HC Deb 15 January 1990 vol 165 cc49-50W
Mr. Patrick Thompson

To ask the Secretary of State for Trade and Industry if he will make a statement on the adoption of the European Community merger control regulation.

Mr. Redwood

I welcome the adoption of this regulation which followed major progress over past months on a number of issues during which the United Kingdom played a constructive role throughout. The adoption of this regulation provides a welcome clarification of powers, giving business greater certainty about which jurisdiction will be exercised and how it will be exercised.

As from 21 September 1990 mergers with a Community dimension involving large companies—broadly those mergers with a combined worldwide turnover of more than 5 billion ecu (around £3.7 billion) and with a Community turnover in excess of 500 million ecu (around £370 million)—will be subject to examination by the European Commission. We expect this to include about a dozen United Kingdom mergers per year. Mergers which primarily concern one member state in that more than two thirds of the turnover of each company concerned is in one and the same member state remain subject to national control.

The United Kingdom was successful in ensuring that the criteria for the assessment of mergers are strongly competition based. Mergers which create or enhance a dominant position and significantly impede competition must be prohibited. Technical and economic progress can be taken into account so long as they do not pose a barrier to competition.

The United Kingdom's objective that there should be a clear separation of the roles of the Commission and member state authorities has also been substantially achieved. Normally the Commission will have exclusive competence over those mergers with a Community dimension as described above. The United Kingdom was successful in limiting the scope for member states to intervene on competition grounds in such mergers. A member state may intervene only where it demonstrates to the Commission that a dominant position significantly impeding competition exists in a distinct market in its territory and the Commission is satisfied that the market cannot be adequately protected under the regulation.

A tight line has been drawn round the grounds other than competition on which a member state can intervene in mergers. Only public security, prudential controls and media diversity are recognised as legitimate national interests allowing intervention.

Outside the thresholds mentioned above, the Commission can intervene under the regulation only at the specific request of a member state and then only to remedy competition defects in that member state. The merger regulation disapplies regulation 17, thereby restricting the Commission's powers to intervene under treaty articles 85 and 86. This should reduce the uncertainty which currently exists and which is an unwelcome hazard to business.