Procedure Consequent Upon An Order Of The Board For The Division Of Any Trade Or Business
1. Every such scheme as is mentioned in subsection (5) of section 3 of this Act shall be subject to the sanctions of the Companies Court (in this Schedule called "the Court") and shall not take effect unless and until sanctioned by the Court and then only subject to any modifications or conditions which the Court may approve or impose.
2. Every application to the Court shall be made at the cost of the Board and in accordance with rules determined by the Board by statutory instrument.
3. Notice of every such scheme shall be served on every person whose rights are affected by the scheme, including (without prejudice to the generality of the foregoing) any company mentioned therein and the shareholders and creditors of any such company.
4. Such notice shall be accompanied by a print of the scheme together with an explanatory statement showing the effect of the scheme and shall state the date, time and place when and where the Court is to hear the petition for approving the scheme.
5. The company and any other person whose rights are affected may appear at the hearing of the petition to support, oppose or propose modifications to the scheme or conditions to be imposed by the Court and may present evidence to the Court in such form as the Court shall direct. The costs of any company or person so appearing shall be at the discretion of the Court.
6. The Court shall not sanction any scheme unless it is satisfied—
7. Nothing in any order made under subsection (5) of section 3 of this Act or in any scheme published under that subsection and confirmed with or without modifications or conditions under this schedule shall have the effect of subjecting any person to the payment of any tax of any nature whatsoever or of any stamp duty which would not have been payable if such order had not been made or such scheme had not been published and confirmed.
and the two Amendments to Amendment No. 31.
In dealing with the Amendments to Amendment No. 31, I imagine that it would be necessary to refer to Amendment No. 31.
I would say. If Amendment No. 21 falls the Amendments to Amendment No. 31 fall and therefore they should be discussed now.
I beg to move Amendment No. 21, in page 6, line 15, after "may", to insert "by order".The Minister of State was unwise enough to say earlier that he had not heard as much from me on Report as he had heard in Committee. I hastened to assure him that I would be on my feet and thereupon he hurried out of the Chamber, but he has now returned. I have become a creature of nocturnal habits recently and I find that I produce the most effective results during the hours of darkness, and as the sun is now setting I rise to my feet. The Amendment deals with the problem of the machinery of divesting. I use the word "divesting" to cover all those powers which the Board of Trade is taking in subsection (5) to break up a monopoly if those powers appear to be the right remedy in relation to the facts found by the Commission. I was glad to hear reiterated the view from the Government that on the whole the divesting procedure will be preferable, where it is possible, to the price control procedure; but it is important that the divesting procedure should be, as I told the Committee, not only effective but fair. To quote briefly from a speech made in the Committee:
That is a speech which the Minister without Portfolio will recognise came not from this side but from his hon. Friend the Member for Birkenhead (Mr. Dell) and it states succinctly exactly what this Amendment tries to achieve. It will be remembered that in Committee I moved two Amendments to deal with these points which were in the alternative. One was to adopt the procedure of Section 206 of the Companies Act, 1948, and to invoke the Companies Court as the machinery whereby the divesting should take place. The other was to set up a special tribunal along the lines of the tribunal set up under the Coal Industry Nationalisation Act, 1946, to apportion compensation paid under that Act. In the event, the opinion, at any rate on this side, seemed to favour the use of the Companies Court and this is what the Amendment seeks to do. In reply to a long and useful debate in Committee on this subject the Minister without Portfolio indicated the Government's thinking, which will require an Amendment to the Bill and we shall he coming to that Amendment later tonight. Although, as the Minister recognised in his brief intervention a moment ago, I shall have to refer to one or two points in the Government's Amendment they are alternative to the Amendment which we are now seeking to put forward. 9.15 p.m. The short point is that it must be for the Government to decide, having received a Report from the Monopolies Commission, that an order should be made for splitting up a monopoly, that a divesting order should be made. The question is: how should that order be implemented? As was recognised on both sides of the Committee, very difficult and complex problems arise, involving the rights of, perhaps, a large number of parties, some of them members of the companies, some of them employees, some of them creditors, some of them persons with whom contracts have been made, and so on. A large number of rights have to be dealt with, and the purpose of the Amendment is to establish a procedure whereby these complex questions can be settled in a way which is fair to all the parties concerned and which is manifestly seen to be fair. We propose adopting the procedure under Section 206 of the Companies Act whereby schemes of arrangement affecting the rights of participants in companies can be brought before the court and the court, if satisfied that they are fair and equitable, may sanction them. We felt that there was a sufficient degree of similarity between the schemes which often come before the Companies Court under Section 206 and the orders which would have to be made by the Board of Trade under this legislation to justify the use of that procedure or something akin to it in this case. The advantages, briefly, are these. The judge in the Companies Court is someone who stands right apart from the parties. He is clearly impartial. He is in a position not to be concerned with the political question, which is bound to arise, of whether an order should be made, the broad lines on which it should be made, what should be divested, how the company should be split up, and so on. He will be in a position to adjust the rights and powers of all the parties so as effectively to carry into operation the order which the Board of Trade will have made, and at the same time, to do justice to all concerned. The suggestion made by the Minister without Portfolio in Committee, which is embodied in the Government Amendment, does not use the Companies Court and it does not use an independent tribunal. It treats the whole question as an administrative one, and the matter is to be decided by the Board of Trade, although, I hasten to add, the Minister without Portfolio went on to say that he would envisage that, in certain circumstances, it might be right for the Department to employ the services of an expert in this subject, a member of the companies Bar or, perhaps, a senior accountant, who could be employed to advise the Department on the best method of carrying its intentions into effect. But, basically, the difference between the two sides of the House on this issue is that we favour a more formal procedure using the courts whereas the Government favour the more administrative procedure within the Board of Trade. In reply to the Amendment which I moved in Committee, the Minister without Portfolio—I hope that I am not misleading the House or distorting his attitude—made five objections which he regarded as the major objections to our proposal. First, he said that the procedure under Section 206 of the Companies Act was not really analogous to the requirements under Clause 3(5); the two situations were really different in kind and, for that reason, it would not be right to import the Companies Act procedure for use in these circumstances. Obviously, the situations are not exactly the same. Under the Companies Act, for the most part, schemes of arrangement are brought forward by the companies or by participants in the companies themselves, whereas under this legislation the schemes would need to be promoted by the Board of Trade in implementation of a decision to carry out the recommendations of the Monopolies Commission. To that extent there is a difference. On the other hand, the nature of the operations that will have to be carried out dealing with the rights—this is the matter which engaged the attention of the Committee; it involves, to some extent, the right of debenture holders who have a floating charge on the assets of the company, the problem of dealing with different classes of shareholders who may have different rights either when the company is in operation or when it winds up, the problem of dealing with creditors who may have money secured on the assets of the company, the problem of dealing with people with contracts, employees and so on—these are all very similar to the problems which the Companies Court deals with under Section 206. Therefore, if one looks at how the matter reaches the court, there is a difference. If one looks at the matters with which the court would be expected to deal, I suggest that they are very similar and that the judge in the Companies Court would find himself on very familiar ground. Therefore, I cannot accept the first objection which the Minister without Portfolio made to the suggestion. The Minister's second point was one with which one is familiar in this legislation—namely, that the issues raised are not justiciable. That was argued out ad nauseam on the 1956 Restrictive Trade Practices Act. The hon. Gentleman argued that this is really an administrative matter. Is this so? Even if it were entirely an administrative matter, is not the nature of the Companies Court judge's jurisdiction more analogous to an administrative procedure than to something which is strictly justiciable? The judge has to make up his mind on the points of detail that arise when the scheme of arrangement is under consideration by the court, but the jurisdiction of the Companies Court is of the nature of an administrative procedure and smacks more of that than of a purely judicial procedure involving the normal processes of the courts. The point about this, however, is that at some stage, and it may be at many stages, during the working out of the divesting order someone "will have to decide" The Minister without Portfolio will, no doubt, recognise those words for he uttered them three times during the debate in Committee. It is our contention that if someone has to decide, this is exactly the sort of matter which ought to be decided by one of Her Majesty's judges sitting in one of the ordinary courts of the land and not inside the Administration or one of the Departments of Government. Therefore, I submit that, so far as this is a justiciable issue, so far as it is a point which someone will have to decide, it is the courts and not the Government which ought to decide. The third point made by the Minister without Portfolio was that the right place for this matter to be considered was the Floor of the House when the order is brought in, and that the court is the wrong place. We envisage two stages in this procedure. One is the decision that an order shall be made and the broad lines upon which the Board of Trade will expect the order to be carried into effect. That is clearly one for the Government and should require the approval of this House. The second stage, the detailed stage of implementing the order, is quite different. I submit that it is quite unsuitable for consideration on the Floor of the House. One's imagination boggles at the suggestion that individual hon. Members, briefed, perhaps, by constituents who represent different interests in the company which is the subject matter of the order—some perhaps speaking for the preferential shareholder, others for the debenture shareholder and others for the creditors—should argue all the details of this on the Floor of the House when the order is brought up for approval. It would really be a fantastic procedure and I cannot imagine how it could possibly be an effective check upon the power of the Government to carry the order through. In any event, I believe that I am right in saying that this House has no power to amend an order which comes before it for approval. It has power only to accept it or reject it. Presumably, if the order were so shot full of holes that the Government felt it required to be rewritten, the Minister in charge could withdraw it and we would have a second go at it but that would be a very unsatisfactory procedure. I cannot believe that this matter has been properly thought out by the Board of Trade and that it has seriously envisaged the problems that could arise on the Floor of the House in the event of an order of that kind coming before it in all its details. Fourthly, I have collected a number of epithets that the Minister without Portfolio applied to the procedure we suggest. He said that it would be unnecessary, anomalous, expensive and undesirable and would cause delay and inconvenience. But it would be just, fair and open. It would give the opportunity to the company concerned, if it had serious points to raise, to put its case in open court and to be heard in public. It would be able to cross-examine and put arguments. In a matter of this sort, where substantial matters of private rights are affected, that is a better procedure than an inevitably somewhat secret administrative machine working behind closed doors. Finally, the hon. Gentleman argued that there would be no equity in the Statute—I use the word "equity" in its technical sense—since the Government or somebody would have to tell the court, having imposed this duty upon it, how it would resolve that duty. I am quoting as nearly as I can from his words. But, with respect, he has now answered his own question. Without straying beyond the rules of order, I refer the hon. Gentleman to the Government Amendment No. 71, the new Schedule, which is entitled:"The fundamental fact upon which everyone is agreed is that the Government must have the right to decide whether a divestment shall take place. What is in question is to ensure that the arrangements by which the divestment takes place shall be seen to be fair."—[OFFICIAL REPORT, Standing Committee E, 6th May, 1965, c. 301.]
This is the Government's solution to the problem and the concluding words seem to me to express exactly the duty that should quite properly be placed upon the court in these circumstances when implementing the order which the Board of Trade has seen fit to introduce. The court should ensure, to use the words of the Schedule,"Procedure preliminary to laying drafts of Orders referred to in section 3(10)(a) of this Act."
I cannot see the difficulty. If that duty were placed on the court, it would be perfectly clear. I think that I have now listed all five of the major grounds upon which the Government sought to resist this Amendment in Committee. I hope that I have convinced the House that some of them have no foundation but that, where there are some grounds, those grounds are not sufficient to lead the House to reject the Amendment. The choice is clear. We on this side clearly prefer to see the matter, the detailed implementation of the order, brought before the court and argued out in open court where all the parties can put their point of view and where justice can be seen to be done. The Government's solution is to do it behind closed doors within the Department as part of the administrative machine. That, in our view, is unacceptable."… that the rights and interests of persons likely to be affected by the provisions of the order are so adjusted as to secure an equitable distribution of any burden or benefit ensuing from any provision of the order."
I have listened very carefully to what the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) has had to say about the Amendment, and I also listened very carefully, as the whole Committee did, to what he had to say at even greater length in Committee. I am bound to say that he has not added much by way of argument to what he said in Committee.In his introductory remarks, quoting my hon. Friend the Member for Birkenhead (Mr. Dell), he posed what we all agree to be the question when he said that what was at issue was to ensure that the arrangements by which the divestment took place should be seen to be fair. The difference between the situation in Committee, and as it now appears, is that since the Committee stage, and very largely as a result of the protracted debate which we had then, my right hon. Friend the President of the Board of Trade has put forward a whole series of Amendments which go a very long way to meet the substance, though not the form, of the criticisms which were made in Committee. I then gave a series of undertakings, all of which are implemented by the Government's Amendments, which we shall reach in a few moments. Those undertakings in effect were that the Government would put forward Amendments to this Clause which would, first, create a statutory obligation to publish a preliminary draft Order; secondly, to require the Board of Trade to give interested parties an opportunity to make representations before preparing the final draft of the Order to be made before Parliament; thirdly, requiring the Board of Trade to take account of those representations before preparing the final draft Order; finally, after further debate in Committee, I went further and gave the undertaking that we would also introduce an obligation that in the making of any Order for divestment regard should be had to the need for equitable adjustment of the rights of the parties. Those undertakings are now incorporated in Amendment No. 31 which is the paving Amendment for the new Schedule in Amendment No. 71. As the hon. Gentleman has said, the simple issue between us is whether the detailed arrangements which will flow from any divestment Order should be left for adjudication in a court of law by some procedure similar to that which obtains under Section 206 of the Companies Act when a company is wound up, or when there is an amalgamation; or whether those details and complex arrangements, including not only the respective rights as between the various classes of shareholders, debenture holders, creditors and other contracting parties, should be left for settlement either by the Board of Trade itself, or by the Board of Trade in consultation with some eminent lawyer, chartered accountant or other expert qualified to deal with these matters, as will frequently be the case. The hon. Gentleman keeps repeating that he would be happier if these matters were dealt with by a court of law and he says how important it is that there should be impartiality. I must remind the House that it is not only the courts which are capable of handling matters of this kind with impartiality, and that it is not the function of the courts to deal with complicated solutions on the basis of what is fair, as the Amendment would require. That is not the function of the court of law. Judges have repeatedly complained that it is not what they ought to be asked to do. There was an instance only the other day in the House of Lords when a Law Lord and an ex-Lord Chancellor pointed this out. It must be repeated in this House in answer to the Amendment of the hon. Gentleman the Member for Wanstead and Woodford
It follows from that that this House ought not to impose upon Her Majesty's judges the obligation of resolving matters in dispute between citizens on the basis of what is fair without first laying down the principles which should apply. It is for Parliament to make laws and it is for the judges to administer those laws. If circumstances arise in monopoly legislation in which, as a result of a divestment order having to be made, somewhat complicated assessments have to be made between the respective interests of various parties, in a situation in which Parliament has not and cannot lay down any canon or yardstick which the judges should apply, it is not fair to ask those judges to discharge that function. It is placing upon them a burden which is unreasonable and contrary to the high judicial office which they serve. I have tried to make it plain in the Committee stage, and I repeat with emphasis that in my view it would be contrary to all principle and constitutional understanding and relationship between Parliament and the judiciary if that Amendment were accepted. There is the necessity of making arrangements that are fair and equitable between the parties. That is what the Amendment of my right hon. Friend the President of the Board of Trade seeks to do. It goes far beyond the definition in the Opposition Amendment which is merely an injunction to Her Majesty's judges to do what is fair. That is something which I do not think ought to be imposed upon them. We have examined this matter at great length, and I thought that by putting down this series of Amendments we had ensured that the interested parties would not, as the Bill originally proposed, be faced with a draft order but that they would have ample opportunity of seeing a preliminary draft order advertised in the London Gazette and brought to their notice, followed by the opportunity of having consultations with the Board of Trade in which they could make representations. Over and above that there is the assurance that wherever necessary some expert on this subject will be called on to settle disputes. I would have thought that solution would have been more than enough to satisfy the Opposition that we wanted to meet their legitimate objections in the best possible way. The hon. Member referred to five points which were dealt with in Committee. I have attempted to deal with all of them. For the reasons which I have given, I hope that these Amendments will be rejected."The duty of Her Majesty's Judges is not merely to administer justice, but to administer justice according to the law. Those of us who have taken the judicial Oath will remember it; it for ever rings in our ears. It is to do right to all manner of men according to the laws and usages of this Realm, without fear or favour, affection or ill-will'—and that is what Her Majesty's Judges try to do."—[OFFICIAL REPORT, 11th May, 1965; House of Lords, Vol. 266, c. 21.]
I reject entirely the Minister's suggestion that the judges could not do this job. They have frequently to apply the principles of equity, which are fairly clear and are laid down in a very good book called Snell with which the Minister is undoubtedly familiar.
If the Minister cannot read the whole of Snell, I can refer him to Rivington's Epitome of Snell, of which the fifth edition was edited by the hon. Member for Wanstead and Woodford.
What is fair and equitable is not the length of the Chancellor's foot. It is laid down in various principles going back over hundreds of years. If we cannot find one of those principles, we are driven to such fundamental principles as equity is equality and all the other maxims which illustrate the good sense of the courts of equity since the days of Lord Chancellor Nottingham and before. I have no doubt that these principles will also be applied by the Board of Trade if the Minister has his way, because they are not something dreamt up and artificial but are fundamental to our ideas of justice.The judges of the Companies Court are accustomed to applying these principles in matters dealing with a conflict of interest between different classes of contractors and different debtors, some of whom may have floating charges over the whole assets of a company to be divested and the question of where the floating charge shall fall in the case of divestment. I am sure that the Board of Trade will be obliged to apply these principles, subject to the advice of a distinguished lawyer or accountant, whoever it is the Minister wishes to bring in. The only question between us is whether it is to be done openly so that people can see and hear how it is done, or whether it is to be done secretly. It seems to me far better that it should be done openly, because if somebody does not get his way, or if his submission is turned down, he will not go away with that sense of grievance which people always have, rightly or wrongly, and usually wrongly. If it is done secretly and by administrative order, people always think that they have been "got at" and that they have been unfairly treated, whereas if it is done in open court, where they can hear what the other parties say and meet it in public, they go away with a far less sense of grievance. The Minister knows this perfectly well. That is the point of administering justice in open court before a person who is totally independent of political pressure. The principles which will be administered by the Board of Trade will be those which the judges administer. I am sure that it will do its best to be impartial and that most of the time, if not all of the time, it will succeed. The only residual complaint will be that people will not believe that it happens because they want to have their day in court. This is not one of those cases about which we often hear where people say, "But the courts are so expensive", because, ex hypothesi, a good deal of money will be at stake. They will not be cases in which there is a dispute under the National Health Act or the National Insurance Act on the part of people who cannot afford legal fees. A good deal of money will be in dispute, and therefore the expense of the proceedings before the Companies Court are not an issue. The only issue is whether it is to be done openly and whether justice is not only done but seen to be done, because, as I say, the principles on which the Board of Trade acts will be exactly the same as the age-long principles on which the Companies Court acts and on which any court of law administering a system of equity has acted on for centuries.
The argument which I have heard on the Amendment seems to be very much the argument that was put many centuries ago over the Star Chamber Court, through which many of us pass when we come into the House every day. The Star Chamber Court probably dispensed as good justice as was carried out in the ordinary courts of the Realm, but it was carried out in secret and, therefore, the public had no confidence in it.When we in this House pass legislation, we are not able to find whether it works in a just manner unless the cases that come before the court as a result of that legislation are dealt with in public so that we as Members of Parliament and people throughout the country can form a view of what is happening. For the Board of Trade to deal with these problems in secret—
The hon. Member is under a misapprehension. There is no question of secrecy. A draft scheme must be produced and published in the London Gazette. In the second stage, it must be laid before the House. There is no question of secrecy. All this will be done in broadest daylight.
With respect, it will not be done in daylight, because most of the arguments and submissions will be put before a body appointed by the Board of Trade. They will not take place in public. The only basis on which we get justice done is when all the submissions and counter-arguments on both sides are made in open court.Judges are just as able to deal with these problems as anybody in the Board of Trade. I am certain that the House is taking a retrograde step in producing legislation which will not be operated in the full blaze of publicity of the realm. Therefore, because of these arguments, I support the Amendment.
The House will be glad to know that I intend to be short, as all my hon. Friends have been in our many debates on the Amendments today. I shall be short because there is still enough left for us to debate by the many hon. Members who have yet to follow to take us to the early hours—or perhaps I should say the late hours—of the morning and I do not want to keep the House too long. Furthermore, I realise that debates on what are sometimes rather technical matters which may take place in the small hours, even though relieved from time to time by Divisions, can be a little tedious and trying for the patience of hon. Members.Thirdly, I intend to be short because the case has been deployed fully by my hon. Fr end the Member for Wanstead and Woodford (Mr. Patrick Jenkin), who deployed it with his usual brevity, cogency and eloquence. In Committee upstairs, he deployed the case at considerable and greater length, ably assisted by my hon. Friend the Member for Wokingham (Mr. van Straubenzee) to whom, with others of my hon. Friends, tribute was paid by the Minister without Portfolio. There is no doubt that in Committee my hon. Friends did a great service to the House by highlighting the problem that would arise if an Amendment such as we suggested was not incorporated in the Bill. I agree that the Minister has done exactly as he promised to do. He has introduced an Amendment making it a statutory obligation to publish a preliminary
Division No. 212.]
|Allan, Robert (Paddington, S.)||Berkeley, Humphry||Boyle, Rt. Hn. Sir Edward|
|Atkins, Humphrey||Biff en, John||Brinton, Sir Tatton|
|Baker, W. H. K.||Biggs-Davison, John||Brooke, Rt. Hn. Henry|
|Barber, Rt. Hn. Anthony||Bingham, R. M.||Brown, Sir Edward (Bath)|
|Barlow, Sir John||Birch, Rt. Hn. Nigel||Buchanan-Smith, Alick|
|Batsford, Brian||Black, Sir Cyril||Bullus, Sir Eric|
|Beamish, Col. Sir Tufton||Bossom, Hn. Clive||Burden, F. A.|
|Bell, Ronald||Box, Donald||Butcher, Sir Herbert|
draft order. We said that we would consider whatever proposal the Minister put forward and that in the meantime we would table our own Amendments to safeguard our position. Having considered the Minister's Amendment, my hon. Friends and I do not consider that it goes far enough.
The point at issue, which has been stressed on several occasions from both sides, is whether the matter should be dealt with administratively or judicially. It has been argued time and time again that some aspects of a proposed scheme or order would not be judiciable. My hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) answered that point extremely well and demolished that argument.
It has been said by the Minister without Portfolio that the courts are not the only impartial bodies, and I accept that. It is true that a Department of State can, in certain circumstances at least, be equally impartial. The point is whether those who have to appear before the Department of State believe that it is likely to be as impartial as a court of law. It is a platitude to say that justice must not only be done but be seen to be done, but a platitude, after all, is only a truth of which we are tired of hearing: it does not get any less true by repetition. This is a case where justice has to be seen to be done, and I think it has been shown by my hon. Friends, time and time again, by their arguments skilfully deployed, that the courts would be able to deal with these questions.
For these reasons, and because we are not at all satisfied that the alternative way proposed by the Government is the right way of doing it, and because we believe our Amendment is the right way, I would advise my hon. Friends to divide the House.
