House of Commons Hansard Debates for 1 Mar 1989

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support for what I am about to say. I was speaking about the morning of 10 November 1988 when Elders chose to fly in the face of accepted City conduct by ignoring the gentlemen's agreement between industry, the Office of Fair Trading and the Department of Trade and Industry that after a reference no further purchases of the shares of the company being bid for should be made.

That shameful 45 minutes of casino trading was described by my right hon. and noble Friend the Secretary of State for Trade and Industry merely as "regrettable", but was apparently considered by Elders to be acceptable financial conduct. It resulted in Scottish and Newcastle Breweries suffering from actions that have now been rendered impossible by the Department's new practice of issuing what are known in the City as "Elders orders". Such practice is now reflected, as the Minister will know, in clause 100 of the new Companies Bill. In the light of that, does the Minister not consider it outrageous for dealers and market makers associated with a bidder in a bid situation to have sold short to the bidder shares in the target at considerable profit to the parties concerned? I put that question to him, and I hope that I will receive an answer. Where holdings of material influence are acquired by bidders prior to, or after, a bid being referred, can the Minister assure the House that in the event of an adverse finding by the Monopolies and Mergers Commission he will take all the necessary steps to ensure that the divestment of such material interest contrary to the public interest will be achieved as swiftly and effectively as possible?

I fervently hope that at no time, or under any circumstances, will anyone be able to claim that Elders IXL and Mr. John Elliott were in a privileged position because he is the president of the Australian Federal Liberal party, which is the Australian equivalent of the Conservative party in the United Kingdom and because he has employed the services of a former Conservative Member of Parliament who lost his seat in 1987 and who, for a time, served as a Minister in the Scottish Office and in the Department of Trade and Industry. Can the Minister give an assurance to those who are deeply interested in the whole issue and in the principles at stake that, if the Monopolies and Mergers Commission finds that the merger between Elders-Courage and Scottish and Newcastle Breweries, creating the largest concentration in beer supply and pub ownership in the United Kingdom, would be against the public interest, the Secretary of State will not overrule the finding of the Monopolies and Mergers Commission?

In conclusion, I give a clear message to Mr. John Dorman Elliott, who brags to the Australian press and to the boys back home that he has easy access to No. 10 and to the Secretary of State for Trade and Industry. His colleages in the Australian Liberal party may be impressed but--and I say this rhetorically--"You cannot buy after hours shares in 10 Downing Street." Again I say to Mr. John Dorman Elliott of Elders IXL that I do not believe that his taking over of Scottish and Newcastle Breweries is in the national interest or the public interest, and that No. 10 Downing Street is certainly not for sale.

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10.20 pm

The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Francis Maude) : My hon. Friend the Member for Macclesfield (MrWinterton) has put a number of comments in his characteristically forthright way and has asked a great many questions. I know that this subject is of great concern to him and to the whole House and we have listened with respect to the way in which he has put his views. I am glad to see in the Chamber my hon. Friends the Members for Dumfries (Sir H. Monro), for Eastwood (Mr. Stewart) and for Thanet, North (Mr. Gale). I know that they have a close interest in this matter. I listened with interest to my hon. Friend the Member for Macclesfield, who said in what I suspect was an optimistic frame of mind that he hopes that I will answer all the questions that he asked. I think that he understands that, because of the subject matter, it simply is not possible for me to do so.

My hon. Friend spoke principally about the Elders IXL bid for Scottish and Newcastle Breweries. Those issues are now in the process of being investigated thoroughly by the Monopolies and Mergers Commission. The MMC is to report by 8 March this year, which is next week.

It is for the MMC to decide whether the merger would be against the public interest, in accordance with the provisions of the Fair Trading Act 1973. It would be entirely inappropriate for me to comment on this particular case while it is in the commission's hands, as any such comment might prejudice the conduct of the MMC's inquiries. The MMC has a duty to take all relevant matters into account when preparing its report.

My hon. Friend--and indeed any other interested person or body--has had ample time to put his views to the commission during the course of its inquiry. I do not ask whether my hon. Friend has done so, but he is experienced in such matters and I am sure that he will have taken that opportunity.

