HC Deb 05 July 1984 vol 63 cc213-4W
Mr. Hanley

asked the Secretary of State for Trade and Industry if he has completed his review of mergers policy.

Mr. Tebbit

Yes. I have been reviewing mergers policy in the light of the Government's general view of the role of market forces and competition in promoting the efficient use of resources and stimulating the economy, to the benefit of producers and consumers alike. I have also had in mind the desire of companies for stability and predictability in this field of policy.

I am satisfied that the mergers provisions of the Fair Trading Act remain an appropriate legislative framework for mergers policy. They leave to Ministers who are accountable to Parliament the decisions on references to the Monopolies and Mergers Commission and on action following adverse MMC reports. They also give Ministers the benefit of independent expert advice from the Director General of Fair Trading and leave the task of investigating the public interest in the hands of another independent body, the MMC. This system provides the flexibility that is necessary in dealing with commercial arrangements. It also allows for an authoritative independent evaluation of the public interest where necessary.

I do not favour either increased rigidity or increased Ministerial discretion. I therefore propose no change in the basic framework of the Act. I am, however, raising the assets threshold in Section 64(1)(b) of the Fair Trading Act from £15 million to £30 million. Under an order which I have made today the change will come into force on 26 July 1984.

The threshold was last increased in 1980. The increase is greater than the adjustment needed to allow for inflation and is intended to secure a worthwhile reduction in the number of small and insignificant mergers caught by the legislation. It is estimated that the change will initially reduce the number of mergers qualifying for investigation under the Fair Trading Act from some 200 a year to some 150 a year.

Apart from the market share and assets tests in Section 64, the Fair Trading Act lays down no statutory criteria for references to the MMC. I regard mergers policy as an important part of the Government's general policy of promoting competition within the economy in the interests of the customer and of efficiency and hence of growth and jobs. Accordingly my policy has been and will continue to be to make references primarily on competition grounds. In evaluating the competitive situation in individual cases I shall have regard to the international context: to the extent of competition in the home market from non-United Kingdom sources and to the competitive position of United Kingdom companies in overseas markets.

An important aspect of the administration of merger control is the "confidential guidance" system operated by the Office of Fair Trading. The office is already able to provide in a considerable proportion of cases positive guidance as to whether or not a reference is likely. This service is much appreciated by companies. I expect my policy on references to enable guidance to be given in an even greater proportion of cases in future.

The independent competition authorities in this country have a justifiably high reputation and in reaching my decisions I expect to be guided by their advice in the great majority of cases.

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