Amendments Nos. 1 and 6 are related and may be taken together.
Mergers, Take-overs and Monopolies (Control) Bill, 1978: Committee Stage.
SECTION 1.
I move amendment No. 1:
In page 3, subsection (1), to delete lines 25 to 29, and substitute the following:
"(a) a society, including a credit union, registered under the Industrial and Provident Societies Acts, 1893 to 1971,
(b) a society registered under the Friendly Societies Acts, 1896 to 1977, and
(c) a society established under the Building Societies Act, 1976; or".
The purpose of these two amendments jointly is to put building societies in the same position as industrial and provident societies and friendly societies and to make them subject to the controls proposed in the Bill. The Building Societies Act, 1976, does not give the registrar the necessary powers to prevent a merger which would be undesirable or a take-over of a building society which would be undesirable. If the various regulations set out in that Act are complied with, the registrar has no discretion but to register a merger or a take-over of such societies. The phraseology used in that Act is not "merger or take-over" but "union of societies or transfer of engagements" which amounts to the same thing. I think the House would agree it would be desirable in the public interest that unsatisfactory mergers or take-overs of societies such as this should be avoided in the same way as the Bill applies to companies, friendly societies and industrial and provident societies. In the normal course of business, there will be many unions or transfers of engagements as between building societies which would be desirable and would be encouraged by the registrar and by me. Indeed, some of these have happened in recent years and no doubt will continue to happen in the future.
We have no objection to this amendment.
We have no objection. We think it is a useful amendment and we accept it.
Amendment agreed to.
I move amendment No. 2:
In page 3, subsection (1), line 39, after "basis" to insert ", but does not include any enterprise at least 90 per cent. of whose output is exported from the State or any enterprise at least 90 per cent. of whose output comprises components for products which are exported from the State".
This amendment is self-explanatory. Some concern was expressed about the effect of the inclusion of totally export-orientated companies in this Bill and some organisations who made representations to me suggested that the possibility of such companies being controlled by the Bill or being regarded as a potential monopoly in the Irish market might have a detrimental effect from the industrial promotion point of view.
In view of the fact that these companies are not selling in the Irish market for the most part. I thought it as well to amend this definition of "monopoly" at the end of page 3 by adding these proposed words to it which would have the effect of excluding companies manufacturing here, 90 per cent of whose output is exported, or 90 per cent of whose output comprises components for other further manufactured products which, in turn, are exported from the State. The output of these companies would not affect the internal market situation in Ireland. For that reason I do not think it is necessary that they should be included within the Bill. In view of the possible disincentive effect of technically classifying them as a monopoly—a disincentive effect from the industrial promotion point of view —it is as well to exclude them and I hope the House will agree to that approach.
We certainly would agree with that, but the fact that the Minister has seen fit to introduce this good exemption in favour of companies of this kind leads me to ask him whether he would not consider a string of other such exemptions? My feeling about this Act is that it is not really dealing with the kind of enterprise at which it is principally aimed. There are a couple of kinds of enterprise particularly in mind and in order to catch these kinds of enterprise, which I accept it is proper and right to do, the Bill is so framed as to be a potential nuisance and millstone to a very large number of other enterprises. I am glad that the Minister is excepting by this amendment enterprises which are very largely export oriented. That leads me to wonder whether he might think of recasting the Bill in such a way as to relieve the apprehension of a very large number of enterprises of all kinds, the mergers of which might be beneficial even though they are not so heavily export oriented as the ones envisaged in the amendment. However, I certainly accept this amendment.
In view of the major amendment which the Minister has tabled and the rather tentative manner in which he has explained the reasoning behind the amendment, I should be glad if he would elaborate. I, too, have received representations along the lines of the amendment which the Minister has introduced. One might ask why the amendment should stipulate 90 per cent. What is the rationale behind that? It is conceivable that a company can set up in Ireland and reexport and they can be in a substantial monopoly situation, even in the export field. I am a bit concerned with the definition here. One will have some difficulty in policing it. The Department will have to make sure that 90 per cent of a company's output is exported.
By and large the amendment is unsatisfactory. One can see the gist of the Minister's intention. In my relatively limited knowledge of this field, I have not seen similar domestic legislation relating to mergers, takeovers and monopolies. I do not think one would find it in UK or American structures. What were the views of CTT and the IDA on this issue or is this simply a response to a particular comment? There is need for greater elaboration. We have quite a few such companies here and, while I have not any particular objection to their not being given the exemption, it is in the national interest that there should be more elaboration on why the change of heart came about.
This amendment deals with the definition of a monopoly. The Bill proposes to extend the powers which I have in relation to monopolies beyond the powers already contained in the Restrictive Practices Act, 1972 by giving power here in certain cases and subject to a great many safeguards and delays, including the necessity to legislate through this House, the power to break up a monopoly. Monopolies would be broken up by me or any other Minister only as a result of the fullest inquiry and my being satisfied and the Oireachtas being satisfied that the monopoly was not in the public interest and that it had undesirable consequences for the Irish consumer.
In the case of many companies which are here now and which I am glad to say will be establishing here in the years to come, if their virtually exclusive interest is in markets outside Ireland and if they are selling the great bulk of their output outside this country, then they have no significant effect on the Irish public interest, though many of them might be the sole producers in Ireland of the goods they are selling. I do not see any point in seeking to control them. The point of controlling monopolies is to see that the Irish market is not distorted or abused in any way by the holder of a monopoly. These companies would not affect the Irish market because the great majority of them do not sell anything on the Irish market.
Rather than put the percentage figure at 100 per cent, I thought it fairer to put it at 90 per cent. There are some companies which sell a small proportion of their output here and it would be wrong to catch them simply for a small percentage. It would exclude from the Bill about 90 per cent of the companies about which we are talking. These companies are in the vanguard of our job creation programme and have been for some time in the past and will be in the future. The IDA and CTT welcome this amendment. The figure of 90 per cent is the fairest one that we can arrive at in the circumstances, bearing in mind the various interests concerned.
Amendment agreed to.
I move amendment No. 3:
In page 3, subsection (1), line 39, after "basis" to add "but shall not include any enterprise, or any two or more enterprises under common control, which is or are the sole user or users within the State of any material produced within the State".
The purpose of this amendment is to put it to the Minister that, where an enterprise absorbs the entire output of raw material or processed material in the country and is in that situation not in consequence of having destroyed competitors but because it was never in a different situation, where its appearance on the Irish industrial scene was explained only because of the availability here of a product either raw or processed which would not otherwise have been exploited, it is technically a monopoly but not in the potentially detrimental sense of dominating the market and keeping other people from doing business. In an instance of this sort the exclusion of such an enterprise from the provisions of this Bill might be appropirate.
I am not certain that I fully see the point of the amendment. I am not saying that in any derogatory way. It seems to me, if I understand Deputy Kelly correctly, that the great majority of the kind of cases which he mentions in this amendment have been covered by the previous amendment which the House has accepted. The only difference I can see is that this would apply to the sole users of a particular commodity on the home market.
Yes.
I do not think it would be right to exclude such companies from the jurisdiction of the Bill. They are not in a fundamentally different situation to the companies we talked about in relation to the previous amendment, inasmuch as their activities could well be the cause of difficulties for the consumer and might be seen in certain circumstances as being contrary to the public interest here. There would not be very many companies in this situation, but such as there are are precisely the kind of companies in respect of which one should have the power to control a monopoly, if I and the Oireachtas considered that the monopoly was not in the public interest.
I was aiming at a purchasing monopoly, not a selling monopoly. I was making the point that the purchasing monopoly—a situation that has been achieved not by driving competitors out of the market but because there never was anybody else in the business on the purchasing side— is not a monopoly in the pejorative sense of that term, namely, somebody who can dictate terms, thus creating unfavourable conditions of business for somebody else. When I put down my amendment I had not seen the Minister's amendment No. 2. I am inclined to agree that the kind of enterprise I have in mind which absorbs the total output of a concern is equally likely to be the kind of enterprise that is covered by amendment No. 2. I should like the permission of the House to withdraw my amendment and shall see if I can contrive another amendment for Report Stage if that is considered justified, which will describe in a more acceptable way the kind of enterprises I have in mind, if they exist in substantial numbers or if there is a prospect of this, and which are not exempted by amendment No.2.
Amendment, by leave, withdrawn.
Amendment No. 4 is in the name of Deputy Kelly. Amendments Nos. 13 and 14 are related and they may be discussed together.
They are not the only ones that are related.
Amendments Nos 4, 13 and 14 may be discussed together.
Amendments Nos. 16, 17 and 18 would appear to come into the same category.
It appears that Nos. 7 and 16 may be taken together.
I move amendment No. 4:
In page 3, subsection (1), after line 39, to insert the following: "‘nett assets' means gross assets within the State less current liabilities, loans and loan capital, taxation (including deferred taxation), repayable grants, and any other deferred liabilities;"
This hinges on the notion of gross assets in the first subsection of section 2. I put it to the Minister and the House that the gross assets situation in an enterprise that will be brought under the control of this measure may not give a fair picture of the economic power of that enterprise in that the gross assets may be scarcely capable of covering the liabilities. It would be more reasonable and rational in order to bring under the control of the legislation enterprises of a certain economic weight, which is what the Minister is aiming at, if the gross assets were net assets. It was in connection with the amendment which I had envisaged in section 2 (1) that I proposed a definition in the definitions part of the Bill, to define nett assets in such a way as to exclude the conventional liabilities that would reduce the actual value of the enterprise.
I am not disposed to accept this amendment. I see the point the Deputy is getting at but I consider that gross assets reflect a reasonably true picture of the strength of a company and that to employ the term "nett assets" would have the effect of reducing considerably the scope of application of the Bill and would be tantamount to increasing the threshold in relation to assets that are set out in subsection (1) of section 2.
An examination of the definition which Deputy Kelly now proposes shows that nett assets would approximate to share capital and reserves and could be as much as 50 per cent smaller than the amount that would be concerned if we were to use the term "gross assets". The chapter of the United Kingdom Act dealing with fair trading concerned with merger control includes a provision for the valuation of assets taken over. However, that definition could be described as a definition of capital employed in the enterprise and is more in line with the use of gross assets rather than nett assets. In the circumstances, the proposal to substitute the word "nett" for "gross" and the consequential suggestion that nett assets should be defined should not be accepted by the House. If the House were to take the view that an even greater number of companies should be excluded from control of this Bill, the appropriate place to press that point would be on the figures contained in subsection (1) of section 2.
