

§ LORD BYERS
My point was that if the Board of Trade come to the conclusion that the matter should not be investigated, then they could give a clearance on it so that there is no doubt about the matter from that point onwards.

§ LORD DRUMALBYN
I entirely agree that if notice has to be given to the Board of Trade, and they have considered the matter, they will inform the company either that they are going to give a reference or that they are not; I think that would quite obviously be so. I thought that what the noble Lord meant was that at a very early stage, with the minimum of consideration, they would be able to say, "That is all right; you can go ahead". But I think there would have to be some consideration first. With these reservations, I am bound to say that I do not dispute that the Board should be given these powers. Indeed, this was envisaged in the White Paper published by the last Government. I do not think this clause has been improved by making it possible to stay the process of the merger. I think this would have been much better left to the judgment of those concerned. Apart from that, I think we were bound to have some kind of provision such as this in the Bill. I hope the noble Lord will be able to give some indication of the Government's reactions to the points I have raised.

§ LORD SHEPHERD
I will try to answer the noble Lord as quickly as I can. He is still unhappy about the asset 70 qualification. I will not endeavour to reply to him this afternoon, as we have already had a fairly full debate on this. With my noble friend I will carefully consider all that he has said, and perhaps we can have a meeting between now and the next stage to see whether there is any misunderstanding between us. We on our side will see whether we can satisfy the noble Lord in this matter.
I am sorry that the noble Lord, Lord Hawke, took a rather dismal view of the Government's proposals in this Bill. If the Board of Trade are approached by two companies which wish to merge, and the position is clear on the facts and the information given to them, the Board might well say, "It appears to us to be in order, and that it is not contrary to the public interest". I think this is a reasonable attitude. My noble friend had to make a proviso because one never knows whether all the ramifications of the companies concerned are disclosed. As the noble Lord, Lord Byers, will know, in a company's accounts or books there are many things that are hidden which may come out only later. In spite of the Board of Trade having said that in their view there could be a clearance, if further facts arose it is only understandable and right that the Board of Trade should have the power to say, "Irrespective of what we said previously, we feel in this new light that this case should be sent to the Monopolies Commission."

LORD HAWKE
This is a very important point. Does that mean that it will be quite impossible for two firms to get a firm clearance that is a lasting clearance? The noble Lord has said that the Board of Trade will always be able to go back on their decision and change their mind.

§ LORD SHEPHERD
If facts become available to the Board of Trade, or to any body set up to decide in this matter, which are different from those given them previously, surely they have a right to say that either they revoke, or that they wish to proceed, as we propose in this Bill, by sending the matter to the Commission. I would suggest that that is right.

§ LORD DRUMALBYN
It is true, however, that they can only do so up to six months from the time the merger actually takes place. Is that not so?

§ LORD SHEPHERD
That is so. In regard to subsection (1), about which the noble Lord, Lord Drumalbyn, had some concern and raised a drafting point, naturally we shall look at it to see whether we can make the Bill more understandable to the general public.
In regard to a merger which may have taken place before the passing of the Bill, and is not known, I should have thought from looking at the Bill that it would not come within its terms—that is, a merger that had been completed but had not been disclosed. I should have thought that such a merger, which was completed, was simply a matter of fact. But of course that may have to be looked at further.
As an illustration, although in no way criticising it, I am thinking of the interesting situation of Chrysler and Rootes. There is to a certain extent a merger between Chrysler and Rootes where Chryslers have a minority shareholding and Rootes have the majority shareholding. One could not say that this has been a full merger in the sense that Chrysler can influence the policy of Rootes, but it seems to me that if the Chrysler position were to alter and become one of greater influence than now exists this might well be a matter that the Board of Trade would wish to send to the Monopolies Commission. However, I would stress here that not every merger by any manner of means will be referred to this Commission. In fact we anticipate that there will be only a few each year.
The noble Lord, Lord Drumalbyn, also drew our attention to whether the disclosure of mergers should be mandatory. This is certainly an interesting point. I expect the Government, when they drafted the Bill, thought that there was sonic point it it, but probably felt that they could not "get away with it". I am not quite sure whether we should make it mandatory that every merger which takes place within this particular category should be disclosed to the Board of Trade, but I will look at it. I hope that those few remarks answer the points made by the noble Lord.

§ Clause 6, as amended, agreed to.

§ Clause 7 [Application of general provisions about mergers]:

§ LORD RHODES
This is a correcting Amendment, and I should like to take 72 with it Amendments 15 and 16. These Amendments involve no question of policy, they simply correct three mistakes in the present text of the Bill. The reference to "the principal Act" is meaningless and the references to the subsections are wrong. I beg to move.

§ Amendment moved— Page 13, line 36, leave out ("the principal") and insert ("this").—(Lord Rhodes.)

§ On Question, Amendment agreed to.

§ LORD RHODES
I beg to move.

§ Amendment moved— Page 13, line 37, leave out ("(4)") and insert ("(5)").—(Lord Rhodes.)

§ On Question, Amendment agreed to.

§ LORD RHODES
I beg to move.

§ Amendment moved— Page 13, line 43, leave out ("(5)") and insert ("(6)").—(Lord Rhodes.)

§ On Question, Amendment agreed to.

§ Clause 7, as amended, agreed to.

