Joint Committee on Statutory Instruments Sixth Report


Memorandum by the Department of Trade and Industry


1.  By a letter from its Clerk dated 13 January 1999 the Committee has requested the Department of Trade and Industry to submit a Memorandum on the following point—

    Explain (in the absence of any indication in the Explanatory Note or in the footnotes) what Community obligation or right is being implemented by this instrument so as to authorise its being made under section 2(2) of the European Communities Act 1972.

2.  Section 13 of the Industry Act 1975 confers on the Secretary of State power by order to prohibit foreign change of control of an important manufacturing undertaking. He may if necessary make an order vesting the shares in the company or its assets in the Board of Trade or himself.

3.  Under the EC Treaty the United Kingdom is under an obligation not to exercise these powers in a way that discriminates against EC persons exercising freedom of establishment in the UK except on the grounds permitted by Article 56 of the Treaty: "public policy, public security or public health". The Order implements this obligation by amending the Industry Act to define "interest" and "national interest" (on the basis of which the Industry Act powers may be exercised) in terms of these exceptions in the Treaty. The Department takes the view in so far as the effect of the order extends to non-EC persons that is a matter arising out of or related to the obligation within section 2(2)(b) of the European Communities Act.

4.  The Department apologises that the instrument did not identify the relevant Community obligation as required by Statutory Instrument Practice.

18th January 1999

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