HC Deb 26 October 1995 vol 264 cc753-4W
Mr. David Nicholson

To ask the President of the Board of Trade what reviews of the law and regulations regarding company takeovers have been carried out since 1985; and what were their main conclusions. [39262]

Mr. Jonathan Evans

In 1988, the Government published the results of a review of mergers policy and the merger control procedures of the Fair Trading Act 1973—"Mergers Policy—a DTI paper on the policy and procedures of merger control". The main conclusion was that the policy towards mergers should remain unchanged but that a number of changes would be made to merger control procedures to help speed up decision. The changes introduced include a non-mandatory prenotification system and the power to accept divestment undertakings in lieu of reference to the Monopolies and Mergers Commission. More recently, following a review of merger control procedures as part of the Government's deregulation initiative, a number of changes have been made or are to be made, including the power to accept behavioural undertakings in lieu of reference to the MMC and a reduction in the period during which a merger may be referred to the MMC from six to four months.

Mr. Nicholson

To ask the President of the Board of Trade, if he will make a statement on the objectives of the current law regarding company takeovers. [39264]

Mr. Evans

The Fair Trading Act 1973 gives my right hon. Friend the President of the Board of Trade discretion to refer qualifying mergers to the Monopolies and Mergers Commission where he believes they may operate against the public interest. Since 1984, the Government's policy has been that, in determining whether mergers should be referred, the primary consideration is the effect on competition. Certain mergers are also subject to the City code on takeovers and mergers which is a non-statutory code administered by the panel on takeovers and mergers. The code and the panel operate principally to ensure fair and equal treatment of all shareholders in relation to takeovers. The code also provides an orderly framework within which takeovers are conducted.

In 1987, a review of the operations of the takeover panel identified a number of measures to strengthen the panel's regulation of takeovers while maintaining its existing non-statutory status. The measures were designed to improve the monitoring and investigative capabilities of the panel and to bring the panel into a closer relationship with the regulatory arrangements established by the Financial Services Act 1986.

The Trade and Industry Committee of the House also undertook a review of takeovers and mergers policy and made a number of recommendations, which were published on 27 November 1991, HC 90. The Government's response to that report was published on 26 February 1992, HC 300.