§ Clause 8:

§ Newspaper mergers

§ 8.—(1) A transfer of a newspaper or of newspaper assets to a newspaper proprietor whose newspapers have an average relevant circulation amounting, with that of the newspaper concerned, to five hundred thousand or more copies shall be unlawful and void, unless the transfer is made with written consent given (conditionally or unconditionally) by the Board of Trade after the Board have received a report on the matter from the Commission:

§ 6.12 p.m.

§ LORD ERROLL OF HALE moved, in subsection (1), to leave out "five" and insert "six" [hundred thousand]. The noble Lord said: It might be for the convenience of the Committee if we were to take with this Amendment, No. 17, Amendment No. 20. Amendment No. 17 is similar in principle to the Amendment I moved earlier this afternoon. In Clause 8 the figure of 500,000 or more copies is taken to be the limiting figure for a newspaper proprietor who, on taking over an additional newspaper, shall be subject to a report or consent by the Board of Trade. I am concerned to discover from the Government why the figure of 500,000 was chosen. We are here in an entirely new field. Is it the case that there are many newspaper proprietors who have total circulations just over 500,000, so 73 that they will all be caught at any time when they propose a further amalgamation; or is it the case that there are a large number of newspaper proprietors whose circulations are, say, 475,000, so that they will be able to take over one small newspaper before being caught? Has statistical research been made into this question? If so, I shall be grateful to learn why the figure of half a million, which sounds a round figure, was selected.

§ As I have mentioned, this is an entirely new field, and it would seem advisable for the Government to take powers to vary the figure of 500,000, in the light of experience. It may be found that the figure is too low and that a somewhat higher figure should have been selected. It may be that there are some up-and-coming, aggressive, newer newspaper proprietors with circulations of the order of 200,000 who, nevertheless, may be developing monopoly positions in certain parts of the country by taking over quite small evening or local newspapers, and therefore it might be advisable to lower the figure to some figure below the 500,000. In Amendment No. 20 I suggest to the Government—and I hope that they will accept it in principle, even if it is not quite right in its drafting—that they should arm themselves with powers to vary the figure. I know from my own past experience as a Minister that nothing is more annoying than to find, years after a Bill has passed into law, with a set figure in it, that it is impossible to alter that figure in the light of experience except by introducing amending legislation. I beg to move.

§ Amendment moved— Page 15, line 29, leave out ("five") and insert ("six").—(Lord Erroll of Hale.)

§ LORD FRANCIS-WILLIAMS
I wonder if it would be convenient to the House if the Amendment which is in my name, No. 18, which touches on the same point, might be considered at the same time?

§ LORD ERROLL OF HALE
I am content.

