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10.32 pm
The Minister for Competition and Consumer Affairs (Mr. John M. Taylor): I acknowledge straight away the concern of the hon. Member for Workington (Mr. Campbell-Savours) about the closure of the Maryport plant. I realise that it is a blow for his constituency. But the matter is for the commercial judgment of Campbell's. It would be wrong for the Government to intervene in such decisions. I say also in the margins of the debate that there is a fair amount of understanding between the hon. Gentleman and myself over this matter. If I do not in the time available cover all the points he raised, I shall certainly refer to the matter in a letter to him.
I fully understand the depth of the hon. Gentleman's concern for his constituents, but he must bear in mind the fact that Campbell's has been present in the United Kingdom since 1959. The company employs about1,200 people here, and has shown its commitment to the UK by recently investing over £100 million. The Government would not want to threaten these jobs and investment.
I realise that closure must be very disappointing for Maryport, and in particular the 120 employees involved, but I understand that Campbell's has offered all employees jobs at one of its five other plants.
I know that the hon. Gentleman is aware that Maryport is within an assisted area and, as such, qualifies for regional selective assistance for investments that create or safeguard jobs. That means that the site of the Campbell's Soup plant qualifies for RSA. Proposals by companies wishing to invest in the facility would be considered for support against the criteria for RSA awards. Of course, it is not for Government to say what type of business might make use of the site.
A range of other services is also available through the local Cumbria training and enterprise council, through business links, and through Inward, the north-west development agency, which could assist in attracting new businesses to invest in the area of the Campbell's site. Those services include business advice counselling, diagnostic and consultancy services, exports advice,
business enterprise services, and technical expertise as well as access to the personal business advisor network.I know, for example, that Cumbria TEC already offers practical help to individual employees of Homepride and will continue to do so beyond closure.
I remind the hon. Gentleman that west Cumbria has European objective 2 status, which gives the area access to funding for business support measures, and also for the cost of training and re-skilling activities.
Let me remind the House that the food industry is a very successful UK industry. The success of the industry in recent years can be demonstrated by the figures on exports: in 1988, UK exports of food and drink were worth some £5 billion. By 1994--six years later--they were worth some £9 billion.
The rest of Europe, and, indeed, the world, is finding out how good British food and drink really are. British bread is chic in Paris, and British lamb and Scottish salmon are particularly well regarded there. We are selling pizzas to Italy and ice cream to Spain. Such successes are a tribute to the industry, and also to the Government's determination to create and maintain an economic framework within which such enterprise can be rewarded.
Sales by the UK food and drink manufacturing industries in 1994 were worth more than £56 billion. With a work force of about 450,000, the sector accounted for one in nine jobs in manufacturing. The industry has continued to compete effectively in world markets, with 1994 exports of food, feed and drink valued at £9 billion.
The soups and sauces industry is no exception to this success story. In 1992, UK exports were worth some£13 million, with major markets established in Ireland, Germany and France. Not only that, but the UK consumer can choose from a vast array of delicious and imaginative soups and sauces on sale at the supermarket, grocer or corner shop. The competitive nature of the market means that companies are constantly looking for new product types and ideas to provide what the consumer wants.
The UK soup market has recently been characterised by rapid innovation and increased choice, not only in the variety of flavours on the market but by different product types, such as low-calorie, premium, chilled and fresh. Sales of soup are expected to continue to grow steadily in the near future. I have no doubt that Campbell's Soups will continue to play a significant role in this expanding and innovative market.
The hon. Gentleman referred to the role of merger control. As he knows, the Director General of Fair Trading has a duty to advise my right hon. Friend the President of the Board of Trade on qualifying mergers. The director general looked at this transaction, and concluded that it did not give rise to a qualifying merger.
The transaction met neither of the tests in the Fair Trading Act 1973. The assets being acquired were only £9 million, as I understand it, which is some way short of the £70 million test in the Act. Indeed, it is short of the hon. Gentleman's suggested £20 million. The market share test--that a 25 per cent. share should be created or increased--was not met, either. There was therefore no role for my right hon. Friend the President of the Board of Trade in the matter. He had no decision to make on the acquisition.
Let me remind the House that a merger can be blocked only if the Monopolies and Mergers Commission finds it to be against the public interest. Furthermore, since 1984, the policy of the Government has been to make decisions about whether mergers are referred to the MMC primarily on competition grounds. That policy will continue.
The hon. Gentleman called for greater transparency in such bidding procedures. I emphasise that the conduct of the sale of Homepride Sauces was a commercial matter for Dalgety; it would be wrong for Government to intervene in such matters. There are no plans to change existing legislation or policy governing mergers.
Mr. Campbell-Savours:
Under this Government.
Mr. Taylor:
I am speaking for this Government, as I think the hon. Gentleman knows.
There have been calls for the Fair Trading Act to be amended, so that smaller mergers can be considered by the competition authorities. As the House will know, in February 1994, the assets threshold for mergers was increased from £30 million to £70 million: that was agreed by Parliament as part of the Government's deregulation initiative. The change does not signal a weakening of competition policy; all larger mergers, and any small mergers that create or increase a 25 per cent. market share, will still be considered under the Fair Trading Act. The measure is clearly deregulatory, and has been welcomed by business generally.
Let me also make it clear that United Kingdom and foreign companies are treated alike under UK merger procedures. The Government feel that commercial considerations should generally determine ownership of businesses. UK companies themselves do very well overseas, and long may that continue.
There have been calls for predatory takeovers to be blocked. I understand that Dalgety put the Homepride business up for sale and decided to sell to Campbell's. That was a normal commercial transaction. As I said earlier, it would be wrong for the Government to intervene in commercial decisions: companies must be free to adjust to the competitive demands of the market.
The hon. Gentleman referred to the role of foreign companies in the UK economy. I remind him that the Government welcome foreign investors, and will continue to do so. Nowhere is the competitiveness of our economy better demonstrated than in our ability to attract inward investment.
Mr. Campbell-Savours:
Does the Minister think that it would be much fairer if a work force knew when the enterprise for which they worked was being put on the market and bid for?
Mr. Taylor:
The hon. Gentleman will not be surprised to learn that my knowledge of the company and the transaction is not as detailed as his. In fact, it would be rather surprising if, as Member of Parliament for Solihull, I knew as much about Maryport as he does. I shall reflect on what he has said, because good practice should always involve consultation; but I do not wish to stray into matters involving his constituency or a particular transaction.
I was talking about inward investment. More than40 per cent. of all United States, Canadian and Japanese investment in the European Union, together with over50 per cent. of Korean and over 57 per cent. of Taiwanese investment, has come to the United Kingdom. Our stock of inward investment is now£147 billion--up from £44.3 billion in 1985--and99 of the "Fortune" top 100 companies have chosen to locate in the UK. Our record in attracting inward investment within the European Union is second to none.
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