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Mr. Maude : The report is published today. The Monopolies and Mergers Commission concluded that UniChem has arrangements for the allotment of shares in its capital which are anti-competitive and against the public interest.
I accept the MMC's findings and conclusions. As from tomorrow, 18 May 1989, purchases from UniChem by its members will not be able to contribute towards the allotment of shares in its capital. A notice will shortly be published describing in detail the order I propose to make with a view to achieving this result.
UniChem is an industrial and provident society whose main activity is the wholesale supply of pharmaceutical goods. The Monopolies and Mergers Commission was asked to investigate UniChem's allocation of shares prior to its proposed conversion into a public limited company in mid 1990. UniChem had decided to allocate a large
Column 240number of shares at £1 per share nominal value (refundable if members left the society) to new and existing members of the society. The allocations to be made on the basis of the levels of business placed by them with UniChem in the period up to May 1990. Because UniChem is a profitable business with a large share of the market, the value of shares on conversion is likely to be well in excess of the nominal value. Partly as a result of this prospect of considerable capital gain, UniChem has attracted both new members and additional business from existing members, and increased its market share.
The commission found that the arrangements enabled UniChem to increase market share by means other than price reduction or improved quality of service, and that competitors were not likely to be able to compete using similar arrangements, or, having regard to the low margins prevailing in the industry, through price reductions or other forms of discount. The commission concluded that UniChem's arrangements had distorted competition and were therefore anti-competitive. The commission went on to conclude that the arrangements were also against the public interest and, if the arrangements were allowed to remain in place, would continue to be, as leading to reduced competition in the supply of goods to retail pharmacies, reduced choice of wholesalers, and reduced quality of service.
The commission also concluded that measures should be taken to prevent further damage to the wholesale pharmaceutical market, and recommended that any shares to be issued by UniChem in future should not be related to purchases from UniChem made after publication of the report. Nor should UniChem change the minimum level of turnover required for membership, or the number of shares to which new members must subscribe.
I accept the commission's recommendations. I intend to make an order which will prohibit UniChem Limited from continuing to operate its "share scheme", under which shares will be allotted by reference to the amounts of goods and services acquired from UniChem, except in respect of allotment by reference to goods and services acquired by 17 May 1989. UniChem may not make or carry out any agreement in respect of allotment by reference to later acquisitions of goods or services.
UniChem must also hold its minimum purchase qualification for continued membership to £3,000 per month and its initial share subscription qualification to 200 per premises, up to a maximum of 1, 000.
Mr. Newton : My right hon. and noble Friend the Secretary of State has now received the report from Touche Ross Management Consultants appointed on 29 November 1988 to undertake a detailed study of the National Engineering Laboratory and to advise on the restructuring that is necessary as the way forward towards privatisation. Copies of a summary of their report are being placed in the Libraries of both Houses and made available to staff at NEL.
Taking account of the report and the advice of the NEL supervisory board, we concluded that the considerable skills of the laboratory are best exploited in a framework
Column 241which provides greater opportunities for commercial drive. In our view this is best secured through privatisation. We have concluded that in order to achieve a successful privatisation, restructuring and a new commercially oriented approach to business must first be established. This process could take some years.
To prepare for privatisation, we propose to follow the recommendation of Touche Ross and to transfer the laboratory out of the Civil Service into the ownership of a limited company, to be called the National Technology Centre Ltd., whose shares will be held initially by Government, but which could later be sold when the business of the laboratory has been transformed. The necessary legislation will be brought forward as soon as possible. The laboratory will play a central role within the National Technology Centre and within the East Kilbride site. The future of the East Kilbride site is also important, and we intend that it should be developed as a science and technology park which will be an attractive location for science based companies.
Mr Forth : My Department's strong support for the management charter initiative (charter group initiative) is set out clearly in the 1988 White Paper, "DTI--the Department for Enterprise"(Cm. 278). We have offered pump- priming funding of up to £0.5 million a year for up to five years, to match employer donations. £500,000 was awarded during financial year 1988-89. DTI and all major Government Departments have become founder members of the management charter initiative.
Mr. Cousins : To ask the Chancellor of the Duchy of Lancaster if he will list the LINK programmes so far announced, showing in each case the funds committed to them by (a) the Government, (b) higher education institutions, (c) the research councils and (d) the private sector.
Mr. Forth : The LINK programmes so far announced, together with the funding authorised, are listed below. Higher education institutions are normally recipients of research council funding. The private sector is required at least to match the Government funding for each LINK programme.
Funding (£ million) Programme |Government Departments|Research councils |Private sector -------------------------------------------------------------------------------------------------------------------------------------------- Molecular electronics |5.00 |5.00 |10.00 Advanced semiconductor materials |9.00 |3.00 |12.00 Industrial measurement systems |5.40 |5.40 |10.80 Eukaryotic genetic engineering |1.50 |0.80 |2.40 Nanotechnology |6.00 |1.50 |7.50 Biotransformations |1.00 |1.00 |2.00 Personal communications |3.35 |3.00 |6.35 Drug delivery and targeting |0.50 |1.00 |1.50 Construction maintenance and refurbishment |0.75 |0.75 |1.50 Food processing sciences |7.00 |- |7.00 Ventilation, air conditioning and refrigeration |0.75 |0.75 |1.50 Optoeolectronics |10.00 |5.00 |15.00 Design of high speed machinery |5.00 |5.00 |10.00 Structural composites |14.00 |6.00 |20.00
Mr. French : To ask the Chancellor of the Duchy of Lancaster if, when he next meets the Director-General of Oftel, he will direct him to make it a condition of British Telecom's licence that they abolish rental charges on telephones for pensioner customers.
Mr. Atkins : Under the terms of the Telecommunications Act 1984, it would be entirely for the Director General of Telecommunications to consider whether such a licence condition would be appropriate. I understand that he is considering with British Telecom the details of a more effective replacement for the existing low user rebate scheme and that he is aware of the importance such a scheme has for those pensioners who spend relatively little on telephone calls.
Column 242research and in developing those areas of space activity that have commercial potential. Earth observation is now the centre piece of civil space policy. The United Kingdom has joined ESA's Columbus programme, concentrating on the polar platform element : and the Government are funding the establishment of the earth observation data centre at Farnborough. The civil space programme is implemented through the British National Space Centre which brings together the space interests of various Departments and research councils. Greater private sector participation in space programmes is being encouraged. But the Government expect to maintain its own expenditure on civil space at the level of approximately £130 million per annum. Further details are given in the Government's response to the Second Report of the House of Lords Select Committee on Science and Technology, 1987-88 Session. The memorandum containing this response was placed in the Libraries of both Houses on 28 July 1988 [ Official Report, House of Lords, c. 477.] and was subsequently published in HL Paper 105 (11 October 1988).
Mr. Dalyell : To ask the Chancellor of the Duchy of Lancaster, pursuant to the answer to the hon. Member for Linlithgow of 12 April, Official Report, column 543, when he expects the urgent and thorough investigations into the leaking of his Departmental inspectors' report on the acquisition of the House of Fraser to be concluded.
Mr. Tim Smith : To ask the Chancellor of the Duchy of Lancaster if he will consult interested parties before reaching any decision on the recommendations of the Kemp report on the future of the Export Credits Guarantee Department.