Question put, That those words be there inserted in the Bill:—
The House divided: Ayes 154, Noes 162.
|Buxton, Ronald||Harvie Anderson, Miss||Page, John (Harrow, W.)|
|Carlisle, Mark||Hawkins, Paul||Page, R. Graham (Crosby)|
|Cary, Sir Robert||Heald, Rt. Hn. Sir Lionel||Pearson, Sir Frank (Clitheroe)|
|Channon, H. P. G.||Higgins, Terence L.||Peel, John|
|Chataway, Christopher||Hill, J. E. B. (S. Norfolk)||Pitt, Dame Edith|
|Clark, Henry (Antrim, N.)||Hobson, Rt. Hn. Sir John||Pounder, Rafton|
|Clark, William (Nottingham, S.)||Hogg, Rt. Hn. Quintin||Powell, Rt. Hn. J. Enoch|
|Cole, Norman||Hooson, H. E.||Price, David (Eastleigh)|
|Cooke, Robert||Hopkins, Alan||Quennell, Miss J. M.|
|Cooper-Key, Sir Neill||Hordern, Peter||Ramsden, Rt. Hn. James|
|Corfield, F. V.||Hornsby-Smith, Rt. Hn. Dame P.||Redmayne, Rt. Hn. Sir Martin|
|Costain, A. P||Hutchison, Michael Clark||Rees-Davies, W. R.|
|Craddock, Sir Beresford (Spelthorne)||Iremonger, T. L.||Renton, Rt. Hn. Sir David|
|Crosthwaite-Eyre, Col. Sir Oliver||Jenkin, Patrick (Woodford)||Ridsdale, Julian|
|Curran, Charles||Johnson Smith, G. (East Grinstead)||Roberts, sir Peter (Heeley)|
|Currie, G. B. H.||Johnston, Russell (Inverness)||Robson Brown, Sir William|
|Davies, Dr. Wyndham (Perry Barr)||Kerr, Sir Hamilton (Cambridge)||Sharpies, Richard|
|d'Avigdor-Goldsmid, Sir Henry||Kilfedder, James A.||Sinclair, Sir George|
|Dean, Paul||King, Evelyn (Dorset, S.)||Smith, Dudley (Br'ntf'd & Chiswick)|
|Deedes, Rt. Hn. W. F.||Kirk, Peter||Soames, Rt. Hn. Christopher|
|Digby, Simon Wingfield||Langford-Holt, Sir John||Stainton, Keith|
|Eden, Sir John||Legge-Bourke, Sir Harry||Stanley, Hn. Richard|
|Elliot, Capt. Walter (Carshalton)||Lewis, Kenneth (Rutland)||Steel, David (Roxburgh)|
|Elliott, R. W. (N'c'tle-upon-Tyne, N.)||Litchfield, Capt. John||Studholme, Sir Henry|
|Emery, Peter||Loveys, Walter H.||Taylor, Sir Charles (Eastbourne)|
|Errington, Sir Eric||Lubbock, Eric||Taylor, Frank (Moss Side)|
|Eyre, Reginald||McAdden, Sir Stephen||Thomas, Sir Leslie (Canterbury)|
|Fletcher-Cooke, Charles (Darwen)||MacArthur, Ian||Thompson, Sir Richard (Croydon, S.)|
|Foster, Sir John||Maclean, Sir Fitzroy||Tiley, Arthur (Bradford, W.)|
|Fraser, Ian (Plymouth, Sutton)||van Straubenzee, W. R.|
|Gardner, Edward||Macleod, Rt. Hn. Iain||Walker, Peter (Worcester)|
|Glover, Sir Douglas||McMaster, Stanley||Walker-Smith, Rt. Hn. Sir Derek|
|Godber, Rt. Hn. J. B.||Maitland, Sir John||Walters, Dennis|
|Goodhew, Victor||Maude, Angus||Ward, Dame Irene|
|Grant, Anthony||Mawby, Ray||Webster, David|
|Grant-Ferris, R.||Maydon, Lt.-Cmdr. S. L. C.||Wells, John (Maidstone)|
|Gresham Cooke, R.||Meyer, Sir Anthony||Whitelaw, William|
|Griffiths, Peter (Smethwick)||Mills, Peter (Torrington)||Wilson, Geoffrey (Truro)|
|Grimond, Rt. Hn. J.||Mills, Stratton (Belfast, N.)||Wise, A. R.|
|Gurden, Harold||Mitchell, David||Wood, Rt. Hn. Richard|
|Hall, John (Wycombe)||Mott-Radclyffe, Sir Charles||Woodhouse, Hon. Christopher|
|Hall-Davis, A. G. F.||Munro-Lucas-Tooth, Sir Hugh|
|Hamilton, M. (Salisbury)||Neave, Airey|
TELLERS FOR THE AYES:
|Harris, Frederic (Croydon, N. W.)||Nugent, Rt. Hn. Sir Richard||Mr. Francis Pym and|
|Harvey, John (Walthamstow, E.)||Osborne, Sir Cyril (Louth)||Mr. Jasper More.|
|Albu, Austen||Evans, Albert (Islington, S. W.)||Jeger, George (Goole)|
|Alldritt, Walter||Evans, Ioan (Birmingham, Yardley)||Jeger, Mrs. Lena (H'b'n & St. P'cras, S.)|
|Bacon, Miss Alice||Fernyhough, E.||Jenkins, Hugh (Putney)|
|Barnett, Joel||Fitch, Alan (Wigan)||Jenkins, Rt. Hn. (Stechford)|
|Beaney, Alan||Fletcher, Sir Eric (Islington, E.)||Jones, Dan (Burnley)|
|Blackburn, F.||Foley, Maurice||Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)|
|Boston, T. G.||Foot, Sir Dingle (Ipswich)||Kenyon, Clifford|
|Bottomley, Rt. Hn. Arthur||Foot, Michael (Ebbw Vale)||Kerr, Mrs. Anne (R'ter & Chatham)|
|Bowden, Rt. Hn. H. W. (Leics S. W.)||Ginsburg, David||Kerr, Dr. David (W'worth. Central)|
|Boyden, James||Gregory, Arnold||Leadbitter, Ted|
|Braddock, Mrs. E. M.||Grey, Charles||Lee, Rt. Hn. Frederick (Newton)|
|Bradley, Tom||Griffiths, David (Rother Valley)||Lever, Harold (Cheetham)|
|Broughton, Dr. A. D. D.||Griffiths, Will (M'chester, Exchange)||Lewis, Arthur (West Ham, N.)|
|Brown, Hugh D. (Glasgow, Provan)||Gunter, Rt. Hn. R. J.||Lewis, Ron (Carlisle)|
|Butler, Herbert (Hackney, C.)||Hamilton, William (West Fife)||Lomas, Kenneth|
|Carter-Jones, Lewis||Hamling, William (Woolwich, W.)||Loughlin, Charles|
|Castle, Rt. Hn. Barbara||Hannan, William||McBride, Neil|
|Chapman, Donald||Harper, Joseph||McCann, J.|
|Corbet, Mrs. Freda||Hart, Mrs. Judith||MacColl, James|
|Craddock, George (Bradford, S.)||Hazell, Bert||MacDermot, Niall|
|Cronin, John||Healey, Rt. Hn. Denis||McGuire, Michael|
|Crosland, Rt. Hn. Anthony||Herbison, Rt. Hn. Margaret||Mackie, John (Enfield, E.)|
|Dalyell, Tam||Hill, J. (Midlothian)||McLeavy, Frank|
|Darling, George||Hobden, Dennis (Brighton, K'town)||Manuel, Archie|
|Davies, G. Elfed (Rhondda, E.)||Holman, Percy||Mapp, Charles|
|Davies, Harold (Leek)||Homer, John||Marsh, Richard|
|Davies, Ifor (Gower)||Howarth, Harry (Wellingborough)||Mason, Roy|
|de Freitas, Sir Geoffrey||Howarth, Robert L. (Bolton, E.)||Molloy, William|
|Delargy, Hugh||Howell, Denis (Small Heath)||Morris, Alfred (Wythenshawe)|
|Dodds, Norman||Howie, W.||Murray, Albert|
|Donnelly, Desmond||Hoy, James||Newens, Stan|
|Driberg, Tom||Hughes, Hector (Aberdeen, N.)||Noel-Baker, Francis (Swindon)|
|Dunn, James A.||Hunter, A. E. (Feltham)||Noel-Baker, Rt. Hn. Philip (Derby, S.)|
|Dunnett, Jack||Irving, Sydney (Dartford)||Norwood, Christopher|
|English, Michael||Janner, Sir Barnett||Oakes, Gordon|
|Ensor, David||Jay, Rt. Hn. Douglas||Ogden, Eric|
|O'Malley, Brian||Rose, Paul B.||Tomney, Frank|
|Oram, Albert E. (E. Ham, S.)||Rowland, Christopher||Tuck, Raphael|
|Orbach, Maurice||Sheldon, Robert||Urwln, T. W.|
|Orme, Stanley||Shore, Peter (Stepney)||Walden, Brian (All Saints)|
|Owen, Will||Short, Rt. Hn. E. (N'c'tle-on-Tyne, C.)||Walker, Harold (Doncaster)|
|Palmer, Arthur||Silkin, John (Deptford)||Wallace, George|
|Park, Trevor (Derbyshire, S. E.)||Silkin, S. C. (Camberwell, Dulwich)||Wells, William (Walsall, N.)|
|Parker, John||Silverman, Julius (Aston)||Whitlock, William|
|Parkin, B. T.||Silverman, Sydney (Nelson)||Wigg, Rt. Hn. George|
|Pavitt, Laurence||Skeffington, Arthur||Wilkins, W. A.|
|Pentland, Norman||Slater, Mrs. Harriet (Stoke, N.)||Williams, Mrs. Shirley (Hitchin)|
|Perry, Ernest G.||Slater, Joseph (Sedgefield)||Willis, George (Edinburgh, E.)|
|Popplewell, Ernest||Snow, Julian||Wilson, William (Coventry, S.)|
|Price, J. T. (Westhoughton)||Stones, William||Winterbottom, R, E.|
|Probert, Arthur||Summerskill, Hn, Dr. Shirley||Woodburn, Rt. Hn. A.|
|Pursey, Cmdr. Harry||Swain, Thomas||Zilliacus, K.|
|Redhead, Edward||Swingler, Stephen|
|Reynolds, G. W.||Taylor, Bernard (Mansfield)|
TELLERS FOR THE NOES:
|Rogers, George (Kensington, N.)||Thomas, George (Cardiff, W.)||Mr. George Lawson and|
|Mr. Harry Gourlay.|
It being after Ten o'clock, further consideration of the Bill, as amended, stood adjourned.
That the Proceedings on the Monopolies and Mergers Bill may be entered upon and proceeded with at this day's Sitting at any hour, though opposed.—[Mr. O'Malley.]
Bill, as amended ( in the Standing Committee), further considered.
I beg to move, Amendment No. 23, in page 6, line 17, to leave out "or otherwise".
I suggest that with this Amendment the House should consider Amendment No. 52, in page 13, line 17 at the end to insert—
() Section 3 of the principal Act, as applied by section 6, shall have effect as if, in subsection (4), the reference to bodies corporate becoming interconnected bodies corporate included a reference to enterprises being brought under common control otherwise than by reason of their becoming enterprises of interconnected bodies corporate, and to enterprises ceasing to be carried on as mentioned in subsection (1) above, and, in subsection (5), the reference to the division of a trade or business as therein mentioned included a reference to the separation, by the sale of any part of any undertaking or assets concerned or other means, of enterprises which are under common control otherwise than by reason of their being enterprises of interconnected bodies corporate.
I am sure that it will be convenient to take the two Amendments together.This is a short but not unimportant point which, owing to some muddle on both sides of the Committee, we were unfortunately unable to take in Committee. Clause 3(5) states that
The Board of Trade are therefore taking very wide powers. What have they in mind by the inclusion of the words "or otherwise"? Under which circumstances would it be necessary to provide"The Board may provide for the division of any trade or business by the sale of any part of the undertaking or assets or otherwise …"
in any circumstances apart from"for the division of any trade or business"
Have the Board of Trade any examples in mind for which this sort of procedure, whatever it may be, would be appropriate? I can imagine that under the subsection it would be possible for the Board of Trade—although I hope improbable—to divide any assets arbitrarily, alloting some assets to some and some to others. But I do not see how that could be done with the assets of a company. Presumably they would have to liquidate the company to sell the assets and split the proceeds among the people among whom they wished to divide the assets, in which case they would have provided for a division of the trade or business by the sale of any part of the undertaking. I hope that the Minister of State will tell us under which circumstances he proposes to use the words "or otherwise", which are in a sense repeated in the Government's Amendment No. 52, which includes the words"the sale of any part of the undertaking or assets"?
That covers the same point. The Clause as drafted gives the Government practically carte blanche as to how they treat assets in a company. No one should ever give any Government carte blanche, and certainly not this Government, and certainly not without finding out exactly what they have in mind. I can envisage no circumstances in which it would be possible to provide for the division of any such trade or business unless there were a sale of some part of the undertaking at some stage. I hope that the Minister of State will tell us why the words are in the Bill. Is it just a precaution for the remote future to deal with some obscure situation? What is the reason for the inclusion of these words?"the division of a trade or business as therein mentioned included a reference to the separation, by the sale of any part of any undertaking or assets concerned or other means …"
As the hon. Member for Southend, West (Mr. Channon) said, this is a small point, although it could be important if one read into it the misgivings he appears to have. This is a cautionary suggestion, because if the Amendment were accepted the effect would be that the Board of Trade could provide for a trade or business to be divided only by the sale of its undertaking or its assets. This might operate, in certain circumstances, to the disadvantage of the parties concerned.As the hon. Member knows, these are hypothetical matters at the moment, although we have looked back at previous monopoly examinations to see whether we are on firm ground. The probability we have in mind is where, for example, it might be more convenient for part of the undertaking or assets of a company to be transferred to another company in return for shares issued either to the first-named company or to its shareholders. Technically, this would not be a sale, but it would be excluded. It would be an arrangement which might be of great advantage to the parties concerned, because this would be better than selling off the assets. Therefore, to exclude the possibility from the Bill would, we think, be rather a mistake. In most cases, where divestment is called for on a report from the Commission it would be obtained by a sale of the undertaking or part of the undertaking, or whatever it may be. But circumstances may arise where the example I have given would be of greater advantage to the persons concerned.
I find that a most puzzling reply, and I say that with respect to the Minister of State. What is the example which he gives of the transfer of assets in exchange for the issue of shares if it is not a sale? How does the nature of the consideration affect the basis of the transaction? However this matter is dealt with, at some stage there must be a sale. It might be possible, as my hon. Friend said, to envisage a case, to take a silly example, where a company is running two buses and it has been found to be monopolising a particular corner of the country. It has two shareholders, and the buses are to be divided between the two shareholders. Even that would have to be a sale. The company would be liquidated and the liquidator would sell the buses one to each shareholder. The authorities I have consulted on this matter cannot envisage any circumstances whereby a divesting under this subsection can take place without there being technically a sale; hence the Amendment to remove the words "or otherwise", and I remain utterly unconvinced by what the Minister of State has said in his reply.
I echo the misgivings which have been voiced by the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin). The example quoted by the Minister of State was a transfer for consideration. It is true that it was a transfer for shares, but for the valuable consideration which those shares represent. Surely that is nothing less than a sale. These words are surplusage, because the disposal of that part of the company which has been divested can be obtained eventually only through a sale. The Minister of State's reply was puzzling. I should like to be reassured.
I am glad that at last, since Second Reading, we have had some words from the Liberal Party.
There have been none before simply because no Liberal Member was put on the Standing Committee.
We have been discussing the Bill since 3.30 this afternoon. Subsection (5) says this:
We have taken this to mean that the arrangement is for a straightforward sale. The situation I was describing would be more correctly described as an exchange of shares, which is not the same as a sale. Therefore the words "or otherwise" have been put in to cover that situation."The Board may provide for the division of any trade or business by the sale of any part of the undertaking or assets or otherwise."
When I moved the Amendment my hon. Friends and I had imagined that there would be some simple explanation for the inclusion of these words. I find the Minister of State's explanation incomprehensible. I am fortified in this view by the support of the Liberal Party, which I did not expect to have. I cannot understand why the transfer of assets for shares should not be a sale, whereas the transfer of assets for money is a sale. I am no lawyer, but I am supported by two Queen's Counsel. My hon. Friends must have found the Minister of State's reply extremely unsatisfactory, one which has made them have worries about this part
Division No. 213.]
|Albu, Austen||Gregory, Arnold||Marsh, Richard|
|Alldritt, Walter||Grey, Charles||Mason, Roy|
|Atkinson, Norman||Griffiths, David (Rother Valley)||Maxwell, Robert|
|Bacon, Miss Alice||Griffiths, Will (M'chester, Exchange)||Mayhew, Christopher|
|Barnett, Joel||Gunter, Rt. Hn. R. J.||Molloy, William|
|Beaney, Alan||Hamling, William (Woolwich, W.)||Morris, Alfred (Wythenshawe)|
|Blackburn, F.||Hannan, William||Murray, Albert|
|Boston, T. G.||Harper, Joseph||Newens, Stan|
|Bottomley, Rt. Hn. Arthur||Hart, Mrs. Judith||Noel-Baker, Francis (Swindon)|
|Bowden, Rt. Hn. H. W. (Leics S. W.)||Hazell, Bert||Noel-Baker, Rt. Hn. Philip (Derby, S.)|
|Boyden, James||Healey, Rt. Hn. Denis||Norwood, Christopher|
|Braddock, Mrs. E. M.||Herbison, Rt. Hn. Margaret||Oakes, Gordon|
|Bradley, Tom||Hill, J. (Midlothian)||Ogden, Eric|
|Broughton, Dr. A. D. D.||Hobden, Dennis (Brighton, K'town)||O'Malley, Brian|
|Brown, Hugh D. (Glasgow, Provan)||Holman, Percy||Oram, Albert E. (E. Ham, S.)|
|Brown, R. W. (Shoreditch & Fbury)||Homer, John||Orbach, Maurice|
|Carter-Jones, Lewis||Howarth, Harry (Wellingborough)||Orme, Stanley|
|Castle, Rt. Hn. Barbara||Howarth, Robert L. (Bolton, E.)||Owen, Will|
|Chapman, Donald||Howell, Denis (Small Heath)||Palmer, Arthur|
|Corbet, Mrs. Freda||Howie, W.||Park, Trevor (Derbyshire, S. E.)|
|Craddock, George (Bradford, S.)||Hoy, James||Parker, John|
|Crawshaw, Richard||Irving, Sydney (Dartford)||Parkin, B. T.|
|Cronin, John||Janner, Sir Barnett||Pavitt, Laurence|
|Crosland, Rt. Hn. Anthony||Jay, Rt. Hn. Douglas||Pentland, Norman|
|Dalyell, Tam||Jeger, George (Goole)||Perry, Ernest G.|
|Darling, George||Jeger, Mrs. Lena (H'b'n & St. P'cras, S.)||Popplewell, Ernest|
|Davies, Harold (Leek)||Jenkins, Hugh (Putney)||Price, J. T. (Westhoughton)|
|de Freitas, Sir Geoffrey||Jenkins, Rt. Hn. (Stechford)||Probert, Arthur|
|Delargy, Hugh||Johnson, Carol (Lewisham, S.)||Pursey, Cmdr. Harry|
|Dodds, Norman||Jones, Dan (Burnley)||Redhead, Edward|
|Donnelly, Desmond||Kenyon, Clifford||Reynolds, G. W.|
|Driberg, Tom||Kerr, Mrs. Anne (R'ter & Chatham)||Richard, Ivor|
|Dunn, James A.||Kerr, Dr. David (W'worth, Central)||Rogers, George (Kensington, N.)|
|Dunnett, Jack||Leadbitter, Ted||Rose, Paul B.|
|English, Michael||Lee, Rt. Hn. Frederick (Newton)||Rowland, Christopher|
|Ensor, David||Lever, Harold (Cheetham)||Sheldon, Robert|
|Evans, Albert (Islington, S. W.)||Lewis, Arthur (West Ham, N.)||Shore, Peter (Stepney)|
|Evans, Ioan (Birmingham, Yardley)||Lewis, Ron (Carlisle)||Short, Rt. Hn. E. (N'c'tle-on-Tyne, C.)|
|Fernyhough, E.||Lomas, Kenneth||Silkin, John (Deptford)|
|Fitch, Alan (Wigan)||Loughlin, Charles||Silkin, S. C. (Camberwell, Dulwich)|
|Fletcher, Sir Eric (Islington, E.)||McBride, Neil||Silverman, Julius (Aston)|
|Floud, Bernard||McCann, J.||Skeffington, Arthur|
|Foley, Maurice||MacColl, James||Slater, Mrs. Harriet (Stoke, N.)|
|Foot, Sir Dingle (Ipswich)||MacDermot, Niall||Slater, Joseph (Sedgefield)|
|Foot, Michael (Ebbw Vale)||McGuire, Michael||Snow, Julian|
|Ginsburg, David||Mackie, John (Enfield, E.)||Stones, William|
|Gourlay, Harry||Manuel, Archie||Summerskill, Hn Dr. Shirley|
of the Bill which they did not have before this short debate took place.
In view of the Minister of State's reply, the best thing for us to do is to test the matter in the Lobbies. This is most unsatisfactory. I cannot believe that any hon. Member opposite could have understood the Minister of State's explanation. If there is any doubt whatsoever, it is far better for the Government's powers to be restricted to provide
"for the division of any trade or business by the sale …"
That is clear. It is comprehensible. What the Government have put into the Bill is neither clear nor comprehensible. Therefore, I advise my hon. Friends to support the Amendment in the Lobby.
Question put, That "or otherwise" stand part of the Bill:—
The House divided: Ayes 160, Noes 151.
|Swain, Thomas||Walker, Harold (Doncaster)||Wilson, William (Coventry, S.)|
|Swingler, Stephen||Wallace, George||Winter-bottom, R. E.|
|Taylor, Bernard (Mansfield)||Wells, William (Walsall. N.)||Zilliacus, K.|
|Thomas, George (Cardiff, W.)||Whitlock, William|
|Tomney, Frank||Wigg, Rt. Hn. George|
TELLERS FOR THE AYES:
|Tuck, Raphael||Wilkins, W. A.||Mr. George Lawson and|
|Urwin, T. W.||Williams, Mrs. Shirley (Hitchin)||Mr. Ifor Davies.|
|Walden, Brian (All Saints)||Willis, George (Edinburgh, E.)|
|Alison, Michael (Barkston Ash)||Foster, Sir John||Meyer, Sir Anthony|
|Allan, Robert (Paddington, S.)||Fraser, Ian (Plymouth, Sutton)||Mills, Peter (Torrington)|
|Atkins, Humphrey||Gardner, Edward||Mills, Stratton (Belfast, N.)|
|Baker, W. H. K.||Glover, Sir Douglas||Mitchell, David|
|Barber, Rt. Hn. Anthony||Godber, Rt. Hn. J. B.||Mott-Radclyffe, Sir Charles|
|Barlow, Sir John||Goodhew, Victor||Munro-Lucas-Tooth, Sir Hugh|
|Batsford, Brian||Grant, Anthony||Neave, Airey|
|Beamish, Col. Sir Tufton||Grant-Ferris, R.||Osborne, Sir Cyril (Louth)|
|Bell, Ronald||Gresham Cooke, R.||Page, John (Harrow, W.)|
|Berkeley, Humphry||Grieve, Percy||Page, R. Graham (Crosby)|
|Biffen, John||Griffiths, Peter (Smethwick)||Pearson, Sir Frank (Clitheroe)|
|Biggs-Davison, John||Grimond, Rt. Hn. J.||Peel, John|
|Bingham, R. M.||Gurden, Harold||Pitt, Dame Edith|
|Black, Sir Cyril||Hall, John (Wycombe)||Pounder, Rafton|
|Bossom, Hn. Clive||Hall-Davis, A. G. F.||Powell, Rt. Hn. J. Enoch|
|Box, Donald||Harris, Frederic (Croydon, N. W.)||Price, David (Eastleigh)|
|Boyle, Rt. Hn. Sir Edward||Harris, Reader (Heston)||Pym, Francis|
|Brinton, Sir Tatton||Harvey, John (Walthamstow, E.)||Quennell, Miss J. M.|
|Brooke, Rt. Hn. Henry||Harvie, Anderson, Miss||Ramsden, Rt. Hn. James|
|Brown, Sir Edward (Bath)||Hawkins, Paul||Redmayne, Rt. Hn. Sir Martin|
|Buchanan-Smith, Alick||Heald, Rt. Hn. Sir Lionel||Renton, Rt. Hn. Sir David|
|Bullus, Sir Eric||Higgins, Terence L.||Ridsdale, Julian|
|Buxton, Ronald||Hill, J. E. B. (S. Norfolk)||Roberts, Sir Peter (Heeley)|
|Carlisle, Mark||Hobson, Rt. Hn. Sir John||Robson Brown, Sir William|
|Carr, Rt. Hn. Robert||Hogg, Rt. Hn. Quintin||Sharpies, Richard|
|Channon, H. P. G.||Hooson, H. E.||Shepherd, William|
|Chataway, Christopher||Hopkins, Alan||Sinclair, Sir George|
|Clark, Henry (Antrim, N.)||Hordern, Peter||Smith, Dudley (Br'ntf'd & Chiswick)|
|Clark, William (Nottingham, S.)||Hornsby-Smith, Rt. Hn. Dame P.||Soames, Rt. Hn. Christopher|
|Cole, Norman||Hutchison, Michael Clark||Stainton, Keith|
|Cooke, Robert||Iremonger, T. L.||Stanley, Hn. Richard|
|Cooper-Key, Sir Neill||Jenkin, Patrick (Woodford)||Steel, David (Roxburgh)|
|Corfield, F. V.||Johnston, Russell (Inverness)||Studholme, Sir Henry|
|Costain, A. P.||Kerr, Sir Hamilton (Cambridge)||Taylor, Sir Charles (Eastbourne)|
|Crawley, Aidan||Kilfedder, James A.||Taylor, Frank (Moss Side)|
|Crosthwaite-Eyre, Col. Sir Oliver||King, Evelyn (Dorset, S.)||Thompson, Sir Richard (Croydon, S.)|
|Curran, Charles||Kirk, Peter||Tiley, Arthur (Bradford, W.)|
|Currie, G. B. H.||Langford-Holt, Sir John||van Straubenzee, W, R.|
|Dance, James||Legge-Bourke, Sir Harry||Walker, Peter (Worcester)|
|Davies, Dr. Wyndham (Perry Barr)||Lewis, Kenneth (Rutland)||Walters, Dennis|
|d'Avigdor-Goldsmid, Sir Henry||Litchfield, Capt. John||Ward, Dame Irene|
|Dean, Paul||Loveys, Walter H.||Webster, David|
|Deedes, Rt. Hn. W. F.||Lubbock, Eric||Wells, John (Maidstone)|
|Digby, Simon Wingfield||McAdden, Sir Stephen||Whitelaw, William|
|Dodds-Parker, Douglas||MacArthur, Ian||Wilson, Geoffrey (Truro)|
|Eden, Sir John||Maclean, Sir Fitzroy||Wise, A. R.|
|Elliot, Capt. Walter (Carshalton)||Macleod, Rt. Hn. Iain||Wood, Rt. Hn. Richard|
|Elliott, R. W. (N'c'tle-upon-Tyne, N.)||McMaster, Stanley|
|Emery, Peter||Marten, Neil|
TELLERS FOR THE NOES:
|Errington, Sir Eric||Maude, Angus||Mr. Jasper More and|
|Eyre, Reginald||Mawby, Ray||Mr. Geoffrey Johnson Smith.|
|Fletcher-Cooke, Charles (Darwen)||Maydon, Lt.-Cmdr. S. L. C.|
I beg to move, Amendment No. 26, in page 6, line 43, to leave out from "above" to "the" in line 44.The purpose of the Amendment is quite clear, like that of all our Amendments. It deletes the words
We feel that it is wrong that the Board of Trade, only having the making of an order in mind, should be able to bring the activities of a company to a halt and to impose all the restrictions empowered under the Clause, including the power to control and supervise the company until such time as the Board decided whether or not it wished to make an order. It is generally realised that it could be the cause of serious damage to a concern in that if the Board eventually decided not to proceed the concern would be unable to claim any compensation. We might have had a different view of the Clause if the Government had included a provision for compensation but they have not seen fit so to do. The reason for the insertion of the Clause, as I understand it and as the Minister of State confirmed in Committee, was to cover the possibility of a company, being subject to an adverse report by the Commission, attempting to forestall what it foresaw might be appropriate Board of Trade action. That, as I understand it, is really the reason why these words have been put in. I suggested in Committee, and I suggest again now, that a Clause on the lines of Section 24 of the Iron and Steel Act, 1949, which dealt with the dissipation of assets by transactions involving payments, distributions and so forth to members of the company, might have met the point which the Minister had in mind, and I still think that a Clause on those lines might deal with the worry which the Government have. The Minister of State promised in Committee,"or have the making of such an order under consideration".
