Takeovers: EC Legislation (Hansard, 7 June 1988)

§ Lord Young of Graffham
My Lords, the Government believe that the existing legislation adequately protects the national interest in the kind of situation that the noble Lord has in mind and have no plans for change in this respect.

§ Lord Campbell of Alloway
My Lords, I thank my noble friend for that Answer. Is he aware that there is no true reciprocity of treatment as regards the disposal of major shareholdings on takeovers as between our financial institutions and those of certain other member states? Does he agree that the proposed merger and takeover regulations, to be discussed at the Council of Ministers on 22nd June, are a crucial and urgent consequence affording some form of Community solution? Secondly, if, as the noble Lord said on a previous occasion, reciprocity is to be the test by which we refuse or allow a takeover bid, is there any statutory provision to give effect to 1238 that test? If not, should he not introduce some protective measures pending a European solution?

§ Lord Young of Graffham
My Lords, authority already exists for the Commission under Articles 85 and 86 of the Treaty of Rome to look at mergers which cross national boundaries and which have competition implications. It is a power to look backwards; to look after the event.
Proposals emanating from Commissioner Sutherland are before the Council of Ministers at the present time to see whether we can agree upon a European merger control. That has many implications. The proposals are in the early stages of discussion and, to my knowledge, all member countries are paying serious attention. We must consider them to discover whether they affect the operation of Articles 85 and 86 and whether they will be necessary in future as regards mergers. That is a matter which we must look at in the future.
Financial institutions are covered in different ways. However, my powers to look at reciprocity are those which are open to me under the Fair Trading Act for the Monopolies and Mergers Commission to assess public interest. I can look at the matter under those powers.

§ Lord Harmar-Nicholls
My Lords, as regards the discussions which my noble friend has said are taking place, have industry and commerce been consulted in those discussions? Those who are having to run the show find it difficult enough when one government put their oar in. If 12 of them do so we may well be interfering with the whole of the business community in the European Community.

§ Lord Young of Graffham
My Lords, discussions are not easy because one of the difficulties in this area is to determine the precise boundary between national competition implications and European competition implications in order to discover when a European or a national monopolies authority would have authority. When one looks at the many mergers which take place over two or three countries the whole area becomes very complicated. The matter will be thought out and consultations are taking place. I cannot see that there will be a quick and speedy decision on the matter because of the difficulties which arise.

§ Lord Williams of Elvel
My Lords, in view of the noble Lord's Answer to an earlier Question when he advocated an open market, does he not agree at least that open markets require "level playing fields", to use the old expression? Secondly, does he not agree that the real reciprocity between us and other members of the Community—by which I mean the behaviour of financial institution investors—does not exist?

§ Lord Young of Graffham
My Lords, in the past governments have found it exceedingly difficult to legislate for the behaviour of individuals or institutions. We must ensure, as far as we can, that there are level playing fields. However, it is admitted that the existing systems in many of the countries of the community are different in nature. In many cases they owe their origin to the Code Napoleon and not to English common law. They have very different 1239 grounds and I suspect that there will be a long process during which we shall gradually bring the differing situations closer together.