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"
(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