Michael Howard – 1985 Statement on Merger of Scottish and Newcastle Breweries and Matthew Brown

The statement made by Michael Howard, the then Parliamentary Under-Secretary of State for Trade and Industry, in the House of Commons 13 November 1985.

With permission, Mr. Speaker, I should like to make a statement on the report of the Monopolies and Mergers Commission on Scottish and Newcastle Breweries and Matthew Brown which was published on 12 November. The Commission has concluded that, while the merger could not be expected materially to benefit the public interest, there are not sufficient grounds for concluding that the proposed merger may be expected to operate against the public interest. In the absence of an adverse public interest finding by the Commission, my right hon. and learned Friend the Secretary of State has no powers under the Fair Trading Act 1973 to intervene to prevent that merger, or to impose any conditions on it.

Following press reports at the end of last week, it has been suggested that there may have been a leak of confidential information in advance of the report’s publication. An investigation is under way to establish whether there has been a leak.

My attention has been drawn to the existence of a letter from my right hon. Friend the Secretary of State for Scotland, about which he has written to the hon. Member for Blackburn (Mr. Straw). That, together with all other material which may be relevant, will be considered in the context of the investigation.

Mr. John Smith (Monklands, East)

Is the Minister aware that this is an extremely serious matter because it reflects on the capacity of the Government and agencies responsible to them to hold commercially confidential information until the appropriate time for a public announcement? In those circumstances should not the Secretary of State for Trade and Industry who is responsible for the whole Department have come to the House to make the statement, instead of a relatively recently appointed junior Minister?

Is the Minister aware that it is a little more serious than information “perhaps” having been leaked? It is well known that on 8 November, some days before the public announcement was made, newspapers carried stories predicting, not what the result of the Commission might be, but the result in terms which showed clearly that they knew the contents of the report, particularly the recommendation to which reference has been made.

Is the Minister further aware that there was a significant movement of shares, whereby the shares of the company in question moved from 478p to 520p—an increase of 42p—on the information being made available fairly widely through the press? As a result of that, is it not clear that an investigation in considerable depth should be held—I welcome the fact that an investigation is being undertaken—with a full disclosure of what it reveals? Will the Minister guarantee that that will be done?

Furthermore, should not the Government consider whether Ministers and officials, whether of Departments or agencies responsible to them, fully understand the important rules which exist about commercial confidentiality, and should they not take urgent steps to ensure that if those rules are understood, they are also enforced? It is disgraceful that a Government are unable to hold commercially confidential information as they are expected to. If they cannot do so, they are breaching an important trust to the British people.

Mr. Howard

It is of course a serious matter, and a serious investigation will take place. Of course that investigation will be in depth, as the right hon. and learned Gentleman suggests. All the matters to which he has referred will be carefully and fully investigated in that inquiry. It has not, however, been the practice of this or previous Governments to publish reports of internal inquiries and I therefore cannot give him the guarantee of publication which he requests.

Mr. D. N. Campbell-Savours (Workington)

Is not the most remarkable aspect of this affair the letter which the Minister sent to me yesterday in which he said:

“Although Matthew Brown have no present intention of closing the Carlisle and Workington breweries, the jobs there could not be regarded as totally secure in the longer term even if Matthew Brown were to remain independent.”

Is the Minister aware that that is simply not true? I have correspondence in my possession from Matthew Brown giving me almost indefinite assurances about the future of the brewery in my constituency.

Since Matthew Brown made £7 million profit last year, until the takeover was approved by the Monopolies and Mergers Commission, the brewery at Workington was as safe as the Bank of England and the hundreds of jobs directly and indirectly dependent on that industry were absolutely secure.

Is it not clear that the Minister himself has given the green light to Scottish and Newcastle to close my brewery? He is encouraging Scottish and Newcastle to take that decision. Should he not resign because he has acted irresponsibly?

Finally, may we have an assurance from the Secretary of State for Scotland who leaked—and it was his leak which led to speculation on the Stock Exchange and the rise of 50p in the price of these shares, whereby City slickers have lined their pockets? It is for him, too, to resign. He has offended the House, he has undermined the Monopolies and Mergers Commission and he has done a disservice to the company Matthew Brown which has made an honourable contribution historically to my constituency.

Mr. David Maclean (Penrith and the Border)

Mr. Speaker, on a more reasonable note may I ask my hon. and learned Friend—

Mr. Campbell-Savours

Answer.

Mr. Speaker

I must say to the hon. Gentleman that the question was a bit long so I was taken in myself. I apologise and call the Minister to answer.

Mr. Howard

In the letter which I wrote to the hon. Member for Workington, I did not express any personal views, but I recited the conclusions reached by the Monopolies and Mergers Commission. That report has been published and is available for all to see. I invite those who wish to test the hon. Gentleman’s wild allegations to refer to that report.

Mr. Maclean

May I say in all reasonableness that many of my constituents believe that the conclusions by the Monopolies and Mergers Commission are at variance with the evidence presented to it? In view of the inquiry that my hon. and learned Friend announced today, does he agree that it is better to put the whole matter on ice and to have a fresh submission to the Monopolies and Mergers Commission?

Mr. Howard

No, Sir. The commission’s report is available and I do not wish to make any further comment on it.

Mr. Jack Straw (Blackburn)

Will the Minister explain why he skated so gingerly over the letter which the Secretary of State for Scotland wrote to a member of the public in Leyland, Lancashire, last Friday, four days before the publication of the report, in which he disclosed the contents of the Commission’s report and the Government’s decision upon it? I do not impugn the integrity or the honour of the Secretary of State, but does not the fact that he sent that letter disclose a degree of incompetence and carelessness within the Scottish Office and the Department of Trade and Industry which is unacceptable when handling market-sensitive information?

