§ 2.35 p.m.
§ The Question was as follows:
§ To ask Her Majesty's Government what was the nature of the undertakings required by the Department of Trade and Industry from, and given by, Hill Samuel in the course of the discussions on the proposed merger with Slater Walker Securities; and whether those undertakings related solely to operations within the United Kingdom.
§ THE PARLIAMENTARY UNDERSECRETARY OF STATE, DEPARTMENT OF TRADE AND INDUSTRY (THE EARL OF LIMERICK)My Lords, the two companies indicated in the course of discussions and subsequently informed my Department in their letter of May 22, which was published in full in the offer document of May 30, that their main aim was to create a banking group with sufficient resources in terms of assets and skills to be able to compete effectively in Europe and other overseas markets, and that they hoped to establish significant presences in the major financial centres 1836 of the world, particularly in Europe, North America and the Far East.
They indicated also, in relation to any substantial shareholdings in other United Kingdom quoted companies, first that the new group would seek to develop along the lines of a European banque d'affaires and that their policy would be related to the long-term improvement of profitability, with due regard to the interests of employees, rather than to the realisation of short-term gains; second that they would consult with my Department before entering into any transactions which might directly or indirectly put them in a position to control, or materially influence, particularly United Kingdom industrial companies; and, third, that they would be prepared to divulge more information about company holdings than is required under the Companies Act (to include shareholdings of investment trusts and unit trusts managed by the Group, and of full discretionary investment clients, as well as direct holdings).
§ LORD HALEMy Lords, while thanking the noble Lord for that extremely helpful Answer, which corresponds with what was seen in the Sunday Times of June 3, may I ask whether it occurred to the Department, when they made that extraordinary circuit of this immense financial and international labyrinth, that it is very difficult for this organisation to transact purely the business of a banque d'affaires? And did it occur to the Department that the proposed merger quite clearly contravenes the spirit of the decision of the Monopolies Commission in the case of the Rank Organisation and the De la Rue Company and that many experts say it contravenes the spirit of the E.E.C. Treaty and, particularly, not merely the spirit but the words of Articles 85 and 86? Moreover, is it not in contravention of the decision of the Brussels Commission in 1971 in the case of New York Continental Cam Incoporated? Had not the Department then before them the decision of the Court at Luxembourg in February last which affirmed the spirit of all the observations I am making, while revoking the Commission's decision on purely technical grounds?
§ THE EARL OF LIMERICKMy Lords, I fail to see why a decision not to refer can have contravened all these matters, 1837 decisions and statutes to which the noble Lord has referred. As my right honourable friend announced in declaring the decision not to refer this merger, he took into account that the merger would not result in any monopoly or near-monopoly situation in any interest or industry in which the company group would be involved, and he took account of the likelihood that the move would lead to expansion of merchant banking activities overseas.
§ LORD HALEYes, my Lords, but may I say that this Question has been carefully framed to make no reflection on the probity or conduct as regards the complex of companies concerned—in one of which I have a miniscule life insurance in loan stock. Does it not occur to the noble Lord, that whether we like it or not, we are members of the European Community? If, by giving their consent to a merger of this magnitude they leave it to be the subject of an Order of the Brussels Commission, and 16 months of appeal to the Court of Luxembourg, then to be sent back to the Brussels Commission and then go to an appeal to the Court of Luxembourg, who is going to unravel this tangled skein in the end and how can it be done? In view of the anxiety in the City—with which I do not normally sympathise—surely the Government ought to take an advisory opinion for the future from the Brussels Commission or from the Court of Luxembourg.
§ THE EARL OF LIMERICKMy Lords, my right honourable friend took account of all the relevant facts known to him in arriving at his decision. But I think it should be clear that the decision he arrived at was that it was not necessarily in the public interest to refer the merger. That is not the same thing as giving approval to the merger.