COMMONS AMENDMENT (Hansard, 9 November 1989)

§ Viscount Ullswater
My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 192. With leave, I shall also speak to Amendments Nos. 195, 196 and 198 to 200. I may incur the wrath of the noble Lord, Lord Airedale, but I intend to refer to Amendment No. 195A tabled in the name of the noble Lord, Lord Peston, which would leave out Amendment No. 195.
These amendments put the connected persons of a prenotifier under a similar duty to provide true and accurate information but remove any obligation to give information which they could not have known. The provisions of Clause 117 introduce a new procedure under which a properly prenotified merger cannot be referred to the Monopolies and Mergers Commission once the allowed period for consideration has elapsed. This system requires safeguards against the provision of false or late information.
Amendments Nos. 192 and 196 improve these safeguards by extending the director general's powers to reject a prenotification and the Secretary of State's power to refer a merger although the allowed period has elapsed to cover in both situations cases where the "connected person" of a prenotifier has given false or misleading information. Where a connected person is involved in a merger or gives information about it, that needs to be covered by these provisions; otherwise they could be avoided, for example, by channelling false information on a prenotification through a subsidiary.
Amendment No. 195 on the other hand prevents a prenotified merger from being referred after the period for consideration has expired if the reason for the late reference was the late discovery of material information but that could not have been known to the prenotifier and connected persons. This is because it would be unfair if new information which emerged afterwards and could not have been known by the notifier were to throw a merger open to reference.
Amendment No. 195A, tabled by the noble Lord, Lord Peston, would remove this provision, so that if any information material to the merger is not disclosed the merger may still be referred to the Monopolies and Mergers Commission, even if that information could not have been known to those involved. If I understand the noble Lord correctly, he is concerned that we should retain the power to make a reference where there is new material information of any kind.
We believe that there is a balance to be achieved here between, on the one hand, proper consideration of mergers which may affect the public interest and, on the other hand, allowing companies to go about their business unhindered. We consider that 1052 Amendment No. 195A shifts this balance too far in one direction. A prenotifier who provides all the information available to him at the time in good faith should not then have a completed and successful merger reopened for scrutiny because of facts he could not have known and which another party has failed to disclose. We consider that this would create undue uncertainty for the businesses involved. In practice these provisions will allow proper consideration of the ramifications of a proposed merger at the time. If new material facts which could not have been known at the time can at some future date lead to an investigation, the whole basis of the system for prior clearance of mergers could be undermined.
Amendment No. 198 provides a definition of a connected person for these purposes as an associated person or a subsidiary. Amendment No. 200 provides that the definition of "subsidiary" is that given in Section 75(4K) of the Act as introduced by Clause 120. This definition covers ownership by an individual as well as by a company.
Moved, That the House do agree with the Commons in the said amendment. —(Viscount Ullswater.)

§ Baroness Seear
My Lords, before the noble Lord, Lord Peston, replies, I would ask whether we may have some comment on the remarks made by my noble friend Lord Airedale. They concerned noble Lords on the government Front Bench speaking to amendments which are to be moved but which have not been moved from these Benches. The noble Viscount, Lord Ullswater, said that he hoped that he understood the noble Lord, Lord Peston, correctly. I suggest that he would have a better chance of understanding the noble Lord correctly if he waited to hear what he had to say.
I do not know what the strict procedural position is, but I think that the intervention of the noble Lord, Lord Airedale, calls for some comment. Perhaps the position could be clarified.

§ Lord Trefgarne
My Lords, perhaps I may reply because it is a sensible point, if I may say so. I recognise the difficulty in which the noble Lord, Lord Airedale, and the noble Baroness find themselves. The problem has been that the amendments were agreed in groups. Then at a late stage amendments to particular amendments within the groups have been tabled. It has proved difficult to disentangle the groups because of the late tabling of amendments.
Having said that, I have done my best to reply specifically to the points raised. I think the position is different when an amendment seeking to change a Commons amendment is tabled, as compared with an amendment simply to delete a Commons amendment. That is the same as seeking to negative the agreement to the amendment that may be proposed from this Dispatch Box. I recognise the difficulty and I think it arises out of the arrangements that I have referred to. However, I certainly think it is right for Ministers to seek the permission of the House to reply to a particular amendment within the grouping, when that is appropriate.

§ Baroness Seear
My Lords, I thank the noble Lord for that explanation. I do not wish to prolong the discussion at this time of night. However, I think the noble Lord will be aware that, what with the nature of some of the amendments which have come back from the Commons in vast numbers and the late placing of government amendments, we feel that the position of the Opposition is now being made almost impossible by the way the Government are conducting their business.

§ Lord Peston
My Lords, one day I shall learn how to do these things. However, I shall do the best I can now. Let me again say that it is not my desire nor that of my noble friend Lord Williams of Elvel to undermine what the Government are doing in this set of amendments. What the Government are doing seems to me to make perfectly good sense. However,
I am in a slightly difficult position because I thought that the noble Viscount, Lord Ullswater, expressed my points better than I had prepared them myself before he rebutted them. That puts me at an even bigger disadvantage than would otherwise be the case.
I have two simple points to make. One concerns where we disagree. We disagree at a fundamental level. My view of all mergers is that they should be demonstrated to be in the public interest before they go ahead, rather than that they should be not against the public interest. In other words, I think the balance is all wrong on the merger question. However, we have argued that point and we shall continue to argue it until we are sitting on those Benches and can do something about it. We hope that will be sooner rather than later, but who knows? That disagreement underlies our position here.
That leads to the point that there ought to be a predisposition to provide all the information that is required to make a judgment at any of the stages. Using the device that my noble friend Lord Williams of Elvel used earlier, I oppose Amendment No. 195 simply in order to argue not that Amendment No. 195 per se is wrong but that one needs a stronger merger policy in the first place.
I accept the point of the noble Viscount about balance. Information here is of such enormous importance in order to get the matter right that, in considering the balance, I would lean rather more the other way in order to make absolutely sure that those who are concerned with these matters, in trying to express the public interest, can always obtain the appropriate information. I accept that the noble Viscount does not take that view, as he has already argued his case before I got a chance to argue mine. However, I thought your Lordships would at least like to have on the record the view of our side in connection with information, and how that stems from our view of the criterion for judging mergers in the first place. Having said that, I do not intend to delay the House.
On Question, Motion agreed to.