Mergers and Monopolies: Policy Review (Hansard, 6 June 1986)

§ Lord Bruce-Gardyne
My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

§ Lord Brabazon of Tara
My Lords, my right honourable friend, the Secretary of State for Trade and Industry announced the start of the review yesterday. The review will cover mergers and restrictive trade practices policy. It will investigate both the scope for changes in policy under existing law and the desirability of changes in the law.

§ Lord Bruce-Gardyne
My Lords, I am most grateful to my noble friend for that reply, even though, as the governor of North Carolina said to the governor of South Carolina, "It's been a long time between drinks"—nine months, I think. Can my noble friend give us any indication how long this review will now take? Can he also assure us that it will not be dominated by the note of slight complacency which was in the statement from the department yesterday about the perfectiveness of existing monopoly legislation which conflicts so strongly with what the Director General of Fair Trading was saying only a day before?

§ Lord Brabazon of Tara
My Lords, as to the timing of the review, there is much ground to be covered and it is important that time should be allowed for a thorough job. It is possible, however, that recommendations for change in policy under existing law may be identified at an early stage of the review. If so, the Government will not hesitate to make any desirable changes immediately.

§ Lord Grimond
My Lords, will the noble Lord the Minister give us an assurance that two matters will be within the terms of reference? The first is the growing habit of selling off parts of the business to be taken over, not for any commercial or economic reasons but apparently to attempt to comply with the existing law and avoid a reference; and, secondly, there is the effect, particularly the long-term effect, upon the communities affected by these takeovers, which are very often not for commercial reasons but for purely financial reasons.

§ Lord Brabazon of Tara
My Lords, I think I can give the assurance that the noble Lord seeks that the review 1196 will take those matters into account. Also, anybody who wishes can give evidence in this review. All such evidence will be taken account of.

Lord Bruce of Donington
My Lords, is not the noble Lord aware that the Government themselves have at their disposal all the information necessary for them to arrive at a conclusion? Is he aware that the matter has now become a public scandal and that many people will take this announcement of an inquiry covering an indefinite period of time to be a further device of delay, particularly until after the passing through Parliament of the Financial Services Bill?

§ Lord Brabazon of Tara
No, my Lords; I do not accept that from the noble Lord. I do not accept that the current situation is entirely unsatisfactory. The purpose of this review is to see where there are areas which cause concern and whether those areas can be identified. If it is found that there is something wrong, something will be done about it.

§ Lord Orr-Ewing
My Lords, will my noble friend the Minister consider whether, since this review may take some time and the resulting action further time, the MMC and the Office of Fair Trading are rather overloaded with the present spate? Will he examine whether they need a stronger staff or more power for them to carry out expeditiously the very important work they are doing?

§ Lord Brabazon of Tara
My Lords, I certainly take note of the views of my noble friend Lord Orr-Ewing and I shall indeed pass them on to my right honourable friend the Secretary of State.

Lord Bruce of Donington
My Lords, will the Government give an undertaking that the terms of reference of the inquiry will be sufficiently wide to encompass an inquiry into the circumstances of the takeover of Harrods by Mr. Al Fayed and that in those circumstances Ministers of the Crown will be available to give evidence?

§ Lord Brabazon of Tara
My Lords, the terms of reference of the review are as set out in the Written Answer given in another place by my right honourable friend the Secretary of State. As to the specific case that the noble Lord mentions, I cannot give an undertaking that that will be covered, but I am sure that it will. I am not too sure that I follow his accusations regarding Ministers of the Crown.

§ Lord Taylor of Gryfe
My Lords, may I encourage the Minister to accept the urgency of this matter as expressed by the noble Lord, Lord Bruce-Gardyne, because the less uncertainty there is the better? May I ask him whether under the terms of this inquiry, or as a separate inquiry within his department, he will examine the economic consequences in terms of employment, return on assets and so in, of the mergers that are taking place?

§ Lord Brabazon of Tara
My Lords, again, I can do no more than take note of the views of the noble Lord, Lord Taylor of Gryfe, and I shall pass them on to my right honourable friend the Secretary of State.

§ Lord Leatherland
My Lords, will the Minister take into account the fact that when mergers take place one of the results is that large numbers of employees are sacked? Will he see that that aspect of mergers is borne in mind when he considers this matter?

§ Lord Brabazon of Tara
Yes, my Lords. I do not necessarily accept that large-scale sackings take place as a result of mergers. In fact, in many cases mergers lead to a more effective industry in the industry concerned and improve employment prospects.

§ Lord Graham of Edmonton
My Lords, can the Minister give us an assurance that when the review takes place the question of conditional disposals in contested take-over bids, where a bidder attempts to sell off part of the target company without its consent, will be looked at very closely? This is a matter that was alluded to by the noble Lord, Lord Grimond. Will the Minister note, for instance, the current situation where Dixons, in an attempt to purchase Woolworth's, have already made arrangements to sell off Comet; and that this quite clearly is designed to keep themselves within the law and avoid a reference to the Monopolies and Mergers Commission?

§ Lord Brabazon of Tara
My Lords, yes, I am sure that this will be one of the things which the review will look at as it is one of the aspects which has attracted criticism recently. As I said at the beginning, the review should be wide open to public debate and views will be taken note of.

§ Lord Bruce-Gardyne
My Lords, can my noble friend assure us that the review will also look into the role of financial intermediaries in the current range of mergers? Can he further say who is going to advise this body of officials and provide the expertise in this sort of area?

§ Lord Brabazon of Tara
My Lords, as to the first part of my noble friend's supplementary question, at the moment I do not have the information with me; but we are planning to get the best possible advice and expert knowledge available whether from inside or outside Government.

§ Lord Bruce-Gardyne
My Lords, I apologise for disturbing my noble friend again but could he check on that point about the role of the financial intermediaries and let us know because that really is an important matter?

§ Lord Brabazon of Tara
Yes, my Lords. I shall endeavour to do so and I shall write to my noble friend.

§ Lord Annan
My Lords, the noble Lord made no reference to the point in the original Question on the membership of this commission. Can he give an assurance that not all its members will be dedicated monetarists and that there will be some spread of political opinion among its members?

§ Lord Brabazon of Tara
My Lords, as I think I said in answer to the last supplementary question, we hope to get expert advice from both inside and outside 1198 the Government, and of course we would invite representations from anybody, including the noble Lord himself if he so wishes.