The Government have tabled Amendment No. 27, which we are discussing with this one, to insert the words:"… we will look at the matter again to make sure that action will be taken only on receipt of an adverse report from the Monopolies Commission. The Board of Trade will not lay art order to prohibit or restrict the doing of things which might impede the operations of a company".—[OFFICIAL REPORT, Standing Committee E, 6th May, 1965; c. 318.]
That does not seem to make very much change."with a view to the achievement of that purpose".
Order. We are not discussing Amendment No. 27 at the moment.
I am sorry, Mr. Deputy-Speaker. I thought for a moment that we were debating the two together. However, it appears to me that the one relates to the other, and I am sure that the Minister takes the point I make.Perhaps I may again use the analogy of matrimonial intention which I used in Committee. As the Clause now stands, if the Minister had marriage under consideration, he could under the powers given by the Clause not only prevent the lady of his choice from marrying anyone else but he could also anticipate all the things he might do if, in fact, he did enter into marriage. That is the position under the Clause as it stands before the Amendment which we shall come to later. If I may just mention that later proposal again without going out of order, it would enable the Minister to say to his intended bride, "Everything I do is with a view to the achievement of my purpose, which at the moment is matrimony". The analogy is perfect but for one thing. If, having done his worst, the Minister did not marry, he could be sued for damages. Unfortunately, if the Board of Trade has done its worst to a company, has threatened an order and has taken action because it had the issuing of an order under consideration, and if the company is damaged thereby, there will be no claim to compensation of any kind. We do not regard the Government's Amendment as satisfactory. We consider that our Amendment No. 26, which I have moved, does precisely what we want to do. It removes the offending words, which we do not think should be there because they are inserted to provide against a possible contingency which can be covered in other ways. For these reasons I hope that, even at this stage and after tabling their own Amendment, the Government will relent and be prepared to accept our Amendment in place of their own.
The hon. Member for Wycombe (Mr. John Hall) has reminded us that we discussed this matter at some length in Committee and I gave an undertaking that we would try to find a form of words to meet the legitimate concern then expressed. In a moment, I shall explain the difficulty we have had in seeking suitable words.The hon. Member tried to use, both in Committee and today, the analogy of marriage to explain the point of view that he had in mind. But I think that a more accurate analogy would be divorce. The measures that the Board of Trade may well take will be to divest—to break up—rather than to amalgamate. As the subsection is drafted, it provides for the Board of Trade to make orders to prevent the frustration of an order breaking up the business or other appropriate action, not only where such a break-up order under subsection (5) has been made but also where the Board of Trade has the making of such an order under consideration, which I suggest is very different from saying "a break-up order which the Board of Trade has in mind". It is actively under consideration. If these words were removed, the Board of Trade would not be able to act in anticipation of the breaking up order. We think it is important that the Board should have the power conferred by these words. First, the preparation of a breakup order under subsection (5), as I am sure the hon. Member for Reading (Mr. Peter Emery) would agree, might in certain circumstances take a considerable time. The proposed scheme might be complicated. As I am sure that both the hon. Member for Reading and the hon. Member for Wycombe would like us to express again the purpose here, lengthy discussions with the firms concerned will probably be necessary because one does not want to take arbitrary action where arbitrary action is not needed. If one can get agreement between the firms, so much the better. Again, the draft order would then be required to be laid before each House of Parliament and approved by Resolution. All this will take time. If the Board of Trade could not use the powers that are conferred by subsection (6) before an order for the purposes of subsection (5) was actually made, it might be possible for the persons concerned so to arrange their affairs as to render the operation of the expected break-up order unnecessarily difficult, if not impossible. The matter, as I say, was discussed fully in Committee, and I undertook to see whether a form of words could be found which would make it quite clear that the Board would not use the power unless there had been an adverse report and the Board was bona fide contemplating the making of an order exercising the powers that are conferred by subsection (5). It is already clear that the power conferred by Clause 3(6) cannot be exercised unless there has been an adverse report. We have considered various ways of expressing this condition so as to indicate that the Board must be seriously and honestly considering the making of an order exercising the powers under subsection (5), and, short of imposing conditions which would, we think, deprive the power of most of its value, we cannot think of any words which express this intention better than the words which it is now proposed to delete. The hon. Member for Wycombe both in Committee and a few moments ago suggested that the Board's position could be protected by a provision on the lines of Section 24 of the Iron and Steel Act, 1949. We think that there is not a true parallel here. That Section was aimed against the dissipation of assets by companies due to be nationalised, and prohibited the return of capital to members and similar transactions except with the approval of the Minister. We think that this is quite a different situation, where the Board of Trade on an adverse report from the Monopolies Commission is quite clearly contemplating a break-up order, but before the order is made all the circumstances that I have referred to—the discussions with the firms concerned, the laying of the order before both Houses of Parliament—inevitably lead to delay before the appropriate action is taken. I think that one has to ensure that the Board of Trade has powers to deal with any action that would frustrate the purposes which the Board has in mind on the recommendations of the Monopolies Commission. Of course, we cannot foresee all the ways in which a company may set out to frustrate a divestment order once it suspects that one is to be made and therefore we cannot accept a limited power such as that suggested by the hon. Gentleman. But I make it clear again—and this is implicit in the Clause—that the Board of Trade could not possibly take action, using the power that the hon. Gentleman wants to omit, unless there had been an adverse report from the Monopolies Commission, because such an order could not be brought before Parliament unless there was clear justification for it. I think that, on reflection, the hon. Gentleman will agree that, if the Board of Trade has to bring an order forward because of an adverse report of the Monopolies Commission, we should not allow anyone to take action that would frustrate the purpose of that order to their own advantage and against the public interest.
The hon. Gentleman will understand when I say that his argument is familiar and that it is really the one he deployed in Committee. I agree that my argument also, with some slight additions, is familiar. But the
Division No. 214.]
|Albu, Austen||Ensor, David||Hoy, James|
|Alldritt, Walter||Evans, Albert (Islington, S. W.)||Hynd, H. (Accrington)|
|Atkinson, Norman||Evans, Ioan (Birmingham, Yardley)||Irving, Sydney (Dartford)|
|Bacon, Miss Alice||Fernyhough, E.||Janner, Sir Barnett|
|Barnett, Joel||Fitch, Alan (Wigan)||Jay, Rt. Hn. Douglas|
|Blackburn, F.||Fletcher, Sir Eric (Islington, E.)||Jeger, George (Goole)|
|Boston, T. G.||Floud, Bernard||Jeger, Mrs. Lena (H'b'n & St.P'cras, S.)|
|Bottomley, Rt. Hn. Arthur||Foley, Maurice||Jenkins, Hugh (Putney)|
|Bowden, Rt. Hn. H. W. (Leics S. W.)||Foot, Sir Dingle (Ipswich)||Jenkins, Rt. Hn. Roy (Stechford)|
|Boyden, James||Foot, Michael (Ebbw Vale)||Johnson, Carol (Lewisham, S.)|
|Braddock, Mrs. E. M.||Ginsburg, David||Johnston, Russell (Inverness)|
|Bradley, Tom||Gourlay, Harry||Jones, Dan (Burnley)|
|Brown, Hugh D. (Glasgow, Provan)||Gregory, Arnold||Kenyon, Clifford|
|Brown, R. W. (Shoreditch & Fbury)||Grey, Charles||Kerr, Mrs. Anne (R'ter & Chatham)|
|Carter-Jones, Lewis||Griffiths, David (Rother Valley)||Kerr, Dr. David (W'worth, Central)|
|Castle, Rt. Hn. Barbara||Griffiths, Will (M'chester, Exchange)|
|Chapman, Donald||Grimond, Rt. Hn. J.||Lawson, George|
|Corbet, Mrs. Freda||Gunter, Rt. Hn. R. J.||Leadbitter, Ted|
|Craddock, George (Bradford, S.)||Hamling, William (Woolwich, W.)||Lever, Harold (Cheetham)|
|Crawshaw, Richard||Hannan, William||Lewis, Arthur (West Ham, N.)|
|Cronin, John||Hart, Mrs. Judith||Lewis, Ron (Carlisle)|
|Crosland, Rt. Hn. Anthony||Hazell, Bert||Lomas, Kenneth|
|Dalyell, Tam||Healey, Rt. Hn. Denis||Loughlin, Charles|
|Darling, George||Herbison, Rt. Hn. Margaret||Lubbock, Eric|
|Davies, Harold (Leek)||Hill, J. (Midlothian)||McBride, Neil|
|de Freitas, Sir Geoffrey||Hobden, Dennis (Brighton, K'town)||McCann, J.|
|Delargy, Hugh||Holman, Percy||MacColl, James|
|Dodds, Norman||Hooson, H. E.||MacDermot, Niall|
|Donnelly, Desmond||Horner, John||McGuire, Michael|
|Driberg, Tom||Howarth, Harry (Wellingborough)||Mackie, John (Enfield, E.)|
|Dunn, James A.||Howarth, Robert L. (Bolton, E.)||Manuel, Archie|
|Dunnett, Jack||Howell, Denis (Small Heath)||Marsh, Richard|
|English, Michael||Howie, W.||Mason, Roy|
hon. Gentleman has not met the point that worries us.
If we leave the Clause as it stands, the Board—even accepting the fact that it would only be on an adverse report—could, if it had an order under consideration, do all the things laid down in the Clause—prohibit or restrict the doing of things which might restrict or frustrate the order, for instance, and appoint a person to conduct or supervise the activities of the company.
All these things could seriously affect the conduct of a business. But if, at the end of the day, the Board decided not to make the order it might have done very considerable harm in the meantime to the operation of the company concerned. It is this point which worries us and it was in acknowledgment of that worry that the hon. Gentleman agreed to search for some alternative form of words which would meet our point of view. However, we do not believe that the Government have succeded in doing so. We must press our point of view and I therefore advise my hon. Friends to divide the House on this matter.
Question put, That the words proposed to be left out stand part of the Bill:—
The House divided: Ayes, 166; Noes 145.
|Maxwell, Robert||Price, J. T. (Westhoughton)||Swain, Thomas|
|Mayhew, Christopher||Probert, Arthur||Swingler, Stephen|
|Molloy, William||Pursey, Cmdr. Harry||Taylor, Bernard (Mansfleld)|
|Morris, Alfred (Wythenshawe)||Ramsden, Rt. Hn. James||Thomas, George (Cardiff, W.)|
|Murray, Albert||Redhead, Edward||Thorpe, Jeremy|
|Newens, Stan||Reynolds, G. W.||Tomney, Frank|
|Noel-Baker, Francis (Swindon)||Richard, Ivor||Tuck, Raphael|
|Noel-Baker, Rt. Hn. Philip (Derby, S.)||Rogers, George (Kensington, N.)||Urwin, T. W.|
|Norwood, Christopher||Rose, Paul B.||Walden, Brian (All Saints)|
|Oakes, Gordon||Rowland, Christopher||Walker, Harold (Doncaster)|
|Ogden, Eric||Sheldon, Robert||Wallace, George|
|O'Malley, Brian||Shore, Peter (Stepney)||Wells, William (Walsall, N.)|
|Oram, Albert E. (E. Ham, S.)||Short, Rt. Hn. E. (N'c'tle-on-Tyne, C.)||White, Mrs. Eirene|
|Orbach, Maurice||Silkin, John (Deptford)||Whitlock, William|
|Orme, Stanley||Silkin, S. C. (Camberwell, Dulwich)||Wigg, Rt. Hn. George|
|Owen, Will||Silverman, Julius (Aston)||Wilkins, W. A.|
|Palmer, Arthur||Skeffington, Arthur||Williams, Mrs. Shirley (Hitchin)|
|Park, Trevor (Derbyshire, S. E.)||Slater, Mrs. Harriet (Stoke, N.)||Willis, George (Ebinburgh, E.)|
|Parker, John||Slater, Joseph (Sedgefield)||Wilson, William (Coventry, S.)|
|Parkin, B. T.||Snow, Julian||Zilliacus, K.|
|Pavitt, Laurence||Steel, David (Roxburgh)|
|Pentland, Norman||Stonehouse, John|
TELLERS FOR THE AYES:
|Perry, Ernest G.||Strauss, Rt. Hn. G. R. (Vauxhall)||Mr. Ifor Danes, and|
|Popplewell, Ernest||Summershill, Hn. Dr. Shirley||Mr. Joseph Harper.|
|Alison, Michael (Barkston Ash)||Foster, Sir John||Meyer, Sir Anthony|
|Allan, Robert (Paddington, S.)||Fraser, Ian (Plymouth, Button)||Mills, Peter (Torrington)|
|Atkins, Humphrey||Gardner, Edward||Mills, Stratton (Belfast, N.)|
|Baker, W. H. K.||Glover, Sir Douglas||Mitchell, David|
|Barber, Rt. Hn. Anthony||Godber, Rt. Hn. J. B.||Mott-Radclyffe, Sir Charles|
|Barlow, Sir John||Goodhew, Victor||Munro-Lucas-Tooth, Sir Hugh|
|Batsford, Brian||Grant, Anthony||Neave, Airey|
|Beamish, Col. Sir Tufton||Grant-Ferris, R.||Osborne, Sir Cyril (Louth)|
|Bell, Ronald||Gresham Cooke, R.||Page, John (Harrow, W.)|
|Blffen, John||Grieve, Percy||Page, R. Graham (Crosby)|
|Biggs-Davison, John||Griffiths, Peter (Smethwick)||Pearson, Sir Frank (Clitheroe)|
|Bingham, R. M.||Gurden, Harold||Peel, John|
|Black, Sir Cyril||Hall, John (Wycombe)||Pitt, Dame Edith|
|Bossom, Hn. Clive||Hall-Davies, A. G. F.||Pounder, Rafton|
|Box, Donald||Harris, Frederic (Croydon, N. W.)||Powell, Rt. Hn. J. Enoch|
|Boyle, Rt. Hn. Sir Edward||Harris, Reader (Heston)||Price, David (Eastleigh)|
|Brinton, Sir Tatton||Harvey, John (Walthamstow, E.)||Prior, J. M. L.|
|Brooke, Rt. Hn. Henry||Harvie Anderson, Miss||Pym, Francis|
|Brown, Sir Edward (Bath)||Hawkins, Paul||Quennell, Miss J. M.|
|Buchanan-Smith, Alick||Heald, Rt. Hn. Sir Lionel||Ramsden, Rt. Hn. James|
|Bullus, Sir Eric||Higgins, Terence L.||Redmayne, Rt. Hn. Sir Martin|
|Buxton, Ronald||Hill, J. E. B. (S. Norfolk)||Ridsdale, Julian|
|Carlisle, Mark||Hobson, Rt. Hn. Sir John||Roberts, Sir Peter (Heeley)|
|Channon, H. P. G.||Hogg, Rt. Hn. Quintin||Sharpies, Richard|
|Chataway, Christopher||Hopkins, Alan||Shepherd, William|
|Clark, Henry (Antrim, N.)||Hordern, Peter||Sinclair, Sir George|
|Clark, William (Nottingham, S.)||Hornsby-Smith, Rt. Hn Dame P.||Smith, Dudley (Br'ntf'd & Chiswick)|
|Cole, Norman||Hutchison, Michael Clark||Soames, Rt. Hn. Christopher|
|Cooke, Robert||Iremonger, T. L.||Stainton, Keith|
|Cooper-Key, Sir Neill||Jenkin, Patrick (Woodford)||Stanley, Hn. Richard|
|Corfield, F. V.||Kerr, Sir Hamilton (Cambridge)||Studholme, Sir Henry|
|Costain, A. P.||Kilfedder, James A.||Taylor, Sir Charles (Eastbourne)|
|Crawley, Aidan||King, Evelyn (Dorset, S.)||Thompson, Sir Richard (Croydon, S.)|
|Crosthwaite-Eyre, Col. Sir Oliver||Kirk, Peter||Tiley, Arthur (Bradford, W.)|
|Curran, Charles||Langford-Holt, Sir John||Tilney, John (Wavertree)|
|Currie, G. B. H.||Legge-Bourke, Sir Harry||van Straubenzee, W. R.|
|Dance, James||Lewis, Kenneth (Rutland)||Walker, Peter (Worcester)|
|Davies, Dr. Wyndham (Perry Barr)||Litchfield, Capt. John||Walters, Dennis|
|d'Avigdor-Goldsmid, Sir Henry||Longden, Gilbert||Ward, Dame Irene|
|Dean, Paul||Loveys, Walter H.||Webster, David|
|Deedes, Rt. Hn. W. F.||McAdden, Sir Stephen||Wells, John (Maidstone)|
|Digby, Simon Wingfield||MacArthur, Ian||Whitelaw, William|
|Dodds-Parker, Douglas||Maclean, Sir Fitzroy||Wilson, Geoffrey (Truro)|
|Eden, Sir John||Macleod, Rt. Hn. Iain||Wise, A. R.|
|Elliot, Capt. Walter (Carshalton)||McMaster, Stanley||Wood, Rt. Hn. Richard|
|Elliott, R. W. (N'c'tle-upon-Tyne, N.)||Marples, Rt. Hn. Ernest|
|Emery, Peter||Marten, Neil|
TELLERS FOR THE NOES:
|Errington, Sir Eric||Maude, Angus||Mr. Jasper More and|
|Eyre, Reginald||Mawby, Ray||Mr. Geoffrey Johnson Smith.|
|Fletcher-Cooke, Charles (Darwen)||Maydon, Lt.-Cmdr. S. L. C.|
I beg to move Amendment No. 27, in page 6, line 44, after "Board", to insert:
This is a clarifying Amendment. I am the first to admit that some legislation introduced into this House is capable of clarification. In this case, it was suggested in Committee that after the Board of Trade had made a divestment order, its powers of control over the companies concerned might, in accordance with the Bill, although this was not intended, have been totally unrestricted. We never wished that they should be so unrestricted. They were merely intended to go as far as the control that was necessary for the proper carrying out of the order. The words which I now propose to introduce make that perfectly clear and beyond doubt, as, I think, the House would wish."with a view to the achievement of that purpose"
The Minister's explanation of the Amendment does nothing to remove my previous uneasiness in his refusing to accept our Amendment No. 26. As, however, one-eighth of a loaf is better than no bread, we do not propose to oppose the Amendment.
Amendment agreed to.
I beg to move, Amendment No. 28, in page 7, line 25, to leave out the second "directions" and to insert "order".
We can also discuss Amendments No. 29 and No. 30, in page 7, line 29, leave out "directions" and insert "order", and in line 35, leave out "vary or".
These three Amendments are, I am afraid, an exercise in biting the hand that feeds one, because in Committee the Minister without Portfolio drew attention to a matter which nobody had drawn attention to, and with characteristic candour and frankness he said that the powers contained in subsection (8) of the Clause were very unusual. He said they were.
He gave one of the reasons:"unusually wide powers which are not subject to Parliamentary control … I think it should be pointed out that if Parliament passes an order under subsection (10) containing those directions to individuals, those directions will not have to come before Parliament."
I see the reason he gave for a very remarkable example of sub-delegated legislation. As subsection (8) now stands, the Board of Trade may be authorised by an order which is subject to Parliamentary control to give directions to a person specified in the directions to take certain steps "within his competence" or"It may be undesirable that they should do so because it might give publicity to individuals who, in their own interest, would not wish their names to be mentioned."—[OFFICIAL REPORT, Standing Committee E, 11th May, 1965; c. 343–4.]
In general, the directions which may be given and the persons who may be named are in very wide terms, and subject, as the Minister said, to no sort of Parliamentary control or indeed other control at all. On reflection, we have come to the conclusion that the reason he gave for this remarkable power is really insufficient, namely, that the person concerned would rather have these Draconian powers done secretly without publicity because otherwise publicity might be damaging. It might be damaging, but that is not sufficient reason to outweigh the usual constitutional arrangements which we have, which are that these things should be done quite openly and should be subject to some sort of Parliamentary control. Therefore, what we suggest is that instead of a person being named only in the directions which are sub-delegated legislation he must be named and specified in the order, and also that the steps which the person named has to take must also be specified or described in the order. That is the effect of our Amendments, including the consequential one, the third, about varying the direction. We wish to delete the power to vary by direction. It is to be my means of revoking the order and making a new order which, again, would be under Parliamentary control. I think the point is fairly clear. It is a constitutional matter. It is to try to remove the extraordinary nature of this sub-delegated legislation. Whatever the good intentions of the Minister without Portfolio—and I certainly see them and honour them—I do not think it right that these secret directions should be made with such little foundation as a general order not specifying the person to whom it is directed, not specifying the steps which that person has to take, in the only instrument which has Parliamentary control upon it. That is not a point which requires any elaboration."to do or refrain from doing anything … specified or described which he might be required to do or refrain from doing".
I think that the House is grateful to the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) for having put down these Amendments although, as he was kind enough to acknowledge, the Opposition cannot on this occasion claim any credit for the initiative. I am glad that the hon. and learned Gentleman has tabled them, because they give us an opportunity for a short while to discuss exactly what the subsection does. I think that before accepting it, and, as I hope, rejecting the Amendment for the reasons that I shall give, it is important to understand what is intended by the subsection.I have considered whether the Amendments could be accepted, and I have come to the conclusion that they do not really either take away from the Board of Trade the power which the subsection is intended to give to it, or have the effect which the hon. and learned Gentleman contemplates they should have, or at any rate only in part. It is the case that if an Order has to be made under subsection (5), that is to say a divesting order, it will, as a consequence of that, be necessary to ensure that it is properly enforced, otherwise it could be evaded and nullified. Therefore, if a divesting Order has to be made, it will become necessary for the Board of Trade to give directions to individuals to take certain steps. For example, if a divesting Order involves a company in selling its shares to another company, at some stage the directors and secretary of the company which is going to sell its shares will have to execute share transfers. If there is any difficulty about enforcing a divesting Order which, ex hypothesi at that time would have had the approval of Parliament, it follows that effect must be given to the wishes of Parliament. That may involve the Board of Trade giving directions to A, B and C that they shall execute certain documents, in the same way as the court has to have residual powers to see that its decrees are carried out. Having reflected on this matter, I can see no escape from letting the Board of Trade have power by an Order, if approved by both Houses of Parliament, to direct unspecified and unnamed individuals, that is to say unspecified and unnamed in the Order, to do certain things. The reason why it is not possible, or perhaps desirable, to name the individuals in the order is not exclusively the reason that I gave in Committee. It may well be that it will not be possible, when the order is made, to identify the individuals to whom the directions have to be given. It may also be the case that if certain individuals are specified and given directions to do things evasive action could be taken, either by a company forming a subsidiary, or adopting one or other of the several devices which hon. Members know are open to those who manipulate companies, subsidiary companies, and associated companies, and such evasive action could defeat the intentions of Parliament. Therefore, although, as I concede, and as I have pointed out, this is an unusual form of sub-delegated legislation, I can see no escape from it. My advice to the House is that, its attention having been drawn, with its eyes open, to what it is being asked to do, it is the only logical way of carrying out the intentions of Parliament. 11.0 p.m. It might be said that that is all very well, but there must be some safeguard for seeing what the Board of Trade does. I have considered how that kind of objection can be met. There are two ways. It would always be open to any hon. Member to ask the President of the Board of Trade what directions had been given following an order made and approved by Parliament, and he could, I suppose, also be asked if he would place copies of any such directions in the Library. Although I cannot commit any President of the Board of Trade either now or in future as to what he might do, I indicate that as showing that there are methods whereby action taken in the way contemplated by this subsection could be made available to Members of Parliament. For these reasons and with this explanation I hope the hon. Member will feel satisfied that it would be impracticable to accept his Amendment.
Although we have had certain strictures from the hon. Member for Sheffield, Hillsborough (Mr. Darling), the House will appreciate that there was no Liberal on the Committee. Therefore, I crave the indulgence of the House if I should raise a point which might have been dealt with in Committee. From a constitutional point of view, is not what the Minister is saying that he can see the force of the argument of the hon. and learned Member for Darwen (Mr. Fletcher-Cooke), that Parliament should be able to question any particular order, but that it is difficult to make an order with any precision and with any certainty by naming the parties involved for the simple reason that it might not be all-embracing, that there might be certain persons who were operating certain practices to which the Board of Trade took objections but who might be omitted from the terms of an order specifically designating certain people?But surely the contrary is of equal importance, namely, that when a Department of State makes an order specifying that certain practices shall or shall not be stopped, prevented or desisted from, there should be some measure of certainty and finality. What the right hon. and learned Gentleman is saying is that the net must be so wide that it may not only catch the fishes whom he wishes to catch but it may also pull in certain other sprats of whose existence at the time he is not fully cognisant. This seems a strange constitutional doctrine. Persons must know what the law is, and there must be finality and certainty. After all, this is one of the basic principles of the rule of law—that there is certainty and people know where they stand on a particular issue. This, as I see it, is the great argument against retrospective legislation, that a man may do something in good faith on the basis that it is intra vires only subsequently to find it has been retrospectively made ultra vires. While one can appreciate the intricacy of this matter, and anyone who has seen the Monopolies Commission or the Restrictive Practices Court in action will know that complexity of these various company arrangements and various trade matters which are the subject of stricture and indeed of examination, I would urge on the Minister strongly that it is surely a bad principle to say that we must define offences so widely and vaguely that not only do we catch those whom we know are operating them, but also those who are operating but whose existence we do not know of at the moment, but whom we hope to get, notwithstanding that, in the net at the same time. I would have thought that was a novel constitutional doctrine which is certainly new as far as Ministerial directions are concerned.
