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Baroness Turner of Camden: I thank my noble friend the Minister for that explanation. I am glad that it is expected that there will be opportunity for employees' organisations to make submissions. I note that.

But my noble friend is correct: we looked for rather more than he gave. We were looking to widen the criteria because, as my noble friend Lord Hoyle made clear, we did not feel that competitiveness was sufficient on its own. We felt that other considerations should be taken into account.

However, it is not our intention to take this matter further this evening. We shall think carefully about it during the recess and consider whether or not we should say anything further on Report. We believe it to be an important question which matters to a great many people. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 32 agreed to.

Clause 33 agreed to.

Clause 34 [Questions to be decided in relation to completed mergers]:

[Amendment No. 119 not moved.]

Clause 34 agreed to.

Clause 35 agreed to.

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Clause 36 [Cancellation and variation of references under section 21 or 32]:

Lord Sainsbury of Turville moved Amendment No. 120:

    Page 22, line 41, at end insert—

"(2A) Where, by virtue of subsection (2), the Commission treats a reference made under section 21 or 32 as if it had been made under section 32 or (as the case may be) 21, sections 74 to 78 shall, in particular, apply as if the reference had been made under section 32 or (as the case may be) 21 instead of under section 21 or 32.
(2B) Subsection (2C) applies in relation to any undertaking accepted under section 77, or any order made under section 78, which is in force immediately before the Commission, by virtue of subsection (2), treats a reference made under section 21 or 32 as if it had been made under section 32 or (as the case may be) 21.
(2C) The undertaking or order shall, so far as applicable, continue in force as if—
(a) in the case of an undertaking or order which relates to a reference made under section 21, accepted or made in relation to a reference made under section 32; and
(b) in the case of an undertaking or order which relates to a reference made under section 32, accepted or made in relation to a reference made under section 21;
and the undertaking or order concerned may be varied, superseded, released or revoked accordingly."

The noble Lord said: This group comprises a number of minor and technical amendments which all relate to the enforcement provisions of the merger regime. I do not believe that they raise any issues of substance. Members of the Committee will have received a letter setting out briefly the purpose and nature of the amendments. However, if it is helpful to the Committee I shall provide further details of the amendments we are tabling.

Amendments Nos. 120, 126, 132, 142 to 144 and 150 clarify what happens where a merger referred to as an anticipated merger becomes a completed merger during the course of an investigation or vice versa. That will happen only rarely. Amendments to Clauses 36, 48, 63, 104 and 125 provide that undertakings or orders that were accepted on one basis continue to have effect where the nature of the merger reference changes. The automatic restrictions on certain dealings in Clauses 74 and 75 will also apply as if the merger reference had been made on the relevant basis at the outset.

Amendments Nos. 127 to 129 and 139 make clear that the normal enforcement provisions contained in Clauses 74 to 78 apply to public interest cases where the public interest claim is withdrawn and the case is passed back to the Competition Commission to be investigated purely on competition grounds.

Amendments Nos. 135 and 136 are minor technical corrections to Clause 75 which take out references to Clauses 68 and 69, orders and undertakings. These are concerned only with completed mergers and are therefore not relevant in the context of anticipated mergers.

Amendments Nos. 137 to 140 make clear that if a replacement order is made under Clause 80, it is only specified undertakings which fall away. An order under Clause 80 will be brought when undertakings

18 Jul 2002 : Column 1463

are not being fulfilled. It would not be desirable to penalise all parties where only one is in breach of its undertaking.

Amendments Nos. 165 and 166 are technical amendments to improve internal drafting consistency by aligning references to airport operators with language used elsewhere in Schedule 9. I beg to move.

On Question, amendment agreed to.

Clause 36, as amended, agreed to.

Clause 37 agreed to.

Clause 38 [Time-limits for investigations and reports]:

[Amendments Nos. 121 and 122 not moved.]

Clause 38 agreed to.

Clause 39 agreed to.

Clause 40 [Duty to remedy effects of completed or anticipated mergers]:

[Amendment No. 123 not moved.]

Clause 40 agreed to.

7.15 p.m.

Clause 41 [Intervention by Secretary of State in certain public interest cases]:

Baroness Turner of Camden moved Amendment No. 124:

    Page 26, line 39, at end insert—

"( ) "Public interest consideration" in subsection (2) shall include possible social consequences, including the effect on employment."