It might be the case that one could argue the same point on the other amendment. No matter how high one places the money threshold one is describing a situation in which a company if they have become heavily indebted are likely to be that much more heavily indebted. If the gross assets are that much higher it may well be that the liabilities will have climbed up in the same proportion.
As I understand it, the object of this Bill and that of the previous Bill in 1974 and the measure that was mooted in 1972, is to protect the public against the effect of concentration of economic power in too few hands. The machinery by which that is to be effected is to bring under the control of a measure such as this associations of big concerns. Surely the power of such concerns is measurable not merely by the amount of gross assets but by the amount of nett assets. To bring under the control of a measure such as this concerns where the thresholds, in any case, are arguably too low, and to discount in doing so the amount to which an enterprise may be indebted is not a rational way of doing business. Even if the Minister is not disposed to accept this, I think the definition section should contain some definition, even if it is only of gross assets. The definition section is defective in not defining some of the terms that are central to the use of the Bill.
I could not agree with the Minister that it is irrelevant to the purposes of the Bill or that the same point can be dealt with adequately by proposing to raise the threshold. No matter how big a firm may be on the money threshold level, the possibility that liabilities will be catching up—to the 50 per cent mark, as mentioned by the Minister—moves up in proportion. I suppose this is a question of principle. I cannot argue the point with too much emphasis because our own Bill was at fault in the same direction, if it is a fault. However, as the thresholds in any case are arguably too low, they are now going to reach a point where relatively small businesses—ones that are not visible in European terms under the expression "big business"—are going to find themselves brought in. This amendment is one of a pattern which I put down with the intention of relieving relatively small concerns from the control of this measure.
I have some reservations about the criteria introduced by Deputy Kelly. On Committee Stage there has been some dilution of the Bill and Deputy Kelly is proposing a further dilution. The view of my party is that the net impact of the Bill in the long term will be seriously affected. For that reason I think Deputy Kelly would be unwise to dilute the Bill any further.
Amendment, by leave, withdrawn.
Amendment No. 5 in the name of Deputy Kelly and amendment No. 8 in the name of the Minister are related and may be discussed together.
If amendment No.8 were accepted by the House I do not think amendment No. 5 would arise because they are exactly the same point.
I want briefly to explain that due to a clerical error on my part my amendment No. 5 is not exactly what it was intended to be. I intended an expansion of the word "announcement". It does not make any sense as it stands. Unfortunately, I put my amendment in without having introduced that expansion. I want to apologise for the latter ten or 12 words of the amendment. In view of the Minister's amendment about which I did not know when I put this amendment down I will ask for leave to withdraw amendment No. 5.
Amendment No. 5 not moved.
Amendment No. 6 was discussed with amendment No. 1 and agreed.
I move amendment No. 6:
In page 4, subsection (1), to delete lines 9 and 10.
Amendment agreed to.
Amendment No. 7 in the name of Deputy Kelly and amendment No. 16 are related. We will take amendments Nos. 7 and 16 together.
Did you say when we were discussing amendment No. 4 that it was related to amendments Nos. 13 and 14?
Yes.
We have not dealt with amendments Nos. 13 and 14 yet.
That is not the Chair's fault. The three were taken together.
I query that immediately. I did not take us to have discussed the three amendments together.
They both refer to the definition of capital.
Amendment No. 13 does but not amendment No. 14. I quite agree that amendment No. 13 does but not amendment No. 14, which is a money threshold.
I suggest when we come to it we can discuss that.
Did you say that amendment No. 7 was related to amendment No. 16?
Yes.
Again, I must make the reservation that I would like to discuss the question of the money threshold separately from the question of the definition of turnover.
I will not quarrel with the Deputy if he thinks that they should not be taken together.
It is not a question of imposing my point of view on you. These are two quite separate issues. In the early amendment I am trying to suggest to the Minister that the Bill should contain a definition of "turnover". In the later amendment I am trying to propose that whatever the definition of "turnover" may be the threshold of turnover should be raised. These are two quite independent matters.
We can discuss them separately.
I move amendment No. 7.
In page 4, subsection (1), between lines 25 and 26 to insert the following:
"‘turnover' means sales within the State less (i) Value Added Tax paid; (ii) excise duty paid; but does not include sales to another enterprise which is already under common control with the enterprise in respect of which turnover is to be calculated.".
My point here is simply that as in the case of assets but, of course, it is a more troublesome problem: the question of turnover is not defined in the first subsection of section 2. "Turnover" is a common commercial term but I believe it should be defined. In view of the Bill with which we are dealing and about which so many apprehensions have been expressed that we will catch enterprises which would be laughably small by European standards, "turnover" should be defined in such a way as to have the effect of pushing firms out of the operation of the Bill rather than pushing them into it. I believe that "turnover" should be defined in such a way as to exclude from it the liabilities which I have mentioned here, VAT paid, execise duty paid and so on.
I would like to emphasise in this regard that in failing to define "gross assets", if that is what the Bill is now going to contain, and "turnover", we are leaving undefined two of the most important elements the Bill contains. We are leaving people who may apprehend that they will be under the control of this Act unable to be quite certain, if they are anywhere near the border line, whatever it ends up with when the Bill leaves both Houses, whether they are within or without the application of the Act. It is perfectly arguable that there are several ways of estimating turnover and that turnover should perhaps be estimated at any rate less the tax elements in it.
I put forward this amendment partly with the intention of making the thing clear one way or another. The later part of it is with the intention of trying to put smaller firms out of the control of the Bill. I remind the House that there have been other examples. The best known example in which turnover was used here legislatively was in the imposition of turnover tax in 1963, a time which we all remember. At that time although "turnover" was defined in such a way as not to exempt these tax elements, at least it was defined. Part VI of the Finance Act, 1963 spoke about a charge of turnover tax and said in section 47:
With effect on and from the 1st day of November, 1963, a tax, to be called turnover tax, shall, subject to this Part of this Act and the regulations thereunder, be charged, levied and paid—
(a) on moneys received in respect of all or any of the following activities.
There then followed a list of activities, the sale of goods, the hire of goods, the provision of services, acceptance of bets and four or five further ones. At least somebody knew for revenue purposes what he would be charged turnover tax on. That was as good as a definition of "turnover". I agree that Part VI of that Finance Act does not include for revenue purposes the exemptions I am seeking here. At least the Act was clear about what "turnover" meant. There is nothing in this Bill, so far as I can see, which will tell anyone who may possibly be caught by the provisions of the Act if he is or is not caught by it.
The amendment aims to do two things. First, it defines "turnover". I would like to urge that point on the Minister, irrespective of whether he thinks there is any merit in my suggestion of defining it in such a way as to tend to push companies out of the control of the Bill. The intent is partly to urge him to incorporate in the Bill some definition of "turnover". If it is not mine let it be his own. Secondly, the amendment seeks to define "turnover" in such a way as to subtract from the understanding of turnover tax elements of the kind I have detailed.
The position is that the concept of turnover is one which is well known in commercial circles and about which I do not think there is any doubt. This is one of the terms used in the Bill like a lot of others in common commercial use which are not defined because it is considered (a) that it is unnecessary to define them and (b) that if one set out to define them one is liable to cause difficulties that would not otherwise arise. As far as the amendment is concerned, the Deputy suggests deducting VAT and excise duty for the purpose of arriving at turnover. I understand that is not the normal commercial practice. Certainly, as far as excise duty is concerned, which would be the major element in regard to some companies, there are only three categories of companies I can think of offhand that would pay significant amounts of excise duty. They are oil companies, tobacco companies and distilling or brewing companies. I believe it is true to say that in virtually all of those they would certainly be well over any threshold which might reasonably be fixed here.
I do not think very much would be gained by excluding excise duties or VAT. In regard to the amendment generally the definition would not cover non-manufacturing or non-selling of goods activities, and all the various services, for example, which are not excluded under section 1 would be excluded for the purposes of turnover if the Deputy's definition were accepted. For example, the provision of some service which is not one of those ten which are excluded there would be excluded by the definition of turnover, because the turnover of such a service for the purpose of this Act would be its gross income before payment of salaries and various trading expenses. The Deputy will appreciate that this definition which he proposes now would exclude completely all non-manufacturing enterprises and all enterprises which did not deal in selling something which was physically in existence, and I imagine that that was not the Deputy's intention. I would not be prepared to accept that because it would mean that we would exclude from the Bill not alone the ten sets of services which are set out here but also all services, and "services" is a very wide concept, as the House will know. That would not be desirable, and I think the House generally would agree that it would not be desirable.
The Minister has raised several points, some of them a distance away from the point I was trying to make, but I will give the Minister my reactions to them off the top of my head. I hope I am not spilling any beans by saying that I understood this Bill to be aimed primarily at controlling mergers of enterprises which are trading in goods and which, because of merger, tend to monopolise the market, particularly a retail or distribution market, in such a way as could injure possibly the consumer, the person who goes out with a shopping basket.
Another potential target of the Bill which is not expressed is the merger of newspapers or the taking over of organs of the media. I endorse the idea that newspapers have a dimension which is more than a commercial one and that it would be in the public interest that the bringing of all these organs of opinion under the control of too few hands is undesirable and would not be in the public interest. When we come to that section I will say that the right way to do this is to express what we are after in so many words. Both these prime targets of the Bill, the newspaper empires and the supermarket empires, fall within the categories which are envisaged by my amendment. I agree that the services which do not pay excise duty or VAT would be excluded completely by my definition of turnover, and I accept that if there are services the amalgamation or merging of which does threaten the public interest, then this amendment would require redrafting or resubmission in some form. A fault which this Bill has, and had when the National Coalition introduced it, is insufficient particularity and insufficient frankness in regard to what was being aimed at. When you have in mind a couple of flies you want to swat, to construct an enormous, cumbersome machine through which every kind of insect and creature must pass in the hope that now and then you are going to find the fly you are after is a bad way of going about legislation. While the Minister's Bill, like all Bills of which it is very nearly a photocopy, mentions services in the same breath with other enterprises, I am not too clear which services the Minister or his Department have in mind as being potential targets for the operation of this control. Perhaps they exist, and I do not say it in any polemical sense because I am not aware of what services they have in mind. I do not, therefore, regard this objection by the Minister, technically correct though he is in saying my amendment should be rejected, as very weighty.
