Clause 20 - Duty to make references in relation to completed mergers
Enterprise Bill
3:30 pm
Mr Nigel Waterson (Eastbourne, Conservative)
I am sure you do, Mr. Beard; you probably received much constituency correspondence about it.
A dominant position was created in the German market for potash but the case was cleared from a reference under mergers legislation in the EU because it was considered that a prohibition would have led to the same outcome in the market as if there had been a clearance. In the Commission's decision, the following three criteria were set out: first, the company would in any event go bankrupt in the immediate future; secondly, the market shares of the company would in any case go to the merging party; and thirdly, there was no less anti-competitive way of selling the company. It is immediately apparent that the main difference between the US and the EU approach is that the latter imposes the additional requirement that the market shares of the failing firm would in any case go to the acquiring party.
The amendments are probing, and we are genuinely interested to hear the Government's comments. I suspect that they considered the failing firm defence but discarded the idea, possibly for good reasons–if so, we would be interested to hear what they are. We propose a test based on the US lines, but as the CBI said in its comments:
''adoption of either approach would be acceptable''.
That is probably right and also raises an important issue.