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Lord Forsyth of Drumlean: My Lords, I do not propose to detain noble Lords. Suffice it to say that the contributions made by my noble friend Lord Kingsland and the noble and learned Lord, Lord Donaldson, reflect very much what I wish to say.

Perhaps I may make two points. First, I thank the Minister for bringing forward Amendment No. 40. It demonstrates that the Minister is trying to respond to the points that have been made. That said, the

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amendment has a serious weakness in terms of meeting the anxieties expressed in that it does not make clear who will determine whether the City code has been complied with. Unless it is the panel, clearly we are no further forward. I hope that the Minister will reflect on the points that were made by my noble friend and give an undertaking that he is prepared to change the wording to make it clear that compliance with the City code will be a matter determined by the panel in this context.

The second point that I should like to put to the Minister, in the politest possible way, is that the Government have been at great pains to tell everyone how much they respect the Takeover Panel, how good it is and what an important institution it is. As I came into the Chamber, I was handed a page of briefing from the Takeover Panel stating that:


    "Unless the Bill is amended, there will be significant damage to the quality of takeover regulation in the UK. This in turn will damage the reputation of the UK financial markets for integrity and efficiency".

That is a very strong statement, coming from a body which the Government say that they respect and which, unlike members of the Government, has years of experience in this area. I do not think that any government can afford to ignore statements of this kind in this rather cavalier way. Therefore, I hope that the Minister will listen to these points.

Subsection (2) of Amendment No. 40 gives the game away. Perhaps I have missed something--I know that it is the practice throughout the Bill--but when we were in government we did not introduce clauses referring to government departments; they referred to Ministers. Subsection (2) states,


    "But the Treasury's approval is required before any such provision may be included".

Had I been responsible for the Bill, the reference would have been to the Chancellor of the Exchequer. We really are seeing the game being given away and that this is being run by officials in the Treasury rather than Ministers. There is an extraordinary appearance of Banquo's ghost here. We have been assured throughout proceedings on the Bill that the principle at stake is that there should be one responsible authority. Suddenly, we find in the proposed amendment that the Treasury is the hidden hand to which the authority will have to go for approval.

I say in the friendliest possible way to the Government: please listen to the points that have been made. My noble friend has proposed a solution. It is important that our markets are seen to have integrity and to be efficient. That is in the interests of shareholders--that means every pensioner in this country with a private pension. For a Bill that purports to be concerned about ensuring market efficiency and integrity, it is extraordinary that we have arrived at this stage with these kinds of statements being made by people with no axe to grind other than the good name of the City of London.

6.15 p.m.

Lord Borrie: My Lords, concern has been apparent throughout our debates on this topic at various stages

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that the powers of the Takeover Panel and the reputation that it has built up over more than 30 years should be preserved in a new environment. We value it for the great benefits that it has achieved and we do not want them to be adversely affected by anything in the Bill.

With respect, one of the difficulties that the Opposition have had in putting forward amendments is that one of the great benefits of the Takeover Panel is that it is not a statutory body. It is a self-regulatory body, devised and deriving its composition from a number of City institutions and, as I said, it has given great value. But any amendments in this or any other Bill referring to the Takeover Panel involve the panel in a statutory role and statutory functions. A responsible legislative Chamber must accept that when such a body is, as it were, inserted into legislation, that is done without any controls over its composition, formation, procedure and so forth.

The Opposition have rightly been concerned about the detailed composition, function, objectives and concerns of the Financial Services Authority. I have no doubt that they are concerned about those matters in relation to the Takeover Panel, but Parliament is not concerned with it. Therefore, there is something of a dilemma in slotting in the Takeover Panel and giving it certain powers under the Bill, without having any say in how it works or how it is composed.

The reason I mention this is that there has been a measure of agreement about wanting to preserve the Takeover Panel's role during the offer period. In so doing, both the Government and the Opposition have been faced with the question of how to slot the panel in, how to devise a way in which the panel is not lost to life, is not coming to an end after 30 years but has a continuing and valid role. That can possibly be achieved by legislation, but we must make sure that we get it right. This is not the only way of getting it right. It could be done by means of agreement, practice or concordat between the Financial Services Authority, which is a statutory body, and the Takeover Panel.