I think the House is grateful to my hon. and learned friend for bringing this point to its attention and also to the hon. Member for Devon, North (Mr. Thorpe) for raising so many pertinent points. We have been twitted for not having raised that point on the Committee stage, but my hon. Friend the Member for Wycombe (Mr. John Hall) pointed out that the implication of this had not escaped us. I am glad that we have had an opportunity on Report of raising these important issues. The situation has not been left in a wholly satisfactory manner by the answers which we have obtained so far, and there are one or two further questions which I should like to put to the Minister without Portfolio.First, is the power which he is taking in subsection (8) unprecedented or can he refer us to precedents of such action in the past? Our Amendment does not modify the powers which the Board of Trade would be able to take, but it gives some safeguards to persons who might be affected by such directions. The Board can pass an Order through the House empowering them to give directions to unspecified persons—to be specified only in the directions and not in the Order. What remedy lies open to the person specified in such a direction? My hon. and learned Friend earlier pointed out that someone might be specified in the directions in error or there might be a genuine mistake. What power does that person have to make representations and to have that obvious injustice remedied? The Board have enormous powers under the Clause. The House is right to examine the matter carefully before granting such powers to the Board of Trade and also right to question keenly the decision to use not only delegated legislation but sub-delegated legislation. In Clause 3 the Board of Trade have power to regulate prices, to stop the acquisition or disposal of assets, to deal with the winding up of companies and the formation of companies, to declare certain practices illegal and to discriminate in any manner specified. The Board are taking a number of very important powers. We do not object; on the whole, they are excellent powers for the Board of Trade to take. But we consider that there should be some safeguards, and all that the Amendment does is to say that the Board of Trade should specify not in the direction but in the Order to which persons they are giving instructions or to the holder of which office. The Minister told us that it was not always possible to identify certain individuals, and that it might be possible to evade such an Order. If it is impossible to identify them, will he explain how it is possible to bring them into the net by direction when it is not possible to bring them into the net by the Order? In Committee he based his case largely on the ground that often it would not be in the interests of the people concerned to have these matters brought out into the open. A few moments ago he said that it would be open to any hon. Member to put down a Question to the Board of Trade asking which directions they had given, and he said that he might be asked to put copies of such directions in the Library. If that is so, very little secrecy is left. If hon. Members, and the public, can get this information any way, there is little safeguard for the people concerned if it is secrecy that they want. It is far more frank for the House to have this information laid down in the Order than to have it in a direction later, especially—unless the President of the Board of Trade refuses to do so—when any hon. Member may at any time ask the right hon. Gentleman to place the directions in the Library. If any President of the Board of Trade refused to place any directions in the Library which he had given based on an Order of the House, he would be open to wide criticism. Indeed, I hope that such a refusal would not occur. For many years the Minister without Portfolio was a member of the Statutory Instruments Committee, and he knows full well what can be done by delegated legislation. At a time when the House has been criticised from both the Labour and the Liberal benches for not having sufficient control over the executive, this is one small battle in which we are entitled to ask the members of the executive to look again at what they propose. We are not asking for very much. We are asking that the Board of Trade should not wield wide powers and issue instructions which may affect many people and involve large sums of money, without the House knowing what the instructions are. At a time when we are told that the prestige of the House has never been lower, that the Executive rides rough-shod over us and that we have not the ability to control it, it is the duty of the Government to make sure that they do nothing further to increase this process if they believe it to exist. We were told in Committee that it would be impossible to reveal people's names in certain conditions, but the Board of Trade takes powers to name the holders of offices. That is all the Board has to do, whether it does it by order or by direction. The Board can give directions not only to a named person but to a holder of an office for the time being in a company or association. The Minister without Portfolio raised a point along these lines. He said that it might be necessary in certain circumstances to give directions to directors of companies or secretaries to execute share transfers if it was necessary to sell certain shares. There is power in subsection (8) to make an order authorising the giving of directions to the holder of an office to do that, and I do not see what harm there would be for an order directing the secretary of a company to execute a share transfer to be laid before the House. That would be quite a proper matter to bring before the House in the ordinary way, subject to a Prayer if necessary. In most cases it would be unlikely that it would be prayed against. It would be a far greater safeguard than the safeguard of secrecy to which the Minister referred earlier. We ought to allow this subsection to remain in its present form only if two conditions are satisfied; first, if it can definitely be shown that it must be in the public interest for such directions to be made, not subject to the scrutiny of this House; and secondly, if it is shown to be in the interest of the people concerned. However, I cannot see from the examples which the Minister has so far given that it would be in the public interest or in the interest of the people concerned. I agree with the hon. Member for Devon, North about the necessity for certainty and finality. Our Amendment adequately meets that point. An order would have to be made. It would be certain and final. The Board of Trade would be able to make another Order if the first one proved insufficient, but that also would be subject to the scrutiny of this House. It would be far more satisfactory to all concerned if these matters could be brought out into the light of day rather than that wide powers should be taken by the Board of Trade. I hope the Minister will be able to satisfy the House that these matters are in the public interest and in the interest of the people concerned. Without that assurance the Minister's case falls to the ground. If this subsection goes into the Bill in the terms in which it is drafted, it will be very necessary to watch this legislation extremely closely. I have no doubt that the Board of Trade will administer any such provision with the greatest possible care and with the greatest incentive to minimise injustice. Nevertheless, in a number of important particulars in this and other legislation we have been enlarging the powers of the Board of Trade considerably. The Board of Trade has enormous powers which are not subject to the scrutiny of this House. The House of Commons should assert its traditional right of being allowed to control the Executive and ensure that Orders that affect people, as Orders which are made under subsection (8) do, are subject to the scrutiny of the House. I hope the Minister will realise that we on this side of the House support these Amendments in no party spirit but in a probing spirit, to discover the purpose of the subsection and to ascertain whether or not it is vital to the Bill that it should remain in its present form. I ask him, if there is any doubt whatsoever in his mind about the necessity of this provision, that he should give the benefit of the doubt to the House of Commons and not to the Executive. If there is any doubt whatsoever he should allow the House of Commons to scrutinise the orders in the ordinary way. I hope that we can be satisfied before we part from the Clause that the intention of the Government will be to protect the interests of the House of Commons in this. 11.15 p.m. Far too often the House of Commons comes last as far as the Executive is concerned, and not first. The Minister without Portfolio is well known as a good House of Commons man, and this is a chance for him to show us this evening that he will take into account the genuine and legitimate interests of the House of Commons in considering this subsection of the Bill.
I am sure that everyone who has the interests of the House of Commons at heart must be very worried about the present situation under this Bill and will support the Amendment moved by my hon. Friend. The Minister has been Chairman of the Statutory Instruments Committee. I know that we ought to take a great deal of interest in Statutory Instruments. I am one of the few hon. Members who are here late at night when we are debating them. There are very few occasions when we divide the House on Statutory Instruments. Nevertheless, it is the last occasion when this House of Commons has any control over the Executive.I do not understand how an Order can be produced, which the House of Commons can genuinely debate, when there is an instruction which is not part of the Order and which puts in information that is not being given to the House of Commons. If the Order is going to be put in the Library, there is not going to be much secrecy. If there is no secrecy, surely it is a far better system that the information given in the direction should be included in the Order. Taking the House of Commons to be a slightly lazy body, if these Orders are going to be properly debated, it is necessary that hon. Members should know from the Order what they are arguing about on the Order. Whatever instruction there may be in the Library, the legislative effect is given by way of the Order before the House of Commons. The fact that there may be some instruction or further information in the Library or some other place does not really affect the problem of that sovereignty of this House. How are we to agree to an Order, or disagree with it, if we have not got the information in the Order that will allow us to come to a proper conclusion? Is it going to say in the Order that secretary A will be ordered to do such and such thing, or director B to do such an such a thing? How is the House of Commons going to decide what hon. Members are being asked to do? The fact that we have this in some directive somewhere else is not, I think, relevant to the argument. If we are going to debate this in the House of Commons—and I do not agree with the view that all these Orders will be debated—this is an argument on a slack House of Commons.
If Orders are made that should not be made they obviously will be scrutinised, but I hope that some Orders will be made that are so obviously proper and just that the House of Commons will not feel it necessary to spend its time in debating them.
If my hon. Friend does not mind my saying so, my experience of Governments is that the cloudiest Order is the one which we should be debating and the Order which no one minds will be the soul of clarity. If we are not given the information on which to debate these Orders, the Executive is taking more powers and is reducing the power of the House of Commons. I ask that this matter should be looked at again. I am not now speaking as a Conservative but simply as a House of Commons man. The House is far too slack about Orders, but we cannot debate them unless we have the information on which to reach a conclusion. The Amendment would provide that information and it should be accepted. A very disrespectful attitude to the House is being shown.
I would echo the appeal of my hon. Friends the Members for Southend, West (Mr. Channon) and Ormskirk (Sir D. Glover) on behalf of the House and against the Executive. It is one thing for the Executive to take powers when we understand clearly what they are, but in the last Government Amendment powers were taken over matters which they have "under consideration". What those can be deemed to be could provide a great deal of room for legal argument. This time the words in the Clause are
I certainly could be fooled on what that means. If the Executive proposes to take powers over all sorts of things which will be increasingly difficult to comprehend, the Executive must think again. The legal profession would be a great deal less lucrative if we saw to it that things put on the Statute Book were clearly indicated. It is unforgivable that with our eyes wide open we should put words of this kind in the Statute Book. They may be clear enough to legal luminaries, though I doubt whether they are clear even to them. The Minister without Portfolio must be more forthcoming in this matter."… to give directions to a person specified in the directions …"
I should like to clear up some of the points raised, with the leave of the House. I do not complain about the degree of attention given to this matter. It is not a party matter but, as has been said, a House of Commons question. I share the sentiments of hon. Members opposite that the House should be clear about what it is doing. I agree with them that it would be wrong for Parliament to give uncontrolled powers to the Board of Trade unless it is clear that they are necessary and in the public interest. Nobody wants the Board to have power to act arbitrarily or without full Parliamentary control. The only question here is whether it is necessary that the Clause should remain as at present drafted.The hon. Member for Devon, North (Mr. Thorpe) will forgive me for saying that I do not think that he has fully appreciated what is involved in this matter. He did not have the advantage—it was not his fault—of taking part in the debates in Standing Committee. There is no question here of infringing the rule about finality or the rule against uncertainty. Both are not involved. Some of the sentences uttered by hon. Members opposite have magnified the danger which all of us think may be inherent here unless the matter is fully explained in the subsection. The House should be clear as to the limited effect of the subsection. We are dealing simply and solely with the question of enforcement. There is no question of giving wide and diverse powers in a field in which there is not absolute certainty. We are dealing here with a situation in which there has been a report by the Monopolies Commission recommending the breaking up of a monopoly, the divesting by a monopoly of part of its assets. It is a situation in which Parliament has decided that a divestment—to use an unfortunate word—is necessary, and, therefore, an order has been brought to the House and approved by the House recommending that, in the public interest, a monopoly concern should part with some of its assets. Pausing there, that means a disposal either to a purchaser or a competitor or to somebody who is prepared to take them over. All that must be assumed. We are dealing now with something quite novel and unprecedented in this country. There has never been the compulsory divesting of a monopoly interest. If such a situation arises, it will have been approved and have the blessing of Parliament. Then comes the question of enforcement, and this is all we are concerned with here. How does Parliament give effect to its wish that a monopoly concern should transfer some of its assets? What is the practical method of doing it? It is no use just saying, "Please divest". Unless the wishes of Parliament are observed voluntarily, somebody must say to the directors and shareholders concerned, "You must sign such-and-such transfers of your shares", or "You must deal with such-and-such assets by transferring certain factories to somebody who will buy them". It is purely a question of enforcement. In order to give effect at that stage to the wishes of Parliament, directions have to be given to some individuals to do certain things. That is the whole object of the subsection. All we are concerned with here is whether the Order containing those directions will have no effect unless it is approved by this House. The issue is whether an Order should give the Board of Trade power to say that A, B, C and D should do certain things or whether the order approved by Parliament should give a blanket authority to the Board of Trade to tell the people who are in the effective position to dispose of the assets that they should do so. 11.30 p.m. The argument for giving the Board of Trade that power to give blanket directions to unspecified persons is merely this. It may not at that stage be possible to identify with precision the people to whom the directions must be given. They may, for example, be the directors of a company, in which case they may have resigned and, so far as shareholders in a company are concerned, they can transfer their shares to other persons. What one cannot face is a situation where the wishes of Parliament may be frustrated because, by various devices, steps are taken to prevent Parliament from giving effect to its wishes. That is the answer to the point that Parliament should give directions to the persons who are found to be the appropriate persons for carrying out the wishes of Parliament. I assure hon. Members opposite that I have given a great deal of thought to this matter, and that I should not recommend what is here recommended were I not satisfied that there is no real invasion of the rights of the House of Commons or that it might be necessary, in certain contingencies, that the Order should contain the power to give blanket directions. The hon. Member for Southend, West (Mr. Channon) asked if an Order in these terms was unprecedented. It is not. I have straight away to admit that I cannot recall a specific instance, but as Chairman for some time of the Statutory Instruments Committee I can recall other cases where Parliament has conferred on the Executive powers not merely of delegated legislation, but also of sub-delegated legislation which did not require Parliamentary scrutiny. The view has been expressed on both sides of the House that Parliament is very jealous of conferring those powers, and that they should not be conferred unless such a course is absolutely necessary. But there is the further safeguard that this debate, so far as it affects the relationship between Parliament and the Executive, will have had a salutary effect. Secondly, I assure the House that no order will be presented which contains this power of sub-delegated legislation unless, in any specific instance, it is required to be justified. Every time there is such an Order the circumstances will have to be specified, but unless subsection (8) is contained in the Bill it will be impossible for any Order under the earlier sections to contain this power of sub-delegation of legislation because, unless the Bill does so provide it, any such acts would always be ultra vires. I have done my best, if I may say so with respect, to allay some of the exaggerated fears which have been expressed on this matter. I have given as complete an explanation as possible of why it is in the public interest that we should have this power and of how, in the last resort, the rights of this House are protected.
Could the Minister explain this point in order that the situation may be absolutely clear? Why must there be power for the Board of Trade to give a direction to the directors or the shareholders of a certain company so that action shall be taken by directive rather than by an Order under subsection (8)? Does the Minister not agree that he has power to give orders to holders of offices specified in this subsection?
Yes, but if my right hon. Friend is to rely on an Order each time for getting Parliamentary approval, then there is opportunity for evasion, because if the order specifies individuals it may well be found, as I have already pointed out, that they are no longer holders of offices and are, therefore, without the powers. Another Order would have to be made. Unless there is the power to give directions to unspecified persons, then the Order must specify the persons to whom the directions have to be given. There might very well then be frustration of the will of Parliament.
I am sorry to press the hon. Gentleman again. He can give directions not only to persons but to holders of offices. If his argument is that one may make an Order concerning a Mr. Jones, a director or a company, but he may resign and a Mr. Brown may become a director, the hon. Gentleman can make an Order directing the directors of a company. No matter if they change, they are still bound by the Order. So why is it so necessary to do it by direction and not by Order?
To give one example, the company might form a subsidiary and transfer all its assets to it, and so it would be the directors of another subsidiary.
From what the Minister without Portfolio has said, I am slightly less unhappy than I was at the beginning of the debate. He has admitted one thing, that there is a possibility that these directions will not be secret. This is very important. He drew a parallel with the enforcement powers of the courts—for example, the giving of injunctions or the making of decrees for specific defaults. I accept that. But these orders are public and people dealing with injuncted persons do so at their peril. Indeed, it adds to the force of the enforcement that it should be public. I should like the Board of Trade directions to be public for the same reason.We now know that they are to be public to the extent that they may be placed in the Library. This is some advance. We feared that the directions would be directed secretly so that the public would not know about them and there would be no way of complaining about them. I still do not quite understand why a subsequent Order in the proper sense of the word cannot be made and laid. Nevertheless, we have got somewhere. As the Minister said, the debate itself will have done some good. Furthermore, it would be most ungracious to divide the House when the whole debate was, in fact, provoked by the Minister without Portfolio originally. For this, among other reasons, I beg to ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Amendment made In page 8, line 7, after "House", insert:
"and the provisions of Schedule [Procedure preliminary to laying draft of orders referred to in section 3(10)(a) of this Act] to this Act shall have effect with respect to the procedure to be followed before laying a draft of such an order".—[Sir Eric Fletcher.]
I beg to move, That further consideration of the Bill, as amended, be now adjourned.I move this Motion largely to ascertain the Government's intentions. The House will agree that we have made good progress up to now. The speeches from this side have been short and to the point. [Laughter.] Hon. Gentlemen seem to treat that remark with levity. But it is true. A perusal of HANSARD will show that the speeches from this side have been short and to the point, have been most constructive in character and have added a great deal to the development of the Bill. The speeches from the Government side have been even shorter both in time and in number. We have had two interesting but short interventions from the Liberal benches. It is unfortunate that the burden of improving the Bill has fallen largely on the shoulders of my hon. Friends here and in Committee. But I stress that we have not wasted any time throughout the debates in our consideration of the Bill, and that is generally acknowledged. Nevertheless, there are some very important Amendments to follow, as Ministers will agree. If my Motion is not accepted, we shall debate some important Amendments to Clause 4 which cover matters of considerable substance, and, what is even more important, as we get towards the end of the Bill, to Clause 8, which at the present rate of progress is likely to be between four and five o'clock in the morning, we shall debate matters affecting the press, matters of very considerable importance indeed about which there is considerable feeling. I merely ask whether it is wise to deal with these very important matters in the early hours when none of us are at our best, when perhaps we cannot give the attention that we should to them and when, unfortunately, fatigue tends to make us go on much longer in saying things that we could say more shortly if we were fresher. For these reasons, amongst others, there is a Motion on the Order Paper signed by about 50 hon. Members opposite deploring all-night sittings and pointing out that it is not easy to give proper attention to matters of importance in the early hours. One may have different views on this, but that is the strong opinion on the benches opposite. In these circumstances, if my Motion cannot be accepted, perhaps the President of the Board of Trade will at least let us know his intentions. Are we to go on until we have completed consideration of the Bill, including Third Reading, which might take us to a very late hour tomorrow?
I agree that we made excellent progress in a constructive spirit—indeed, such good progress that we should continue. So far as I can see, hon. Members not merely on this side but opposite are still in full possession of their faculties and will continue to be for a long time yet. Everybody is awake, and we even have the Liberal Party with us.We all believe in higher productivity and the full use of productive assets all round the clock in industry. Since we are doing so well in such a co-operative spirit, and as there are expressions of alertness on all our faces, we clearly should continue.
I must confess that I did not expect any other answer, but I would point out that we have been in debate now for eight hours. During that time, we have disposed of 31 Amendments at the rate of about one every 15 minutes, which is quite good progress. At that rate of progress, however, the remaining Amendments will take another ten or eleven hours to discuss. Then we are to have Third Reading.We on this side have always been prepared to sit here all night and during tomorrow as well. As the right hon. Gentleman has pointed out, all the vigour is on this side. We are all alert and all our faculties are alive. We are full of eagerness and vim and are likely to maintain our energy until any hour he cares to mention. It was the expressions of dismay by hon. Members opposite in their Motion that led me to move my Motion. However, if the right hon. Gentleman is determined to push on we are quite prepared to do so. But I warn him that this will be a long night. I beg to ask leave to withdraw the Motion.
Motion, by leave, withdrawn.
Clause 4—(Powers Exercisable To Honour Treaty Obligations)
I beg to move Amendment No. 32, in page 8, line 35, at end to insert:
Provided that this subsection shall not have effect until the Board have made an order setting out a list of the treaties concerned.
I suggest that, at the same time, we also consider Amendments Nos. 34 and 35 in the name of the hon. Member for Wycombe (Mr. John Hall) and the names of his hon. Friends—in page 9, line 2, at end insert:
In page 9, line 2, at end insert:"and which is included in Schedule (Treaties) to this Act."
—and the new Schedule—"Treaties", also standing in the name of the hon. Member for Wycombe.(5) The Board shall have power by order to add or vary the list of treaties set out in Schedule (Treaties) to this Act.
That would be convenient, Mr. Speaker.I am obliged to the President of the Board of Trade for assuring me that I still look as if I am in possession of my faculties. I will do my best to justify his confidence. We now arrive at Clause 4, which gives certain powers to the Board to exercise the very considerable powers in Clause 3 if there has been or is likely to be a breach of a treaty. When we discussed this in Committee a number of my hon. Friends were concerned to know how anyone would have the opportunity of appreciating what treaty it was they were likely to breach. It was because we did not then feel we had been given an adequate reply to the arguments put forward that this composite series of Amendments has been put on the Order Paper for our consideration. What they do, in brief, is to provide that there is added to the Bill a Schedule specifying, initially, two treaties which are the ones at point at the moment, and ensure that the necessary flexibility is given for those to be added to and for the powers contained in Clause 4 only to come into force when the Board has made an order setting out the list of treaties concerned. That summarises the effect of Clause 4 as it would be if this series of Amendments was accepted. There was a great deal of probing upstairs to try to find out what was in the President's mind. The point was most succinctly put by the hon. Gentleman the Minister of State of 11th May, 1965, when he said:
He went on:"On the points raised by the hon. Member for Wycombe (Mr. John Hall), the appropriate part of Clause 4(1) is about half-way through, where it says that when the Commission makes a report the Board of Trade may take action where something 'has been or is likely to be a breach or a conflict of the Treaty'."
That is what he said when hon. Member's on this side of the Committee were probing as to what was in his mind. This point was followed closely by my hon. Friend the Member for Worthing (Mr. Higgins), with his usual pertinacity. It might be a fair summary to say that he said he was not satisfied that these were the only two treaties and although he may explain it himself later I got the impression that he, and other hon. Members, were questioning in their minds whether there might be treaties additional to those but which were not known to the House. I am able, after carefully reading the reports of our meetings in Committee, to set at rest the anxieties of any hon. Member who thinks there is some kind of secret treaty in this matter, for the Minister of State was quite explicit. In col. 363 this is what he said:"Now the only two treaties with which we are really concerned in this regard are the E.F.T.A. Convention and G.A.T.T. Therefore, where action is required so that we honour our E.F.T.A. obligations, I think it is, although perhaps not as clearly stated as the hon. Member for Wycombe would like, implicit in this Clause that we are referring to a treaty of this kind. We do not want to spell it out too clearly, for the reason given by the hon. Member for Reading (Mr. Peter Emery) that there may be other treaties in the future."
The Minister was quite emphatic, definite and clear. To summarise, he made it plain that there were only two treaties that he had in mind and that those treaties were E.F.T.A. and G.A.T.T. It is for that reason that we seek to place in the Bill precisely those two treaties by way of scheduling them. I am hopeful that the necessary time for reflection having passed, the Minister of State will now see how helpful it would be to all concerned if there was absolute certainty on this point. "Absolute certainty" picks up the discussion which took place on the last Amendment. I do not need to dwell on it at length, particularly at this hour, but the Minister of State will recall that on both sides it was agreed that it was a duty of this House, wherever possible, to make the state of the law clear to those who might be affected by it. I do not believe that the matter could be more clearly put than it was put in Committee by my hon. Friend the Member for Worthing at col. 359. With my hon. Friend's consent, I should like to repeat what he said:"These are not secret treaties. All the trade agreements that Great Britain has entered into are available for public inspection."
I thought then, and I certainly think now, that that placed the argument in a nutshell. In Clause 4, we are taking extended powers relating to possible breaches of treaty. There is nothing in the Bill to say what those treaties are. It is surely inherent in our method of dealing with those who are affected by our legislation that we should make it as clear as we can what the law is and what it is that business men, who might possibly breach a treaty, have to avoid and what are the rocks that they must watch out for in the channels ahead. I have sought to show that, on the Minister's own words, he has only two treaties in mind. Those are the two treaties listed in the new Schedule. I have sought to show that fears and anxieties that there might be other treaties are, on the Minister's own words, not justified. I genuinely believe that the argument stands without any further difficulty or elaboration and I am confident that after mature thought in the period that has since elapsed, the Minister will feel able to accept our Amendments."I think that the fundamental point which we ought to make is that if business men are to be subject to the provisions of the Bill when it becomes an Act because the actions which they are taking are in conflict with some treaty, they are entitled to know where they stand. It would be unfair if, because of treaties which had been signed in the past, or which may be signed in the future, a business man, who perhaps unwittingly was in conflict with one of those treaties, suddenly found that the Board of Trade was able to take action against him on the basis of this Clause."—[OFFICIAL REPORT, Standing Committee E, 11th May, 1965; c. 351, 363, 359.]