The noble Baroness said: Amendment No. 124 stands in my name and that of my noble friends. It is clear that the Government want to hand over responsibility in merger and takeover situations to the OFT and the commission, and the sole criterion, as we heard this evening, appears to be competitiveness.

There is a clause about public interest but it seems clear that government intervention is only envisaged in the most extreme circumstances. I believe that to be wrong. It is surely clear that many mergers and takeovers have considerable social consequences, and only governments can deal with those. Indeed, they may have to if the consequences involve high unemployment in a particular region.

The TUC is concerned about that. It says in briefing:

    "The danger for the Government is that removing Ministers from competition decisions will not prevent politically damaging situations arising, but will curb their ability to act when they do".

If a company is a major employer, local communities and other local firms may be hit; regional development may be interrupted or brought to an end altogether. In other words, a large merger or takeover could affect adversely many thousands of people and not only those in the immediate environment.

We have recently been witnesses, as I said on the earlier amendment, to another round of mergers and takeovers—referred to as "merger mania". A recent newspaper article said that many of the deals were done when share prices were roaring. So the predators overpaid for their targets and are now having to write

18 Jul 2002 : Column 1464

down huge amounts of money in their accounts to reflect the subsequent slump in value. That is the reason, perhaps, why Vodafone is nursing the biggest loss in Britain's corporate history.

Norwich Union and the CGU merged to become Aviva. But that lovely new name has not prevented a halving of the share price in 18 months. So it is not only employees in the relevant companies that suffer—often through job loss or demotion—shareholders suffer too, and of course pension funds. We have heard a great deal about a pensions crisis in recent weeks. The catastrophic drop in the stock market is cited as one of the reasons for the disappearance of defined benefit schemes. There may of course be other reasons as well, but a drop in share values clearly has made a major impact. So mergers and takeovers are not just about competitiveness.

Those are some of the reasons why the Trades Union Congress is saying that it does not agree that decisions as to whether mergers and takeovers should proceed should be made only on the basis of competition. The TUC believes that mergers and takeovers should be regulated in the public interest and that the impact on employment should be taken into account.

Our amendment is very simple; indeed it is modest. We are seeking to introduce it in the part of the Bill dealing with the public interest. We define that as possible social consequences, including the effect on employment. In those circumstances we believe the Government should be able to intervene. I urge my noble friend the Minister to accept the amendment. I beg to move.

Lord Hoyle: I support Amendment No. 124 in the name of my noble friend Lady Turner and myself. Again, I echo what my noble friend said. The Government are trying, in their words, to escape from political decisions; but what they cannot escape from are the consequences of those decisions. To remain on one side, or to pretend to do so, and simply rely on competition when social consequences are taking place is a decision they will regret in the longer term.

Perhaps I may give the media as one example. News International, owned by Rupert Murdoch, has newspapers read by 70 per cent of adults in this country. That is almost a monopolistic position yet the draft Communication Bill does not rule out a further take-over by that group. Of that 70 per cent, The Times is the best-selling "heavy". The Sun sells 4 million copies daily. Quite apart from The Sunday Times there is the News of the World which is the largest-selling Sunday paper.

I am not in favour or against or get too excited about the euro, but there is something to be said as regards Rupert Murdoch. He has already determined that before any referendum takes place his media interests will be opposed to the euro. That is a very dangerous position. Any further decision must have social consequences. I cannot see any Government, particularly one whom I support, backing away from taking that into account.

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There is also the question of employment. Not very long ago it appeared that Rover was in a difficult situation which would have had grave consequences for the whole of the West Midlands. Given that situation, the Minister put together a rescue package because of the consequences which would have affected not only the company but all the suppliers in the area. There would also have been a devastating effect on the whole of the region.

What would happen if there were another bid for Rover? Could any Government, Minister or Secretary of State escape from the social and employment consequences? Given some of the circumstances, it is totally unrealistic to rely on competition. I hope that the Minister will look a little further. He realised that he did not satisfy us on the previous occasion. We are speaking here about public interest which can have tremendous social and employment consequences for the whole of the region and, as regards the media, for the whole nation. I ask him to accept this modest amendment, particularly having regard to the social consequences of a merger.

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