The Minister enumerated the kind of firm who would normally be paying excise duty, such as oil companies, tobacco companies and drink companies, and said that these companies tended to be too big anyway and that they would be over any threshold that this Bill is likely to wind up with. That may be so, but that is not the way to bring a company over a threshold nor is it the proper way to deal with the point I am trying to make. It is a mere accident that in practice oil companies are large concerns with plant and assets of various kinds which will exceed any likely threshold we are trying to adopt here. I am not sure whether the same is true of tobacco companies. It may be true of drink companies. That mere fact is an accident and it is not inherent in the nature of the oil, tobacco or drink business. There seems in any case to be a discrimination. I do not want to make too much of it as it is not very sinister, but it seems to be to a degree discriminatory that companies, because of the accident of the kind of trade they are engaged in and the accident that the State has chosen to levy excise duty on their operation, will find included in their turnover for threshold calculation purposes a very high degree of money which is by-passing their pockets and passing to the State again. That would be true of big companies. If you compare them, on the other hand, with operations which are free not only of excise but of VAT as well, it seems that the threshold is operating in, what I am sure is unintentionally, a discriminatory way. That discrimination could be avoided and the definition of turnover could be achieved in such a way as to let out the smaller kind of concern, if the Minister will accept amendments as those I have proposed.
Even if he is unwilling to accept any amendment along the lines which I am arguing, I urge him very strongly that the Bill ought to contain some definition of turnover. I accept that if you start to define something you may wind up in more difficulties than you anticipated, but that is no reason for ducking the definition. That means that you are leaving it to a court at some later stage to tangle with the question of what is a turnover.
This House refusing to grapple with the problem of deciding and putting into a paragraph what a turnover is, means that some judge in the future will have to do it, and we may wind up with a definition which is far from the Minister's present intention. I mean this not simply in respect of turnover but of anything which is left undecided. I urge the Minister then that it would be sensible to have a definition of turnover, whatever that definition is. By refusing to do it we are making difficulties for the courts later and they may solve those difficulties in a way which the Minister's Government or any Government would not find welcome. On the other hand the definition of turnover which I am urging here will eliminate any possible discrimination between firms paying excise duty and firms who do not pay excise duty at all, and again firms who do not pay even VAT on a substantial part of their trading.
I will go this far with the Deputy, that it is undesirable to give or attempt to give a positive definition of a normal commercial concept like turnover. I hope he will agree that you would create more difficulties than you would solve by it. But to meet many of the points he has made I would be prepared on Report Stage, subject to the views of the draftsman, to put in in a negative way that turnover for the purposes of this Bill shall not include value-added tax or excise duty, without at the same time attempting to enter the potential morass of defining it in a positive way which could be dangerous.
The Deputy suggested that this Bill was aimed mainly at firms trading in goods and he mentioned also the newspaper situation. Those items are two of the primary concerns of the Bill but it is concerned also, and properly so in the public interest, with all forms of services other than the ten excluded at the top of page 4. There is a wide variety included. A surprising number of items is included, one of which is shipping, but it is proper that shipping be covered because it is an area in which one could foresee much detriment to the public good in the event of certain take-over or merger situations. If, for example, a monopoly situation in shipping were ever to arise here, although I do not see any such possibility in the foreseeable future, there could be a serious situation so far as the public interest was concerned. Shipping is a specialised type of business. Also included in the Bill is all banking other than banking licensed under section 9 of the Central Bank Act. Certain aspects of that type of banking give rise to much concern and we are trying to do something about it at present. All transport services are included in the provisions of the Bill other than those licensed under the 1932 and 1934 Acts. Included also are numerous other services of that kind.
Even in the strictly professional area there have been considerable mergers down through the years. On the whole these mergers are desirable and they have been beneficial publicly, but should the situation be taken a step further and the stage were reached, for example, where there was only one stockbroking firm in Munster, I would begin to wonder whether such a situation was in the public interest. To take another example: if, say, there were only two or three firms of solicitors in Limerick I would begin to wonder also whether that situation was in the public interest. The time must come when those mergers and take-overs would reach what I would call an optimum limit. It should be possible to have control in this area under this Bill.
Admittedly, some of the situations I have been talking about are remote possibilities but ten or 15 years ago one could not have foreseen the kinds of mergers that have taken place since then.
Can the Minister say whether the turnover of Limerick solicitors is more than £2.5 million?
That would depend on how one defines their turnover. If they merged at an enormous rate, I suppose their turnover would reach a figure of that nature.
Is all transport included in the Bill with the exception of that covered by the licences issued under the 1932 and 1934 Acts?
With the exception of CIE. They are not included.
Are the hauliers who were licensed under the 1933 Act included or excluded?
They are excluded.
Why?
Because the Minister for Transport and Tourism can control them. They must renew their licences every year and the Minister must approve, for example, of the transfer of licences under the Road Transport Acts. It is not a simple matter of two people agreeing to either buying or selling a licence. The Minister must give his approval.
Presumably the Minister has had legal advice on this but in my opinion he would be on very poor legal ground because what has been happening for the past 50 years is that the approval of the transfer of a licence has been automatic. In a situation in which a licence changes hands illegally, a sum is paid in consideration of the transfer but the person selling the licence goes then to the Department involved with transport and the Department under the guise of transferring the business agree to the transfer of the licence so that theoretically the person concerned has bought a business and not a plate.
There are many precedents that could be quoted. Since the war years very big transport companies have been built up by way of people continuing to acquire licences and thereby building up fleets of lorries. Under the provisions of the Transport Bill that went through this House within the past month, these people on the basis of their existing licences will be able to build up much bigger companies because a company with, say, ten licences and operating 20 trucks, will be able to operate more than 100 trucks. Therefore these companies can become very big concerns. Obviously, CIE should be excluded. When I was Minister I had a similar Bill but my successor was of the opinion that that Bill would allow companies that were too big to merge. He limited the number of companies to six but it will be possible under his Bill for a company operating up to 100 trucks to be built up. I can think of two firms in particular who, if they combined their licences and then merged, would have a considerably greater proportion of the road freight business than CIE have.
There are a couple of questions I should like to put to the Minister. First, though, I am grateful to him for accepting the sense of what I said and of proposing to introduce an amendment at Report Stage to meet what was sought by me in the first part of my amendment, that is, to take excise duty and VAT out of the understanding of turnover.
I am not happy with the Minister's reluctance to define turnover but perhaps he will have second thoughts about it now. However, further questions remain in relation to the amendment. Has the Minister a scheme in mind or have the Department any idea of how turnover is to be defined in connection with certain kinds of service, for example, I mentioned jocosely the question of solicitors' turnover? For all I know there may be some way of interpreting this in the solicitor's profession but which would need a good deal of explanation in regard to computing turnover of a solicitor's firm. For example, would the turnover include money passing through the solicitor's hands in a purely fiduciary way which of course is the way solicitors are supposed to handle virtually all money except their costs?
I do not ask this contentiously. I merely wonder whether it would add a dimension of sense to my pressing the Minister to define "turnover" itself. For example, how would he define "turnover" in connection with the operations of a rental company, one which rents cars, television sets or plant? Will it be the total rents which they collect? Does it correctly express the dimensions of their economic operation in the way that total sales would in the case of an ordinary trading firm not engaged in rental business but in selling? These are things about which I should like to inquire. How will "turnover" be computed in the case of firms doing something else, providing a service or doing something other than selling?
The other matter I wanted to mention is something which had not occurred to me until the Minister spoke a few minutes ago. It is that I think there will be a good deal of worry amongst some of the professional services mentioned here after the definition of "services" in the Bill. I think there will be a certain amount of worry amongst the Minister's own profession, amongst accountants, architects and so on on hearing that their amalgamation of relations will, on some standard which is not here defined in regard to their turnover, potentially be within the ambit of this Bill when it becomes law. I accept that these features were present in our Bill as well but that is water under the bridge; I have to make this point. I am sure the Minister, as a solicitor, will accept—in fact he said as much a few minutes ago in connection with banks—that there are many solicitors in the country making a lot of money and there are many of them pulling the devil by the tail.
In what respect?
In the sense of not making a living commensurate with the effort they are putting into it. There certainly were until recently, although things may have changed since I stopped practising.
Unhappily for both of us things have changed. We were in at the wrong time.
I still think and have reason to believe that there are solicitors who are not making all that much of a killing out of their legal profession and for whom it may very well be the case that amalgamation is a sensible step. I am sure the Minister realises this very well, that a large solicitors' firm—and I am certain the same is true for accountants and architects—can offer the public a service which is infinitely better than the service which a large number of small firms can offer. The amalgamation of professional firms makes it possible for individual members of the firm to specialise to a degree which is not possible if he or she has to look after everything, such as running down cases, district court appeals, wills, conveyancing and everything else in a small under-equipped office. I am sure analogous illustrations could be given from the world of accountancy, architecture and all the other professional services. I know perfectly well that this Bill does not intend to call a halt to amalgamations of practising members of any particular profession. But it will be felt by many of them to be an unnecessary irritant that they should be even nominally subject to the control of the Bill in trying to rationalise their operations. I must accept some blame for not having spotted this point before now. It has occurred to me only since the Minister spoke. I can see there will be a lot of difficulty in trying to construct any system of exclusion for various professional services but it will lend more weight to an amendment I will be introducing later intended to clear the way for an informal system of clearances whereby amalgamations or mergers can go ahead quickly and without the invocation of the cumbersome machinery of this Bill, even though the Minister has introduced amendments to make it less cumbersome.
I simply wanted to draw attention to what I think would be disquiet on the part of some professions on finding that their operations will come within this Bill under the heading of "service". But that makes it doubly important to define, for the purpose of services, how exactly a turnover is to be computed. I shall not hold up the House making this point any longer. The Minister might bear it in mind, and his Department also between now and the next Stage.