I support my hon. Friend the Member for Wokingham (Mr. van Straubenzee), who has so adequately and cogently proposed the Amendment. There are, however, one or two other points which should be brought to the attention of the House, more particularly because this matter was not covered in any detail on Second Reading. Indeed, I am rather uncertain whether it was even mentioned.When we were in Committee upstairs, it became apparent that the Government's proposals in Clause 4 were extremely important—I described them at the time as something of a Trojan horse—because they introduced into our monopolies legislation what appeared to be the beginnings of international monopolies legislation in that they endeavoured to incorporate into the domestic law of the country arrangements whereby treaties which we had signed with other countries could be given effect. To this extent it was an extremely important Clause. Most of my hon. Friends would agree with me when I say that it would be desirable, if it were found that these monopolies were in conflict with one of our treaty obligations, that they should be subject to the sanctions set out in this Bill. Therefore, there is no basic disagreement between the two sides of the House, I believe, on this point. Where we do find very considerable disagreement is on the question of which treaties in particular we are concerned with in this Clause. It is for this reason that my hon. Friends have tabled the Amendments we are discussing. Before I turn to the detail of them there is one point I should be glad if the Minister of State would clarify. He mentioned in Committee that the Clause was to implement the obligations we had in particular with E.F.T.A. We asked at the time if there were reciprocal arrangements, similar to those in the Bill, in the other E.F.T.A. countries. He was unable to answer at the time. I hope that, in the light of the discussion which we had, he will be able to give us some more positive answer than he gave us on that occasion. I turn to the Amendments. The first point which needs to be made clear is that, in spite of what my hon. Friend the Member for Wokingham has said, one feels, if one reads through the speeches of the Minister of State, that there is considerable doubt whether he was merely referring to the E.F.T.A. treaty and the General Agreement on Tariffs and Trade or whether he had some wider scope in mind. I agree with my hon. Friend that there is no question of any secret treaties being involved, but that the question is which treaties in particular are to be covered by the Clause. It is for that reason we have suggested we should specify in detail which treaties are covered. The best the Minister of State could do by way of reply, when we queried this first of all, was to say:
This seems to me to be wider than a reference merely to E.F.T.A. and G.A.T.T. Therefore, I think it is important that we should pursue this matter this evening in the whole House. The second point which must be made, and should be made very strongly, is that in the debates in Committee it was suggested that somehow if we were to specify the treaties precisely this might encourage certain countries overseas to protest about what British firms were doing, and the implication of this seemed to be—and it was not contradicted—that there might be British firms in conflict with our treaty obligations and the Minister was desirous of omitting from the Bill a list of treaties in order to protect them from such complaints. This seems to me a totally wrong attitude for any Minister in this country to adopt when considering the treaties into which we have entered and an honourable obligation. The second point which he made appeared to be that there was no need to specify precisely what the treaties were because business men need not know with which treaties they might be in conflict. This, again, as my hon. Friend said, seems to us to be totally wrong, because it means that business men may find themselves suddenly subject to sanctions of the Bill without knowing in advance that they would be subject to them. 12 m. One of the extraordinary things which emerged in the debates in Committee was, that the hon. Gentleman suggested that the action of the Government might be directed against firms which were going to be caught by the Clause as it now stands. The hon. Gentleman said:"We were advised that those were the words which ought to be used in this connection to cover all the trade treaties which this country has entered into. …"
Are we to understand from that that we are going to omit from the Bill any specific reference to certain treaties other than those which we specify, and we are then going to find that when the Bill becomes an Act the Government are proposing to take action against a company which the Minister of State or his colleagues have in mind, and in this way they will catch the company? That is a wrong attitude for the Government to adopt in this matter, and I hope that by accepting one or other of the Amendments the hon. Gentleman will remove any doubt from the minds of hon. Members on both sides of the House about the Government adopting an irresponsible attitude of this kind. There seems no reason why we should not specify in the Bill the actual treaties which are concerned. The hon. Gentleman tended to excuse this with the words:"It may be that after the Bill has become law this will be one of the first references to the Monopolies Commission, and it would be improper, for a number of reasons, to mention the case this morning."
Later on he said:"I am also advised that it was technically difficult, and perhaps not altogether in the public interest, for the whole list of trade treaties and agreements which we have entered into to be published as a Schedule to the Bill …"
Whether or not it was accepted by the Committee, I very much hope that the same unsatisfactory answer will not be accepted by hon. Members tonight, because to say, "I am sorry it is an unsatisfactory answer, but I hope that it will be accepted" is not really the kind of intellectual approach that we expect from the hon. Gentleman, and I hope, therefore, that he will have no hesitation in accepting the Amendments. The hon. Gentleman will observe that the Amendments are in two forms. The first is that the Clause shall not have effect until such time as the Board of Trade has specified what treaties it has in mind, and the alternative is that we should accept the Schedule which we have added. When we discussed the matter in Committee, it was not possible for the Amendment covering the Schedule to be called, for the rather good reason that we had omitted to put down the Schedule. We have now managed to cover that particular point, and so the Schedule now reads that the two treaties concerned are those which the hon. Gentleman, during most of his speeches upstairs, seemed to say were in his mind, namely, the E.F.T.A. Treaty, and the G.A.T.T. If the hon. Gentleman accepts the Amendments, it will still be possible to add to the Schedule any further treaties which he feels he would like to cover. We think that this is a matter which ought to be clarified. We agree with the general principles of the Clause, but we think that it is vitally important that business men should know where they stand in operating within this legislation, and I therefore have great pleasure in supporting the Amendments."I know that that is an unsatisfactory answer, but it is the answer that we have to give to the hon. Gentleman, and I hope that it will be accepted by the Committee."—[OFFICIAL REPORT, Standing Committee E, 11th May, 1965; c. 360–1.]
I do not have much to say on this Amendment which has been moved so admirably by my hon. Friend the Member for Wokingham (Mr. van Straubenzee) and supported with his usual clarity by my hon. Friend the Member for Worthing (Mr. Higgins), but it is important that we should press this matter because the Government did not give an exact undertaking in Committee upstairs. The Minister of State intervened on more than one occasion during our discussions on this topic, and I tried to put forward some alternatives in an effort to help the hon. Gentleman.It is a nonsense of the most extreme sort that a business may find itself suddenly, when this Bill becomes an Act, subject to the regulations of treaties entered into and unspecified by the Bill, and then suddenly find that because of the rest of Clause 4, line 32 to 36, that where
Looking in Section 3(2) and (3), we see the whole panoply of powers even down to the price regulation in paragraph (3) which it would be open for the Board of Trade to take. If any Government, whatever its political structure, is to be given the power to take this action with industry, then industry must surely, in common decency and ordinary reasonable understanding of a logical or business approach, have the right to know what these treaties are they could be breaking. As I said in Committee, and I think it is worth repeating, this is much more difficult for the smaller firms. Large firms have staffs in the export market. They have legal departments that are completely au fait with what is going on in international trade. It may well be expected that they will know and possibly cope with this present situation. But it is not true of the medium entrepeneur, the small business in the Midlands, the small engineering firm, particularly in Reading, my own constituency, where they are attempting to assist in the export drive and indeed are probably over-stretched on their capital resources and staff resources at the moment. They certainly would not have legal departments who would be examining or considering this particular aspect of the Bill. Therefore, I believe that if one looks at the statement by the Minister of State and mentioned by my hon. Friend the Member for Wokingham:"there has been or is likely to be a breach of or conflict with a treaty, then, for the purposes of remedying or preventing that breach or conflict, the Board may by order exercise all or any of the powers conferred by section 3(2) and (3) of this Act."
As long as that is true, and we have no reason to doubt that the Minister would say anything but what is the case, then indeed there can be no reason for not accepting our Amendment. We have the Schedule there. It will be within the power of the Government to add whatever treaties they want to the Schedule. There are two treaties down at the moment, and the Government would have powers to add to these treaties if they saw fit. Therefore, I hope that they can accept the Amendment. If they cannot, and I would want strong reasons to be given why they could not, would they then accept and give an assurance on the question that I asked during the Committee stage."These are not secret treaties. All the trade agreements that Great Britain has entered into are available for public inspection."
We were given a partial assurance. If the Government cannot accept the Amendment, they should state categorically that a firm has this right to go to the Board of Trade and automatically to be provided with a list of the treaties. That is not the best way to deal with the matter; it is a bad second or third best. Someone who picks up the Bill for the first time will not have seen this assurance and will not know of the Board of Trade's intentions in this respect. I therefore urge the Minister to accept the Amendment, which would assist industry in the operation of the Bill."Could any company wishing to have a list of all the treaties affecting the operation of the Bill and the regulations obtain this list by application to the Board of Trade? If we could have that understanding, anybody wishing to have such a list could obtain it without any difficulty, although it would not be written into the Bill"—[OFFICIAL REPORT, Standing Committee E, llth May 1965, c. 364.]
The hon. Member for Worthing (Mr. Higgins) said that in Committee I said that I knew that "this was an unsatisfactory answer". After a series of interjections and speeches I tried to say, "I know that this answer will be unsatisfactory to hon. Members opposite"; but I am willing to accept the Report as it appears. I give the hon. Member the assurance that the other E.F.T.A. countries have either introduced similar provisions, or are in the process of doing so, and there would be the reciprocal arrangements about which he asked.All hon. Members who have spoken have quoted from my speeches in Committee. Added together the quotations have been at some length. One quotation, which is germane, has not been made. I said that we were concerned in the discussion with E.F.T.A. and G.A.T.T., but I continued,
We are concerned only with firms which have thus offended. I continued,"… there are a number of other treaties and trade agreements which come within the definition, which we decided on after full consideration, and a treaty means 'any agreement with a country outside the United Kingdom or the government of such a country, or with any international organisation or authority, being an agreement binding on Her Majesty's Government in the United Kingdom.' We were advised that those were the words which ought to be used in this connection to cover all the trade treaties which this country has entered into, and is likely to enter into, where action as proposed in subsection (1) might be called for to deal with the trade practices of firms which offend against international treaties and agreements."
We have gone into the matter very carefully. We shall have to stick to this definition, because the Bill refers to trade treaties; and to give a full list would mean a very long Schedule indeed. I am not altogether convinced that it would be helpful even to larger firms, and I do not think that it would be helpful to smaller firms merely to have a long list of the treaties. But I give the hon. Member for Reading (Mr. Peter Emery) the assurance for which he asked, that any exporter or person engaged in overseas trade who wants a list of the treaties may have it. But I hope that the Board of Trade will go much further than giving the applicant the list. What the Board of Trade has to do is to give advice and information on the content of treaties. The Board of Trade must ask the circumstances of the firm, and inquire why it wants the information and what the Board can do to help. The reason for the inquiry may be that the firm feels that it is on the verge of doing something which would be contrary to the terms of the treaty to which the United Kingdom is a party. So the function of the Board of Trade is to give advice—not a list of treaties. 12.15 a.m. Therefore, for the reasons given in Committee and with the assurance that I have given that the Board of Trade will give all the help possible to people engaged in overseas trade who want information about agreements—not just titles but the content and other helpful information—I hope the hon. Gentleman will withdraw the Amendment."I am also advised that it was technically difficult, and perhaps not altogether in the public interest, for the whole list of trade treaties and agreements which we have entered into to be published as a Schedule to the Bill in the way suggested by the hon. Gentleman."—[OFFICIAL REPORT, Standing Committee E, 11th May, 1965; c. 360.]
I do not wish to speak again, but before the hon. Gentleman sits down I want to ask a question. The Minister has said that there is this very long list. We accept that. We are not arguing about that. But I cannot see the difficulty, if this long list exists, between a long list being provided in private and a long list being provided in a Schedule to the Bill. It will save the Board of Trade a lot of trouble if this list is put into the Bill. It seems a complete nonsense to suggest that it is difficult to put a long list into a Schedule to the Bill but that it is easy for the Board of Trade to provide the list. Could the Minister comment on that statement?
I had better repeat what was said in our Committee proceedings, reported at column 360 of the Report. I said that I was advised that it was not only technically difficult, but perhaps not altogether in the public interest, to publish the full list.
In spite of his usual courteous approach, I am afraid that the Minister of State has not satisfied those of us on this side of the House who raised the matter. I realise that he repeated the arguments reported in column 360, which naturally we carefully reread before approaching this discussion, but, as my hon. Friend the Member for Reading (Mr. Peter Emery) pointed out, all the trade agreements that Great Britain has entered into are available for public inspection.There is considerable anxiety on this side of the House about the effect of this upon innocent businessmen and exporters—
On a point of order, Mr. Deputy-Speaker. We are not in Committee and the hon. Gentleman has already addressed the House. If we are to have much more of this we shall be here nest week and not merely this morning.
In reply to the hon. Gentleman's point of order, the hon. Gentleman who is addressing the House moved the Amendment, and, although we are on Report, the hon. Gentleman who moves an Amendment is in order in replying to the debate.
I am much obliged, Mr. Deputy-Speaker. I generally find myself politely and correctly slapped down by the Chair, and it is for me a refreshing experience to discover that I am in order.I was about to say that I appreciate that the Minister of State has made two short advances in our direction. The first is this very helpful point about the reciprocity of the other E.F.T.A. countries, which will be welcomed by my hon. Friend the Member for Worthing (Mr. Higgins) who has gone into this point. Secondly, there is the clear assurance that the Board of Trade will make lists of these treaties available, and the advice that goes with them. I understand that the Minister of State has put that forward to the Committee in a genuine spirit and in a desire to help us in the difficulty that we have expressed. There is, fortunately, another opportunity and another place for this point to be considered further. Speaking for myself, I think we would like to reflect rather more fully on the implications of some of the things that the Minister has said, because I realise that these matters are not as easy of solution as they might appear. On that understanding, I beg to ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
I beg to move Amendment No. 33, in page 8, line 40, leave out from "be" to end of line 42 and to insert:
"laid before Parliament after being made, and, if the order is not approved by resolution of each House of Parliament within the twenty-eight days beginning with that on which it is made, the order shall cease to have effect (but without prejudice to anything previously done thereunder).
This Amendment changes the procedure under Clause 4 dealing with Orders to honour treaty obligations. Orders that may be made for this purpose are those provided for in Clause 3(2) and Clause 3(3), but not the power to prohibit acquisition provided for in Clause 3(4) and any related powers provided in Clause 3(5) and Clause 3(6). The Bill as introduced provided for such Orders to be subject to a merely negative Resolution procedure. The Amendment, which I am sure will be accepted by hon. Members on the Opposition side with gratitude, substitutes for this that the Orders should require affirmative Resolution of each House of Parliament within 28 days of making the Order. The 28 days procedure is quite common with Orders of this kind. It means that they come into effect because of the need for speed. But unless they have Parliamentary approval within 28 days they lapse. This of course is that procedure which that Bill already lays down for similar Orders. Under Clause 4, when Orders are made on that basis of that Monopolies Commission report that a monopoly or merger may operate, or operate in part, against that public interest, we think that adequate publicity must be given to the situation in which an Order under Clause 4 may have been passed. The affirmative Resolution procedure means that there can, in all cases, be a Parliamentary debate when the Order is made. In preparation for that debate publicity will be given, and I hope that this change, which was more or less what was suggested in Committee, will have the approval of the House.In reckoning any such period of twenty-eight days, no account shall be taken of any time during which Parliament is dissolved or prorogued, or during which both Houses are adjourned for more than four days".
Although I personally had a little difficulty in following the Minister at the beginning of his speech because he was reading his brief at great speed, nevertheless I have got the gist of what is intended. I can assure him that we do welcome the Amendment. It is an improvement and we shall certainly support it.
Amendment agreed to.
Clause 6—(General Provisions About Mergers)
I beg to move Amendment No. 36, in page 9, line 37, to leave out "either".
Mr. Speaker proposed that we take with this Amendment,
Amendment No. 40, page 9, line 45, leave out from "competition)" to end of line 2 on page 10,
Amendment No. 41, page 10, line 28, leave out from "may" to "be" in line 33,
Amendment No. 58, page 14, line 17, leave out subsection (7),
Amendment No. 60, page 14, line 36, leave out subsection (8).
The purpose of these Amendments is to delete subsection (1,b,ii) and take out of the Bill the power to refer to the Commission proposed mergers which involve taking over assets exceeding £5 million. When these Amendments were debated in Committee there was strong support for them from the Government side and the several speeches included those by the hon. Member for Ashton-under-Lyne (Mr. Sheldon) and the hon. Member for Heywood and Royton (Mr. Barnett). The speeches impressed the Government. The Minister without Portfolio admitted that the figure of £5 million was purely arbitrary and he agreed that there would be considerable difficulty under the Bill as drafted in arriving at the value of the assets. He said that he would consider with the President of the Board of Trade whether the reference should be deleted or the provisions modified.To quote his words:
Unfortunately, nothing seems to have come out of these deliberations. This is extremely regrettable, but I am not entirely surprised. In the circumstances, perhaps one ought to rehearse some of the arguments again. The inclusion of £5 million seems to argue that in some way monopoly is associated with size and size with monopoly. This tends to create the impression that bigness means badness. I am sure that that is not the impression which the Government intended to convey. It would be quite wrong to create that impression. One of the anomalies which can be created by this provision can be illustrated quite simply. A £6 million company which decided to take over a company with £4 million or £4½ million assets would not be affected and subject to possible reference under the Clause. If however, and this is quite a possibility, a live energetic company with a capital of £4 million or less took over a larger company with assets of £6 million it could be referred under the conditions of the Clause although the resulting assets would be precisely the same in each case. The definition of the assets is a difficult problem. If it is taken, as apparently it is, according to the definition in the Bill, as the nominal book value this will create a number of problems. Everybody knows that the book value of assets has very little relation to the real value. It might be that in some companies, anticipating the possible effects of the Finance Bill, the book value might have some relation to the actual value, but in many cases we know that book value does not hold any such relationship to the true value. 12.30 a.m. There is also the danger of holding up desirable mergers because they might be referred on grounds of size. It has been said that it is not the Government's intention to discourage mergers which may well be desirable in the interests of the economy and the efficiency of industry, and some mergers the Government might even wish to encourage if they had the power so to do. But a company wishing to take over another one or more companies, with assets in excess of £5 million, might find its affairs referred by the Board of Trade, and this could have the effect of discouraging a possible merger. I should regard this as an undesirable consequence. It emerged from the debate in Committee that one of the reasons behind the insertion of the reference to assets of £5 million was the desire to protect companies which might be unwilling parties which, like brides carried screaming to the altar, did not want to be absorbed by another company. One has had cases of this kind in this country in recent years, especially with bids coming from overseas, in which there has been considerable controversy and sometimes the necessity for the Government to intervene or lake an interest. If it is thought necessary to protect companies which may not be willing to be taken over, this is not the proper place for providing that protection. It would be much more appropriate in the Companies Act. We have had the Report of the Jenkins Committee, and I imagine that the Government will, if they can find time, introduce some amending companies legislation arising out of that Report. The Companies Act is a far better place for provisions designed to protect companies subject to take-over bids to which they object. This Bill is not the right place for it. The Government used another argument. On Second Reading—his words are reported in column 1333 of HANSARD—the Minister of State said that the sheer power of the giant could give rise to a monopoly situation. Although a company, already a large one, perhaps, taking over another company with assets in excess of £5 million might not, even after that absorption, itself create a monopoly or be the subject of formal action under the Bill, it could nevertheless, by the mere size of the concern, almost create a monopoly position. Examples were given to substantiate that argument. It was said that not only would the size tend to stifle competition but the empire created might be too large for the most efficient use of resources. This was another argument used in support of the idea of investigating the absorption of companies on the ground of size. The argument that the empire created might be too large for the most efficient use of resources is a strange one to come from right hon. and hon. Members opposite who, by and large, were the creators of the nationalised industries. Are they saying that the creation of large empires of the size of the nationalised industries leads to the inefficient use of resources? If so, I might be tempted to agree, because we have had evidence showing that this is so in many cases. But to use that argument in support of the inclusion in the Bill of the figure of £5 million is to stretch the point a little too far. There is no point in this provision. It has almost been admitted that there is little point in it. It is a figure snatched out of the air. In a pamphlet produced by certain distinguished colleagues on this side of the House a rather smaller figure was mentioned. I think that £1½ million was given as the possible figure which might be taken into account in the case of a proposed merger. Of course, it is well to remember that this proposal was made against a quite different background; the background which envisaged the establishment of a Registrar, and, even so, I should not necessarily have agreed with the recommendation in that pamphlet, distinguished though the writers of it may have been. This is an arbitrarily chosen figure and mere size has no relation in practice to a position of monopoly at all. I do not want to deploy these arguments at any great length, because I am certain that the President of the Board of Trade has heard of them. I am sure he has read of the debates upstairs and knows all the arguments and, having been seized of them upstairs, and the Minister of State having gone so far as to say that he will endeavour to get round the point we are making, will he, although there is at present no Amendment meeting our point, say that he will consider introducing a suitable Amendment to the Bill in another place?"I am bound to say that I appreciate, as I think everybody does, the profound difficulties about attempting to explain whether the £5 million figure should be judged on the basis of book values or any other values. Admittedly the figure of £5 million is a completely arbitrary one. Having chosen an arbitrary figure, one appreciates the difficulty of arriving at any scientific basis for determining whether the assets are there or not. I would like to suggest that if the hon. Member for Wycombe would withdraw the Amendment my hon. Friend and I will consider with the President of the Board of Trade, in the light of everything that has been said this morning, what course we ought to propose, either by deleting it or substituting something else or modifying the provisions."—[OFFICIAL REPORT, Standing Committee E, 13th May, 1965; c. 422.]
I will be very brief and should not have intervened at all were I not so bitterly disappointed that the Government insist on sticking to this stupid criterion as a basis for bringing a merger under scrutiny. That the mere matter of size should prompt an investigation, when no question of market domination comes into the issue at all, is something one cannot understand. This is totally wrong and wholly irrelevant to any of the problems with which we are faced today. It has nothing at all to do with modernisation, or efficiency, or making this country more progressive.It is just old-fashioned suspicion of business—commercial enterprise—in all its forms in general, and of big business in particular. It is very sad to see a Government which professes to be dedicated to the modernisation of the national economy clinging to such out-dated dogma. One can only describe the President in the words that Mr. Harold Wincott uses when he particularly dislikes someone, as "an elderly left-wing parrot".
It is a very sad moment when we come to consider as the criterion for the purpose under discussion a business which is said to be of great size because it has assets of £5 million. What on earth does the President of the Board of Trade mean by assets? Does he mean book value? Does he mean the market value of the assets as quoted on the Stock Exchange? Does he mean the real value of the assets? If that is what he means, then how will he calculate the real assets? Will it be before depreciation; after depreciation?The whole of this Bill so far has had a very fair hearing both in the Committee and in the House and so far we have dealt with serious eventualities. Now, we are lost in the mists of sheer prejudice. I will not speak more than I can avoid of the prejudice which must be inherent in this proposal, but will try to show how utterly impracticable it is. We have already had a debate on the place of the nationalised industries in relation to the Bill, and whether they should be included in its provisions. During the Second Reading debate he said:
This is the kind of ludicrous defence which the right hon. Gentleman was anxious to make. If that is so, how can the nationalised industries be excluded from the purview of the Clause? The right hon. Gentleman's memory has already been refreshed by the words of the present Prime Minister on 22nd April, 1948, when he said that if, for instance, the National Coal Board were to make mining machinery, it would be possible to have such activities brought before the Commission."There could be cases where monopoly in this sense is not technically involved, but, nevertheless, the concentration of economic power would be such that the transaction should at least come within the field of public scrutiny."—[OFFICIAL REPORT, 29th March, 1965; Vol. 709, c. 1213.]
Order. I hope that the hon. Gentleman will not repeat a debate on which we have already taken a decision.
I move quickly to my next point, Mr. Deputy-Speaker.At the very time when we are encountering more and more opposition in other countries, particularly Common Market countries, when we are seeing the French positively encouraging mergers, we have this absurd provision. Last week the Americans announced the results of a competition to join the "Billionaire Club", something which I would have thought was very dear to the heart of the hon. Member for Buckingham (Mr. Maxwell). They produced evidence that there are now 69 members of the New York Stock Exchange "Billionaire Club"—companies with annual sales or revenues of 1,000 million dollars or more. Such companies in the United States are pleased to be big. What is wrong with size anyway? Why should we be so pathetic about it? It is time the other side of the House grew up and realised that we are living in a big world. This is not the age of the cottage industry. What does the right hon. Gentleman want to do? Why does he not fragment industry into tiny parts or bring us back into the world—
Is the hon. Gentleman aware that the requirement of the Bill in respect of large businesses with assets worth £5 million or more does not imply that the Board of Trade would refuse such a merger? All it means is that the Board of Trade will have an opportunity to make sure that such a merger takes place in the national interest. Also, whereas in the past people used to get knighted for the kind of things for which the Americans send their businessmen to gaol—I do not think that our Bill has gone quite that far—has not the time come for our businessmen to realise that there is such a thing as the national interest on the question of mergers?
On the second point, I do not know to which aspect the hon. Gentleman is directing himself—gaol or knighthood. But he has not made any point of substance.The right hon. Gentleman and all hon. Members opposite must grow up and realise that we are in a world of increasing competition and increasing size of concerns. I am very glad to see the hon. Member for Heywood and Royton (Mr. Barnett) entering the Chamber. I know his views on this subject, and I very much hope that he will voice them during this debate. This is a lamentable procedure. It means ultimately that the President of the Board of Trade wants us to return to a sort of Jean Jacques Rousseau existence, a cottage industry existence, with La Nouvelle Heloise in person sitting on the Government Front Bench. That is the kind of thing that we are faced with. The President of the Board of Trade and, no doubt, the Minister of Public Building and Works will be constructing "Le petit Hameau" again in this country to make little cottage industries.
On a point of order. Mr. Deputy-Speaker. Is it in order for an hon. Member to use a foreign language in this debate?
I was almost inclined to intervene to translate what the hon. Member for Horsham (Mr. Hordern) was saying. He has, however, so far merely mentioned the titles of one or two French books and the name of part of Versailles. So far he is in order.
I am obliged, Mr. Deputy-Speaker, and I am about to conclude. I am flattered that you should recognise my expressions and place them so accurately.I am in despair in trying to allude to something reasonable and sensible in these late 1960s. We are in a competitive world and it is high time that the Government woke up to realise what an absurd notion they are trying to put into what is otherwise a very respectable and important Bill.
