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Oral Answers to Questions
TRADE AND INDUSTRY
Mid Kent Water Company
1. Dame Peggy Fenner: To ask the President of the Board of Trade when he expects to make a decision on the Monopolies and Mergers Commission report on the bid for Mid Kent Water by General Utilities and Saur Water Services. [10587]
7. Sir Roger Moate:
To ask the President of the Board of Trade when he expects to announce his decision on the takeover proposed for Mid Kent Water by General Utilities and Saur Water Services. [10595]
The Minister for Competition and Consumer Affairs (Mr. John M. Taylor):
My right hon. Friend the President of the Board of Trade announced his decision to block the proposed bid for Mid Kent Holdings plc by General Utilities plc and Saur Water Services plc on 21 January. That decision was in line with the recommendation in the Monopolies and Mergers Commission report which he published on the same day, and the advice of the Director General of Fair Trading and the views of the Director General of Water Services.
Dame Peggy Fenner:
I thank my hon. Friend for that prompt reply, and I welcome the decision. In view of the fact that, collectively, the two companies have a 38 per cent. holding in Mid Kent, may I ask my hon. Friend what reassurances he can give to the company that that situation will not happen all over again?
Mr. Taylor:
My right hon. Friend the President of the Board of Trade has made it clear that the proposed bid by General Utilities and Saur for Mid Kent will be blocked and that undertakings will be sought by the Director General of Fair Trading from both companies. Those undertakings will be intended to ensure that those aspects of the proposed merger that the MMC identified as operating against the public interest are effectively prevented now and in the future.
Sir Roger Moate:
I, too, congratulate the Secretary of State on a decision that will be warmly welcomed in much of Kent, and is clearly in the best interests of Kent and competition policy generally. Does my hon. Friend accept that that situation has arisen because rival companies have pooled their shareholdings to undermine previous undertakings? In the absence of the compulsory divestment of shares--which my right hon. Friend the Secretary of State is not seeking--how can we be sure that the situation will not arise again? Can my hon. Friend ensure that the undertakings will prevent the bid from being repeated or, indeed, being repeatable?
Mr. Taylor:
The honest and candid answer to my hon. Friend must be vigilance on his part, and on the part of my right hon. and hon. Friends who represent constituencies in Kent and of the Director General of Fair Trading. If he or his constituents suspect that something that they do not want is about to occur, they must tell the Director General of Fair Trading straight away.
Electricity Industry
2. Mr. Hanson: To ask the President of the Board of Trade what representations he has received regarding takeovers and mergers in the electricity industry. [10588]
The President of the Board of Trade and Secretary of State for Trade and Industry (Mr. Ian Lang): In the past six months, I have received some 80 representations regarding takeovers and mergers in the electricity industry. In addition, the Director General of Fair Trading has noted some 100 representations when advising me.
Mr. Hanson: Given that 50 per cent. of UK electricity companies are owned by foreign-based companies, does the Secretary of State feel that the Government have helped to defend the interests of British consumers by allowing the companies to be purchased? Is he aware that it is illegal for non-US citizens to buy shares in such companies in the United States?
Mr. Lang: First, I have had assurances from the American Secretary of Commerce, Mr. Mickey Kantor, that British companies can invest in electricity companies in the United States; and, secondly, the question of ownership does not affect the interests of the consumers. What matters to consumers is that the company is efficiently and competitively run. When the Labour party was last in power, electricity prices rose repeatedly by substantial amounts, but since privatisation, prices for both domestic and industrial consumers have fallen.
Mr. Couchman: Are there lessons to be learnt about hostile and predatory bids as referred to by my hon. Friend and neighbour the Member for Medway (Dame P. Fenner)? Does my right hon. Friend feel that those lessons might suggest that such actions, which are so detrimental to both companies and their customers, should be examined as a matter of urgency?
Mr. Lang: Of course I will take careful note of what my hon. Friend says and consider it, but what delivers the best results to consumers is a free and open marketplace in which competition is the yardstick by which the Government decide whether it is necessary to intervene in a merger or takeover bid. I have measured my responsibilities against that criterion of competition, and it is notable that, in almost all the decisions that have been taken, the Director General of Fair Trading, the Director General of Electricity Supply and I have been of one mind.
Boeing-McDonnell Douglas Merger
3. Mr. Pike: To ask the President of the Board of Trade what assessment his Department has made of the implications of the Boeing-MDD merger for the British aerospace industry. [10589]
The Minister for Industry (Mr. Greg Knight): The proposed merger would be of great significance to our aerospace industry, which competes with Boeing and McDonnell Douglas, mainly through participation in the airbus consortium, but also works with them, notably in supplying equipment. The proposal is being considered by the United States competition authorities, and may also be
considered by the European Commission. My Department is currently examining the implications with United Kingdom industry.
Mr. Pike: Does the Minister recognise that the merger will be a dominant feature in the aerospace industry for both civil and military aircraft and that the Government must ensure that the airbus consortium and our aerospace industry as a whole are able to compete, so that a monopoly is not created? Aerospace is crucial to Lancashire and to the country and we must ensure that it can survive.
Mr. Knight: The hon. Gentleman has had a long interest in the matter, and of course I take note of, and will bear in mind, what he says. The European Commission has not yet been notified by Boeing; when it is, we expect to play a part in the consultations and discussions, and we shall take account of what UK industry has to say. Indeed, if the Consortium of Lancashire Aerospace, with which I know that the hon. Gentleman is associated, wants to make any representations, I shall be delighted to hear from it.
Sir John Cope: This announcement, together with Boeing's cancellation of its work on its very large aircraft, makes it important that the Government should back our aerospace industry, and especially Airbus Industrie, with its plans for the stretch A340 and a large aircraft. Launch aid--or more properly launch loans--is extremely important to those two projects, and the recent announcements from America make it essential for the Government to back them.
Mr. Knight: I hear what my right hon. Friend says; he is right. I have every confidence in the British aerospace industry. To recap for the benefit of the House, since 1979 we have given about £1.25 billion in launch aid to help the industry and we shall certainly continue to consider projects that are brought to our attention, including projects involving research and development under CARAD--the civil aviation research and development programme.
Mr. Barry Jones: Does the Minister appreciate the fact that 2,300 of my constituents have a strong interest in the response of the Government and of Airbus Industrie to the merger to which he has referred? What chances do my constituents, who make the wings for airbus, have of making the wings of the new jumbo jet that Airbus Industrie has planned?
Mr. Knight: That must be a matter for Airbus Industrie. We have been in the forefront of trying to persuade the consortium to convert to a company--in effect, a limited company--so that it is better able to compete with Boeing. It has been doing well and it needs to continue improving; we shall give every encouragement to ensure that that happens.
Mr. Atkins: Has my right hon. Friend considered the implications of the proposals of the right hon. Member for Dunfermline, East (Mr. Brown) for the military and civil projects of the British aerospace industry, which the
Government have supported through thick and thin? They would be prejudiced, if not terminated, if there were a Labour Government.
Mr. Knight: My right hon. Friend makes a valid point. If Britain had the misfortune to elect a Government whose spending proposals exceeded the taxation that they imposed, where would they get the money? Perhaps they would get it by cancelling projects such as Eurofighter.
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