Is amendment No. 7 withdrawn?
In case there are misapprehensions could I answer some of the questions asked by Deputy P. Barry in regard to transport services. My Department are assured by the Department of Tourism and Transport that that latter Department are satisfied that they can exercise adequate control over the transfer of licences under the 1933 Act. The transfer is not in fact automatic. I have seen cases in my own practice where a Minister of the day—15 years ago—refused to allow transfers of licences.
Not for commercial reasons.
Often because the proposed transferee was regarded as unsuitable in some way.
That is correct.
There are limitations under this new Bill which has passed this House and is now in the Seanad. There are limitations on the number of vehicles that can be operated. I think the present Minister took a different view from that of his predecessors in regard to that. He was right not to allow absolutely enormous conglomerations of licences together in a small number of companies. It is better to try to spread it, which is in the public interest from the point of view of maintaining and, if possible, increasing competition.
That was not the point of the Bill.
The point of the Bill is to liberalise the existing situation but one wonders how far one should go in liberalising it. The present Minister has taken a somewhat more restrictive view than his predecessor for valid reasons. However, that is peripheral to what we are discussing here.
Turnover for the purpose or a professional service, or indeed any service whether professional in the limited sense, is gross income. A rental company's turnover is its gross rentals, whether it be a car rental company, television rental company or whatever. Similarly with a shipping company it would be its gross charter fees or the gross amount paid to it for the carriage of goods. Similarly in regard to solicitors, accountants, stockbrokers or whatever, their clients' money which passes through their hands continuously would not be regarded as part of their turnover but their gross income would be. I do not want anybody to get the impression that I am setting out to try and control mergers of solicitors or accountants. For the most part one would encourage these because they have been very beneficial. They have been beneficial for the reasons that Deputy Kelly mentioned. But it is proper that we put the matter in perspective lest anything that Deputy Kelly said might cause a scare or apprehension amongst people of that kind. The only firms of solicitors or accountants who would have the possibility of their merging with some larger firm, subject to scrutiny and approval by me, would be firms of solicitors whose gross income—their own personal gross income, not anything to do with their clients' money— would exceed £2½ million. There may be a few firms of solicitors or accountants in this country whose turnover would exceed £2½ million but I do not think there are very many. It is only when they are taken over that the question would arise, not when they take over somebody smaller than themselves. Therefore, it is not a very real problem from their point of view. There probably are some accountants, and there may be some solicitors, but they would be very few. Certainly 99 per cent of each of those professions would not in any way be affected.
I accept that. I should like to join the Minister in quietening any apprehensions I may have raised. The Minister has only mentioned one other criterion. As it stands, his Bill treats the various criteria disjunctively. This Bill has no inbuilt multiplier on its thresholds corresponding to the rise in the cost of living or anything like that. If the Minister persists in treating these criteria disjunctively, it is not inconceivable that firms will step over one or other of those thresholds and will be surprised to find that their amalgamation plans are subject to Ministerial control. I accept that the danger is not a very proximate one. It is like a cloud on the horizon no bigger than a man's hand at the moment but I think that the professions will still be a bit surprised to see it there at all.
Can the Minister say anything in regard to amendment No. 7 about the status for the purpose of turnover calculations of a sale made by a company to another company which is under the same control as itself—not one with which it is going to be amalgamated but one which is under the same control as itself on the outside, so to speak.
That latter point would be covered by my amendment No. 10.
Not really.
Why not?
It is quite likely that it will cover a lot of them. I had been thinking of putting down an amendment along the lines of amendment No. 10 but I decided not to because, with great respect, amendment No. 10 is superfluous for a reason which I will explain later. Even if it is necessary and does make sense, I am not sure that it entirely meets this point, because amendment No. 10 is related to section 1 (2). It refers to two enterprises which are to be amalgamated. I am only talking about one of these enterprises. Suppose there are two enterprises which are to be merged. If one of these enterprises is doing business with a third enterprise and it and the third enterprise are under common control, sales between it and the third enterprise ought not to be reckoned in the calculation of turnover. It is not as between itself and the firm with which the amalgamation is proposed but as between itself and another firm with which it shares a common control. If the Minister misunderstood the amendment I do not mind leaving it. He might think about it between now and Report Stage.
Amendment, by leave, withdrawn.
I take it that amendment No. 8 was discussed with amendment No. 5. Will the Minister move amendment No. 8?
I move amendment No. 8:
In page 4, between lines 25 and 26, to insert the following subsection:
"(2) For the purposes of this Act, a merger or take-over shall be deemed to be proposed when an offer capable of acceptance is made.".
There is one——
If it was discussed with amendment No. 5 we cannot reopen it.
When we reached amendment No. 5 I said I would withdraw it in view of the Minister putting forward amendment No. 8. I should like to say something very brief about amendment No. 8.
Briefly Deputy.
I feel that amendment No. 8 is slightly unspecific. I think I know what is meant by "an offer capable of acceptance." What we are talking about is an offer capable of acceptance which, if accepted, will affect the merger or the takeover, not just any old offer at all. I realise that commonsense ought to tell us that that is not necessary, but the Minister knows perfectly well that a statutory provision which is left in sufficiently specific is a breeding ground for litigation. While accepting his amendment, I would ask the Minister to look at it again to see whether he considers the phrase "an offer capable of acceptance" should be expanded to make it clear that the offer relates directly to the two and, if accepted, will affect the merger or the takeover that the Bill is supposed to cover.
Amendment agreed to.
I move amendment No. 9.
In page 4, subsection (2) (c) (ii) (A), lines 45 and 46, to delete "onequarter" and substitute "30 per cent.".
This amendment was made in response to a suggestion from more than one of the groups that made representations to me—the merchant banks or the Stock Exchange, I think. The point was made that the corresponding figure in the city takeover code is 30 per cent. It was felt by the Stock Exchange that it would be preferable to have the same figure in the Bill as in the city takeover code. I accept that this is a valid point for purposes of administrative convenience and so on. The figure was 20 per cent in the 1974 Bill. I changed it to 25 per cent because this figure would be the amount needed to block a special resolution under the Companies Act, 1963. If one had more than a 25 per cent holding in a public company, one could be said to have substantial control because the power to block a special resolution is a very real one, particularly in a public company. I am suggesting—and obviously Deputy Kelly agrees—that we make it 30 per cent in order to make it compatible with the city takeover code.
Amendment agreed to.
I move amendment No. 10:
In page 5, subsection (2), between lines 24 and 25, to insert the following paragraph:
"(g) This subsection does not apply to two or more bodies corporate, each of which is a wholly-owned subsidiary of the same body corporate.".
Deputy Kelly has already referred to this amendment. It was represented to me that this Bill, as originally drafted, would catch, as it were, transactions of nominal merger or nominal take-over between two companies, each of whom was a wholly-owned subsidiary of a parent company. Since they are merged anyway if they are wholly-owned subsidiaries, there is no point in seeking to control any proposed merger or takeover between them.
I have no objection to the amendment. I have received the same representations as the Minister did. Originally, I drafted an amendment with the same purport as the Minister's amendment, but I tore it up as it seemed unnecessary. Subsection (2) (a) is the portion with the teeth in it. The reason I think this is unnecessary is because that provision contains the words "come under common control". The use of the word "come" leaves us with the understanding that the merger or take-over did not already exist. It did, so the amendment is redundant. I have no objection to the amendment. My purpose is to explain why I did not put down one of my own in the same sense. Though the Minister's amendment will not do any damage, the intent has been achieved already.
Amendment agreed to.
I move amendment No. 11:
In page 5, subsection (2), between lines 24 and 25 to insert the following paragraph:
"(h) This subsection does not apply to a case where an enterprise which carries on business in the State makes any such acquisition as is contemplated by paragraph (c) of this subsection in another enterprise which carries on business wholly or substantially outside the State.".
This speaks for itself. I see the point of the Bill generally as did the Government of which I was part, but at the same time Irish businesses are small on the European scale and more so on the world scale, and they are being continually urged by the IDA to rationalise, to become more competitive and so on. For that purpose, amalgamations, mergers and take-overs are encouraged.
During the Second Stage debate I drew attention to the apparent conflict between the anxiety of the IDA to have businesses rationalised and a Bill which will subject mergers to controls and which the CII and other interests feel will be seriously inhibited by legislation. The Minister has gone a fair distance to meet the objections raised in those quarters but I am surprised to find that the Minister's amendment did not cover the case of the enterprise being acquired outside the State. I cannot see the detriment to the Irish consumer in such a situation or how that would have to be guarded against. If a company here makes itself more competitive and wants to acquire a foot for itself in another country, I regard it as a piece of inadvertant busybodying to be trying to interfere with an Irish company which tries to strengthen itself by acquiring a company that does not operate in this jurisdiction but which will be equally caught by this Bill.
My amendment is designed to take out of the application of subsection (2) an enterprise which carries on business in the State which makes the type of acquisition contemplated by paragraph (c), of a business essentially outside the State. Rare though such an occurrence has been, I hope it will become more common in the future and I cannot for the life of me see where the danger for the Irish consumer would lie. I ask the Minister to remove this aspect from the Bill either by accepting this amendment or by drafting one himself to the same effect.
The old question of whether I could stop an Irish company acquiring a foreign one is a matter of some doubt. The laws of this Parliament extend only as far as the jurisdiction extends, at the moment to 26 counties of this island. I am not certain whether I have effective powers to prevent an Irish company acquiring a foreign one, but in so far as I might have it is desirable that I should maintain such powers under this Bill. One could see a situation in which a proposed foreign acquisition by an Irish company might have objectionable features, such as the transfers of the Irish company's manufacturing activities to the foreign company abroad with consequent effects on employment here. In so far as one could seek to control that situation, it is only right the Minister should have those powers.
In any event, the type of amendment the Deputy proposes here, not just this one specifically but this type generally would seek to discriminate or differentiate between Irish companies on the one hand and non-Irish companies on the other, is no longer acceptable in the EEC because it is in contravention of the Treaty of Rome. There is no point in this Parliament legislating on such lines from now on, whether in this field or in any other. It would be a little strange that Irish firms would be discriminated against in their own country but not abroad. That would be the unexpected and not very desirable result of this amendment. Anyway, whether we thought it desirable or not, it is no longer legally allowable within the Community and therefore it could not be accepted.