§ LORD FRANCIS-WILLIAMS
It will be seen that my Amendment, which IS to substitute "four million or more copies a week", has two objectives. The first is the point that was raised in the Second Reading debate; namely 74 whether a daily figure is a better and more accurate test than a weekly figure. The original proposal of the Royal Commission on the Press, on which this clause is to some extent based, was a weekly figure, and I think I am right in saying that throughout the course of the Bill in another place a weekly figure was also given. It is only comparatively recently that it has been altered to a daily figure. In the Second Reading debate I was somewhat puzzled as to what was actually meant by the daily figure then given, and I think that other Members of your Lordships' House were also puzzled. The noble Lord, Lord Rhodes, has since very courteously written to me, in an attempt to clear up my doubts, but although he has now made it clear to me what was intended, I do not think that it is made clear in the Bill itself, especially when the clause is considered with the Explanatory Memorandum.
It would seem that what is intended is what is normally called, in the newspaper industry, the net circulation figure per issue, taken on a six-monthly average. While taking that as a proper criterion of a circulation I suggest in this Amendment that a weekly figure, rather than a daily figure, should be taken because the clause is intended to cover daily papers, Sunday papers and provincial weekly papers. I believe that in such circumstances one gets a fairer and more easily ascertainable test of circulation figures by taking a weekly total than by simply taking the circulation per issue. For example, many provincial weekly papers publish a main week-end issue which comes out on a Friday, but also publish a mid-week issue, coming out probably on a Wednesday, which is usually much smaller in circulation and is meant, so to speak, to cover interim news; it is a sort of interim report on the affairs of their area, much of the main items in it being repeated in the main week-end edition.
If you are simply going to take the basis of calculation in the Bill as it stands, you would presumably have to take those two figures separately. They are both net circulation figures of what are technically separate issues, but in every understanding of the newspaper itself and of its advertisers are accepted as merely separate editions of the same paper, just as in a daily paper there are separate editions, although the time 75 factor is smaller—a matter of hours rather than days. To meet all this, it seems to me that the first thoughts, the thoughts of the Royal Commission and the drafters of the Bill when it was going to another place, were correct and more practical than the second thoughts, and that one gets a better assessment by taking a weekly total. It is perfectly easy to put the minor into the major and add up the certified daily figures and get weekly totals.
My second point is much the same as that of the noble Lord who moved the other Amendment. I believe that the figure as given in the Bill, whether it is to be decided on a daily or a weekly basis, is too small, and I am not sure by what criterion it was judged. I think it is too small in terms of the actual situation in the newspaper industry at the present time. I am, as your Lordships know and I made clear on Second Reading, very strongly behind the general principle of this clause and behind the attempts to put some check, some test of public interest, on great monopoly and merger movements in the newspaper industry. But I also think that in doing so we must be careful not to make a viable economic unit in the newspaper industry, particularly the provincial newspaper industry, more difficult.
I think, for example, of an instance like the Birmingham Post and Mail, an excellent local newspaper group, whose politics I personally disagree with but whose general reputation as a local newspaper group is very high indeed, and which is indeed, in its conduct, governed by the principles of a trust laid down that it must govern its affairs by certain what seem to me to be very admirable newspaper standards. The Birmingham Post and Mail, with a very small weekly newspaper which it also controls, has a combined weekly circulation of 3,782,000.
I can conceive that it might well be approached by some local weekly newspaper or newspapers in its area which are in somewhat difficult times, which need improved managerial direction and possibly some new injection of finance, or the ability to rely on greater technical knowledge and equipment than they possess, and it would seem to me in the interests of the community and not at all against the spirit of this Bill that in that 76 case a merger between the Birmingham Post and Mail Limited and a soundly-based local weekly newspaper serving the same interests in its own area should be facilitated. I should be sorry if this clause meant there had to be a hold-up of that and an investigation which might make things more difficult. I believe that the public interest would be better served by letting mergers in such circumstances go through, rather than in delaying them.
I think there are other cases in which newspaper groups, such as the Westminster Press and the Provincial Press, which own a number of weekly and evening papers, conducted on the whole as what one might term public-service newspapers in the interests of their local communities, might well, not merely economically but in the general viable interest of their service to their communities, be allowed to add one or two newspapers to their groups in particular circumstances, and in so doing might save local newspapers from dying or might make weak newspapers stronger. Other groups which perhaps do not quite come up to this size, like the Portsmouth group and Sunderland News and Southern Newspapers, spring to mind.
Going through the statistics of newspaper circulation, since an eye on the general development of newspapers is, so to speak, part of my business, it seems to me very much the case that a higher figure than that originally suggested in the Bill, a figure nearer to that of 4 million copies a week, whether it is stated, as I propose, in weekly terms, or in daily terms, would more meet the needs of the situation and be better in the public interest.
I should like to quote on this matter the Guardian. I quote it because it is one of the papers which has been strongly in favour of the principle of this clause, though other large newspaper groups have attacked it. It has seen this clause as a general defence of newspaper freedom, but in a leading article on Friday last, commenting on the Amendments of the noble Lord, Lord Erroll of Hale, and myself, it made a comment which I think is perfectly just and which I hope your Lordships will believe is worthy of consideration, that: although the right to buy and sell newspapers can and perhaps ought to be circumscribed as in the Bill, in order to protect the 77 freedom of the Press, the freedom to publish also depends on solidly based commercial organisation, and this point has been too lightly overlooked. The newspaper reader will not be better off if the effect of the Bill is to deter or prevent some of the expanding newspaper groups from taking over and modernising ailing local papers. It is because I believe that this higher figure would be of assistance in doing just that that I hope that the Government will find it possible to give careful consideration to it.

§ THE DEPUTY CHAIRMAN OF COMMITTEES (LORD AILWYN)
Members of the Committee have been speaking on Amendments 17, 18 and 20. Nos. 17 and 18 are, of course, exclusive; if 17 is agreed, 18 cannot be moved. Amendment 17 is now before the Committee.

§ 6.30 p.m.

§ LORD SHEPHERD
I am most grateful for the co-operation of the noble Lord, Lord Erroll of Hale, and the noble Lord, Lord Francis-Williams, in speaking to their Amendments on Amendment No. 17. It certainly saves time, and they are on very much the same point. When the Government were drafting this Bill, they had very much in mind the Royal Commission whose chairman was the noble Lord, Lord Shawcross. The Committee will remember that that Royal Commission recommended that mergers which involved, I think, 3 million copies aggregate per week should be referred to a court. As your Lordships will see, the Government are using the Monopolies Commission instead of setting up an independent court. But the Government felt that they should take the figure recommended by the Royal Commission, of 3 million aggregate per week. That was the figure that was in the original Bill when it went to the other place.
During the Committee stage the Government were greatly impressed by the views of friends of noble Lords opposite in regard to bringing in weekly newspapers, and the Government accepted Amendments on these lines; so that we have the Bill broadened from just dailies and Sunday newspapers to weekly newspapers. It immediately became necessary to look at the figure, which you might call a criterion, for sending a merger to the Monopolies Commission. It was felt in all the circumstances that, instead of having 3 million aggregate, we should 78 come down to 500,000 copies average—I would stress the word "average"—per day. This is what is in the Bill.

§ LORD FRANCIS-WILLIAMS
May I just interrupt for a moment? It is not in the Bill. "Per day" is only in the Explanatory Memorandum.

§ LORD SHEPHERD
I thought I had read the Bill reasonably well, and I am quite sure that the word "average" appears.

§ LORD FRANCIS-WILLIAMS
The word "average", but not "per day".