Like my hon. Friends, I feel strongly on this matter, but unlike them I make no apology for speaking at length. I would have no qualms about speaking at great length on the subject. The President of the Board of Trade has been kind enough to say that we look alert, vigorous and fresh. I would expend every ounce of vigour and alertness on the discussion of the Clause and I hope that the right hon. Gentleman will take as much time as he wishes in expounding the arguments in support of the Government's proposal to keep the figure of £5 million in the Bill.This is one of the most important provisions of the Bill. It is perhaps unfortunate that we are taking it at this hour but as we are let us deal with it with the emphasis its importance demands. It is one of the new departures in the Bill compared with the principal Act. It is a departure with which I have not a great deal of sympathy. Because the Government's arguments in support of it have been sketchy and because I dislike it so much. I have endeavoured to examine carefully and in detail just what has been said by hon. Members opposite in support of the proposal. On Second Reading, the right hon. Gentleman dealt with this in the most general terms. In answer to a query from my right hon. Friend the Member for Bexley (Mr. Heath) he said that it applied to foreign firms with the same provisions, in effect, that it would to firms in this country. But in Committee I think that it was denied that this was the underlying reason for the figure. Perhaps a case could be made out for this if it were to give control or some sort of supervision over take overs by foreign firms but apparently that is not the main underlying reason. It is therefore only incidental that the proposal applies to this kind of take over. The right hon. Gentleman, on Second Reading, referred to the "size of assets" concept. I have looked in vain for any development of this concept of the danger, presumably, of the size of assets. We must adjust our minds to changing values. Not only are units getting bigger but, regrettably, money values are changing. The figure of £5 million these days is comparatively small. There is another point which cannot commend this proposal to us—the use of the word "arbitrary". My hon. Friend the Member for Wycombe (Mr. John Hall) has referred to its use in Committee by the Minister without Portfolio. It was also used by the Minister of State on Second Reading in replying to the debate. I would like to quote what he said in full but, in order to reassure you, Mr. Deputy Speaker, after my early remarks, comparatively briefly. The hon. Gentleman said:
I emphasise that last sentence. May I ask the President of the Board of Trade, if he is going to reply, a very satisfactory figure in relation to what? This is what puzzles us on this side of the House. What is it that this figure is as satisfactory in relation to? It can only be that it is at this sort of figure that inhibitions against size begin to operate on the other side of the House. If this is the case, then I certainly am waiting to be persuaded on this. But this has not been advanced in explicit terms, despite the fact that it is one of the major new provisions in the monopoly legislation in the Bill. We come again to the reply of the Minister without Portfolio in Committee, to which I would draw the attention of the President of the Board of Trade. This was one of the major debates in Committee and it was given one of the briefest replies from the Government Front Bench of almost any discussion that took place. The Minister without Portfolio wound up by saying:"The figure of £5 million is arbitrary; we accept that. We went through the list of mergers over the last five years and did a little separating of the sheep from the goats. It seemed that £5 million was a very satisfactory figure where the merger did not lead to a monopoly situation."—[OFFICIAL REPORT, 29th March, 1965; Vol. 709, c. 1333.]
I want to convince the House that I am not laying undue emphasis upon this point. I would draw the attention of the President of the Board of Trade to the fact that his own side expressed the most direct doubts about giving support to this Clause. The comments of the hon. Gentleman the Member for Ashton-under-Lyne (Mr. Sheldon) in Committee have just been referred to. I was looking for the arguments in support of this proposal and I happened by chance to read the speech of the hon. Gentleman the Member for Ashton-under-Lyne on Second Reading. I felt able, after reading it, to say that should we reach Third Reading tonight I might be able to condense some of my remarks by referring to what he said then. He spoke most explicitly on this and so did other hon. Members on his side. I would, therefore, ask the President of the Board of Trade to give us a full explanation in support of this Clause in the Bill which, up to now, the House have been denied. I assure him we shall not grudge him one moment of the time and we shall listen with very great interest to what he says. Unless some arguments are produced which are clearer and stronger than have been produced, I certainly will feel that this Clause will do far more damage than good and that this figure is so arbitrary as almost to have been plucked from the air because someone felt that somewhere there should be reference to size, otherwise a lot of dearly-held shibboleths were going to be abandoned, and this would cause grief in certain quarters."… the Minister of State and I feel we should have an opportunity before attempting to answer this debate, to consult the President of the Board of Trade on everything that has been said this morning, to see whether any other course ought to be taken to deal with this subject."—[OFFICIAL REPORT, Standing Committee E, 13th May, 1965; c. 421.]
Before I make a few remarks on this series of Amendments I have an interest to declare in that I am associated with a company which exists to promote and encourage mergers in industry. I view with some concern, the same degree of concern already expressed by my hon. Friends, the limitation likely to arise in a number of cases during the course of any one year as a result of the inclusion of this figure. I take the point made in an intervention by the hon. Member for Buckingham (Mr. Maxwell) a moment ago, that this gives power to the President of the Board of Trade to refer such a merger involving the take-over of assets of £5 million or over, to the Commission. It does not necessarily follow that such a reference will be made.The trouble which is apparent throughout this part of the Bill is the mixing up of mergers and monopolies, the idea that at some stage, almost automatically, a merger becomes a monopoly and the idea, following on from that, that almost automatically a monopoly is something harmful. I cannot believe that that is what the Government intend. I do not think that it is what they have in mind. I was extremely surprised that the Government did not put down their own Amendments along these lines for this stage of the Bill. Anybody who has studied the proceedings in Committee must be astonished, in the light of the undertaking, to which my hon. Friend has just referred, given by the Minister without Portfolio, that no Amendment has been put forward on Report by the President of the Board of Trade to delete the figure of £5 million. What was in the mind of the Government when they persuaded my hon. Friend the Member for Wycombe (Mr. John Hall) to withdraw his Amendment if it were not to look again at their original proposals and to come forward at this stage with an Amendment to meet the objections of both sides of the House? One further point is that even though, as the right hon. Gentleman has said, there were in 1964 about 17 instances involving mergers when assets of £5 million or more were taken over, in the context in which it was said this may be considered to be a comparatively small number when one takes into account the total number of mergers throughout industry year in and year out. What I object to, and what, I am sure, all my hon. Friends object to, is that by fixing the figure arbitrarily at such a low level as £5 million and by placing an upper limit at too low a level, the Government are guilty of reversing the trend and are generally discouraging the process towards the creation in British industry of larger units. Because, as I believe, that is not what the Government want to happen, either they must be prepared to accept our Amendments or they must have much better reasons for imposing the £5 million limit than those advanced in Committee, when their arguments were weak and were indicative that this was a purely arbitrary figure without basic justification. I hope, therefore, that the President of the Board of Trade will accept our Amendments. I hope that, in accepting them, he will take the opportunity to emphasise that in doing so he is seeking to give every positive encouragement that he can to worthwhile, sensible, logical mergers in industry to ensure the increasing strength of our manufacturing units to make certain that Britain, through the strengthening of her economy, can become more competitive than she now is. This, I am sure, is the intention of the President of the Board of Trade. His ambition would be greatly strengthened if he accepted our Amendments.
It is quite clear from the strength of the opposition aroused on this side of the House that this Amendment is concerned with the major point of principle in this Bill. Throughout our monopolies legislation it has been recognised that the criterion of a monopoly is whether it controls the supply of a good or service sufficiently to act against the public interest through price rises, and so on. It is because this Clause is a major precedent in our monopolies legislation that we on this side feel it should be examined with the greatest interest and care. It is true that we went into this question in Committee, and I think we examined it in such a way that no reasonable person could feel other than that he should support this Amendment. As we have not had an opportunity of hearing the President of the Board of Trade on this matter we look forward to the benefit of cogent argument by him about why he feels that this extremely unfortunate Clause should remain in the Bill.There are really three possible cases where control of supply is a relevant and, indeed, an important consideration. The first of these is where we get a horizontal monoply with a particular firm occupying more than one-third of the market in the supply of goods at a particular level of production. I think everyone would agree that in this case the one-third share criterion is a reasonable one. The second one is where we have vertical integration, a firm integrating backwards to the sources of raw materials and forwards to the resources of retail outlets. Here it became clear that there is no danger to the public interest unless at some stage of production the firm were to occupy more than one-third of the market and able to control supply so as to act against the public interest. There was, however, one final case which was discussed in some detail by the hon. Member for Birkenhead (Mr. Dell), who suggested that there might be a case of an existing monopolist in the sense of having a one-third share of the market who began to diversify into some other market. He suggested that unless we accepted the £5 million criterion he would not be caught. However, I think it will be agreed that Clause 6 (1,b) covers this sort of case, either as it stands, or by the Government's later Amendment, if we agree to it, by which that one-third share of the market could be written in in place of subsection (1,b). It is true that, because this covers supply of any goods, if we have a monopolist, in the normal sense, diversifying into some activity in which he is not a monopolist, in the sense of having a one-third share of the market, he will still be caught by the Bill. Therefore, we must ask the President of the Board of Trade to explain why the Government insist on maintaining this dogmatic approach to the definition of monoply when a merger is likely to be investigated. We suggest to him as strongly as we are able that the basis on which he has put forward the valuation in this Clause is quite absurd. My hon. Friends put forward, with great cogency, the argument that the book value of the assets, which, we understand, is to be used in this case, is completely arbitrary. Arbitrary? Indeed, meaningless. Because the value of the money with which the assets were purchased at different dates has changed from one date to another. Therefore, what the Government are really saying in this Bill is that one adds up the value of the assets which were purchased perhaps in 1890, when the £ was worth a certain amount, then one adds up the value of the assets purchased in 1900, when the £ was worth something different, one then does the same for assets purchased in the 'twenties and the 'thirties, up to the present day, and finally one says that the total is a given sum. However, the amounts which are added up are all expressed in terms of £5 million which represent totally different values in terms of real assets, and the figure at the end is a complete nonsense. It is not only a nonsense, but it is an arbitrary nonsense, because, under the criteria laid down by the Board of Trade, the Bill as it stands means that the older firms which bought assets long ago, even though they may have repaired them from time to time and invested large sums of money by way of repairs, will be less open to investigation than the newer firms. One may disagree with the Government's attitude towards the elderly and perhaps the old-age non-pensioners, but to introduce legislation which favours the older firm in this way is not only a nonsense, but an arbitrary nonsense. There is another important point to be made here. We appear to be suffering from government by schizophrenics, because the argument advanced by the Treasury Bench last week when discussing Clause 78 of the Finance Bill, which was concerned with forestalling, was that book values were impossible to compute and therefore we must rely on share value. Tonight, on this Bill, we are told that book values are a reasonable measure of capital employed. There is a complete inconsistency between the attitude adopted by the Government one week and that adopted by them the next. The fortunate thing is that there is one link between the Front Bench finance group of last week and the Government this evening, namely, the Minister without Porfolio. One cannot help feeling that it is unfortunate that he does not have a portfolio of definitions to carry from one Ministry to the other, because we cannot sensibly debate this kind of Measure, nor can we sensibly debate the Report stage of the Finance Bill, unless we have a clear and categoric answer from the Government about whether they think that book values are a reasonable measure of capital employed, and I hope that we shall get a clear answer to that today. If, as was suggested by the Chief Secretary to the Treasury, they are not a clear indication, then the Government should accept the Amendments. If they are, then surely they should amend Clause 78 of the Finance Bill. I hope that in replying to this debate the right hon. Gentleman will not only concern himself with the important point of principle that we have raised, but will give a clear and categoric answer about whether they think that book values mean anything or not.
I agree that this is a legitimate issue to raise in the discussion on this Bill, and that it is an important point. On the other hand, I think that the hon. Member for High Wycombe—
I think that the hon. Member for Wycombe (Mr. John Hall) is a little hard to please. Earlier today, when I was pointing out in another instance that previous Governments had done what we were doing, he said that we ought not to give any weight to that because we ought to be doing something different from what was done on previous occasions. Here we are doing something new, and therefore, on his argument, he ought to approve of it on that ground alone.
We welcome the Government doing something new which is positive and useful. We do not welcome them doing things which are wrong.
I am glad the hon. Gentleman agrees that we should decide the matter on its merits, because that underlines the point that he put before us earlier today.Let us examine the merits of the case. The first point is that all that this size of asset test is being used for in this Bill is as a qualifying test to bring mergers within the field of scrutiny. Of course, if it were a test which was going to result in automatic condemnation of the merger, then this would not be a justifiable test to use. What hon. Members opposite are asking is that we should exclude a merger on grounds of the size of assets altogether even from scrutiny under the Bill. If they do not realise that, they do not really understand the Bill they are discussing, and that is what I thought led at least one hon. Member below the Gangway to talk a certain amount of rubbish just now. We are not arguing that all mergers are bad any more than that all are good. Nor are we arguing that size in itself is bad. But hon. Members appear to be arguing that size in itself is good. If the hon. Member is arguing that size is good he is taking an extreme point of view. I believe the sensible, intelligent and realistic assumption here is that size is sometimes good and size is sometimes bad. If that is true then at least it ought to be brought within that field of scrutiny, which we are doing.
The right hon. Gentleman cannot say that the argument is that size should necessarily be either good or bad. If he is saying that size in itself is bad, surely his argument must be that smallness of itself is rather good. That is the argument he is deploying.
What I am arguing is that size may be sometimes good and sometimes bad, and therefore it should be brought within the field of scrutiny. The hon. Member believes in the monopoly test for scrutinising a merger. He does not believe that monopolies are always good or always bad. If, therefore, he thinks that because they are sometimes good and sometimes bad they should come within the field of scrutiny, it follows that if he agrees that size is sometimes good and sometimes bad, then size should come within the field of scrutiny also, otherwise there is no logic in the hon. Member's argument.
I think we agree that size is sometimes good and sometimes bad. What we are saying on this side is that whether it is good or bad depends on what share of the relevant market it happens to have. This is the right and proper criterion for deciding whether or not it needs to be scrutinised.
I am coming to that point, but I am glad we have made some progress and that hon. Members, even those below the Gangway, agree with me that size is sometimes good and sometimes bad and therefore should come within the field of scrutiny.
I think I had better finish my argument and then hon. Members may be able to reflect upon it.The next question that arises, therefore, is—how should we calculate size or domination of the market in order to bring these mergers within the field of scrutiny? There are two strong reasons for adding this size of assets test to the share of the market about which we are all agreed. The first is that this certainly does give us some control, which we have not at present, over foreign takeover bids of British companies. That in itself is not the sole reason, but I think it is one important reason for at least giving us the powers to act in a case of this kind. We have in recent years in the House discussed, for instance, the take-over bid of some Trinidad Oil assets. We also discussed a take-over bid by Chrysler for Rootes only within the past year. I am not saying that either of these take-overs was undesirable or that they were desirable. We ought to have the power to act in such a case. 1.15 a.m. I am not one of those who deplore all foreign investment in this country. We need foreign investment in this country, particularly when it takes the form of the creation of new productive assets such as the building of factories in the under-employed areas. But foreign investment which takes the form of the acquisition under foreign control of assets already existing here is quite a different issue. If it takes place beyond a certain size and brings under control industrial assets of great importance in this country, then at least it should come under scrutiny and the British Government should have power to examine it. Some hon. Members may think that we already possess this power through the operation of the Exchange Control Act. We have examined that legislation, and the fact is that we do not possess the power to interfere with foreign take-over bids under that legislation because it could be done only on foreign exchange control grounds. We are, therefore, justified in introducing this test if only on the argument of possible take-overs of companies in this country. But there is also the argument on the ground of a takeover by one United Kingdom company of another. An evil could certainly arise from too great a domination of the market by one enterprise. There is also such a thing as excessive concentration of economic power in the hands of one private group. If hon. Members opposite do not realise that, then I am afraid that there is a direct disagreement between us. There could be a company which held a considerable share of the market—not quite qualifying under the one-third rule—in a number of separate commodities or services. It could build up a further empire without at any point going quite over the line in a single commodity. An empire not merely of great size but of great power could be created in that way. We ought to have power to decide whether this is in the public interest. Let us not forget all the way through that all we are doing is to give the Board of Trade power to refer these cases to the Commission. It is possible for the Board of Trade not to refer them if it sees no reason for doing so, and even if they are referred it is possible for the Commission to come to the conclusion that they are justified.
We need to look at the question of monopoly anew. A company in the United Kingdom may well be on the way to becoming very large for the market, but in relation to the foreign competition which it faces abroad it will be very small. We on this side of the House are satisfied that the powers which the Government are seeking are right, necessary and justified, but I—and industry, too—would very much like an assurance that when examining these cases the Board of Trade will take into consideration the competitiveness of the enterprise vis-à-vis its foreign competitors. The President of the Board of Trade does not require me to stress that exporting is very important to us. Would he give Ian assurance on that point?
I assure my hon. Friend that not only should we take that into account but I have taken it into account in the past six months. The Board of Trade, in deciding whether to refer a case, and the Commission, in examining a case which had been referred to it, would have that as one of the major factors in mind.Hon. Members opposite talked about shibboleths and used other similar emotional language, but they seem to have forgotten the case of I.C.I. and Courtaulds, and the controversial debate which we had on that subject in the House. I would remind them that in that debate quite a number of hon. Members of their own party took the view that if it were possible it would have been right, had it not happened of its own accord, for the Government to step in and prevent that proposed merger going through—
I must finish this argument—even though in that case a technical monopoly under the 1948 Act legislation might not have been created. If hon. Gentlemen do not realise this, they have not studied that case very carefully. Most hon. Members on both sides of the House who were critical of that merger were critical not because it created a technical 30 per cent. monopoly of any particular commodity but because it gave too great an economic power over a wide area of industry to one concern. Therefore, when hon. Members use expressions like "shibboleths" they should reflect upon that case.
I am grateful to the right hon. Gentleman for giving way. He recognises, of course, that Courtaulds has now been referred to the Monopolies Commission under the old legislation? There is no question of size or anything of that sort coming into it.
I realise that perfectly well because I referred it myself. The hon. Member would do well to listen to the argument before jumping up so often. I did not say that it was technically impossible to refer that merger under the old legislation. I said that most people who were critical of it would have thought it ought to have been referred even if it had not been possible under the old legislation. That proves the case that we are making, that economic power and domination of this kind should at least come within the field of scrutiny as well as the technical old-fashioned monopoly definition.The other point which has been raised, and rightly so, is the question of book values. The Bill as it stands and as we intend it to stand certainly makes book values the criterion in this case. Of course, I agree that book values are not a true or accurate measure of existing market values. Again, if this is to be made the criterion of some automatic condemnation of a merger, book values would be a very unsatisfactory test to take. But they are not being so used. They are merely being used as a criterion for bringing the merger, as I say, within the field of examination. For this purpose it is not necessary to have a perfect and accurate measure. It is necessary to have a measure which can be quickly ascertained so that there is not a long delay in deciding whether to go ahead with a reference or not. The merit of book values for this purpose is that there is here a figure which is quickly, easily and indisputably ascertainable. For this purpose I think this is the most satisfactory measure, and if there were any more satisfactory one, presumably hon. Members opposite, who have been so critical of this Clause, and of the measure, would have found it out after three months and would have put forward an Amendment. For this purpose I think this is a legitimate measure and I think the case is overwhelmingly for retaining the Bill in its present form.
During the debates in Standing Committee I often had occasion, when rising after the Minister had spoken, to say that I was disappointed with his reply. I find myself in precisely the same position tonight. It was a disappointing reply.Perhaps I could put one matter right because I am sure that what was said on the point was said inadvertently. We are not critical of the Measure if by "Measure" the President of the Board of Trade meant the Bill. We have throughout supported the Bill. All that we have done is to try to improve it and I think these efforts have been recognised. The President of the Board of Trade in beginning his speech addressed me as the "hon. Member for High Wycombe". I would point out that the word "High" is as unnecessary and unwanted, as an addition to the word "Wycombe", which is the division that I represent, as these words are unwanted and unnecessary in the Bill. The right hon. Gentleman deployed the usual arguments that we have heard before. The strongest one was the point he made that the Government wanted to have some control over take-over bids, whether they were foreign or domestic. He quoted the case of I.C.I./Courtaulds, in which the figure was considerably in excess of the figure in the Bill. He did not address himself to the suggestion I made during the course of my own remarks, that the protection given in cases of this kind to companies that might be subject to takeover bids might be better given under an amended Companies Act, which no doubt will follow in due course, rather than in this Bill. The other point the President of the Board of Trade made was that one has to be careful of excessive concentration of power. Why are we frightened of size in this country? My hon. Friend the Member for Horsham (Mr. Hordern) made this point. We are being rapidly overtaken by concentrations of industrial power in Europe, and there are places where there is a far greater concentration of power than we can command. Why should we be afraid of companies growing larger and larger and being able to compete successfully with some of our competitors and some of the overseas industrial empires? The hon. Member for Buckingham (Mr. Maxwell) seemed to support me on this point of view. He was referring to difficulties that might arise in the export market when up against large concentrations of industrial power.
One of the arguments that was put some years ago for doing away with that nationalised Iron and Steel Corporation was that it had been growing to an excessive size and that was supposed to be leading to inefficiency.
All I am really asking is why the President should be frightened by size. This Bill is concerned with monopolies and with a sharing of a market that is known to exist, what is regarded as the right share of that market and whether the situation could lead to a monopoly. What we are concerned with is not the question of size. Even if size were the subject concerning us, and we really did have to take it into account, the figure of £5 million is not the figure to write into the Bill. It is far too low. It may have been right in prewar days but not now.I should think that if one wanted to put a figure into the Bill it ought to be at least twice that amount. We know that the figure of £5 million has just been plucked out of the air. It could have been £1 million, £8 million or £10 million, but someone said let us compromise and take the halfway house figure of £5 million. This is no way to arrive at a figure in a Clause that is to be written into a Bill. Much more attention should be given to the figure. During the Committee stage, as the President knows, his hon. Friends were critical of this provision in the Bill. I quote just two examples in speeches which were made by hon. Members whose names I have already mentioned during the course of this debate. The hon. Member for Ashton-under-Lyne (Mr. Sheldon) said in col. 415:
he is right there—"Everything is changing."—
The hon. Member went on to say:"What we are trying to do is to legislate for the past, and despite everything that has been said about competition, there are grave limits to it because sooner or later in a very small country we shall find that the size of these units will come up against the monopoly regulations that we are pinning down on them, and sooner or later there will be a tussle between the advantages of large-scale industry, which I have tried to show are very much greater than anybody has previously imagined, and the very great disadvantages of competition for which there is the possibility of hope that there may be some alternative in the future."
The other hon. Member I wish to quote is the hon. Member for Heywood and Royton (Mr. Barnett), whose contributions to our debates in Committee were valuable and based on professional experience. He said:"If we look at this Clause, the value of it is so small that I would urge my hon. Friend to look at it again and see if he can meet some of our objections."
Neither were we. That was the understatement of the morning. We are still very unhappy with it. Nevertheless, it seems we cannot persuade the Minister at this stage to change this. One has to accept it until such time as we get a change in companies legislation that will enable him to use a kind of control over foreign and domestic bids. We do not propose to press this to a Division. I cannot hide from the right hon. Gentleman our discontent and disquiet at his refusal to accept the Amendment on this occasion."Taking up the point of the definition of £5 million, I am far from happy with it."—[OFFICIAL REPORT, Standing Committee E, 13th May, 1965; c. 415–8.]
I beg to move Amendment No. 37, in page 9, to leave out from "result" to "prevail" in line 39 and to insert "the following conditions".I think that we are taking with it Amendments Nos. 39, 42 and 43.
On a point of order. Do I understand now that we are taking other Amendments with this one? I had not realised that we were taking other Amendments with it.
No other Amendment has been selected for discussion with this Amendment. Amendment No. 37 is the only one selected for discussion at present.
Very well, I will deal with this Amendment. It is intended to remove an anomaly in the Bill as drafted. It refers to the definition of what is a separate undertaking for the purpose of deciding what is a merger which should be referred to the Commission. Under the Bill as drafted, and after the decision which the House has just taken, it is possible to refer a merger to the Commission on one of two criteria—either on the ground of the existence of a monopoly by the 1948 definition or alternatively on the ground of the size of the assets, as we have just decided.As the Bill stands, however, a different definition of what constitutes separate enterprises for this purpose would be adopted according to whether the size of assets test or the monopoly test was being adopted. If the size of assets test was adopted the definition of an enterprise would be not just that of being an interconnected body corporate as laid down in the Companies Act but would involve the wider question of de facto control introduced by the Bill. If, on the other hand, the monopoly test was adopted there would be the narrower definition of the inter-connected bodies corporate as defined in the Companies Act. There is no good or logical reason for using different definitions in these cases and therefore we propose by the Amendment to bring the second definition into line with the first, that is to say we should apply the criterion of de facto control both for the size of assets test and the monopoly test. This seems to me more logical and reasonable and to give us a more satisfactory Clause.
On a point of order, Mr. Deputy-Speaker. My hon. Friends and I are in some confusion. Am I right in thinking that we are concerned here only with Amendment No. 37?
Amendment No. 37 is the only one selected at this point. If it is for the convenience of the House, and the House agrees, it would be in order to discuss the other Amendments at the same time.
All the other Amendments concerned are Government Amendments, Mr. Deputy Speaker. Therefore, if I may presume so far upon your selection, I take it that they are all selected, and, for the purposes of rational debate, I think that they go together. Indeed, I could not help referring to them in my own argument. I gather that hon. Members opposite agree that it is really necessary to take Amendments Nos. 39, 42 and 43 with Amendment No. 37 which I have moved.
Further to that point of order, Mr. Deputy-Speaker. Can you tell me, a new Member, why the debate on this Bill, which has been agreed by both sides of the House, as far as I know, is being carried on all over again and why so many Amendments have been chosen?
That is not a point of order.
