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5.30 pm

Adam Price (East Carmarthen and Dinefwr): I had not intended to speak in this debate, but I was inspired by the contribution of the hon. Member for North-East Derbyshire (Mr. Barnes) to add my voice and offer the support of Plaid Cymru and the Scottish National party to the principles that he enunciated, if there is a vote on amendment No. 202.

As we are discussing collusion, I think that there has been a degree of collusion between the occupants of both Front Benches to give the impression that the shift in competition policy from a basis of the public interest to a purely competition-based approach is somehow completely uncontroversial. It is not. It is a matter of concern. In summarising responses to the White Paper, the Department of Trade and Industry referred to


Almost unanimous is not, of course, unanimous. As we have heard, there are important stakeholders who have voiced their concern and their opposition to a narrower competition-based approach.

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I was interested in the Prime Minister's response to the assertion of the right hon. Member for Hartlepool (Mr. Mandelson) that we are all Thatcherites now. One of the Prime Minister's reasons for demurring was that Thatcherism had sought to isolate us in Europe. In this instance, we are seeing a shift to a more United States-based approach, which will hinder moves towards harmonisation of European merger policy.

I agree with the hon. Member for North-East Derbyshire that clause 57 does not provide us with the assurances that we seek. Indeed, the chairman of the Competition Commission has said that he believes that there will need to be a high burden of proof to add to the exceptions of public or special public interest. I understand that it is envisaged that provisions in the draft communications Bill will be added to the list that at present contains only national security.

There is an important issue. Some of us believe that the efficient functioning of markets is not the only consideration when it comes to industrial or regional policy. Merger activity can have a distorting effect on regional economic development. We have certainly seen that in Wales, where companies that are successful and reach a certain critical mass are taken over. The headquarters are then located outside the regional economy, and that has long-term implications for the pattern of economic development. There are also wider issues in the context of economic policy.

We have heard the concerns of the trade union movement, and especially of Unifi, the financial services union, which has led the assault, as it were, from the trade unions. The financial services sector has seen a great deal of merger activity and has suffered for it, in terms both of job losses and of service provision at a very local level. That would not be covered by the terms of the Bill.

Sometimes the public interest would favour loosening some of the competition rules. We have heard of the problem with producer co-operatives in the dairy sector and the wider agricultural sector. There needs to be a public interest basis so that wider issues can be taken into account.

It should be clear, certainly to Labour Members, that mergers affect consumers and communities. The hon. Member for North-East Derbyshire is seeking to uphold the principle that applies to those who used to be referred to as stakeholders. When we make decisions on such matters, we need to take account of a wide range of interests, not only consumer interests or competition policy.

Mr. Dennis Skinner (Bolsover): I congratulate my hon. Friend the Member for North-East Derbyshire (Mr. Barnes) on persevering with this issue, which goes back a few years. A merger took place in Clay Cross in his constituency, which he has raised on the Floor of the House many times; he and I also raised it in Westminster Hall. There was a lot of hand-wringing, as often happens with a lot of mergers when people get sacked; the Department gave the impression that it would love to be able to help, but could not.

The Government cannot do the things that it would like to do principally because of the climate created by the Single European Act. A few years ago Thatcher introduced it, guillotined debate in the House of Commons and shovelled it through. Now everything is

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wrapped up with the Common Market; that is part of the problem experienced by Governments here and elsewhere. I hope that minority parties that now say that they are sympathetic to my hon. Friend's position realise that the wonderful Common Market that they have fallen in love with is part of the problem.

The Biwater merger at Clay Cross prompted my hon. Friend to start the process that we have heard about today. Seven hundred people were told that Biwater was finished and would become part of Saint Gobain, a French firm. They were told that everything would be okay, although a few people might be shifted here and there—but within a few hours they had all lost their jobs, which is why the amendment is ultra-important.

I got the clear impression that the Government would like to resolve the problem. Next time a merger takes place, there will be a lot of hand-wringing and many people will say, "We'd love to do something, but we can't." The least the Government can do is tell my hon. Friend, "We've listened carefully to your case and we know that you've pursued it for a long time. We'll have a look at the amendment and, if necessary, deal with it in another place." As my hon. Friend the Member for Hayes and Harlington (John McDonnell) has just said, if the problem is to be dealt with elsewhere, we shall be quite happy for it to fall into such an embrace.

Let us not kid ourselves; if there is a merger in future and several hundred or several thousand jobs are lost, let us not have any more hand-wringing or any more of the business of everyone feeling sorry about the problem. We could remedy the problem today if the Government agreed to the moderate suggestion made by my hon. Friend the Member for North-East Derbyshire.