§ LORD SHEPHERD
The noble Lord is correct. I will certainly look at that. But the intention of the Government is that it should be 500,000 copies on average per day. However, I will look at this matter between now and the next stage. I think that is an explanation as to the 3 million or 500,000. I have just received a signal to the effect that if one looks at page 17, line 26, these words appear: in subsection (1) above, the reference to relevant circulation is a reference, in relation to a newspaper published on any given day. I am thankful for the angels above! But there we have it. I was quite clear that it was 500,000 copies on average per day. So that would deal with the point made by the noble Lord, Lord Erroll of Hale.
The noble Lord also spoke to Amendment No. 20. I am pleased to say that if he moves that at the appropriate time, I shall be happy to accept it. We think it is right to have a sense of flexibility in this matter. My noble friend Lord Francis-Williams—and who better to speak with knowledge of the newspaper industry?—felt that our figure of 500,000 per day, or the old basis of 3 million, is too low and that this would prevent some quite useful mergers from perhaps taking place. Naturally, the Government will take note of what he has said; but he will recognise that we have had this Royal Commission, and although there were certain criticisms made about its Report, it was generally accepted by Parliament and the public, and I think it would be right at this stage to stand by this figure. The noble Lord will now see that, in intimating that we are prepared to accept Amendment No. 20, which gives a sense of flexibility, we shall be able to watch and see how events occur.
79 As I said on Second Reading we are learning all the time with this legislation. We pass one Bill, and as events turn out we see some things that perhaps we could have dealt with differently. So I hope that my noble friend will be content with these words, that we shall watch events and that we have now got the flexibility to raise the figure, or even lower it if it becomes necessary. I hope with those few words the noble Lord, Lord Erroll of Hale, will now withdraw his Amendment No. 17.

THE DUKE OF ATHOLL
Before the noble Lord withdraws his Amendment, could I just ask the noble Lord, Lord Shepherd, a question? Before doing so, perhaps I should declare that I am a director of a group of provincial newspapers. May I add that I personally would infinitely prefer the method of calculation, although not necessarily the figures, advocated by the noble Lord, Lord Francis-Williams. It seems to me that this is much easier to understand when we are including weekly as well as daily newspapers. But if I read page 17, line 26 and so on, correctly, the average circulation refers to the average over six months of the newspapers concerned—this is the normal A.B.C. figure, so there is nothing surprising about that—but not the average each day. Therefore, if you own a weekly newspaper with a circulation of 6,000 copies, but all on a Friday, you may be prevented from taking over another newspaper because on a Friday that weekly newspaper, plus your existing daily newspaper, may raise your circulation to 500,000 copies, when every other day of the week it would have a circulation of only 494,000 copies. Obviously, this could be made even worse if you have a number of weekly newspapers all published on the same day. It is a fact of newspaper life, as the noble Lord, Lord Francis-Williams, will agree, that they are nearly all published either on a Thursday or a Friday.
Therefore, by taking the daily sale it may well have a distorting effect. It might also mean that because a company wishes to take over another company, it might transfer for a period of say a year, the period of investigation by the Monopolies Commission, the publication 80 of one of its existing newspapers. I hope that the noble Lord opposite will look at these points, and, possibly on Report stage, say whether he is happy that the average daily sale is the sale averaged over the whole week of all the dailies and weeklies, and is not just the average over six months relevant to each particular day. I do not feel that I have expressed this particularly well, but I am sure that the noble Lord can see what I am getting at.

§ LORD SHEPHERD
It is getting slightly late we used to refer to this time as "at this late hour". I will undertake to look at the point that the noble Duke has made, and perhaps without raising it on Report stage I may communicate with him.

The DUKE OF ATHOLL
I thank the noble Lord.

§ LORD ERROLL OF HALE
I should like to thank the noble Lord for his explanation relevant to Amendment No. 17, on which account I beg leave to withdraw it.

§ Amendment, by leave, withdrawn.

§ 6.39 p.m.

§ LORD ERROLL OF HALE moved, in subsection (1), after "copies" to insert: and also provided that the circulation of the newspaper taken over was not less than fifty thousand copies".

§ The noble Lord said: I beg to move this Amendment, which deals with the problem of putting a floor into the Bill in regard to taking over particular newspapers. Lord Francis-Williams, in his most interesting speech, referred to some ailing newspapers of small circulation which, although not absolutely in financial difficulty, might be glad to be taken over, but the taking-over proprietor might be reluctant to consider the matter because he would have to obtain the consent of the Board of Trade. By this Amendment I seek to exempt newspapers with small circulations from the requirement that their takeover proprietors would have to obtain consent in advance. I hope that the noble Lord will be able to accept the principle of the Amendment, if not the actual figure I have selected, which, according to current practice, is rounded off to the nearest 10,000.

§ Amendment moved— Page 15, line, 29, after ("copies") insert the said words.—(Lord Erroll of Hale.)