If it would not be out of order, I could reply at some length to the hon. Member for Buckingham (Mr. Maxwell) and explain why there are so many Amendments down on Report. Briefly, the reason is that hon. and right hon. Members opposite and we have co-operated in finding methods of improving the Bill, and this has made it necessary to put down a number of Amendments at this stage.It is a little difficult to follow the purpose of Amendment No. 37 without looking at the other Amendments to which the President of the Board of Trade referred. When I first looked at it I thought I understood what it meant. After I heard the right hon. Gentleman's explanation, I decided that I did not know at all. Nevertheless, on the basis that, in fact, it means what I originally thought it meant, I should not, despite the explanation, wish to oppose Amendment No. 37. I am not sure, Mr. Deputy-Speaker, whether we are taking Amendments No. 39, 42 and 43 at the same time.
I think we agreed that we would discuss all four Amendments together.
If that is so, Mr. Deputy-Speaker, I echo what I said earlier. Having looked at these Amendments as best I could, and having tried to follow the right hon. Gentleman's explanation, there is nothing I wish to add. As far as I can see, they are not objectionable, although I cannot see that they are particularly advantageous.
They are very good indeed.
"Very good indeed" says the President of the Board of Trade. As I always accept everything he tells the House, and as I am ready to accept his guarantee that the Amendments are designed to improve the Bill—one of the few occasions on which Government Amendments have that effect—I am prepared to accept them as they stand.
I wish to raise a point of substance which has been brought to my attention by Clause 68 of the Finance Bill. Two companies could form a partnership which could have the same effect as a merger, but a company partnership seems, rather strangely, not to be covered by the Bill as originally drafted or as now to be amended.Clause 6, (1,b) refers to the conditions to which the principal Act applies, and Section 3(2) of that Act refers to
and so on. As I understand it, the effect of Amendment No. 39 is not to alter that position at all. That is to say, each enterprise, as I understand it, must have"Where two or more persons conduct their affairs in such a way …"
etc. In those circumstances, if two companies decided not to merge and become one enterprise but instead, remained two separate undertakings and engaged in a partnership, then it would be a matter of doubt if the Board of Trade would have any power at all. If this be the case, then no doubt the Government would wish to introduce a suitable Amendment in another place. At the same time it is strange that we should be adopting the damaging test of the £5 millions take-over but leaving out of account mergers between really enormous concerns which may result in market domination and which should have been brought within the scrutiny of the Bill."… at least one-third of the goods of that description which are supplied in the United Kingdom …"
Might I ask for guidance on what may be a matter of drafting because as things are they may lead to confusion? Amendment No. 38, I understand, is not called, but to my somewhat sluggish brain at this hour of the morning, if it is not called, Amendments Nos. 37 and 39 do not make sense because there would be left in line 39 on page 9 the words
Is that the intention of the Government? As I understand it, if Amendment No. 37 is accepted it will have the effect of leaving out the words from "result" in line 38 to "prevail" in the next line, with the insertion of the words, "the following conditions". So the result would be that the Bill would read,"or do so to a greater extent".
Is that not so? [Interruption.] I still do not follow it. What would be the amended sentence without the inclusion of Amendment No. 38, which is not being called?"as a result the following conditions or do so to a greater extent …"
The answer to the second intervention is broadly this; Amendments Nos. 37, 39, 42 and 43 are Government Amendments. Amendment No. 38 is not a Government Amendment and, in any case, does not hang with the other four. It is not necessary, therefore, that it should be moved or approved in order to make sense of those four. Amendments Nos. 37, 39, 42 and 43 do hang together and have the substantive effect which I tried to explain to the House in my first contribution to the debate. If the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) looks at Clause 9 (3, c) he will find the words,
I am advised that this covers his point and does not leave partnerships unaccounted for."persons carrying on partnership and the husband or wife and relatives of any of them;"
This is covering persons associated with one another, but that does not come into Clause 6. So far as I see it, that does not come in at all. Where persons are associated it is right that they should be dealt with as such, but here we are dealing with two or more enterprises which can cease to be distinct enterprises.
The hon. Gentleman has exhausted his right to speak. He cannot make a second speech. He can make an intervention, but not speak a second time.
I will try to be as brief as possible, Mr. Deputy-Speaker.
On a point of debate. Mr. Deputy-Speaker—I draw the line at a point of order—as we are not in Committee, is it competent for the House to go on discussing and wrangling about marginal points when hon. Gentlemen appointed by Her Majesty's Opposition have already notified the House of their acceptance of the Government Amendments on the Notice Paper?
I do not know what the hon. Gentleman means by "a point of debate".
Can the right hon. Gentleman deal with the point whether "two distinct enterprises" would cover two companies in partnership?
If I may give an answer and not make a speech, the answer is that I am advised that the words that I read out from Clause 9(3) are relevant to Clause 6. I would refer the hon. Gentleman to Clause 9(1), which I think will make this apparent, but since he has raised the point I will check to confirm that what I am saying is correct.
I am sorry to have to rise again. I had prepared a long speech on Amendment No. 39, but in the circumstances I shall curtail it. However, there are one or two things which are not very clear. I had hoped that we might have had something further about the ex-territorial aspects of the matter, but it appears that that is not covered by these Amendments. Will the President say whether the long and quite definite points made during the Committee stage are intended to be covered by any of the Government Amendments? It appears that they are not. I thought that the Government had said that they would try to deal with them.My hon. Friend the Member for Southend, West (Mr. Channon) was to have dealt with Amendment No. 42, and I will ask a question to which he desired an answer. There are references to different forms of supply and to supply taken separately. Is this necessary or relevant? Why does it matter whether a supply is taken separately or not? My hon. Friend was not clear about that, and when it is put to me quickly, I am not clear about it. In the same way, why in order to cover the whole of these Amendments is the inclusion of "20(3)" necessary? It seems that this adds nothing. I cannot see why it is necessary. But we will not prolong the debate. I am sorry that the hon. Member for Buckingham (Mr. Maxwell) has left the Chamber after one of his—
I am still here.
I will raise a point of order, Mr. Deputy-Speaker—a valid point of order, I think. Can the debate be continued when the Opposition Front Bench speaker, the hon. Member for Wycombe (Mr. John Hall), has already indicated to my right hon. Friend that he accepts the Government Amendments on the Notice Paper? The debate has continued and we are speaking with discordant voices on the same matters which are still under discussion.
There is no reason why the hon. Member for Reading (Mr. Peter Emery) should not exercise his right to speak. He has not spoken before on this Amendment.
I was saying that I was sorry that the hon. Member for Buckingham had paid one of his lightning incursions into the Chamber, interjected and gone out again—a habit for which he is becoming famous—because this point illustrates the matter he raised.We make no pretence that this is a simple matter. The hon. Member for Westhoughton (Mr. J. T. Price) knows that it is complex. He served on the Standing Committee and he knows that the point was not properly covered there. We had believed that these Amendments would be taken differently. My hon. Friend the Member for Wycombe (Mr. John Hall) dealt particularly with Amendment No. 37. I have been asked to deal with Amendment No. 39.
Let us press on. This is important. At this hour I am not going to get factious. I am posing three questions to the President of the Board of Trade. If he can answer me perhaps we can proceed to the next Amendment.
My right hon. Friend the President of the Board of Trade having exhausted his right to speak—
Order. The Minister in charge of the Bill has not exhausted his right to speak if he wishes to do so.
Whether he has exhausted his right to speak or not, Mr. Deputy-Speaker, perhaps, having started, I may try to satisfy, indirectly through the hon. Member for Reading (Mr. Emery), the hon. Member for Southend, West (Mr. Channon) who also has not, I believe, exhausted his right. Indeed, he has not spoken at all but nevertheless tried to raise a point vicariously.The question was as to why it is necessary to incorporate under this Amendment the provisions of Section 3(3) of the 1948 Act. The explanation is simple. As hon. Members are interested, perhaps I should try to spell it out for their convenience. The Act went to the trouble of analysing the conditions in which supply of goods takes place in order to make sure that there was complete coverage. Section 3(3) says:
That was to ensure that there should be proper coverage of the supply of goods. In this Bill we are extending the operation of the monopolies complex both to services and to mergers. It is, therefore, necessary in order to ensure conformity with the provisions of the 1948 Act, that there should be an Amendment to extend the provisions of Section 3(3), to all services affected by Clause 2(5)(b), and in order to avoid any possible ambiguity it is desirable that that should be made absolutely explicit. I hope that explanation will satisfy the hon. Gentleman."Where goods of any description are the subject of different forms of supply, the references in the preceding provisions of this section to the supply of the goods … shall be construed as references to any of those forms of supply taken separately, to all those forms of supply taken together, or to any of those forms of supply taken in groups, according as the Board of Trade or the Commission, as the case may be, think proper in all the circumstances;".
Amendment ageed to.
Further Amendments made: In page 9, line 41, leave out from "description" to "or" in line 45 and insert:
"that is to say, as respects the supply of goods of any description, at least one-third of the goods of that description which are supplied in the United Kingdom or any substantial part thereof are supplied by or to any one person, or by or to the persons by whom the enterprises (so far as they continue to be carried on) are carried on, or, as respects the supply of services of any description, the supply of services of that description in the United Kingdom or any substantial part thereof is, to the extent of at least one-third, by or for any one person, or by or for the persons by whom the enterprises (so far as they continue to be carried on) are carried on".
In page 10, line 37, leave out "7 to 9 and 12" and insert "3(3), 7 to 9, 12 and 20(3)".
In page 10, line 38, after "Act", insert:
"as modified by the foregoing provisions of this Act".—[Mr. Jay.]
I beg to move, Amendment No. 44, in page 11, line 2, to leave out "to make their report" and insert:
It will be convenient to discuss with this Amendment No. 50, in page 12, line 12, after "may", insert:
and Amendment No. 51, in page 12, line 22, leave out "report is laid before Parliament" and insert:"at any time before the Commission makes its preliminary report on the reference under subsection (5) (a) above".
"preliminary report is made under subsection (5) (a) above".
The hon. Member for Westhoughton (Mr. J. T. Price) will be delighted to know that we come to what is an entirely new and different concept, or principle, in the operation of the Bill. I hope we shall now be able to have his opinion whether he thinks it is an advantage or not because quite honestly we in the Committee, and I think that means many people on both sides of the House, were concerned to ensure that reports emanating from the Monopolies Commission should be produced as quickly as possible.The stage for these next three Amendments is set very much by what the Federation of British Industries said when this Bill was published. On the question of speed they said:
This is really the whole basis of this Amendment, to try to ensure that the right sort of mergers which can bring greater efficiency to British industry are possible and can be brought about without delay. It will be seen that what we are suggesting is that we should insert into the Bill the possibility that a preliminary report on the matter referred to should be made within two months of it being referred, stating whether the Commission are satisfied there is prima facie evidence warranting further investigation or whether they can give a view within two months. I believe that in most mergers it ought to be quite possible for the Commission to report within eight weeks. As a parallel I use the references to the Prices and Incomes Board which are completed in under eight weeks. These mergers are possibly just as important and it really must be in the interests of the Government to try to ensure that we can get evidence and obtain a view, I do not say verdict, about the merger, preferably within the two-month period. Rather than tie the Commission to saying absolutely within two months, this Amendment allows the Board to be able to give a prima facie judgment and say there is need for greater evidence and for further investigation. This would allow the Commission to take the extra period to make its final report. 2.0 a.m. It is important to understand the reason for this necessity. In certain instances where firms are about to merge, where the level of production and consumption combined would be above one-third or where the financial limit of £5 million would be exceeded, the smaller firm, perhaps with a production of only 5 per cent. and a capital of only £½ million, might well be open to bid, take-over or merger with another company and the joint enterprise might not fall within the scope of a reference to the Monopolies Commission. There might be a merger between firms A and B which requires reference to the Commission, but, while the acceptability of the merger is being considered, firm Z might make a bid for firm B because those two would not fall within the scope of reference to the Commission; the President of the Board of Trade would not have power to make the reference in this kind of merger. We are giving rise to the possibility that where larger firms might wish to merge with small firms, if they believe that there will be a long delay in the making of a decision they might well not bother to go ahead with the unification of parts of the industry with which they are concerned. It is, therefore, of the greatest importance to obtain speed. Secondly, it is obvious that if we ensure speed, there will be little necessity for unscrambling. If speed is achieved, we will obviate this much more difficult problem. In some of our debates, there is reference after reference by the Minister of State to the importance of being able to stop mergers rather than having to unscramble them. From this viewpoint alone, the Amendment should commend itself to the Treasury Bench, because we are obviously attempting to meet part of the Government's view. Rather than give further examples, I have, I hope, explained concisely the aim of the Amendment. The other Amendments which we are taking with it are consequential. I hope that the Government may be able to surprise us all by accepting the Amendment. Although it was drafted by one of my legal colleagues, the Government might not agree with its precise terms. If there were some minor alteration the Government wanted to make to the Amendment, then provided they accepted the principle of the Corn-mission, where necessary, having to report within two months or make a prima facie report, we would be more than happy to withdraw the Amendment and allow the Government to introduce another in another place to cope with the matter."If mergers are to be examined before they are completed the examination must be made very quickly indeed if it is not to make the merger impossible."
I am entirely at one with the hon. Gentleman's purpose in this case; we all want to make the procedure as speedy as possible, and not to leave firms in a state of uncertainty; but I am afraid that, having examined these three Amendments, it seems clear to us that they would have the opposite effect of that which he intends. What he is proposing, substantially, is that the Commission should be required to make a preliminary report within two months of a reference. It would be required to do this, not just permitted to do it. What, in effect, the preliminary report would do would be to state whether there was a prima facie case for supposing that the merger would be contrary to the public interest. That, of course, is precisely what the Board of Trade would do in deciding whether to refer or not to refer the merger in the first place. If there were not, in the view of the Board of Trade, a prima facie case, it would not refer that case. If the Commission were then to spend two months in considering whether there was a prima facie case it would merely be repeating the process which the Board of Trade had already gone through. The net effect, therefore, would be to insert three stages instead of two stages in the whole operation.The Board considers whether there is a prima facie case. If there is it refers it to the Commission. The Commission, within a six months' period normally, makes up its mind. Under the hon. Gentleman's proposal, the Board of Trade has to decide whether there is a prima facie case; then within two months the Commission has to decide again whether there is a prima facie case, and, if it thinks there is, it will have to proceed to its substantive examination. There is nothing in the Bill to prevent the Commission from coming to a conclusion within six weeks or eight weeks that there is, after all, no prima facie case, and forthwith informing the Board of Trade of that view. Therefore, by this Amendment I think we should be inserting a third and unnecessary stage into the procedure.
I find it somewhat hard to follow the logic of the President of the Board of Trade.
Impossible! It was perfect.
It was not perfect logic. We are not inserting an extra stage, because we are not withdrawing the power of the Commission to make a final report within eight weeks. We are not taking away the power of the Commission to finalise its report within eight weeks.
The hon. Gentleman will agree that he is requiring the Commission to make a preliminary report? Therefore, though he is not taking away the existing powers, he is imposing a further duty upon it.
I think there is a misunderstanding about this, because I do not think it is logical, if the Commission is able to make its final report within two weeks, to suggest that there is anything in the Amendment which makes it, before producing its final report, produce a previous—a prima facie—one.There is nothing in the Amendment which requires that. It requires that if there has not been a final report within eight weeks, a prima facie statement must be made by the Commission. I do not want to pursue this argument too far, but that is our intention. I do not want to bring in the complications to which the right hon. Gentleman referred, and that is why I said that I did not think his statement was logical. I cannot see why, as long as the end product is achieved within eight weeks, we have to have a prima facie report. It is only if the end-product is not achieved within that time that there must be a prima facie report from the Commission. I ask the right hon. Gentleman to look at this matter again, because we both wish to obtain the same result. There will be an extra stage only if there has not been a finalised report within eight weeks, and that extra stage will of course help the firm to know where it stands. This is not a matter of politics. It is a matter of easing the Commission's operations. Even if the right hon. Gentleman argues, which I do not think he can, that the Amendment does not do what I intend it to do, he knows what I am trying to do, and I should like his comments on that.
In practice, I think that companies contemplating a merger will, if they think that it is likely to be the subject of reference, take the precaution of having discussions with the Board of Trade before things get very far advanced. I should have thought that it was at that stage of the discussions that as it were a prima facie case would be made out, but I agree with my hon. Friend the Member for Reading (Mr. Peter Emery) that six months is clearly too long a period.I take the point made by the right hon. Gentleman that this is a maximum figure, and that if the Commission's findings can be made known at any point earlier than six months that will be done, but I hope that it will not be necessary to take as much as six months to produce a report, because this would be subsequent to the point at which terms had been agreed between the interested parties, and there might well be a change in the circumstances under which the merger terms had been agreed. If the merging companies were required to hold up proceedings for as long as six months pending investigation by the Board of Trade, the chances are that they would say that there was no point in proceeding with the merger. I do not think that the right hon. Gentleman wants that to happen, and there must, therefore, be some alteration to this proposal to allow the Commission six months in which to make its findings known. If the Amendment as drafted will not achieve what both sides want to achieve, I hope that the Government will take the opportunity of making an appropriate Amendment in another place to ensure that there is no undue delay between a reference being made and the publication of the Commission's report.
My belief is that what I said earlier is correct. I will examine the issue again to make certain and make any change should that prove necessary in such remaining stages as there are of the Bill. I believe that the position is as I have said.
I thank the President of the Board of Trade for that. With that undertaking I beg to ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Encouraged by the undertaking made by the President of the Board of Trade in the last debate, I beg to move Amendment No. 45, in page 11, line 3, leave out from "within" to "or" in line 4 and insert:
"such period, not exceeding six months, from the date on which the reference is made as may be specified by the Board of Trade in the reference".
It would be convenient if we also discussed Amendment No. 46, in page 11, line 6, leave out "six months" and insert "the period specified in the reference".
The object of these two Amendments, as in the previous debate, is to speed up the procedure which is undertaken when a merger comes up for consideration. It was agreed in Committee that we should find in most cases that the proceedings could be carried out satisfactorily in less than six months, certainly in less than nine months, and that generally speaking the period of six or nine months would be the maximum period which would be required for the investigation.Bearing in mind what was said in Committee, the object of these Amendments is to enable the Board of Trade to insert in place of the words "six months" a specific time in which it would hope to receive a report back from the Monopolies Commission. If it were found impossible for the Commission to report in the time specified by the Board of Trade, then clearly they would be allowed to apply for an extension. It seems to us on this side of the House and I would think on the other side as well that there is a grave danger that unless these investigations into proposed mergers are carried out with speed, mergers which are in the public interest and which may lead to greater efficiency in the economy and greater competitiveness in export markets, may not take place simply because negotiations have broken down by the time they have been referred to the commission, considered and referred back. For this reason I hope that the Minister of State will feel he can accept our Amendments. I would also like to clarify a point made by the President of the Board of Trade in the previous debate which seems relevant to this debate as well. As I understand it, he is proposing that the Board of Trade shall carry out a prima facie investigation on the basis presumably of facts presented to him by the firms concerned, and he is then going to decide whether or not to refer it to the Commission. When replying, could the Minister of State make clear whether if the Board of Trade looks into the prima facie case and decides that they are not going to refer it to the Commission, whether this can effectively be taken as a negative clearance, provided no new facts become apparent subsequently, in which case, of course, the whole matter would fall to the ground and would have to be reconsidered? It would be reasonable for the firm to go ahead on that basis. I think that what the President was saying indicates that this was his intention, but as it is not written into the Bill in that form, I hope we will have that point clarified when the Minister of State replies.
The questions that the hon. Member for Worthing (Mr. Higgins) has put to me at the end are not strictly relevant to this Amendment, but I can assure him that after examination if the Board of Trade come to the conclusion that the merger is not going to be sent to the Monopolies Commission, everyone will know that the merger is not to be sent. What will happen in practice, as the hon. Member for Bournemouth, West (Sir J. Eden) said, is that the firms concerned will be in touch with the Board of Trade, the matter will be discussed within the Board of Trade and they will know what the situation is.There are practical difficulties about the Amendments. I disagree with the suggestion that the Amendments will speed up the work of the Commission. The practical difficulty is that when a reference is made the Board of Trade will not be able to say to a week or perhaps a month how long the investigation ought to take, because the investigation itself might throw up problems of great complexity. There might be intricate matters to be examined which were not thought of in detail when the reference was made, and time might be taken in assessing likely developments before making a reference which would, of course, prolong the total process. It may be that firms under investigation, although not deliberately unco-operative, will be slow in bringing evidence forward. In most circumstances, as we see it, the Board of Trade would be compelled to play safe and to specify the six months maximum. But maybe it will not work like that, and I propose to shatter the House by accepting the Amendment.
We are delighted to be shattered in that manner. The Minister of State says that he is compelled to play safe. His safest way is to accept Conservative Amendments, and we are delighted that he has done so.
Amendment agreed to.
May I inquire whether the "shattering" process also extends to Amendment No. 46?
Yes, Sir.Further Amendment made: In page 11, line 6, leave out "six months" and insert
"the period specified in the reference".—[Mr. Higgins.]
I beg to move Amendment No. 47, in page 11, line 26, at the end to insert:
The Amendment carries out an undertaking which we gave in Committee. It will require the Board of Trade to act with all due expedition in deciding whether to refer a merger to the Monopolies Commission. We agreed with views put forward in Committee about the legitimate desire of firms and companies which may be involved in these processes to know as soon as possible where they stand, and the Amendment goes as far as I think it right to go to meet the views expressed in Committee.(7) In determining whether to refer a matter to the Commission under this section, the Board shall have regard, with a view to the prevention or removal of uncertainty, to the need for making a determination as soon as is reasonably practicable.
I should like to ask the Minister of State a question. I must confess that I am not wholly sure that it arises out of the Amendment, but I hope that he will answer it. Is the Board of Trade, before the Bill reaches the Statue Book, prepared to entertain inquiries from industry about prospective mergers? If not, there is likely to be a gap after the Bill becomes an Act when inquiries are going on and before people will feel free to proceed with mergers which they have in mind.
For months the Board of Trade has been doing precisely this.
I should like to take up the cue of "all due expedition", which phrase was mentioned by the Minister of State. This meets the point on which he gave an undertaking to the Committee. By these Amendments we are making much more clear to the public and, indeed, to the Commission the need for speed, for all due expedition, and I shall do no more than welcome this Amendment and say that we are pleased to see it on the Order Paper.
Amendment agreed to.
Further Amendments made: In page 11, line 39, leave out "either".
In line 44, leave out from "interest" to end of line 4 on page 12.—[ Mr. Darling.]
Clause 7—(Application Of General Provisions About Mergers)
I beg to move Amendment No. 52, in page 13, line 17, at the end to insert:
This is a drafting Amendment, consequential upon Amendments discussed on an earlier Clause.() Section 3 of the principal Act, as applied by section 6, shall have effect as if, in subsection (4), the reference to bodies corporate becoming interconnected bodies corporate included a reference to enterprises being brought under common control otherwise than by reason of their becoming enterprises of interconnected bodies corporate, and to enterprises ceasing to be carried on as mentioned in subsection (1) above, and, in subsection (5), the reference to the division of a trade or business as therein mentioned included a reference to the separation, by the sale of any part of any undertaking or assets concerned or other means, of enterprises which are under common control otherwise than by reason of their being enterprises of interconnected bodies corporate.
This is a very difficult Amendment to understand at first sight, but, in view of the assurance that it is purely a drafting Amendment, I do not think we would be disposed to oppose it.
Amendment agreed to.
I beg to move Amendment No. 54, in page 13, to leave out lines 19 to 32 and to insert:
We seem to be making such excellent progress and the Government are so co-operative that I have great hopes that as we move into Clause 7 dealing particularly with definition, we shall have helped the Government by putting down this Amendment dealing with the application of the general provisions about mergers."shall be deemed to have control of a body corporate if he or they have—
(a) the control of powers of voting on all questions, or on any particular question, affecting the body corporate as a whole which if exercised would yield a majority of the votes capable of being exercised thereon; or (b) the capacity to exercise, or to control the exercise of any of the following powers, that is to say, the powers of a board of directors of the body corporate, power to nominate a majority of directors thereof, power to veto the appointment of a director thereof, or powers of a like nature;or if he or they could obtain such control or capacity by exercise of a power exercisable by him or them with his or their consent".
I hope the hon. Member will forgive my interrupting him. I think we clearly ought to discuss with this Amendment No. 5, in page 13, line 19, leave out "or materially to influence". No. 55, in line 26, leave out "or materially to influence", and No. 56, in line 29, leave out from "enterprise" to end of line 32.
That would certainly be to the convenience of this side of the House, Mr. Speaker.What we are trying to do is to make clear the powers of a group of persons who shall be deemed to have control of a body corporate. We consider that the definition at the moment is wide open. We do not believe that this subsection deals in any sensible manner with a number of problems, and I hoped during the Committee stage that we would have these points met by the Government. I believe that the Government saw that there was a considerable amount of substance in our point of view. I suggested that it was within the power of a Minister or a number of outside forces to influence a company but that they would have no real control or working power. Indeed, as the Minister will see, we have attempted to spell out in paragraphs (a) and (b) of the Amendment that the exercise of powers here is quite definite and precise. 2.30 a.m. If I may just refer to Amendment No. 53 and those later to line 19 of Clause 7, it is quite obvious here that the words "materially to influence" might well apply to some person who really has got no control or place in that company whatsoever. It may be that my hon. Friend the Member for Southend, West (Mr. Channon), with no control of the company, because he happens to know somebody or happens to live in a certain place, may be able slightly, but in a material manner, to influence the operation. It really is nonsense to apply this to him, if he has no control or power, and that he should be defined as someone "materially influencing" that specific aspect. I am hopeful that with the spirit of co-operation that we may be able at this later hour to engender—perhaps somewhat against the content of a certain Motion on the Order Paper—that the Minister of State may be able to accept the Amendment. It really is quite amazing how much the House is able to achieve at these late hours. An immense amount of co-operation takes place between the Government and Opposition Front Benches. Only the people who are directly interested in the Bill are here, the experts are here, to discuss these particular subjects. Therefore, I am hopeful the Amendment will be accepted.