The reference of this bid to the MMC thus falls full square within our usual policy on mergers--that the main criterion for deciding whether to refer a bid or merger to the MMC should be the effect on competition in the United Kingdom. However, it does not follow that the bid will automatically be blocked. There is a power to block the bid only if the MMC finds it to be against the public interest. If it finds that the merger is not against the public interest, my right hon. and noble Friend has no powers to take any action.

While competition is the main consideration in considering whether to refer a bid or merger to the MMC, my right hon. and noble Friend retains the power to make a reference on other public interest grounds. I understand, of course, that the uncertainty associated with a merger can be disconcerting for those concerned, especially for the work force of a company that is the object of a bid. I know that all those who are employed by Scottish and Newcastle are making their fears and anxieties known and-- perfectly properly--my hon. Friend has written to me on their behalf on several occasions.

It has been for the MMC to examine the issues put to it over the past months. Although we have made it our policy to make competition the principal consideration when deciding whether to refer a merger, the MMC is not

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restricted by that consideration. It can consider all aspects of the public interest, and has a duty as well as a power to take all relevant matters into account.

My hon. Friend mentioned takeover bids for companies based in the United Kingdom by companies based overseas. There is perhaps a tendency to infer from the remarks that he has made tonight, and from remarks by others concerned about the issue, that the process is entirely one way. I think that my hon. Friend will know that the reverse is the case. It appears from the past 12 months for which figures are available that Britain is very much on the offensive.

Mr. Nicholas Winterton : I am not concerned about straightforward fair competition takeovers of companies here by companies abroad, or vice versa. I am concerned--and I associate my concern with this takeover--about the extraordinary share structure of the company and its massive indebtedness. Will my hon. Friend direct his remarks to those issues?

Mr. Maude : I think that my hon. Friend will understand that I cannot do that, because those are precisely the sort of matters which, no doubt at his instigation and that of others, the MMC is investigating at present. It would be quite wrong of me to express an opinion now.

My hon. Friend expressed views on overseas takeovers of British companies in general. Over the past 12 months for which figures are available there were considerably more than twice as many takeovers by British companies of overseas companies as the reverse, certainly in terms of value. We are rather good at that in this country ; it is a sign of the confidence and expertise of British business. I am sorry that I am not able to answer my hon. Friend's interesting questions, but I think that, with his considerable experience in these matters, he will understand why I cannot do so.

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Mr. Winterton : Will my hon. Friend direct his mind to one or two other questions that I put about the MMC's observations on other occasions, relating to earlier issues referred to it, suggesting that the Government might act?

Mr. Maude : In so far as those observations relate to a previous inquiry by the MMC into Elders IXL, I think that my hon. Friend will understand that I cannot do as he asks. I will, however, set out clearly our views on the general issue of "leveraging". We will not decide to refer a bid or merger to the MMC simply on the basis of leveraging. We regard competition as the principal criterion for referring a bid. If competition is likely to be damaged, or if a serious competition issue is raised by a merger--my hon. Friend made much of competition in respect of this case--we will refer it. Competition, indeed, was the issue that prompted my right hon. and noble Friend to refer the bid. All that that means is that an issue merits full investigation by the MMC, and that is taking place. Although it is our policy not to make a reference to the MMC on the basis of leveraging alone, if a bid is referred on competitive grounds--as this bid was--the MMC wil not be debarred from looking into all such relevant matters. I can say no more than that, but my hon. Friend has had the chance to make representations to the MMC.

Sir Hector Monro (Dumfries) : May I take up the issue of the public interest? Will my hon. Friend give me an absolute assurance that he will take into account the fact that a major loss of jobs in Scotland, particularly the loss of one of Scotland's biggest businesses, would be catastrophic?

Mr. Maude : That issue also will no doubt have been put to the MMC, and, as I have said, the MMC has a duty to take all relevant matters into account--certainly the matters put to it. My hon. Friend has made his point vigorously.

Question put and agreed to.

Adjourned accordingly at half-past Ten o'clock.

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