§ LORD FRANCIS-WILLIAMS
should very much like to support the Amendment. I do so for the same reasons put forward in my earlier Amendment. I am very anxious that the Bill, in establishing the important principles of public interest in relation to the newspaper industry, shall not, almost inadvertently, stand in the way of the sensible and successful economic development of that industry. The great majority of weekly newspapers in this country have a circullation below 50,000 copies a week. A large number have circulations above 50,000, and a rather small group have circulations above 100,000. Getting on for over 90 per cent. have a circulation of under 50,000, most of them being under 25,000.
There are many cases—although they would not, of course, come under the Bill at all if they were merely merging among themselves—where, because of the present technological developments in the newspaper industry, there appears, at long last, to be a strong possibility of the development, after many years of decline, of new evening newspapers, made possible by cheaper processes of publication of one kind and another. The usual pattern which is likely to be followed in developing those new evening papers is that a newspaper group—which needs to be a group of fairly strong financial resources and technical knowledge—may buy a local weekly paper for the purpose of transforming it into an evening paper, in an area which is expanding industrially and in terms of population, and which might be better served by an evening newspaper rather than by a weekly newspaper. In such a case it would be wrong that such an area should have to depend on evening newspapers circulated from one of the big cities such as London, Manchester or Birmingham. It ought to be able to have its own paper reporting, and helping to stimulate, local civic, social and cultural activities.
Such transformations of weekly newspapers into evening newspapers produced by new methods are likely to be handicapped unless some such figure as that proposed by the noble Lord, Lord Erroll of Hale, is accepted. I do not wish to 82 stand pat on the figure of 50,000. It may be that the need would be for a lower figure, say 30,000 or 35,000—and, looking at the circulation figures, that may well be the case. This is an issue which ought to be taken into account. It would be a great pity if this Bill, which in many ways marks a new advance in the conceptions of public relations in terms of newspapers, should, because of its drafting and its failure to understand the changing situation in the newspaper industry at present, prove to be a barrier to newspaper developments which I believe would be strongly in the public interest. I hope, therefore, that very careful, and, I hope, friendly, consideration will be given to this point by the Government.

§ LORD SHEPHERD
I should certainly like to respond to the very friendly atmosphere that has pervaded the entire Committee stage on this Bill, particularly in the remarks of my noble friend Lord Francis-Williams. There is a point to be considered in regard to these very small newspapers, but the Amendment moved by the noble Lord, Lord Erroll of Hale, would permit newspapers to be acquired without the consent of the Board of Trade provided that their daily circulation was less than 50,000.
The effect of the Amendment would be largely to remove acquisitions of single local weekly newspapers from the scope of the provisions of Clause 8. In fact, very few weekly newspapers sell above 50,000 copies. It would also remove acquisitions of certain provincial morning and evening newspapers from the control. The sales of some of these do not reach the specified figure. In some cases, it might even have the effect that the acquisition of a group of newspapers would be outside the scope of the provision. For example, a group publishing three small West Country newspapers has recently been acquired, the total circulation of three newspapers of the group not appearing to amount to 50,000 copies. Thus the Amendment, in our view, having regard to the spirit behind Clause 8, cannot be accepted. I appreciate the feelings of noble Lords in regard to these very small newspapers, but I feel that this, again, is perhaps a point which we are prepared to consider, though we cannot be under any obligation to give any undertaking.

§ LORD ERROLL OF HALE
I fully accept that the noble Lord does not feel able to give an undertaking; but as he has said that he will look at the matter sympathetically, and as I have been reinforced in my arguments by a powerful case put forward by the noble Lord, Lord Francis-Williams, I am sure that the matter will be thoroughly examined. In the light of those remarks, I beg leave to withdraw this Amendment.

§ Amendment, by leave, withdrawn.

§ 6.47 p.m.

§ LORD ERROLL OF HALE
I beg to move this Amendment formally.

§ Amendment moved—

§ Page 16, line 2, at end insert— ("() The Board of Trade may by order at any time vary the figure of five hundred thousand in subsection (1) above; and any such order shall be subject to annulment in pursuance of a resolution of either House of Parliament.")—(Lord Errol of Hale.)

§ LORD SHEPHERD
If the noble Lord is prepared to withdraw this Amendment, which we accept in principle, we will see to it that on Report stage a suitably drafted Amendment is on the Marshalled List.

§ LORD ERROLL OF HALE
I am most grateful to the noble Lord for taking such a sympathetic view of the Amendment. I look forward to seeing a somewhat better draft on Report stage. I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn

§ LORD RHODES
This is a drafting Amendment designed to make it clear that the three months referred to here is the initial period mentioned in line 8 above and that the second paragraph of this subsection does not empower the Board to extend the period of investigation so that the total period exceeds six months.

§ Amendment moved— Page 16, line 18, after ("months") insert ("of the matter being referred").—(Lord Rhodes.)

§ On Question, Amendment agreed to.

§ Clause 8, as amended, agreed to.

§ Clause 9:

§ Associated persons

§ 9.—

§ (3) For purposes of this section the following persons shall be deemed to be associated with one another, that is to say,—

(a) any individual and that individual's husband or wife and any relative, or husband or wife of a relative, of that individual or of that individual's husband or wife;

§ LORD DRUMALBYN moved, in subsection (3), after "section" insert "any of". The noble Lord said: I should like to take Amendments 22 to 25 together for the purpose of arguing them. Amendments 22 and 24 obviously go together, No. 23 could go with them, and No. 25 could stand by itself.

§ LORD SHEPHERD
Let us do our best.