May I press the Minister on the nature of the investigation and its publication? There have been few examples of market-sensitive information being leaked, but when that has happened it has sometimes led to a full tribunal. Therefore, the precedents for the widest possible inquiry, including into share profiteering, are very good. I urge the hon. and learned Gentleman to ensure that the investigation is wide and that its results are published.

Mr. Howard

The letter to which the hon. Gentleman referred will be considered in the investigation. It will be a thorough one, and as wide as is necessary to discover the facts. Unlike the hon. Member for Blackburn (Mr. Straw), I would not wish today to prejudge or anticipate the results of that inquiry.

Mr. Ron Lewis (Carlisle)

Is the Minister aware that there is very strong opposition in Cumbria, among all the political groups, to the decision to allow a takeover? Cumbria’s unemployment problem is grim, and despite everything that the Minister has said today we expect that in less than two years the breweries will be closed. Will he stand on the sidelines and act as Pontius Pilate, or will he do something about it?

Mr. Howard

All those matters were drawn to the attention of the commission, which is an independent body. As I said at the outset, my right hon. and learned Friend the Secretary of State for Trade and Industry has no power to intervene to prevent a proposed merger under the Act in the light of the conclusion of the commission in its report.

Mr. Nicholas Winterton (Macclesfield)

While I warmly welcome the internal inquiry that will look into the unfortunate leak, may I support the request made by my hon. Friend the Member for Penrith and the Border (Mr. Maclean), bearing in mind the mass speculation from which many people—nothing to do with the brewery, but the city slickers described, quite rightly, by the hon. Member for Workington (Mr. Campbell-Savours)—have made a great deal of money?

Will my hon. and learned Friend consider setting aside the conclusion in the report of the Monopolies and Mergers Commission, and ask it to consider the matter again? Will he bear in mind the fact that many Conservative Members Toggle showing location ofColumn 572are deeply unhappy about and strongly opposed to a decision that will undoubtedly wipe out an important private brewery in the north-west of England?

Mr. Howard

I recognise the unhappiness to which my hon. Friend referred. However, the legislation pursuant to which the commission operates has been in existence for some considerable time, under Government of all political complexions. In this instance, it has been operated in the usual scrupulous manner, with all the procedures being properly followed. The Secretary of State has no power to intervene, for the reasons that I have given.

Mr. Robert Maclennan (Caithness and Sutherland)

Does the Minister recognise that, now that the finger of suspicion has been pointed at a Cabinet Minister, a number of public authorities and civil servants, it would be wholly inappropriate merely to conduct an internal inquiry, however wide-ranging? Is it not now necessary to ensure that a completely objective inquiry is conducted, by someone outside the public service?

Mr. Howard

No, I do not accept for one moment that a thorough internal investigation will not be objective. It will identify and ascertain all relevant facts relating to the matter.

Mr. Ivan Lawrence (Burton)

Is my hon. and learned Friend aware that there is widespread concern that smaller breweries are being swallowed by larger breweries, a process which may not be in the public interest?

If the Government do not have powers to overrule the decision of the Monopolies and Mergers Commission, will my hon. and learned Friend seriously consider taking powers to give the Government of the day some right to take action if, in the political of social interest, it is thought necessary to do so?

Mr. Howard

I do not think that it would be wise to consider that aspect of the matter in the light of one case. However, it is my right hon. and learned Friend’s intention to review competition policy generally next year. These matters will be taken into account in the context of that review.

Mr. Dennis Skinner (Bolsover)

Is the Minister aware that the mass of the public will view this matter as one where a Minister has managed to tip off certain favoured people with information to which the remainder of the population is not privy? [HON. MEMBERS: “Disgraceful.”] As a result, will not many people make a financial killing? The Minister then comes to the Dispatch Box and blithely says that, instead of a proper public inquiry, the matter will be dealt with either by self-regulation or an internal inquiry.

I put it to the Minister that, if someone in a betting shop had managed to land a big coup on the basis of backing a string of winners after they had passed the post, that would be a matter for the Attorney-General, the fraud squad and all the rest. Why does that not apply also to people in the City?

Mr. Howard

The investigation into the facts of the matter will be thorough. I have nothing to add to what I have already said.

Mr. Piers Merchant (Newcastle upon Tyne, Central)

Is my hon. and learned Friend aware that, despite the views of some hon. Members, there are areas in which the findings of the Monopolies and Mergers Commission will be welcome? They include Newcastle, where people have wide experience of the Scottish and Newcastle operation and are aware that its reputation and expertise will enable it to run Matthew Brown efficiently and effectively.

Mr. Howard

I note what my hon. Friend said. No doubt many representations to that effect were put before the commission.

Mr. John Ryman (Blyth Valley)

I wonder whether I could ask the Minister to give a sensible reply to my question? Although it is true that the Secretary of State cannot interfere with the recommendation of the Monopolies and Mergers Commission, does the hon. and learned Gentleman agree that the Secretary of State is under no obligation to accept that recommendation? He can accept or reject it.

Mr. Howard

No, the hon. Gentleman has not accurately summarised the effect of the legislation or the powers of my right hon. and learned Friend. Where the commission concludes that a merger is not likely to be against the public interest, my right hon. and learned Friend has no power under the Act to prevent it from taking place.