Conclusions and recommendations
Kraft representation before the Committee
1. The
areas that principally concern this Committee in relation to Cadbury
are Kraft's company strategy and its intentions with regard to
UK jobs, and it is Irene Rosenfeld, as its Chief Executive Officer
and Chairman, in whom Kraft has invested the principal authority
to make announcements on such matters. For that reason, we believe
that she should have made herself available as her company's principal
witness. The manner of her repeated refusal to appear before a
committee of Parliament demonstrates a regrettably dismissive
attitude to a National Parliament—an attitude which we trust
Kraft will rapidly take action to shed. (Paragraph 16)
2. It
was deeply frustrating that so much time was spent on the issue
of Ms Rosenfeld's non-attendance which ultimately overshadowed
some of the positive developments in Cadbury. That situation could
have been avoided had Kraft taken a more positive role in its
engagement with the Committee. If Kraft's decision was driven
by advice on public relations, that decision backfired. (Paragraph
17)
Takover panel decision
3. The
Takeover Panel decision found that Kraft did not have an objectively
reasonable basis for its statements on Somerdale, vindicating
the view of our predecessor Committee that Kraft acted both irresponsibly
and unwisely in making its original statement on Somerdale. A
company of Kraft's size and experience ought to have acted with
better judgement. (Paragraph 36)
4. The
Takeover Panel criticism of Kraft was a serious matter. The Committee
totally rejects the interpretation of the Panel's decision by
Mr Firestone and presumably by Ms Rosenfeld herself. The Panel
decision alone merited the appearance of Kraft's CEO before the
Committee. (Paragraph 37)
Changes to the Takeover Code
5. Based
on the experience of the Cadbury takeover, we believe there is
a strong case for making pre-takeover statements about matters
such as whether factories will be kept open binding for a defined
period. We therefore welcome the proposed changes to the Takeover
Code in that respect. The proposals on the timeframe for bids
are also worth singling out as particularly welcome. (Paragraph
40)
6. We
recommend that the Government use the Kraft Takeover of Cadbury
as a valuable case study when the Government comes to formulate
its policy in this area, and we look forward to scrutinising its
policies when they are published. (Paragraph 41)
Kraft's undertakings
7. We
welcome the increased investment in Bournville. We also welcome
Kraft's commitment to expanding the research role carried out
at Bournville alongside the confirmation that the R&D facilities
at Reading will continue. (Paragraph 50)
8. Given
Kraft's undertaking to manage the Cadbury brands out of the UK,
we trust that all marketing posts other than that of the senior
marketing manager will remain UK-based. We trust furthermore that
marketing decisions made by Kraft at the European level will remain
consistent with strong growth objectives for Cadbury products
in the UK and across the region. (Paragraph 51)
9. We
broadly welcome Kraft's approach to supporting former Somerdale
workers to find employment. We trust that that support will continue
to be delivered in a way that fully does justice to the long-standing
loyalty of those workers. (Paragraph 56)
10. Whilst
we acknowledge that sensible synergies must be sought, we expect
Kraft in deciding on where to make savings to bear in mind its
particular responsibility to Cadbury workers in light of events
of the past 18 months, as well as other factors such as the proceeds
that will result from sale of the Somerdale site. (Paragraph 62)
11. We
expect Kraft to honour its earlier commitment on pay and conditions
alongside and in addition to its further commitment not to make
the current harmonisation exercise one with an objective of cost
cutting. It should fully involve the union in that exercise. (Paragraph
63)
12. We
trust that redeployed workers such as those moving from Uxbridge
or from Cheltenham to Bournville are being offered pay and conditions
consistent with Kraft's undertakings. (Paragraph 64)
Conclusion
13. So
far, Kraft appears to have honoured most of the spirit and letter
of the undertakings that it gave to the previous Business, Innovation
and Skills Committee, although we are concerned about the upcoming
pay harmonisation and the shift of marketing management to Zurich.
However understandable the latter might be, it does not sit entirely
comfortably with the commitments to manage brands out of the UK.
(Paragraph 67)
14. We
are encouraged, however, by the recruitment that Kraft is undertaking,
by its commitment to research in the UK and by its wish to "invest
its way to profitability". Whilst Kraft did not extend its
undertakings on jobs, the strong indication to us was that the
extent of investment at Bournville and other sites would only
make sense alongside retention of employment levels in the UK.
We trust that our interpretation is correct. If it is not, we
shall expect any change in the position to be made public by Kraft
at the earliest opportunity. (Paragraph 68)
15. Our
overall conclusion, therefore, is that, while there remain some
significant concerns about Kraft takeover of Cadbury, a number
of positive signs may be beginning to emerge. Those positive messages
would have been considerably more convincing if conveyed directly
to bodies such as ourselves from the top of the organisation.
As for the future, Kraft's witnesses asked us to judge Kraft on
its deeds. We shall. (Paragraph 69)
| 