§ LORD DRUMALBYN
I will now set about trying to explain them. This is nearing the end, and is nearing the absurd. What we are here debating is that the Board of Trade should deem all the people defined in subsection (3) to be associated with one another, whether in fact associated with one another or not.
What these Amendments try to do, first of all, is to say in effect that the Board of Trade may deem any of them to be associated with one another; that is to say, if they have reasonable cause to think that they are. Then Amendment 24 says: unless the Board of Trade is satisfied that he is not so associated". The first part of these Amendments is designed to leave it to the discretion of the Board of Trade, and not to make it mandatory on them to count all people concerned—that is, relatives, trustees, partners and so on—as associated. It is a question of fact as to whether or not they are associated, and it should be left to the discretion of the Board of Trade to decide whether or not to count them as associated. That is the purpose of the Amendment to leave out "shall" and insert "may". Finally, if that is not conceded, then it should at least be open to anyone to apply to the courts to prove that the presumptions are false and untrue, and to have them set aside.
So there are these three stages. First of all, the Board of Trade should not automatically presume all these persons to be associated merely because they are shareholders. Secondly, it should be open 85 to any of them to rebut that presumption to the Board of Trade. Thirdly, whether this point is accepted or not, I believe that there should be a right of appeal to the court to say that the presumptions made are not in fact true and ought to be set aside. I beg to move.

§ Amendment moved— Page 18, line 40, after ("section") insert ("any of").—(Lord Drumalbyn.)

§ LORD SHEPHERD
In answering these four Amendments I think it best to get to the principle involved. Clause 9 lays down the definition of a newspaper proprietor. We all know that the ownership of newspapers has in the past been intertwined between families. The ownerships of some of the large newspapers are still very much like that, although there are others which are in trusts and in public companies. As the Bill stands, the Government felt that if an issue had to be solved as to whether Mr. A, through relation with Mr. Y, was exerting an influence over a newspaper's business management, it would be far better to leave it to the Commission to decide, because the Commission would be able to go into all the facts in the course of an inquiry. If the Board of Trade were to do it there would be, I suggest, a further delay in dealing with the merger.
The proposals in the Bill mean that, if there is a doubt as to the connections of individuals, the Commission, with all the information which would be made available to it by the parties interested, would very quickly be able to say, "These two companies are in fact separate, although there is a close connection between them by marriage or relationship". I should have thought that was the most sensible way of approaching this most difficult subject and I hope that, on reflection, the noble Lord, Lord Drumalbyn, will agree. That is the view of the Government and, therefore, whatever the different provisos the noble Lord is suggesting in Amendments 22, 23 and 24, I am afraid that these are not ones which we could accept.

§ LORD DRUMALBYN
I am sorry to hear that. I should certainly like to reflect further on the matter. I am bound to say that I am still not convinced that it is right to make it mandatory to deem something, whether or not that is so. I 86 should have thought this was a case where the Commission had not found the facts, and because it had not found the facts it was necessary to make some presumptions, but these presumptions are being made hard and fast. That is the way I read the clause. However, I may be wrong and I shall read it again.

§ LORD SHEPHERD
They are not hard and fast. But as regards making a reference to the Monopolies Commission, something is being assumed. It is, in fact, the duty of the Monopolies Commission to decide and, naturally, this will be one of the first things to which the parties in dispute will draw the attention of the Monopolies Commission. But here, again, I am quite willing to have discussions with the noble Lord to see whether we can put his mind at rest.

§ LORD DRUMALBYN
I am much obliged to the noble Lord. I am very glad to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ Clause 9 agreed to.

§ Clause 10 agreed to.

§ 6.56 p.m.

§ LORD ERROLL OF HALE
moved, after Clause 10, to insert the following new clause:

§ Statements of questions of law as special cases

§ "—(1) The Commission may state any question of law arising in the course of or out of a reference under section 2 of the principal Act (as amended) or under section 6 or 8 of this Act in the form of a special case for the decision of the court.

§ (2) The Commission shall state any question of law such as is referred to in subsection (1) of this section in the form of a special case for the decision of the court if so required by a person interested in the subject matter of the reference, being a person liable to be directly affected by any order which may be made by the Board of Trade under the powers conferred by this Act in consequence of a report by the Commission in respect of that reference."

§ The noble Lord said: A similar new clause was debated in the Committee stage of the Bill in another place, and from what I read of the debate the Minister without Portfolio appeared to have misunderstood the basis upon which the clause was proposed. I should like to repeat that it is not intended to convert the Monopolies Commission into a judicial body. The Minister said in the course of that debate that he could not 87 recall any instance in which a specific point of law had either arisen or been hinted at, which it would have been in any way convenient to have referred to a court of law.

§ In actual fact, questions of law quite clearly arose in the reference of the supply of wallpaper. The Commission's report was ordered to be printed on January 21 last year. I shall not attempt to read out the relevant passages at this stage of the Committees proceedings, but I should like to make some reference to Chapter 5 of the report which sets out the contentions put forward by the Wallpaper Manufacturers, and to Chapter 6 which contains the conclusions and recommendations of the Commission. In particular, noble Lords might like to refer to paragraphs 136, 142, 154–157 and 173, where the Commission set out their findings on what were quite clearly points of law raised by the Wallpaper Manufacturers.