There have been quite a number of acquisitions of foreign companies by Irish enterprises. It is a trend that is increasing and I hope it will continue. Generally one would encourage it, but there could be a situation where an Irish company would acquire a foreign one for the purpose of transferring all its business out of the State and that would have undesirable results from the employment point of view, if no other. I hope the Deputy will not follow all those hares.
I have to chase as many as I can see.
It is a terrible thing that if you say something to Deputy Kelly he can always follow it in many directions.
Like a man who thinks he is plucking up a harmless weed and finds himself holding a mile of root. If the Minister is now revealing for the first time in this or the Second Stage debates a Government intent to prevent Irish companies from transferring their manufacturing business and employment elsewhere—I do not want to introduce here a note we have not had before—we can say it is a laudable national objective to maintain employment here, but to try to achieve it like this is a bad way to do business. There is a dimension here that had not occurred to me until I heard the Minister and I will see that it is in order if I can devise some amendment to meet the point before Report Stage.
In regard to the question of discrimination as between Irish and foreign firms. I cannot see really where the discrimination lies. We are not trying to give an advantage to our own firms as against others. Surely the discrimination the European Communities are death on is the discrimination which would give an advantage to Irish firms and not prejudice foreign ones.
You cannot, of course, put Irish firms at a disadvantage either because, if you do you are discriminating in favour of eight other member states.
That cannot be allowed. The Minister is saying there is no control in the eight other member states whether they acquire firms outside or inside the respective country. That may be, but I would be interested to know whether the other eight, so far as they have controlling legislation, which I presume they have in some shape or form, impose control on acquisition by their own firms or firms completely outside their jurisdiction. It may be so, but I would be interested to know whether a French or a German firm is inhibited by French or German law from acquiring an Irish firm and whether the same kind of control is applied by them to acquisitions as is applied by them to acquisitions and mergers within their own jurisdiction.
There is also the point in regard to discrimination that some account must be had of the purpose behind this legislation. This Bill has been presented to us, and rightly so—we presented a somewhat similar Bill—as essentially something to protect the public interest. Now we hear it has a subsidiary objective of a quite different kind. The public interest so far as this Bill ostensibly goes is the public interest in not being held up to ransom and made to pay an excessive price because of the cornering of a market in the supply of goods or services. That legislative attempt, unexceptionable as it is, and completely as I agree with it and support it, is in no way served by an inhibition or a control exercised on the acquisition by an Irish firm or a foreign firm. In what way is the interest of an Irish consumer prejudiced by that? It escapes me and I am surprised to hear the Minister defend it in the way he did.
His last point he must have been making literally on his feet because it is not the case that our law takes no account of what goes on beyond our shores. A simple instance which flashes into my mind is the provision of what, I think, is called the Exchange Control Act of 1956 which makes it an offence for an Irish citizen to maintain a bank account in some other country. In other words, if the Minister goes abroad and earns fees lecturing in, say, the United States or Germany and banks the fees he earns there he is breaking the law here notwithstanding that his activity did not take place within the boundaries, as the Minister says, of this State. I am not speaking here, remember, about exporting money. The Minister described these points as hares and he will forgive me for spending five minutes now chasing them.
These are large issues which I must go into so far as they are relevant to this Bill on Report Stage. I could not possibly accept that the object of the Bill, which is the protection of the Irish public interest from exploitation by the cornering of a market, is being in any way served by the application of a Bill seeking to control an acquisition by an Irish firm of a company which does all its business abroad. If the Minister wants to prevent manufacturing industry from pulling up its roots here and going elsewhere then that should be done by some other means, if it can be done constitutionally at all, or if it can be done within the very EEC about which the Minister talks, an EEC dedicated to the free movement of capital. I doubt very much if what the Minister says is the object of the interpretation of the Bill, according to him, is lawful. I shall have to think about it, but, if it is, it has certainly nothing whatever to do with the main object of the Bill and an objective like that, even if it is lawful, ought not to be achieved by a backdoor method. I shall have to stand on my amendment.
Amendment put and declared lost.
I move amendment No. 12:
In page 5, subsection (2), between lines 24 and 25 to insert the following paragraph:
"(i) This subsection does not apply to a case where, in any acquisition such as is contemplated by paragraph (c) of this subsection, the assets of the enterprise in which the acquisition is to be effected consists solely or substantially of property not used in the production or distribution of manufactured or processed goods or the provision of services.".
What I have in mind here, and possibly this was part of the submissions the Minister received—I forget which body put it in—is that a body made the point that a purely property acquisition, an acquisition by an enterprise, for possible tax purposes or investment purposes, of another enterprise, which does not engage and could not be made to engage, because it is not of the nature that could engage, in the manufacture or processing or distributing of goods, ought not to be caught by this Bill. It was suggested, and it is a point the Minister should at least deal with, that an acquisition of an enterprise which contained nothing, for example, except an office block, or a set of office blocks, or a farm of land might well be left out of the application of this Bill. In a sense an office block or a farm produces something but nothing of the kind the Minister is here going to control. I may be interpreting the Bill more narrowly perhaps than the Minister intends but he should deal with the point in regard to an acquisition which is merely acquiring capital of a kind not employed in the production of goods or the provision of services and so ought not necessarily come within the control of this Bill.
The object of this amendment is to exclude from the provision relating to the acquisition of assets, assets of an enterprise which are not employed directly in the production or distribution of manufactured or processed goods or the provision of services. The reason for this suggested amendment is not entirely clear. It has been argued that assets which are not directly connected with the business being carried on by the enterprise which owns them should be excluded on the grounds that the acquisition of these assets will not affect the continued operation of the enterprise which sells them in the business in which it is engaged. If this is the case then the reason for concern is not clear because section 1 (2) (e), which is the section concerned with the acquisition of assets, provides that the acquisition will only constitute a merger for the purposes of the Act if a result of the acquisition is that the purchasing enterprise replaces or substantially replaces the selling enterprise in the business in which that enterprise was engaged immediately before the acquisition. In effect, the main consideration here is that a merger will only be deemed to occur where, as a result of an acquisition of assets, one enterprise is replaced or substantially replaced by the purchasing enterprise in the business in which the former was engaged.
The Minister is saying that my amendment is superfluous becase the cases I mentioned of an acquisition of pure property not associated with the production of goods or the provision of services is implicitly excluded by paragraph (e).
Essentially, yes.
Can any interests that have expressed this concern take it as being the Minister's view of his Bill that an acquisition of the kind I have mentioned, such as of farm land or an office block——
Not necessarily those. Non-trading assets I think is what the people who wrote the Deputy were worried about. They all wrote to me also and the Deputy is only putting down their suggestions.
That is what an Opposition is there for.
They are not his own suggestions. These people want non-trading assets excluded. One can see a certain point in that but my point is that non-trading assets of the kind I think they have in mind are excluded by paragraph (e). I would not agree that a farm or office block should necessarily be excluded because in respect of certain companies they could be trading assets.
The Minister has taken me by surprise by directing me to paragraph (e) and I would like to read it more carefully in the context of this amendment. Suppose a supermarket chain wants to invest its surplus and goes into the property business and acquires the Setanta complex. That does not appear to be threatening the public interest in the sense this Bill is trying to prevent because it is not contracting the number of choices offered to the public in getting their goods and services and it is not creating anything more of a corner than previously existed. I am not too happy with the Minister's explanation that the acquisition of a farm does not necessarily fall outside the scope of what he is talking about. I realise there are inhibitions of a kind which arise from our land laws about acquiring agricultural land for the purpose of investment but we could leave the land out of this.
Let us take the office block across the road. Suppose that was acquired by a supermarket chain simply as a mode of investing a surplus and making money, which is the kind of enterprise this Bill is aimed at, in what way is the acquisition of that purely profitmaking investment element putting that supermarket vis-à-vis the consumer in a more commanding situation that it previously was?
As I understand it, the point some people want brought out is that non-trading assets should not count for the purposes of a merger or takeover. My point is that paragraph 1 (2) (e) leaves them out because unless the existing business being carried on by the vending company is replaced by a business of the purchasing or taking over company, then a merger does not take place for the purposes of the Bill.
I will leave it at that.
Amendment, by leave, withdrawn.
Section 1, as amended, agreed to.
SECTION 2.
Amendment No. 13 not moved.
I move amendment No. 14:
In page 5, subsection (1), line 35, to delete "£1,250,000" and substitute "£2,500,000".
This was included with amendment No. 4. There was some question about reconsidering this amendment because Deputy Kelly questioned it at that stage.
This amendment speaks for itself. I wanted to urge on the Minister that the threshold in regard to the gross assets should be raised. I have already argued unsuccessfully that gross assets should be net assets. I do not accept the Minister's argument in favour of leaving it gross assets, but we passed from that. That only makes the point more important that the threshold at which the gross assets are to be computed should be raised. I propose that they should be doubled. As far as I can recall the then Fianna Fáil spokesman on Industry and Commerce when our Bill was before the House—we never got a chance to debate it—put down an amendment on similar lines.
What I have to say on amendment No. 14 would apply to amendments Nos. 15, 16, 17 and 18 —all the amendments on the general threshold question. There are nine major differences between this Bill and the 1974 Bill to which the attention of the House should be drawn because nobody seems to have adverted to them either here or outside the House, notwithstanding the many commentaries. One of those nine major and significant differences—I hope I will not be asked to give the other eight because I cannot remember what they are—is that subsection 2 (1) which deals with these thresholds——
At this stage I would suggest that we deal with amendment No. 14 only, unless there is agreement to take them together.
I do not mind if the Minister deals with the question of thresholds globally.
It is very hard to talk about thresholds on one amendment without talking about them on the others.
We can take amendments Nos. 14, 15, 16, 17 and 18 together, if both sides agree.
I have no objection but one of these amendments is in the name of the Minister.
We can take them together for discussion purposes. At this time there is nothing before us but amendment No. 14, but we can discuss all the amendments together.
I will try to stick to amendment No. 14.
There can only be one amendment before the House at a particular time. We can discuss them together and have separate decisions on them. We will discuss amendments Nos. 14, 15, 16, 17 and 18 together.