The noble Lord, Lord Newby, said that we were concerned with two matters: the first is the safe harbour provision that we want to devise, so that if people comply with the provision in the code they will not be guilty of market abuse; the second is the gatekeeper provision. In regard to the safe harbour provision, there has been a measure of support, although not necessarily enthusiastic, for the Government's Amendment No. 40. The main difference of approach seems to lie in who is to have the final say--not who is to have any say, but the final say--as to what constitutes market abuse. The Bill contains definitions of market abuse, and over the years the Financial Services Authority has developed practice and precedents in regard to market abuse. However, we have no say over the composition and procedures of the Takeover Panel. Surely the final determination must be that of the statutory body; namely, the Financial Services Authority.

If the authority has a desire to preserve an understanding of the role of the Takeover Panel, surely it will do the kind of things that were indicated by my

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noble friend the Minister at the beginning of this debate; namely, to be constantly in touch, to take advice, and because the Takeover Panel has a great deal of experience of bids it will certainly start life in its relationship with the new Financial Services Authority as providing a powerful viewpoint which the FSA would fully understand it would do well to accept. But there is a difference in saying that it is the opinion of the Takeover Panel--this is the opinion of the Opposition in Amendment No. 63--that is all-pervasive and prevailing. It seems to me that that is not suitable. To put it shortly, the opinion of the panel is valuable and highly relevant, but it should not be conclusive. The conclusive view should be that of the Financial Services Authority.

On the gatekeeper provision, noble Lords opposite are right to express concern and regret that there is no government amendment dealing with the matter. I expressed concern in Committee that one does not want a position whereby the authority is in any way fettering its discretion, which could subject it to judicial review. I make no apology for repeating that the FSA is a statutory authority and the Takeover Panel, while it has many advantages, is not. It is inappropriate to insert into the Bill the word "request", which appears in the Opposition amendment, so that the authority can deal with matters only at the request of the panel, because the FSA is accountable and responsible at the end of the day.

Given the view expressed by everyone in this House about the value of the Takeover Panel, I have no fears about the FSA wading in during the course of a bid when the panel with its 30 years' experience is already there. We are to have a new regime and it is important to devise a convention, concordat or agreement--I do not know the appropriate word--to ensure that the excellent practice, the value of which we have all seen, continues and that there is deference by the authority, as it were, to the panel with all its experience. But we must not write this into the Bill when we have no control over the composition and procedures of the Takeover Panel, or anything else to do with that body. Let us ensure that the authority that is set up under the Bill devises codes of practice or concordats with the Takeover Panel.

Lord Boardman: My Lords, in our debates on this particular subject we tend to lose sight of the achievements of the Takeover Panel. The noble Lord, Lord Borrie, and other noble Lords have referred to the achievements of the panel. Its strengths which are now attacked by the government amendment are two-fold. The first, which I describe with some reluctance since I qualified as a lawyer, is that the panel proceeds without the advocacy of lawyers. Secondly, the panel has a code of conduct which, unlike statutory regulation that people seek to get round, everyone feels honour bound to try to observe. As a result, under the chairmanship of the noble and learned Lord, Lord Shawcross, and successive chairmen the Take-over Panel has been made up of experienced businessmen who come to decisions which have been challenged in

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the courts on only two occasions. As the noble and learned Lord, Lord Donaldson, said, on those occasions the Law Lords dealt with the matter briefly, effectively and sensibly. Otherwise, the Takeover Panel has resolved a great number of issues.

The government amendment would destroy the very virtues which have made the Takeover Panel so effective. It would give rise to the involvement of lawyers, injunctions and a whole variety of matters which have been avoided in the past. My noble friend's amendment enables the panel, as far as possible, to proceed effectively in the way that it has done in the past. The panel comprises distinguished and experienced City men and women who know what is going on and can ensure that there is fairness and avoid litigation and all the costs that that involves. I hope noble Lords accept my noble friend's amendment and recognise the weaknesses in the government amendment which invites the trouble that so far we have managed to avoid.


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