§ Quite apart from this recent example, there is more likelihood of points of law arising in the future when one has regard to the extension of the jurisdiction of the Commission to cover mergers and the somewhat complicated definitions in the new Bill relating to control and associated persons, touched upon briefly but eloquently by my noble friend Lord Drumalbyn. Where a body is established by Statute to discharge certain functions, questions will invariably arise from time to time with regard to the extent of its jurisdiction on a particular set of facts. These questions involve construing the Statute and are necessarily questions of law. I think there is little doubt that the occasions on which the Commission might wish, or might be asked by the parties, to state a case on a question of law would be infrequent, but this is not an argument against including a sensible provision in the Bill. Under the extended powers in the new Bill, the Board of Trade will be able to make orders which vitally affect the businesses of persons who have been under investigation by the Commission. In my view it is clearly right that if a question of law arises during a reference the persons concerned should be entitled to have it decided by the court, after hearing proper argument on the point. I beg to move.

§ Amendment moved— After Clause 10, insert the said new clause.—(Lord Erroll of Hale.)

§ LORD SHEPHERD
I am most grateful to the noble Lord, Lord Erroll of Hale, for making it quite clear that he did not believe that we should put the Monopolies Commission into the same position as judicial tribunals. I think we should look very carefully at this matter. The noble Lord may remember that, in the Tribunals and Inquiries Act, 1958, it was provided that any party before these tribunals who was dissatisfied with a decision on a point of law may either appeal to the High Court or require the tribunal to state and sign a case. The reason for that is very clear: that these judicial bodies or quasi-judicial bodies were all empowered—in fact had a duty—to decide questions of fact or law. But the most important thing to remember is that their decisions had immediate effect upon the legal rights of the parties appearing before the tribunals—and I stress the word "immediate". Therefore, it is very reasonable that there should be an expeditious method of settling points of law between those appearing before the tribunal and the tribunal itself.
The Commission is neither judicial nor quasi-judicial; it is purely administrative. First of all, it investigates; secondly, it makes a report; and, thirdly, it makes recommendations. The only time at which action takes place is when Parliament makes an order, when action is taken by the Minister. Therefore, the parties concerned do not suffer any immediate effect from any decision on a point of law made by the Monopolies Commission. There is that considerable difference in this matter, which I felt I should stress. Points of law are not strange. If you are in business, I suppose they arise every day of your business life.
I was attracted to this Amendment in the first instance, but I am satisfied it is not necessary, because the companies have redress if they feel that the Monopolies Commission has acted outside the terms of the Act. Perhaps I could put this point to the noble Lord. First of all, if (shall we assume?) a company were asked to produce papers or evidence, or asked to give evidence, which they felt was quite outside the 89 terms of reference and the Act, they could refuse to give such evidence or provide such figures. They are perfectly entitled to do so. It would then be open for the Commission to take proceedings in court to enforce the production of the evidence or the information, or even the attendance of witnesses. Then would be the opportunity for the company to state their own case and their objection to what the Commission had asked them to do, and it would be for the court to decide, after listening to the Commission in reply. So there is that element of redress.
But suppose, as in the case of the Wallpaper Manufacturers, they disagreed with the Commission but let things proceed, and then had what was an adverse report. If they felt that the Commission had gone outside the Act, it would still be possible for them to obtain redress. They could do it in two ways. First, when the Minister made an order they could refuse to comply with it—in which case, of course, the Minister would have to go to the court to force the company to carry out the order. Then, again, there is this late opportunity for the arguments to be made, not only on the order itself but on the information and evidence which had been placed before the Commission and from which the report arose. Also (and I should have thought this unlikely) the company could take proceedings against the Minister, though this, of course, would mean that they would have to take the initiative. However, I hope that the noble Lord is satisfied that companies have redress if they feel that the Monopolies Commission has gone outside the terms of the law.
I hope that the noble Lord will not press this Amendment. It would certainly involve considerable delay for the Commission. It could well mean that companies who wished to delay an inquiry could use this procedure of raising a point of law. In fact, the people who might wish to use this more than any others might well be the board of a company which did not want to be taken over, who felt that their greatest chance of avoiding being taken over would be by extending the inquiry until such time as the company that wished to take them over or acquire them lost interest. I think it would be wrong to give any opportunity for such endeavours 90 by companies to frustrate the progress of the Commission.
There are a number of other points on this matter. As I said to the noble Lord, I approached this Amendment with considerable sympathy. I have sought advice, as I said to my noble friend Lord Rhodes this morning, outside the Ministry, outside the Board of Trade, and it surprised both myself and him that both sources were agreed on the advice I should give the Committee. With those words, I hope that the noble Lord will withdraw his Amendment.

§ LORD ERROLL OF HALE
I thank the noble Lord for his full explanation. I should like to study it closely, in case I wish to return to the matter at Report stage. In the meantime, I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ LORD ERROLL OF HALE moved, after Clause 10, to insert the following new clause:

§ Amendment of s. 9 of principal Act

§ ".Paragraph (b) of section 9 (publication of reports of Commission) of the principal Act shall be repealed to the extent mentioned in the third column of Schedule 3 to this Act."

§ The noble Lord said: It might be convenient to the Committee if we were to take Amendment No. 29 with Amendment No. 27. I therefore beg to move the new clause standing in my name as Amendment No. 27. Section 9 of the principal Act permits the Board of Trade to exclude from the published report, in paragraph (a), information which it considers would be contrary to the public interest; and, in paragraph (b), information relating to secret processes of manufacture or the presence or situation of minerals or any other similar matter, the publication whereof would substantially damage the legitimate business interest of any person. I am concerned with proviso (b).