So far as subsection 2 (1) is concerned the 1974 Bill was drafted in a way that, irrespective of what may have been the intention of the Minister or the draftsman at that time, the effect of it was that if either the taking over company or the taken over company, or in merger terms, the dominant or the servient company, exceeded the threshold, the Act applied. The way section 2 (1) is now drafted it relates only to thresholds and it is only if the taken over or servient company exceeds the threshold that the Bill applies. The net result has been that perhaps 90 per cent of the cases that were caught under the old Bill are not caught now. If, for example, in 1974 Guinnesses proposed to take over a pub worth £100,000 which was owned by a company. Guinnesses being worth £100 million or whatever, that case is a trivial transaction in commercial terms, a trivial transaction in Guinnesses terms. However, that was caught under the 1974 Bill, but it is not caught here because the company owning the pub is well below the threshold. The threshold in the 1974 Bill, as drafted, applied to either company. This only applies to the servient or taken over company and therefore a large number of transactions of a quite trivial nature which would in many cases have been caught under the 1974 Bill are not caught here.
When one comes to discuss the question of the thresholds here, one has to read these figures in the context of what this subsection means today as opposed to the context of what it meant as proposed in 1974. It is quite invalid to compare these two threshold figures with the corresponding thereshold figures in the 1974 Bill, because the 1974 Bill thresholds applied to either company and this applies only to the taken over or servient company. "Servient" may not be the proper word, but Deputy Kelly knows why I am using it. It relates to property and it is the only word I could find that nearest expresses the sort of thing that needs to be expressed. The two figures are not comparable at all. A huge number of transactions which would have been caught, perhaps unwittingly, under the proposals as published in 1974, are not caught here. A whole lot of transactions of that kind, which would have had to go to the Minister if the 1974 Bill had been passed, have not to go to the Minister now.
One of the other major differences in relation to these thresholds is that, unlike the 1974 Bill, the Minister has power only to increase these figures but not to decrease them, as he had in 1974. I cannot conceive of a case where one should in the future decrease them. One should increase them at least at the rate of inflation, and perhaps more. These figures are larger in real terms than the figures that were proposed in 1974. They apply only to the smaller or taken over company and therefore apply to a much smaller number of transactions than what would have been caught in 1974. For that reason it is not necessary or appropriate to increase the gross assets figure of £1¼ million which is proposed here because it is the gross assets figure of the taken over company. The corresponding figure in 1974 was £½ million and applied to either company. Inflation has been bad in the meantime but has not totalled 150 per cent, so that in real terms this is a much higher figure.
I will again inform the House that amendment No. 14 is before the House, but we are discussing Nos. 14, 15, 16, 17 and 18 together and we will dispose of them all after this discussion.
The Minister's predecessor, at the conclusion of the Second Stage debate in 1974 or 1975, introduced but never had the chance to discuss a large number of amendments in response to points made at the time by Deputy Brennan—then the Industry and Commerce spokesman—of which the matter just mentioned by the Minister was one. The Minister's predecessor introduced an amendment that had the effect of subjecting to control a situation only where both of the enterprises concerned were involved. I accept what the Minister says about the Bill in its original form: he is right to draw attention to the potential absurdity of making subject to control a situation in which Guinnesses are acquiring a public house.
The Minister's assertion that he was looking for some credit for the fact that his power to vary the figures in these thresholds was only a power to vary them upwards and not downwards is an amazing assertion in view of the provision in a later section of the Bill which empowers him, where he thinks the exigencies of the common good require it, to ignore the thresholds altogether. That is a most amazing provision which we will discuss when we come to it. If it is aimed at certain kinds of business, the Bill should say so. To some extent all this holy restraint evidenced by subsection (4) of section 2 is redundant, because the Minister is empowered by a later section to exercise control over any kind of a merger irrespective of thresholds if he thinks the exigencies of the common good require it.
There are four conditions envisaged in subsection (1) of section 2 to be met. Each of the two enterprises involved must have gross assets more than £1¼ million and each must have a turnover of not less than £2½ million. These four requirements are not cumulative, they are disjunctive. In other words, they do not have to be met simultaneously. Only two of these conditions have to be met in order to bring the transaction under control. One of the amendments I have proposed is to subsitute "and" for "or" so as to make these criteria cumulative and not merely alternative. The Minister has just admitted that he has been subjected to the same submissions as the Opposition. He knows perfectly well that the unanimity among the business interests whose view has reached his desk is that the thresholds, whether they are Fianna Fáil or National Coalition thresholds, are too low, that they will impose a potential control on enterprises which, measured on the European scale are Lilliput size, absolutely trivial enterprises by comparison with the kind of enterprises whose merger might cause concern in any of our partner countries. I believe that not one of the top 200 European companies in terms of assets is an Irish company. We rank below that level, even with our biggest, even with Guinness, the instance which the Minister gave. It does not figure in the top 200 European companies—very wounding to the national pride, but that is a fact.
Guinness is by no means the largest and it is not an Irish company.
It is the one the Minister mentioned. I think it is a household word.
Even if it were Irish it would not be close to the top.
That certainly is so but the Minister mentioned it and it is a household word in comparison with some of the other even bigger companies which are not. In any case, it does not figure anywhere there. Our top 200 companies contain scarcely one that would not fall within the potential provisions of this Bill when enacted. The Minister is as well aware of the misgivings which the Confederation of Irish Industry have and which the banks and the commentators have in regard to the necessity for a Bill of this kind. Of course I accept that bodies of that kind cannot be absolved of the suspicion that their judgment is distorted by their own natural and praiseworthy interest and the Government must withstand pressure of that kind; they do not have to take everything handed out by way of even the most carefully argued submission. At the same time the case made that the thresholds here are too low or that they will bring within the control of the Act too many enterprises that are very small on any world or European standard needs to be carefully met.
It seems to me that matters could be improved by raising the thresholds. The Minister has been willing to raise the threshold under subsection (2) but, leaving that aside for the moment, I think that under subsection (1), there is a strong case for raising the threshold and for limiting the applicability of the Act also by striking out "or"—in other words, the alternative element as between the assets and turnover criteria—and substituting "and" which would mean that both companies would have to meet both criteria in regard to assets and turnover.
The Minister instanced a public house in 1974 selling for £100,000. My impression is that even in 1974 when we were so many points further back on the inflation trail £100,000 was by no means the top price being paid for some public houses. Perhaps there is not actually at the moment a public house at this point in time, as the Minister for Fisheries would say, of which it can be asserted that its gross assets, or a company owning one public house whose gross assets exceed £1.25 million and its gross turnover exceeds £2.5 million. I believe there is not such a public house in the country but there are many public houses in the country whose assets and turnover—again borrowing a phrase from the Fianna Fáil benches, one of Deputy Colley's—would be in that order of magnitude. I think that would be fair to say. Even if we have inflation even at the rate which the Coalition last year predicted and for which the Fianna Fáil Government are now trying to seek credit, even at that somewhat improved rate in common with the rest of the world, I can well imagine that some of these barnlike public houses on the Dublin or Limerick outskirts will be within these thresholds. Most certainly, if they are applied alternatively, one or other of these thresholds will be overstepped if that is not already the case.
The Minister introduced a quarter hour ago for the purpose of showing the absurdity of the proposition the idea that the acquisition by Guinness of a public house would be subject to the Act. Even his Bill will produce the same absurdity; if not now, obviously within a measurably short time. Without using strong language against the Bill, which is in substance the same as the National Coalition Bill, I think we will make ourselves seem very foolish if we apply mergers and monopolies control legislation to acquisitions of this kind. Supermarkets which are supposed to be the targets of this legislation, or at least at the moment appear to be the most likely targets, undoubtedly have crossed those thresholds and while I support the idea of not allowing concentrations of retailing and distributing capital in such a way as to be harmful to the public interest and the consumer—I completely support it as does everybody in my party and everybody in the Labour Party— the Minister should ask himself whether these thresholds in the measure, in the light of what I have been saying are still not a bit too low.
I shall end what I want to say about these amendments by saying that if he is aiming at inhibiting the preemption or absorption by supermarket chains of more and more of the retailing capacity and distributing capacity of the country and the cornering of more and more of that market by them to the consequent detriment of the consumer who will then have nowhere else to go if their prices go up, we should have a special Bill on that particular matter. I cannot see why there should be this cumbersome machinery which will draw in all kinds of operations, harmless operations which I know the Minister will also regard as harmless and which I am sure his Department will nod through as soon as they arrive on the table. But if what he is aiming at now is to inhibit the encroachment of a small number of interests in a particular retailing and distributing field, we should have a Bill which says that or provision inside this Bill which exempts other types of operation of which the simple instance put in my mind by the Minister himself is the public house whose value and turnover will very shortly exceed the limits which these sections envisage.
Can we now put all these amendments?
I cannot accept the proposed disjunctive amendment in No. 15 because an enormous number of transactions would be excluded by it. I do not want to get into a political argument with Deputy Kelly in connection with this but he seems to be very irate about the low thresholds here now. They are two-and-a-half times higher than his own Minister proposed only four years ago. God knows inflation was bad enough in the meantime but it was not two-and-a-half times—whatever that is in percentage terms—and if all this is so wrong today it must have been at least twice as wrong, if you take inflation out of it, four years ago.
The Deputy spoke about the feelings of business interests. I accept that they have made the comment that he has made. But there is also the public interest. I must think about it and I think my predecessor was thinking of the public interest also. My job and that of the House, I suggest, is to try to balance the two interests as fairly as possible. That is what will be done. I worry that some people might feel, as a result of what Deputy Kelly and perhaps others say, that every proposed merger will run into awful difficulties in Kildare Street; that the proposers will be arguing for days and hours with civil servants for weeks on end.
I envisage, as I said before, that the vast majority, well over 90 per cent of these proposals, will literally go through in a matter of days and certainly in not more than a week or so. Indeed, we will be encouraging the great majority of them. It is not just a question of allowing them in a grudging way, we will encourage them because they are in the interests of here. There are a small number who potentially would not be. We want to have powers that would enable the Minister of the day, in the public interest, to stop one or more of the very small minority of proposals that would not be in the public interest.
