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Company Mergers

Volume 982: debated on Monday 31 March 1980

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asked the Secretary of State for Trade what annual increase in company mergers he estimates will result from his decision to lift the assets threshold from £5 million to £15 million as a criterion for referral to the Monopolies and Mergers Commission.

I would not expect any increase in the number of mergers which raise significant public interest issues as a result of raising the assets threshold. All mergers which create or enhance a one quarter share in any market will continue, regardless of their size, to fall within the scope of the legislation.

I thank my right hon. Friend for that reply. Now that my right hon. and learned Friend the Chancellor of the Exchequer has eased the tax obstacles, will my right hon. Friend give added emphasis in future to a policy of de-merging in an attempt to stimulate our sluggish and over-concentrated economy?

I am very keen to enable British industry to—if I can use the frightful word that I coined—de-merge as easily as it merges. That is one of the principles that underlie the intentions of my right hon. and learned Friend the Chancellor in the Finance Bill.

Will my right hon. Friend assure the House that he will make certain that industry understands that the economies of scale are often nothing like as great as the diseconomies of scale, and that, rather than increasing takeovers, he will do what he can to encourage small and medium-sized industries, which are usually good and beautiful?

I agree with my hon. Friend that the history of the mergers mania in the 1960s is not a happy one. I think that many of the very large corporations that were created then have proved to be a failure. I believe in a firm mergers policy within restrictive practices policy generally. We intend to keep it going.

In considering further reviews of competition policy, will the right hon. Gentleman make it easier for the commission to recommend the breakup of a monopoly when it examines it and finds it to be against the public interest?