Takeovers and Mergers

Oral Answers to Questions — Trade and Industry – in the House of Commons at 12:00 am on 6th December 1989.

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Photo of Ian Taylor Ian Taylor , Esher 12:00 am, 6th December 1989

To ask the Secretary of State for Trade and Industry what progress is being made within the European Commission in agreeing Communitywide powers to regulate cross-border takeovers and mergers.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

At the 23 November Internal Market Council, major progress was made in negotiations on the proposed EC merger control regulation setting out Community powers to regulate certain EC mergers. Agreement was reached in principle on a number of important issues. Discussion will be resumed at the Council on 21 December.

Photo of Ian Taylor Ian Taylor , Esher

Will my right hon. Friend accept congratulations for the work that his Department has done to speed progress in European co-operation towards achieving the 1992 programme in competition policy and other matters such as insurance services? Will he confirm that the French have dropped their requirement for an industrial element in this policy as opposed to our desire for competition principles to be predominant? Has the Commission decided satisfactorily on the degree of flexibility in referrals for smaller countries?

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

I am grateful to my hon. Friend and I can confirm that good progress was made at the last Council. I am hopeful—but not certain—that an agreement will be reached during this Presidency. We can be satisfied with the criteria for the Communitywide mergers to be considered by the Commission, which are almost entirely on competition grounds.

On the possibility of smaller nations with no mergers control machinery inviting the Commission to consider mergers betwen the thresholds of 2 billion and 5 billion ecu, we have a satisfactory formula which will allow the Commission to take remedial action only in the smaller member state that makes the application in the first place.

Photo of Mr Ronald Brown Mr Ronald Brown , Edinburgh Leith

Whether the House is for or against the EEC—I am certainly against it—can the Secretary of State tell me exactly what the Government are doing to protect Ferranti, bearing in mind the predators within and outside this country who intend to take it over and asset strip it? That means that jobs will go and a major asset will be reduced to ruins both north and south of the border. Are the Government doing anything about that? Will the Government act as a guarantor for British industry or will they just sit back and listen?

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

I think that everything in that supplementary question was out of order and unacceptable—[Interruption.]

Photo of Jimmy Hood Jimmy Hood , Clydesdale

On a point of order, Mr. Speaker. Am I right in thinking that you are the only person who can rule whether something is in or out of order in the House and not a Minister from the Dispatch Box?

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

If I had thought it out of order, I would have said so.

Photo of Mr Spencer Batiste Mr Spencer Batiste , Elmet

Does my right hon. Friend agree that there is an important strategic need to develop large transcontinental companies across Europe in many of the important industries of tomorrow? In order for those companies to emerge, is there not a need for a coherent and consistent takeovers and mergers policy across Europe? Will my right hon. Friend confirm that he is wholly committed to the creation of such a regime?

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

I do believe that the regime—[Interruption.]

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

I believe that the regime in Europe should put as its first priority the preservation of competition, both in distinct markets and in the Community market as a whole. It is more important that there should be competition than that we should seek to construct large European champions in any industry. I believe that there is room for both, but competition must come first.

Photo of Mr Graham Riddick Mr Graham Riddick , Colne Valley

Once the European countries have hammered out an agreement on this, will my right hon. Friend confirm that the Monopolies and Mergers Commission in this country will not carry forward its unfortunate practice of investigating whole industries where companies are competing unless there is clear evidence that prices are being fixed or that the companies are following other incorrect trade practices? Will he stop the MMC from producing grand bureaucratic designs for those industrial sectors as it did with the brewing industry?

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

The subject matter of this question has been Communitywide mergers of assets in excess of 5 billion ecu. Of course it is true that the Monopolies and Mergers Commission is also asked to carry out investigations into situations of imperfect competition. Those investigations are agreed by myself or, in the case of the beer report, by my predecessors. It would be wrong not to turn the spotlight on uncompetitive aspects of the particular industry under consideration. We should continue to have that power. I am sure that my hon. Friend will have views on the beer report that he might wish to express when the orders come before the House.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

On a point of order, Mr. Speaker. My hon. Friend the Member for Clydesdale (Mr. Hood) raised a point of order about the Secretary of State not being allowed to decide which questions are in order in the House, and you indicated your agreement. Surely the Secretary of State cannot brush aside a question by declaring it out of order? He should apologise to the House for usurping your job; otherwise, any Minister could ignore questions.

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

I have said endless times before that I am not responsible for what is said in answer to questions. I said that I did not judge the question asked by the hon. Member for Edinburgh, Leith (Mr. Brown) out of order.