Unfortunately, in order to ensure that one has adequate powers one has to cast one's net fairly widely. It would be preferable if one could be sure of stopping the undesirable ones without casting one's net so widely but one cannot do that. It causes a certain amount of administrative work in order to be sure but as far as the individual companies are concerned there will be very little in it because they will get approval within a short time. I would envisage one week or two in most cases. As a token of my good intent in this respect in the course of later amendments I have reduced the potential maximum period. I cannot reduce it below what I intend reducing it but I have reduced it substantially. It should be remembered that it was nine months under the 1974 Bill and that is now being reduced to three months maximum. A few cases will take the full three months and for that reason I cannot reduce below that period. As far as the ordinary ones are concerned they should be through within a matter of a week or two, and in most cases within a matter of days.
I accept what the Minister has said, that it is our job to try to balance the public good and what the business community see as being in the interests of their members. On reflection, the thresholds in the 1974 Bill were much too low and these ones are also too low. If one considers the number of businesses that have assets or turnover of that amount one will find that we are talking of only about eight or ten hotels in Dublin city. I would imagine that the cost of the construction of a bedroom in a hotel at the moment is about £20,000 and, therefore, any hotel with up to 60 bedrooms will be subject to this Bill. We must try to devise legislation that seeks to eradicate possible abuses and at the same time not to bring within its scope a lot of people who for many reasons want to keep their business private and to conduct their affairs without any interference from the Government.
The Minister said, and I accept this, that probably 90 per cent of these proposed mergers will be "nodded through"—as Deputy Kelly said—and will certainly go through in a matter of weeks. Members of business organisations have made the point to me that it is possible that within that couple of weeks where there is a question of shares involved in a public company and shares could change radically in value. That is something that must be remembered by big companies. Where a merger is desirable, and in 90 per cent of cases small mergers will be desirable because they should bring about more efficiency in many areas, it will not take place if the value of shares changes greatly in a short period of time. The more people we exclude, without doing damage to the public interest, from the scope of this legislation the better. Fewer businesses will come within the scope of the Bill on the assets end of it than on turnover. A turnover of £250,000 is not enormous nowadays. It is reasonably big as far as Ireland is concerned but on a European scale it is very small. There are many firms in the private sector here—when we talk about industry in Ireland we tend to think of the public quoted companies; the list that appears annually of the top 100 companies—who would have a turnover more than that figure they will come within the scope of the Bill. I do not think it was the Minister's intention to bring such companies within the scope of the Bill but because of the thresholds now proposed they will be subject to an application to the Department if they want permission to merge.
In regard to what the Minister said in relation to the Bill introduced by his predecessor I should like to state that the Minister, having made the point that the thresholds proposed now are substantially higher than they were, might also have had the grace to acknowledge that his predecessor proposed an amendment which was circulated although not debated to increase the thresholds. I do not recall how much he proposed to increase those thresholds by but the Minister's predecessor had responded to the arguments raised by the then Opposition and, I presume, by outside interests. I accept that the Minister has to strike a balance between the public interest and the interests of business organisations. The Minister feels that his thresholds at present are the right level, except in the case of his own amendment, No. 17.
Are we discussing amendment No. 17?
We are discussing amendments Nos. 14, 15, 16, 17 and 18 together. Only one can be before the House at any time but they are all being discussed together. When the debate is over I will put them all without further debate.
In one instance, the definition of monopoly section, the Minister has come forward with a substantial increase but, otherwise, he appears unwilling to accept the need for an increase along the lines I have suggested. In that event I should like to tell the Minister that it is my intention, if I can do so within the rules of the House, to introduce on Report Stage an amendment which would have the effect of subjecting the thresholds to an automatic adjuster in terms of the inflation situation.
I thought we were only allowed to talk about the assets and turnover mentioned in subsection (1). I should like to draw attention to the fact that in subsection (2) the figure of £750,000 is three times what it was in the 1974 Bill. I now propose to double that again which will make it six times what it was in the 1974 Bill. That figure applies only to the monopolies aspect. That figure, and the other two, can be increased by me by order at any time under a later sub-section. I would envisage making those orders pretty regularly. I think it will be necessary to make them pretty regularly. It will depend to a great extent on the rate of inflation. Happily it is now one-third of what it was a couple of years ago. The need will be less, perhaps, than it might have been in the past, but nonetheless, it will at least keep up with inflation.
Amendment, by leave, withdrawn.
Amendments Nos. 15 and 16 not moved.
I move amendment No. 17:
In page 5, subsection (2), line 39, to delete "£750,000" and substitute "£1,500,000".
Amendment agreed to.
Amendment No. 18 not moved.
Question proposed: "That section 2, as amended, stand part of the Bill."
I want to say something about subsection (5). I considered putting down an amendment but in the end I thought I would not until I heard what the Minister had to say about it, and I will put down an amendment on Report Stage if it seems necessary.
This subsection has the effect of relieving the Minister from all threshold control of the kind which the foregoing subsections of the same section envisage in a particular case. Where he is of opinion that the exigencies of the common good so warrant, he can declare by order that, notwithstanding subsection (1), the Act shall apply to a proposed merger or takeover of a particular class specified in the order and, upon the making of such an order, this Act shall apply to a proposed merger or takeover of that class.
In other words, if I understand, sub-section (5) enables the Minister in particular cases, or a particular class of cases, to bring them, by his own certain knowledge, special grace and mere motion, under the provisions of the Act, notwithstanding the fact that neither of the concerns reaches any of the thresholds subsection (1) lays down. I notice that the expression "the exigencies of the common good"—and it was in the Minister's predecessor's Bill as well—is cogged straight from Article 43 of the Constitution, which declares that the Oireachtas can make inroads on ordinary property rights in response to the exigencies of the common good. Of course there must be a right of cutting down property rights in any country like this if the common good so requires.
I do not like this kind of legislation. I feel in the departmental mind, in the Minister's mind, and in his predecessor's mind, there was a certain kind of transaction. This is a bad way of doing business. I am afraid it is one which is characteristic of a great deal of the way business is done in this country: to achieve an objective which you feel it would be disagreeable or embarrassing to speak about in so many words and to do it by a route you hope will avoid notice. I want to make it clear I am not accusing the Minister, or his Department, or his predecessor, of that overt mental operation, but that is the effect of this proposal.
If the Government were anxious to inhibit the merger of newspapers, or the acquisition by a newspaper magnate of provincial newspapers or national newspapers, and so on, nobody will be more strongly behind them than I and, I believe, the rest of the party to which I belong. I am completely in favour of having as many voices speak within the four corners of the law, as often as they can, and as much as they can, and of letting people read as many views as they can. I am completely against the progressive acquisition of newspapers, whether provincial or national, or the unification under one set of hands, or by one interest, of modes of communication. I absolutely accept—and, even if the Minister were not inclined to say it, I would say it—that the distribution of opinions and news is an operation which is ostensibly just the provision of another service, a capitalist operation, but which has got a dimension which is over and above that—a very important dimension about which I do not need to read the House a lecture.
If that is what the Bill is aiming at, if that is what is in the departmental mind at the moment, we should say it. I should like to hear the Minister on the subject of why we cannot be told in so many words in the middle of this Bill, where it is very appropriate, that the thresholds do not apply to a certain type of acquisition, or merger, or take-over, notwithstanding the fact that the monetary element of the enterprises involved may not meet the threshold. I refer to the acquisition or takeover of newspaper enterprises or, if the Minister wishes to look forward to the day when there will be more than one broadcasting station on the air, when there will be independent radio or television, the acquisition of one such station or another. Any such acquisitions, therefore, would be within ministerial control, within the control of this Bill, notwithstanding the fact that the financial threshold were not being met.
That is the right way to do it. If it turns out subsequently to be the case that some other form of commercial activity arises which has a public interest dimension—I cannot now think offhand what it might be; perhaps there will be one—over and above its economic or business dimension which is of clear public interest, where the exigencies of the common good clearly require that it should be under control, where serious public interests are being done a disservice by permitting amalgamations and by permitting the concentrations of whatever function is involved in one set of hands, let us have another Bill. The Dáil sits every week except during the recess. I do not believe it can be the case that any serious situation would arise which could not be remedied rapidly. I should far prefer to see it done that way if, in fact, that is what is in the departmental mind, rather than to give the Minister what is on the face of it a blanket discretion to ignore the thresholds altogether on a quite arbitrary reading of his own of what the exigencies of the common good require.
I am not at all opposed to the thresholds being waived or disregarded in certain special cases, but those special cases should be enumerated. It should not be left open to the Minister from time to time, perhaps in a set of circumstances which no one in this House envisages or possibly could envisage, to bring within the control of this Bill operations which on the financial criteria are completely outside it.
I should like to hear the Minister's view on the submission which undoubtedly he will have received and which we in the Opposition parties have also received from the Incorporated Law Society. In relation to subsection (5) they used a style of language which requires a response from the Minister. They said:
We consider that the extensive power given to the Minister under this paragraph to ignore at his will the thresholds, is unreasonable and arbitrary. It will create continuous uncertainty in our industrial and commercial life. It has no precedent in the Restrictive Trade Practices Legislation. The section will have very serious consequences in practice and in the Society's view is unwarranted. With a paragraph of this nature incorporated in the Bill there would appear to be no reason for having the thresholds at all. We strongly oppose this paragraph which encroaches on the rights and liberties of the citizens of our State.
I would be interested to hear the Minister's view on that. Our party had the Bill examined. We consulted with the previous Minister. We favour the sub-section. Situations could develop in which the ramifications were such, and the complexities of the operations were such, that the Minister should have power to make an order for the common good. I accept that but, having received the submission from the Incorporated Law Society in language of that nature, I would be interested to hear the Minister's views on the subject.
This subsection is precisely as it was in the 1974 Bill and I have checked on that. There are changes made in other sections but this one has not been changed at all. Apart from other earlier changes, there is a significant change in the following subsection, the one about the order which the Minister would make in order to bring subsection 4 into effect. Whereas before the Minister would make an order bringing subsection 4 into effect and it would remain in effect unless a resolution annulling it were passed by either House of the Oireachtas within 21 days, the position now is that when an order is made it will lapse unless it is confirmed by an affirmative resolution of both Houses. The result is that whereas before the Oireachtas had only slight, if any, control over the situation and only a limited power to discuss it, they now have an absolute right to discuss it in full. Any improper usage by the Minister of the powers in the section will be the subject of full debate in both Houses of the Oireachtas.
