HL Deb 20 January 1988 vol 492 cc203-4
Lord Williams of Elvel

My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government whether they will refer the acquisition by the Kuwait Investment Office of a substantial holding in British Petroleum plc to the Monopolies and Mergers Commission.

The Secretary of State for Trade and Industry (Lord Young of Graffham)

My Lords, the Kuwait Investment Office holding is being considered under our merger control procedures by the Director General of Fair Trading. He will advise me whether there may be a "merger situation" which qualifies for investigation and, if so, whether it should be referred to the Monopolies and Mergers Commission.

Lord Williams of Elvel

My Lords, I am most grateful to the Secretary of State for his response. I understand exactly the situation that he describes. Is it not true that the Kuwait Investment Office is the investment arm of the Kuwait Government, that it now holds over 20 per cent. of BP, which is our largest company, and that there is a problem of national interest here? Should there not be some formal undertakings from the Kuwait Government about their intentions in respect of this shareholding?

Lord Young of Graffham

My Lords, the Fair Trading Act distinguishes three levels of influence on a company which constitute a qualifying merger. It is that point which the director general is at the moment in the process of investigating. These three qualities are the ability materially to influence policy, the ability to control such policy or the acquisition of a controlling interest. It would be as well to await the report of the director general who will then advise me. I can then see what steps should be taken. I am aware of the interest in the matter and of its implications. I assure all in your Lordships' House that we shall be following this through very closely indeed.

Lord Taylor of Gryfe

My Lords, in addition to the reference to the Office of Fair Trading, will the Secretary of State keep in mind his reserve powers in the exercising of the golden share in this case? Will he consider that separately from any report he receives from the OFT?

Lord Young of Graffham

Yes, my Lords, but the golden share is in respect of a company in the North Sea; namely, Britoil, and not in respect of this one which is some thousands of miles away.

Lord Bruce of Donington

My Lords, may we take it that if, during the course of the inquiries that have been undertaken, anything comes to the noble Lord's attention that leads him to think that the national interest may be affected, he will immediately inform the House?

Lord Young of Graffham

My Lords, if the Monopolies and Mergers Commission (which is the end result of the director general's report) finds that a merger might be expected to operate against the public interest—for this purpose a substantial shareholding can qualify as a merger—my power is to remedy or prevent any adverse effects specified in the report. If a merger is in contemplation I can prevent it. If it has already taken place I can require disposal of all or part of the existing shareholding in the target company.

Lord Lloyd of Kilgerran

My Lords, will the Secretary of State's department be considering how far rulings in respect of the Rome Treaty clauses, particularly those dealing with competition law, will be taken into account?

Lord Young of Graffham

My Lords, I am absolutely satisfied that the Director General of the Office of Fair Trading will be considering whether this is a merger situation. If he finds that it is and that it qualifies for investigation, and at that time I so agree, I am certain that the Monopolies and Mergers Commission will be looking at all aspects of the problem.

Lord Paget of Northampton

My Lords, how does a minority holding become a monopoly? It sounds off-hand like a contradiction in terms.

Lord Young of Graffham

It surely does, my Lords, but, as I told your Lordships a moment ago, under the Fair Trading Act there are three levels of influence in a company which constitute a qualifying merger. Those levels of influence are the ability materially to affect policy, to control policy or to acquire a controlling interest. That is the law.

Lord Williams of Elvel

My Lords, will the Secretary of State tell the House whether the Government have any power, or indeed any influence, to prevent the holding of the Kuwait Investment Office from increasing from what it is at present, which is approximately 20 per cent. according to the latest information, to 29.9 per cent.?

Lord Young of Graffham

My Lords, I believed that the latest holding was just over 18 per cent. I have not been following it closely. I also noticed that the chairman of the company seemed to consider that to be acceptable. I believe that we should wait to see exactly what the director general advises me before taking any further steps.

Back to