§ It appears, as a result of many years of experience, that the Board of Trade take a very limited view of their powers under proviso (b) and consider that they can exclude from the report only information concerning matters similar to those expressly mentioned—namely, secret processes or mineral deposits. There are, however, other kinds of information—for 91 example, financial information, or information about markets—which could not be published without damaging legitimate business interests. It appears that proviso (b) has never, in fact, been applied. It seems clear that the Board of Trade construe this proviso so narrowly that only secret processes of manufacture or details as to the presence or otherwise of mineral deposits are considered to come within its ambit; whereas I would argue strongly, having looked at the proviso, that these two matters were put in merely as examples, and that the real object of the proviso is to permit the exclusion from the published report of any information which would substantially damage the legitimate business interests of the person concerned, always assuming that this could be done without substantially affecting the value or the clarity of the report. I believe that this is what Parliament originally intended, and I could pray in support a debate in this House on the Committee stage (I believe it was) of the original 1948 Act. I hope that the noble Lord who is going to reply will consider this Amendment with sympathy; and, if he is not able to give effect to it this evening, that he will be able to concede it at least at Report stage. I beg to move.

§ Amendment moved— After Clause 10, insert the said new clause.—(Lord Erroll of Hale.)

§ 7.11 p.m.

§ LORD RHODES
The noble Lord has my sympathy up to a point with what he is trying to do. This Amendment would really omit material from the Monopolies Commission's Report on the ground that its publication would substantially damage the legitimate interest of any person. I take that; and then follows the three points he made under Section 9 of the Monopolies and Restrictive Practices (Inquiry and Control) Act, provisos (a) and (b) and under which there are two points. The Amendment really would remove a qualification with the result that the Board of Trade would be required, generally speaking, to delete anything in a Report which would be damaging to business interests and which would also not be essential to the understanding of the sense of the Report.
The noble Lord is quite correct. We have never found it necessary to delete 92 material from a Report on the grounds stated in his next point, the application of which, as he said, is very narrow. We have in some cases deleted material on public interest grounds in the first one, but very rarely. In some cases material which the Board of Trade would be required to delete on public interest grounds would at the same time be material which would be damaging to business interests to make them public; for example, information which would be valuable to foreign competitors. But there have been cases in which representations have been made to the Board of Trade for material to be deleted on the grounds that its publication would be embarrassing or damaging to business interests, even though it might not be detrimental to the public interest in the general sense. As the law stands, the Board of Trade have no power to delete such information. This is a matter of concern to many in industry; but we believe as a Government that to change the law in the manner suggested would be to take the first steps on a very slippery slope, and might seriously detract from the value of the Monopolies Commission procedure. The Commission themselves have made it clear in their Report that they have had very much in mind the problem of confidentiality. I could quote things that have been said in representations made. There is one well-known one, the Report on the Supply of Electrical Equipment for Mechanically Propelled Land Vehicles, where the trade itself expressed their appreciation of the way things had been conducted and the confidentiality of the whole affair.
I think we must rely on the Commission's good sense in all this. It is clear they already take into account all "legitimate business interests" where it is proper for them to do so. Much information may be given in evidence to the Commission which is not reproduced in their Report, and there are strong restrictions on the disclosure of this information, involving criminal penalties (Sections 17 and 18 of the Monopolies Act, 1948). But where the Monopolies Commission include information in their report to the Board of Trade, the assumption really must be that this is essential for a proper understanding of the matter involved. I think the noble Lord could rely on the Commission's not going an inch further than they need to go on this.
93 It would not have been included by the Commission without perfectly good reason. They study the material to consider whether, notwithstanding that it may be necessary for the proper understanding of the matter, it may nevertheless be damaging to the business's interests. In such a case the full effectiveness of the Report must be sacrificed to the public interest. I think that really must be brought out.
But except where the public interest is involved it would be wrong for the Board of Trade to censor the Commission's Report. It would mean, I suppose, that if this were done there would have to be a second Report to investigate the first; and that would be a retrograde step. I hope that the noble Lord will not press this Amendment. I am perfectly certain that he can be confident that the Commission will carry out its duties with the confidentiality which has so often been referred to by parties who have had to appear before it. I hope that the noble Lord will withdraw his Amendment.

LORD ERROL OF HALE
As with the last new clause that I moved, I should like to study what the noble Lord has said. I can give no undertaking that I will not return to this matter at the Report stage, even though I now 94 beg leave to withdraw my Amendment.

§ Amendment, by leave, withdrawn.

§ Clauses 11 and 12 agreed to.

§ Schedule 1[The Monopolies Commission]:

§ LORD RHODES
This Amendment corrects a mistake in the present text of the Bill. Section 15 of the principal Act is to be replaced by Clause 5 of this Bill. This Amendment takes account of that change. I beg to move

§ Amendment moved— Page 24, line 8, leave out ("15 of the principal") and insert ("5 of this").—(Lord Rhodes.)

§ On Question, Amendment agreed to.

§ First Schedule, as amended, agreed to.

§ Remaining Schedules agreed to.

§ House resumed: Bill reported, with Amendments.