At this late hour, I will not try to point out to the hon. Member for Reading that, taking this group of Amendments together, the Amendments are defective in drafting. For instance, one of the defects is that Amendment No. 54 refers only to bodies corporate and therefore would not catch a partnership.The important point is that during the Committee stage the Government gave an undertaking that we would look at the words "materially to influence" to see if we could find another form of words that would meet the objections raised in Committee. We have considered this provision very carefully indeed, but we still believe that it is desirable to keep the reference to "materially to influence" for all the reasons that we gave during the committee proceedings. It was suggested during those proceedings that the words "materially to influence" could be interpreted absurdly far. We have been advised by our legal advisers that in their context, the words would not be interpreted in that particular way. They would be applicable only in cases for which they are intended, where a person obtains substantial financial influence in a company although failing to have effective control. We explained in Committee, as the hon. Member will remember no doubt, that we had in mind developments of this sort which had the effect that previously independent undertakings would be liable in future to be directed by a common mind, and if there is to be legislation on mergers it is our view that a transaction of this kind should be open to scrutiny like any other merger in which full control of a company is acquired by another. We have gone into the matter carefully but we have not been able to find words which would achieve the purpose more aptly than those which are in the Bill. I advise the House to reject the Amendment on this substantial argument of policy quite apart from the fact that the drafting is defective.
Clause 8—(Newspaper Mergers)
I beg to move, Amendment No. 61, in page 14, line 42, to leave out "weekly" and to insert "relevant".I think that this is the weekly newspaper, is it not? The Amendment deals with weekly newspapers and arises out of discussion in Committee where we undertook to table an Amendment which would bring weekly local newspapers within the scope of the Bill. We were impressed by the arguments which were advanced by hon. Members on both sides of the Committee and we agreed that if we could possibly find a form of words which would allow us to deal with local weekly newspapers we would do so. This and other Amendments carry out that undertaking.
For the general convenience of the House, might we also discuss Government Amendments Nos. 64 and 65? I think that the Minister of State would agree that they are consequential.
If the House so pleases. It is a trick on the Minister who was allowed to speak to one only, but if it makes no difference, so be it.
I would be lacking in courtesy if I did not express my appreciation to the Minister. It was I who proposed in Committee the Amendment upon which these Amendments are based and which bring local newspapers within the ambit of the new and improved provisions of the Clause. I follow the difficulty which the Minister has had in finding a definition of what we all understand by the words "local newspaper" but the final wording of the Clause is now a little cumbersome, for it reads:
Even at a reasonable hour of the day one has to pause for a considerable time to work out what in heaven's name that means. If, before the Bill goes to another place, a shorter way of expressing the point can be found, it will be enormously for the convenience of anyone who has to work this Measure in due course. It is common knowledge that the Opposition's proposal of this principle and the Government's acceptance of it has caused considerable anxiety in important sections of the Press. For instance, the Thomson organisation is contemplating extending the range of its evening local newspapers. My hon. Friend the Member for Reading (Mr. Peter Emery) and I are familiar with this since we are shortly to be in the area of one which is starting. I do not believe that the House is acting unreasonably in bringing mergers of local newspapers within the ambit of these new and important provisions. We have not time at this hour to go into them properly, but we went into them in some detail in Committee, and I honestly do not believe that the fears of newspaper proprietors in this regard are valid. I hope very much that, as time goes on, they will feel that they are genuinely in the national interest, and I express my gratitude for what the Government have done."For purposes of this section 'newspaper' means a daily, Sunday or local (other than daily or Sunday) newspaper circulating …"
I join my hon. Friend the Member for Wokingham (Mr. van Straubenzee) in thanking the Minister of State for having brought forward these Amendments which give effect to the proposal which we made in Committee. Obviously, he has had difficulty in arriving at a definition, and it takes a little understanding, as my hon. Friend said. Perhaps a better form of words can be found before the Bill goes to another place.When the Minister of State rose to move the first Amendment, he seemed a little puzzled at first about what the Amendments actually did. This shows the problem facing all of us in debating matters as complicated as these at this hour of the morning, and it gives force to the Motion which I sought to move earlier in the evening that we should report Progress. It is not easy to debate matters of this kind at such an hour, and one suffers sometimes a mental aberration which makes it difficult to argue or to follow argument. This is one reason why we should from time to time make certain that we rise at a reasonable hour. Nevertheless we welcome the Amendments, and we hope that the Minister will be as forthcoming on later matters as he has been on this.
Amendment agreed to.
I beg to move Amendment No. 62, in page 14, line 43, to leave out "three million" and to insert "five hundred thousand".This Amendment is consequential.
The change from weekly to daily necessitates a change also in the figure. The figure of 500,000 daily corresponds, if I may put it in that way, to the figure of 3 million which previously appeared in the Bill. Therefore, it is in that sense consequential.
I understand that one could not leave the larger figure of 3 million in the Bill, but just to suggest that it is consequential is slightly to overplay one's hand. A figure had to be decided upon. Were the newspaper proprietors consulted? How did the Government arrive at the figure of 500,000? In considering this matter, it is important that the House should know why the Government decided upon this particular level. I do not think it is fair to say that this is merely consequential. It is not. It is a figure which ought to be established because of the weekly position, and I do not think it is consequential.2.45 a.m. What consultations has the Minister had before settling on this figure of £500,000, and, indeed, is this something which is generally agreed by those people in the newspaper world?
Of course, this is consequential. There is nothing remarkable about it; it is a simple matter of arithmetic and required no consultation with anybody. In case the hon. Gentleman does not understand it, a weekly newspaper is published weekly; that is, on one day out of every six. If one divides 3 million by six, one gets half a million. It is as simple as that.
The Minister of State cannot get away with that sort of reckoning. He has spent much of his own life with newspapers and he knows as well as I do that the relationship between a daily and national circulation and that of a weekly newspaper is not something which should be subject to a rule of thumb assessment of devising a figure for six days and dividing it in the hope of getting a logical answer. It may be an arithmetically correct answer, but it is no answer in logic, and does not meet the point which we are making.The hon. Gentleman said quite frankly that there had been no consultations, and I think that is quite evident. I am aghast to hear that, introducing the weekly newspapers into this Bill, no more consideration was given to them than the making of just a rule of thumb division of an arbitrary figure. Even at this hour, this is highly unacceptable.
Amendment agreed to.
The next Amendment is No. 57, line 43, to leave out "unlawful and".With it, we shall discuss Amendment No. 69, in line 6 to leave out subsection (4).
I beg to move Amendment No. 57, in page 14, line 43, to leave out "unlawful and".I rise more in sorrow than in anger, to move the Amendment, because it would have the effect of removing the criminal sanction from Clause 8 and, indeed, from all other parts of this legislation. My anger is reserved for the fact that we are discussing this new and dangerous provision at a time of the night when it is quite impossible to do it justice. I would set out once again the objections which we have to this innovation. First, it is applied in the face of 17 years' experience of this type of legislation and directly against Section 11 of the Monopolies and Restrictive Practices (Inquiry and Control) Act, 1948, which is specific in saying that
The same is repeated in the Restrictive Trade Practices Act, 1956, many times. It flies against what I thought was the bipartisan—if there had been a Liberal here I would have said "tripartisan"—determination in the 17 years not to imitate the American experience of introducing the criminal law into this part of our legislation. I think it is unnecessary. I see no reason why those who work for, with, by and on newspapers should be singled out in this way. It is quite enough to provide a civil sanction for those who make any sort of attempt to get round the prohibition in Clause 8(1). It is quite enough that a transfer of a newspaper or of newspaper assets without reporting it to the Board of Trade should be void and unenforceable at law in the sense that the contract was unenforceable and that any money paid under it could not be recovered at law by the purchaser and, therefore, there would be a very severe sanction to prevent the purchaser paying such money because in that case the vendor could keep not only the money but also the newspaper. It seems to me that that would be enough. But if that is considered not enough, we have a divesting procedure, which has been provided in the earlier part of the Bill, to force a newspaper proprietor who infringed this provision to cough up what he was not allowed to acquire. We also have the procedure with mergers which could perfectly well be adapted to this situation. The President has, in my opinion, rightly insisted on a procedure relating to commercial and industrial mergers by which they can be held up pending an inquiry. I do not see why newspaper mergers and take-overs should not be subjected to exactly the same procedure, thus avoiding this heavy wheel of the criminal law. The argument in favour of it is twofold. First, there is the argument that once a newspaper is taken over in this way, it cannot be revived—one cannot unscramble the egg—and, therefore, the divesting procedure is really unnecessary, or, rather, inefficient. But that, of course, is true of a fine or a term of imprisonment. One cannot by means of a fine or term of imprisonment cause any more successful divesting than one can by a divesting decree, and if the various sanctions which I have suggested are really enough, as I am sure they are, I do not think that this extra, unique and extraordinary penalty is correct. The second argument is an appeal to authority, the authority of the Royal Commission on the Press. There it is stated, without having been argued, on page 110 in the following words:"No criminal proceedings shall lie against any person by virtue of the making of any order … on the ground that he has committed, or aided, abetted … or conspired or attempted to commit … any contravention of the order."
That is the only place, except for the summary of recommendations at the end, where this is referred to. It is a remarkable assumption, because there is no argument in the whole of the Shawcross Report about it. There is a mere assumption. I cannot believe that if the case had been argued instead of being assumed the Royal Commission would have reached this conclusion. In any event, of course, it was dealing with only daily and Sunday newspapers and in the very first sentence of that paragraph the Commission says:"If as we recommend, breach of the provision is to involve penalties enforceable in the criminal courts, it is important that there should be no room for doubt on the question whether the provision applied."
Later, the paragraph said that the definitions would have to be particularly tight and close throughout the provision if a criminal sanction could possibly be applied. In fact, the definitions have been considerably widened by the inclusion of weekly newspapers and that again is a reason for having second thoughts about criminal sanctions. The matter becomes more complicated, but at this time of night it is difficult to explain the complications, when one considers the number of persons who may be involved in criminal proceedings. Subsection (4) puts"The limitation of the scheme to daily and Sunday newspapers would remove some of the difficulty of defining the subject matter of the transaction."
in peril. This means that secondary parties—clerks, typists and people of that sort—are technically brought within the ambit of this law. Of course, as it stands, and in spite of the Amendments we moved, the person concerned only has to know that a purported transfer takes place. He or she would not have to know anything about circulation figures or anything about a 25 per cent. shareholding, which is what defines a newspaper proprietor with a controlling interest. Nor would he have to know that it necessarily was even a transfer, because a transfer is defined in subsection (5), among other things, as a"… any person who is knowingly concerned in or privy to any purported transfer thereof without the required consent …"
and he might not think that that was transfer of a newspaper at all. This may seem fanciful but it is a fundamental principle of our criminal law that one does not put people in too wide a net of peril even though one never has any intention of prosecuting them. That principle seems to be very considerably breached by this provision and it is one which could be justified only on the ground of extreme necessity. No sufficient justification was advanced in Committee and I hope that the Minister may somehow, in spite of the hour, lucidly explain the need for it."… transfer of assets necessary to the continuation of a newspaper as a separate newspaper …"
I agree with the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) in one respect only—and that is that it is impossible to do justice to this theme at this hour. The theme I should like just to do justice to is the theme that it is absolutely necessary that in the application of this Bill to Press mergers their prohibition should be buttressed by the full rigours of the criminal law. This matter was very fully debated in Committee and I will try shortly to answer the two points raised by the hon. and learned Gentleman.He referred to the Report of the Royal Commission and said, surprisingly it seemed to me, that no reason was given for the very clear statement of the Commission that the breach of the provision should involve penalties enforceable in the criminal law. He said that it was an assumption. On the contrary, it was stated as axiomatic, because it followed upon a very lucid exposition of the way in which this question of the freedom of the press had been applied in the United States. I cannot do better than summarise what is stated in the Report, in paragraph 339, where the closing passage from the judgment of Mr. Justice Douglas is quoted:
3.0 a.m. In other words, when we speak of freedom of the Press we are speaking of the right of the public to free dissemination of the news. We are not referring to the freedom of the Press millionaires in their commercial interest to enter into combinations. I agree that the proposal involves treating the newspaper industry differently from industry in general and that is what we are doing. The Royal Commission says that the reason for that is that the public interest, in relation to the newspaper industry, is different. That is why it is treated differently. As has been pointed out, if there is a newspaper merger it is impossible to unscramble it, and that is why there must be a severe deterrent instrument to prevent that mischief from arising. One does not have an adequate deterrent effect if one merely relies on civil proceedings, nor would a fine be adequate to deter Press magnates from carrying through a merger. That is why, as has been found in America, and as was treated as axiomatic by the Royal Commission, the only way in which the public interest can be buttressed in this respect is if, differently from all other mergers, it has the sanction of the criminal law. For that reason, I must advise the House to reject the Amendment."Freedom to publish means freedom for all and not for some. Freedom to publish is guaranteed by the Constitution but freedom to combine to keep others from publishing is not. Freedom of the press from governmental interference under the First Amendment does not sanction repression of that freedom by private interest."
The Minister without Portfolio rightly stated that it was impossible to do justice to this theme at this hour of the night, and it is clear he has done no justice to it by saying that a fine would not be enough of a deterrent, because that is exactly one of the deterrents he provides in his Bill, in subsection (4), which is one of the subsections we are seeking to delete. Since justice cannot be done to this important theme at this hour, I express the hope that it may be done in another place at a time when justice can be done to it by a sufficient number of persons in another place, with knowledge of this matter, because this debate has become a thin farce.For that reason I do not think we should continue and I beg to ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Amendment proposed: In page 15, line 9, leave out "to" and insert "so to continue".—[ Mr. Jay.]
I rise only to say that it would be discourteous of me not to acknowledge the courtesy of the Minister in giving effect to the Amendment that I moved, not quite in these words, during the Committee stage.
Amendment agreed to.
Further Amendments made: In line 12, leave out "or Sunday" and insert:
"Sunday or local (other than daily or Sunday)".
In line 14, at end insert "or any part thereof".—[ Mr. Jay.]
I beg to move, Amendment No. 66, in page 15, line 20, to leave out "six" and to insert "three".I think we can discuss Amendment No. 67, in line 30 and Amendment No. 68, in line 33 with this Amendment. The effect of the Amendments is to carry out an undertaking, also given in Committee at the request of various hon. Members, to substitute three months for six months as the normal period for consideration of a Press merger, as opposed to a non-newspaper merger. As a result of these Amendments, in the case of a non-newspaper merger the normal period will be six months with a possible extension to nine months and in the case of a Press merger it will be three months with a possible extension to six months.
Even at this late hour, I think it only right and proper that we should thank the Government for considering the point. Although they would not accept our Amendment in exactly this form when we moved it in Committee, they have now seen fit to implement our proposals. As the President of the Board of Trade will realise, I felt strongly about this in Committee. I am grateful to the Government for seeing reason, and we will be delighted to support them in any Division which they might want to call.
Amendment agreed to.
Further Amendments made: In page 15, line 30, leave out "six" and insert "three".
In line 33, leave out "six" and insert "three".
In page 16, line 37, leave out from "and" to end of line and insert:
"in subsection (1) above, the reference to relevant circulation is a reference, in relation to a newspaper published on any given day, to the circulation of that newspaper as published on that day, and the reference to average relevant".—[Mr. Jay.]
New Schedule—(Procedure Preliminary To Laying Drafts Of Orders Referred To In Section 3(10)(A) Of This Act)
1. Where the Board of Trade propose to lay before Parliament a draft of an order under section 3 of this Act containing, amending or revoking provisions made for any purpose mentioned in subsection (5) of that section, they shall cause notice of their intention to do so to be published in the London Gazette, the Edinburgh Gazette and the Belfast Gazette, and in two or more daily newspapers, not being local newspapers, and they shall not lay a draft of the order until the expiration of the period of forty-two days beginning with that on which the publication of the notice in accordance with this paragraph is completed.
2. A notice under the foregoing paragraph shall—
3. The Board shall consider any representation that is duly made with respect to the draft order and is not withdrawn, and, after the expiration of the said period of forty-two days, may lay the draft order in the form in which it was made available as stated in the notice in compliance with paragraph 2( c) above, or in that form subject to such modifications as appear necessary to the Board to ensure that the rights and interests of persons likely to be affected by the provisions of the order are so adjusted as to secure an equitable distribution of any burden or benefit ensuing from any provision of the order.—[ Mr. Jay.]
Brought up, read the First and Second time, and added to the Bill.
Schedule 1—(The Monopolies Commission)
Amendments made: In page 20, line 10, at end insert:
"but the Board may from time to time by order made by statutory instrument increase the maximum number of members to such number as the Board think lit".
In line 17, leave out from "years" to end of line 18 and insert:
"(exclusive of any previous service of his on the Commission)".
In line 27, at end insert:
(4) A statutory instrument made under this paragraph shall be subject to annulment in pursuance of a resolution of either House of Parliament.
In page 23, line 44, leave out from "place" to end of line 46.
In page 24, line 42, leave out paragraph 12.—[ Mr. Jay.]
Amendment made: In page 26, line 7, column 3, leave out "Section 10(2)" and insert:
"In section 10, in paragraph (e) of subsection (1), the word 'either' and the words from 'or (ii) not earlier than' to the end of the paragraph; and subsections (2)"—[Mr. Jay.]
I beg to move, That the Bill be now read the Third time.At this stage I shall say only that this is a Bill which has been broadly supported by all parties in this House, on Second Reading and, in general, throughout the subsequent proceedings. It has certainly been very fully argued, both in Committee and on Report, and I pay tribute straight away to the contributions made from all quarters of the House. Briefly, what the Bill does is to strengthen and sharpen the Monopolies Commission. It gives the Government power, on the advice of the Commission, to check those few mergers and take-overs which are found to be against the public interest. All this is, of course, permissive. It is not a Bill to condemn or stop monopolies or mergers. It is a Bill to ensure that public control is substituted for pure market forces in deciding in a certain number of cases whether they go forward or not. I do not know how the impression got abroad that because the Government introduced this Bill we are, therefore, arguing on the assumption that all or most monopolies or mergers are bad. I made it perfectly clear, I thought, on Second Reading, that this was not so. I said:
as I said again today—"The Bill is conceived in the belief, which I think is common to all parties,"—
But because we are often impressed by the argument in favour of size, of the economies of scale, and mass marketing, in the present competitive world, it certainly does not follow either that size is always beneficial or that mergers are always desirable. Some mergers, like most restrictive practices, are wholly or mainly designed to restrict competition, and that, in my view, is bad not only for the consumer but for the economy as a whole. Foreign take-overs have been mentioned. I should like to make it clear—I do this in response to an hon. Member opposite who asked me a question at rather the wrong moment—that the Government will, of course, always act in accordance with international law, including any treaties to which we are parties. I hope that soon after this Bill becomes law the Commission can be rapidly expanded, that a number of new references can be made to it, and that its work may be thus accelerated, as the whole House wishes. I have recently received from the Commission its Report on retail sales of petrol and this will be published as soon as possible. I am now referring—and the hon. Gentleman mentioned this today—rayon and also the supply of flat glass and two other issues to the Commission so that its work can continue uninterrupted. We mean to press on as quickly as we can. I shall, therefore, be inviting people with qualifications and experience to accept appointments on the enlarged Commission, and on the standing panel for Press mergers. I am grateful, therefore, for the contributions which hon. Members on both sides have made to improving the Bill, and, for the reasons that I have given, I believe that it will give a powerful stimulus to keener competition, and therefore greater efficiency in British industry."that neither monopolies nor mergers are always bad. Sometimes they are and sometimes they are not."—[OFFICIAL REPORT, 29th March, 1965; Vol. 709, c. 1207.]
Apart from one question which I posed to the right hon. Gentleman, which seems a good many hours ago, this is my first intervention today, although, apart from attending some meetings in the afternoon, I have sat here throughout most of the debate.Listening to the debates, it seemed a long time since I spoke first for the Opposition when we considered the matter on Second Reading. I knew at that time that I was likely to be concerned with certain aspects of the Finance Bill. I did not serve on the Committee, and I therefore decided to take no part in the Report stage, and I am pleased that I did not, because it has been apparent to me that my hon. Friends know much more about this subject than I do. The issues, as I have listened to them during the course of today's proceedings, seemed to have a certain familiarity with the issues which we debated on Second Reading, although the arguments seem to have changed somewhat. The matters on which we differ are well known to us all, so I need not go over them. Generally speaking, we on this side of the House welcome the Bill. I thank the right hon. Gentleman and his colleagues for the unfailing courtesy which they have shown, at any rate during the course of today's proceedings when I have been present. I also thank my hon. Friends for what I am sure the right hon. Gentleman will agree—indeed he said so—has been very constructive criticism. It is unfortunate that the Report stage had to be taken, in part at any rate, in the middle of the night. This is due to the mismanagement of the Government's programme. It is not the responsibility or the fault of Ministers from the Board of Trade, and therefore I can in all sincerity conclude by wishing them and of course you, Mr. Deputy-Speaker, a speedy return home.
Question put and agreed to.
Bill accordingly read the Third time and passed.
Import Duties (Fatty Alcohols)
I beg to move,
The effect of the Order is to increase from 10 per cent. ad valorem to 20 per cent. ad valorem the full rate of import duty on certain forms of fatty alcohols as defined in more technical terms in the text of the Order. I am sure that the House will feel that this is a highly invigorating subject to bring to its attention at this hour. I shall try not to expend too much impassioned oratory on it, but I think that I should explain why the Order is considered to be necessary. The alcohols concerned are used mainly for the manufacture of detergents of a type that has only recently been developed on a large scale. I think that the House will be aware that traditional detergents produce a good deal of lather and that the persistence of their foam when passed through sewage works and discharged into rivers has given rise to very considerable inconvenience and anxiety. Hon. Members will be familiar with photographs in the newspapers of foam covering our rivers from bank to bank, and I recall reports from the United States of water coming foaming from the taps in people's homes, although I have not heard of any such incidents in this country. Nevertheless, this subject has given rise to considerable concern. The trouble is that this detergent foam, that which arises from the detergents currently in use, is not easily destroyed by bacterial action, or to use what is the technical term, is not bio-degradable as is foam from soap, so that it persists for a long time instead of disappearing after the detergent has been used and has been carried away in the sewage system. There is a Standing Technical Committee on Synthetic Detergents, I understand, under the auspices of the Ministry of Housing and Local Government which is currently examining the problem, as indeed it is being examined in other countries. Certain so-called soft detergents, to give an ordinary layman's term—that is detergents which quickly lose their foam when discharged into rivers or through sewage systems—are known but, until recently, the cost of producing them has been too high for them to be competitive, except in special fields such as the production of shampoos and liquid detergents. Some two years ago a British firm, appreciating the growing need for such detergents and anticipating an increasing market for the materials from which they are made, invested considerable sums in setting up modern plant to produce the fatty alcohols which are the subject of the Order we are discussing. This plant—and I think the firm is to be congratulated on its initiative in tackling what is undoubtedly a problem—took advantage of technological advances which made it possible, given large-scale production, to produce fatty alcohols suitable for the manufacture of these so-called soft detergents at a cost which rendered them able to compete with the older types which produce persistent foam. The British firm found that it had to face severe competition from overseas. There are two reasons. Almost simultaneously with the establishment of the British firm, a new German firm set up in the same field, whose capacity, taken together with that of the existing German producer, was many times in excess of the requirements of the German domestic market. I have been given some figures but I will not weary the House. In these circumstances, it was not unnatural that our German competitors should make exceptional efforts to capture the United Kingdom market, and should offer goods at prices cut to the lowest possible level—prices which the British manufacturers have to meet in order to compete in their own home market, and also in export markets in third countries. Secondly, the British firm suffers a further disability in as much as it has higher costs than its foreign competitors, because it has to pay more for its raw materials. These are primarily natural animal and vegetable oils and fats which in this country are dutiable at rates of 10 per cent. to 15 per cent. ad valorem, giving very valuable preference to Commonwealth suppliers, whereas in other countries no import duties or very low ones are payable. In Western Germany the duty ranges from only 0·6 per cent. to 1·8 per cent. ad valorem. There is a further factor which I think justifies this Order. That is that the British firm is located in a development district and it employs one-fifth of the male workers in the town concerned. Further, subsidiary occupations depend on the prosperity of the firm and its employees. The position is that a new industry has been established at considerable initiative and foresight on the part of a British firm and at considerable cost, to make a product for which there should be a growing demand throughout the world. If successful, it may be expected to make a valuable contribution to our balance of payments, both by exports and by import saving. This industry is socially desirable both because of the contribution it can make to eliminating pollution of rivers and maintaining a pure water supply, and also because it gives much-needed employment in a development district. The enterprise was, however, threatened by great pressure from imports at particularly low prices, while at the same time the British firm had to overcome the initial obstacle of paying more for its raw materials than do foreign competitors. In those circumstances, after the most careful inquiry, we have concluded, as I am sure the House will conclude, that the industry ought to be given tariff protection at a level which would offset the disadvantage of relatively high import duties on its raw materials. This has been done by the Order, which I commend to the House. I have explained that the tariff is not bound under G.A.T.T. We have no international obligations against it. While it may appear inconsistent in a sense with our objective in the Kennedy Round to increase any tariff at this time, there must always be some exceptions, and we believe this tariff to be truly of an exceptional character in the interests of the domestic economy. The volume of trade involved, I am advised, is small, and as our exceptions list in the Kennedy Round is much the shortest of any of the main industrial countries, nobody can say that by this action we are impeding the widest possible settlement in the Kennedy Round. In all the circumstances, I commend the Order to the House.That the Import Duties (General) (No. 4) Order 1965 (S.I., 1965, No. 1170), dated 24th May. 1965, a copy of which was laid before this House on 28th May, be approved.