Merger Referrals: Criteria (Hansard, 7 March 1991)

§ The Minister of State, Department of Trade and Industry (Lord Hesketh)
My Lords, the Government's main criterion for referring proposed mergers to the Monopolies and Mergers Commission remains their effect on competition as it affects the UK consumer. In addition, my right honourable friend the Secretary of State for Trade and Industry has made it clear that he will pay particular attention to the degree of state control, if any, of acquiring companies.

§ Lord Ezra
My Lords, despite what the noble Lord says, is there not now some degree of confusion about the criterion for reference of proposed mergers to the Monopolies and Mergers Commission? Further, is it not a fact that the Secretary of State for Trade and Industry, against the advice of the OFT, recently referred to the MMC a case in which one of the parties was a French state-owned bank and that the commission subsequently found that there was no justification for blocking the proposed deal?

§ Lord Hesketh
My Lords, I do not believe that there is any confusion. The reality is that my right honourable friend the Secretary of State considered it relevant to include the criterion of a nationalised company which would not be subject to the same strictures as a private company. That has a direct relevance to the level of competition and the level of comparability.

§ Baroness Oppenheim-Barnes
My Lords, does my noble friend accept that the public interest criterion is confusing and out of date? Does he also accept that a 1493 pure competition criterion would benefit the application of competition policy if it was only the consumer interest and not the public interest which was concerned? I believe that that improvement would be welcomed by the commission.

§ Lord Hesketh
My Lords, I fear that my right honourable friend will not agree with the remarks of my noble friend. However, I shall certainly draw her remarks to his attention for consideration.

§ Lord Grimond
My Lords, does the Minister think that the interests of communities affected by mergers should be given more weight when these matters are considered?

§ Lord Hesketh
My Lords, the requirements of the MMC refer to the consumer. Of course, there is other legislation. There are also other considerations in various areas which are no doubt covered by other departments. However, I suspect that it would be very difficult to have one piece of legislation which would cover all the aspects to which the noble Lord refers under one simple umbrella.

§ Lord Williams of Elvel
My Lords, is it not the case that large mergers above a certain threshold are dealt with in Brussels under what is inelegantly known as Euro-merger control? Further, is not the criterion for that simply one of competition as mentioned by the noble Baroness, Lady Oppenheim-Barnes? The criterion of whether there is any public control does not operate in Brussels. Therefore, is it not true that a small merger can be blocked because there is an element of public control; but that a large merger cannot be blocked because there is an element of public control? In other words, a nationalised company can take over ICI but no nationalised company can take over a division of ICI?

§ Lord Hesketh
My Lords, I am not sure that I can answer the points made by the noble Lord, Lord Williams of Elvel, in his eloquent description of the European body. However, if he were to table a Question on comparability, I should be more than happy to answer it. I suggest to the noble Lord that there are cases where there could be such flagrant infusions of capital that would be relevant with regard to a nationalised company as against a private company within a takeover under European control.

§ Lord Williams of Elvel
My Lords, would that be possible as regards the competition criterion?

§ Lord Hesketh
My Lords, I suggest that it would be possible to have infusions of capital within a nationalised company which would so distort the market that it would come within the criterion described by the noble Lord.

§ Lord Boardman
My Lords, does my noble friend agree that it is very important that there should be the simplest possible criterion and opportunities for companies to have informal discussions so as to reduce the amount of wasted expenditure caused by long inquiries and thereby avoid all the problems involved in the process?

§ Lord Hesketh
My Lords, I am sure that I am correct in saying that it is the duty of government to try to enforce simplicity at all times.

§ Lord Campbell of Alloway
My Lords, is my noble friend aware that it was accepted by my noble friend Lord Cockfield many years ago that the relevant definition of "public interest" was then ripe for review? Is he aware that that fact was also expressly accepted some years later by my noble friend Lord Young?

§ Lord Hesketh
My Lords, I shall draw my noble friend's remarks to the attention of my right honourable friend the Secretary of State.