Dr. Pugh: Before the hon. Member for North-East Derbyshire (Mr. Barnes) ignited our debate with an unexpected note of controversy, there was widespread agreement about the Bill's objectives. Most parties accept that an active free market that satisfies discriminating consumers is a good thing. The Bill seeks to prevent bad things, such as anti-competitive mergers, cartels, consumer rip-offs and the pitfalls of enterprise, including unnecessary insolvency.

Paradoxically, there has been cross-party, and probably international, agreement that a classic free market involves state regulation and a structured environment. Usually, free markets and state regulation are regarded as antithetical, but at the moment a third way appears to carry all before it. In Committee there was argument not about the content of the Bill but about its mechanics; Conservative Members examined in immense detail not the Government's intentions but the way in which they will deliver them. A persistent allegation was that some of the Government's methods might defeat some of their objectives. That accusation was not unreasonable, given the Government's track record of unnecessary bureaucracy.

To be fair, I must add that the CBI has similar fears. In theory, it is not in favour of cartels, consumer rip-offs or mergers that inhibit competition, because they damage trading interests as much as anything else. Nevertheless, all its submissions to the Select Committee have generated a certain image—that of worry about vexatious complaints, bureaucratic bullying, trial by the media as mergers are tested, legal confusion and lobby-group

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grandstanding, along with a constant commercial angst about exactly where the law is leading everyone. I am sure that that is not the Government's intention, but as Conservative Members have argued, it may be the result. It is important that that does not happen, especially if we are to bring criminal law into commercial practice.

So far the Government have not succeeded in allaying the CBI's fears, and arguably they cannot do so at this stage. Law has not become practice yet, and we have not yet seen the natural history of the Bill. Supplementary guidance has not yet arrived. It was evident in Committee, however, that significant issues already exist in relation to the clarity of the legislation—I am thinking of simple matters such as the distinction between hard-core and soft-core cartels—and coherence between this and existing English law, European law and Scots law.

The reference to mergers is crucial. My angle is different from that of the hon. Member for North-East Derbyshire. There are two tests for merger references. First there is the turnover test: is a company's turnover £45 million? It must be, for the company to be of real interest. Then there is the market-share test.

The turnover test has been debated by the CBI, which suggests that the figure should be £75 million. I have a worry, which we voiced in Committee, about the market-share test. It does not seem in any way to inhibit local monopolies. My hon. Friend the Member for Orkney and Shetland (Mr. Carmichael) pointed out that if two airlines fly to Orkney and one takes over the other, there are plenty of other airlines in a national context, but there is no other airline flying to Orkney.

I know that newspapers are a special case, but nearly every newspaper in my constituency is owned by one company. Not long ago, the one independent company was taken over. It set itself up independently and survived somehow, but what had happened was a definite merger.

It could be argued that all my constituents who wanted to place advertisements in newspapers could advertise in the Burnley Bugle or the Middlesbrough Mercury. There were plenty of newspapers around—but there were no more newspapers in that area; one newspaper had an overall monopoly. Something that is theoretically not an issue is a very big issue in practical terms. A flaw in the Bill is the fact that we fret over big national mergers, although in those cases some choice is preserved at the end of the day, while there is no facility for dealing with local mergers by which choice is abolished.

The examples I give can be replicated. Members can cite cases in their constituencies. Taxi drivers, for instance, can form a consortium; there can be just one company in a whole area. Theoretically, someone in Leicester could get a taxi in Wolverhampton or London, say—but they cannot actually do that. Effectively, people faced with a complete local monopoly have no choice.

I genuinely understand the Government's reluctance to go further than they have. If a village contains two shops and one takes over the other, it is not desirable for the villagers to suggest that the OFT should investigate. I suggest, however, that there are simple ways in which local monopolies can be dealt with as national monopolies are. The number of consumers affected might be relevant, or perhaps the support of local trading standards authorities could be required.

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This is wholly in line with the spirit of the Bill. We want to enact legislation that will stop large companies snuffing out small companies locally. Small companies do not start as national companies with national shares in the product they are producing, or as international companies; they start as local companies.

I realise that there are drafting problems and problems of work overload, but it is not possible to create a national climate of enterprise without encouraging a local climate of enterprise. National considerations also apply locally. The public interest defence or the failing firms defence could be used, and compensating consumer gains could be cited. However, if anti-competitive mergers can sustain themselves locally and prevail, local citizens suffer the same ill as when that happens nationally.

Let us consider the cartel analogy. We do not specify the size or turnover of the cartel; we simply define it by its effect. That should also apply to mergers. References to the OFT should be based on a merger's effect on consumers, not some artificial decision about size or market share.


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