S. and W. Berisford Ltd. (Merger) (Hansard, 25 March 1981)

§ Mrs. Sally Oppenheim

My right hon. Friend received the report on 20 February 1981. It is being published today. The Commission concluded that the merger might be expected to operate against the public interest by leading to a reduction in competition unless Berisford were to give up their merchanting and other trading functions in relation to Tate and Lyle products, and by leading to the loss of information on British Sugar's productivity and financial position unless British Sugar were maintained as a separate subsidiary and unless the farmers, and others needing to assess the record of the company which has a monopoly position, had available full information on its operations. However, the Commission considered that these adverse effects could be remedied by undertakings under section 88 of the Fair Trading Act which committed Berisford

(a) as soon as an orderly transition could be arranged, and subject only to its legal commitments, to cease trading in Tate and Lyle sugar and sugar products, save for the acquisition under certain circumstances of sugar for incorporation in Berisford's or British Sugar's own products; and
(b) to maintain British Sugar as a separate subsidiary without major changes in its activities or purposes, and to publish annually reports and accounts with supplementary material such as to give information comparable with that given in the directors' report and accounts, chairman's statement and chief executive's review published for British Sugar for 1979–80.

The Commission also noted with concern that competition in the sugar industry was very restricted, and suggested that if changes were to occur which fundamentally affected the present market arrangements, it would be desirable for any possible monopoly situation to be considered with a view to the establishment of any necessary safeguards in the interests of sugar users.

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In a note of dissent one member of the Commission's investigatory group considered that in view of risk of serious damage to British Sugar's good industrial relations following the proposed merger it might be expected to operate against the public interest and should not be allowed to proceed.

In reaching its conclusions the Commission considered the possible effects of the merger on competition, on the structure of the market, on Berisford's position as a commodity trader in sugar, on British Sugar's relations with the farmers and on British Sugar itself. The Commission found it hard to identify any way in which the proposed merger was likely to operate positively for the public benefit. It had to consider whether the evidence was sufficient to weigh down the scale on the other side and create not just a possibility but an expectation that in some way the merger would operate against the public interest.

The Commission thought that, despite the limited scope for competition in the United Kingdom sugar market, the merger would have no significant effect on competition, provided Berisford ceased to trade in Tate and Lyle's sugar and sugar products. It also found that the future of the market structure was too uncertain to permit any conclusion that the merger would affect it in a manner damaging to the public interest. It found no reason to expect that the merger would undesirably affect Berisford's position in the commodity market. Neither did it find any reason to expect an undesirable effect on relations between British Sugar and the farmers provided British Sugar was maintained as a separate subsidiary without any loss of published information relating to its productivity and financial position.

The Commission considered in particular the possible effect of the merger on British Sugar's efficiency. In each of the three areas of management, capital investment, and labour relations it saw some possibility that the merger might be damaging, but also a possibility that its outcome might be different, and neutral in its bearing on the company's business. It therefore considered the degree of likelihood of an adverse effect. It concluded that the evidence did not produce the required degree of confidence that adverse effects on the efficiency or the development of British Sugar would result from the merger.

My right hon. Friend agrees, in the light of the Commission's conclusions, that it would be appropriate to allow Berisford to renew its offer for British Sugar provided Berisford gives undertakings to take such action as the Secretary of State considers requisite for the purpose of remedying or preventing the adverse effects of the merger specified by the Commission in its report. My right hon. Friend is therefore asking the Director General to seek to negotiate suitable undertakings for these purposes. Pending the Secretary of State's acceptance of such undertakings, Berisford will be asked to refrain from any action which might result in a merger situation arising between it and British Sugar Corporation. In the absence of acceptable undertakings the Secretary of State would have power to prevent the merger.