For that reason, the Incorporated Law Society should not feel that the powers would be abused or that they are too wide. Obviously they would be used only in quite exceptional circumstances. The Minister would have to go into both Houses with a confirmatory motion in support of his order and there would be a heavy onus on him to satisfy both Houses that there were exceptional circumstances in which the public interest demanded that he should intervene.
I do not deny that one of these circumstances would relate to the control of newspapers. There have been some developments in recent times in relation to the acquisition of newspapers about which many people are apprehensive. I am not entirely happy about certain things that have happened in relation to the control and acquisition of newspapers and I could envisage a situation in which I would use these powers, and ask the Oireachtas to confirm them, in relation to newspapers if certain events were to happen in the future. I might well be justified in doing that.
Deputy Kelly suggested that I and my predecessor should have spelled out these classes of cases in which the Minister would intervene in the public interest. It would be wrong to limit legislation to specific classes. The question of the control of newspapers may be topical today but in years to come there may be other matters of equal importance. At the moment one could think, for example, of oil companies here.
But these would be over the thresholds. The Minister said that earlier.
Perhaps small distribution ones. Another instance where it might be necessary to intervene if the transaction were under the threshold would be where a large company were involved in a mopping-up operation and had decided to buy up a lot of small companies, all of whom were below the threshold. They might decide not to do this as a "once off" operation but to buy up every small company in that business and we would find ourselves faced with a situation in which, because all the companies were small, the Act would not apply to any act, acquisition or takeover. The situation might become dangerous and there could be the possibility of a monopoly being created and there would not be any competition in a particular area as a result of this acquisition by one company of a large number of small companies.
I have given three instances. My predecessor took the view, as I do, that it would not be right to spell out here in legislation the sort of cases where one would intervene. Things we know nothing about or which would not cause concern today might be the cause of public anxiety in two or three years' time. It would be wrong to tie down the use of the subsection in a way which would not allow one to deal with major problems in years to come.
There is a major safeguard in this Bill which was not in the previous Bill, namely, that an affirmative or positive motion must be passed by each House of the Oireachtas. A motion did not have to be passed under the 1974 Bill.
I accept that the affirmative resolution machinery is a safeguard and I accept that the Minister has no sinister intentions in his mind, no more than his predecessor had. My colleagues and I have to deal with this Bill as if it were the first time it arrived in the House. No one on this side of the House would be doing his job if he accepted everything in the Bill merely because is resembled or was identical to the Bill of the Minister's predecessor, whom we supported. We have to treat it as if we were seeing it for the first time.
In regard to the matter of newspapers, the Minister has not produced any other immediate instances. I do not blame him for that. I cannot see why we cannot say that newspapers are within this Act, or will be when it becomes an Act. For all I know there may be negotiations going on at this minute, which may be reaching a stage of completion, for the acquisition of a newspaper by another group and the reduction, therefore, by one of the number of independent voices in the country. I cannot see why we should not give notice in the Bill that this kind of operation, irrespective of the financial thresholds, will be within the Act, in advance of the Minister and his Department getting around to making an order.
I have said that.
No. The Minister has said that he agrees that newspapers are the most conspicuous instance of the kind of merger operation of which he would take a poor view and which he might be inclined to bring within the Act. That requires the making of an order. It is not any answer to say that Senator Keating did not do it. I cannot see why this cannot be stipulated in the Bill and the reduction in the number of independent newspapers subjected to ministerial control, so that everybody will know about it.
The Deputy is using the word "independent" advisedly.
"Non-aligned" is what I mean. There is no difference between the parties on this. Perhaps we are afraid of trying to define it or of making enemies in the wrong places. That may be the motive on the other side of the House. Certainly it is not operating here.
We have not an amendment for that purpose.
I was speaking on the section.
I accept that.
I had thought of putting down an amendment but I refrained from doing so because I wanted to hear the Minister. He mentioned oil companies, which he had previously instanced as companies which would be caught in any case because of their size. When I mentioned that to him he referred to small distributing companies. It seems at first blush to be quite a marginal hypothesis and I will not bother with it. He gave a very curious instance of something which he might wish by order to bring under the Act, namely, the acquisition by a large company of a series of small companies, all of them falling below the threshold.
The newspaper matter is one thing, but an oil company is another matter. These are instances that are defined by reference to their economic function. We can understand the sense of trying to prevent newspaper amalgamations and so on, but the Minister's last instance was not defined by reference to the functional status of these companies. I do not want to raise a scare but what the Minister has said must raise the idea in some people's minds that, notwithstanding the words of the IDA, of the Minister and of his Department to the effect that they would like to encourage beneficial mergers, that even in that process there is a limit beyond which one cannot go without risking the making of a ministerial order. In other words, even a company that is not operating in an area that is sensitive for some reason—for instance, newspapers—if it goes about acquiring small interests it may find itself brought in under this measure notwithstanding the fact that the assets or turnover of the servient companies do not pass the thresholds. This is not a satisfactory way of dealing with this matter. I should prefer the Minister to express his fears in a concrete way by introducing amendments that would have the effect of waiving the threshold requirement in connection with newspapers and also in connection with multiple acquisitions of firms that are below the thresholds.
No doubt there are other Members in the House who know more about this from personal experience than I do. The subsection states that the order will have the effect of applying the measure to a proposed merger or take-over. We have defined the word "proposed" by agreement in the sense that we both had amendments tabled to the same effect. A merger is now proposed under the Bill as it stands when an offer capable of acceptance has been made. What is the situation if a merger takes place quietly? Suppose the Minister finds himself with a fait accompli in regard to the acquisition of a newspaper? Where is his order then? The merger is no longer proposed; it is concluded. Whatever his powers may be under other legislation, so far as this Bill goes the Minister does not seem to me to have any power to break up that merger once it has taken place. I point out such a case not in a contentious way but to spell out that it is far better to bring such cases under the scope of the Bill now so that they will know where they stand. Otherwise they can defeat the Minister's intention so far as it bears on newspapers by carrying out the merger quietly behind closed doors so that the first the Minister hears of it is when he reads it in his morning newspaper.
I should like the Minister to elaborate on this matter before we adjourn at 1.30 p.m. In the other point made by the CII in their submission they said it was not clear whether the Minister without inhibition can decide to overrule the commission's views and make an order independently. They also stated it was not clear what kind of power is being vested in the Minister without prejudice to the validity of anything done previously. They went on to say there was no provision in the Bill for appeal to the courts except on a point of law.
I support the section but I am worried about the requirement which I think should be developed on the Minister to state his opinion. The Minister may make an order and it may be a very bland order. There are many industries and services engaged in an area in which an order could be made quite legitimately. It is not just confined to newspapers; in this connection we could talk about the licensed trade, the theatre and the cinema and about certain take-overs in the wholesale distribution companies. There is a wide range of services and industries in practice that could come within the ambit of the orders being made by the Minister.
Such is the suspicious nature of industry towards that form of power that there does not seem to be any obligation on the Minister to state his opinion. It just makes provision for a situation that where he is of the opinion he may make the order. Presumably in a public statement subsequently he would have to give his reasons. Personally I should like to see some obligation developing on the Minister to indicate clearly why the order was being made.
I should have to justify it to both Houses because it would have to be passed by them.
Perhaps the Minister inserted that section with tongue in cheek. The Government have a majority of 20 and the Minister will not be caused any undue worry about the order. While the order must be laid before both Houses of the Oireachtas with a confirming resolution, in practice the Minister could make a three line statement and leave it at that. Issues of that nature have such profound implications that very often the advice given to the Minister is that the less said the better.
In view of the submission of the CII in relation to this matter, I should like the Minister to elaborate on it. I do not share their view but it should be dealt with in the House. They stated that these provisions would place businesses in a hopelessly arbitrary position, subject to quite indeterminate criteria and would give the Minister wide-ranging and unpredictable powers. Presumably the Minister will be exercising these powers in the years ahead —he may not be elected Taoiseach but at least presumably he will remain Minister for Industry, Commerce and Energy for the next few years. It is as well that these objections be teased out although personally I do not share them. In fact, if this section were not included I would not have had a great deal of time for the measure overall. Perhaps the Minister will elaborate somewhat further with regard to the CII objections.
The Minister cannot use his powers under this section if he does not know about a merger. As Deputy Kelly has pointed out, some companies could surreptitiously get the whole business through before the Minister became aware of it and there is nothing that can be done about that. The only way anything could be done is to take away the thresholds and make every merger subject to control but that would be unreasonable and unwarranted.
Subsections (5) and (6) of section 2 within these limitations try to give some power to the Minister in the public interest to exercise control over sensitive areas, and it is reasonable that the Minister should have that power. It should not be assumed by the CII or anyone else that any Minister would arbitrarily exercise those powers. He would not last very long if he exercised them improperly. Whatever about winning divisions, having to come in to this House and justify what one has done is a significant control.
Often it is not easy.
That depends on what a person is doing. The Bill would be much weakened if it did not contain a provision of this kind. What I have not considered yet—because I think it is premature—is what orders I might make under the section if and when it is passed. I believe the first candidates for making an order under this section would be the newspaper industry. I do not believe they would be the only ones. There might be others and there might not. It depends on developments in the commercial and industrial life and the needs of the public as they develop over the next few years. I understand it was contemplated having a section devoted to newspapers only but it was considered on reflection over a long period that newspapers are not the only sensitive area where control of this kind at fairly short notice might be needed in the public interest. I believe the right decision was taken not to confine a section of this kind simply to newspapers but to allow other potential areas to be covered also.
There is the problem that until I make the order there are certain transactions which may well escape. Mergers will take place and they will be completed or have gone to the stage that one cannot do anything about them before the Minister gets to hear about them. Even if he disapproves of them he would be impotent at that stage to do anything about them. That is something we have to live with. The alternative is to cover every merger of every kind. I believe that would be unreasonable.
Would commercial banking services not rank high as candidates for examination?
If they are licensed under section 9 of the Central Bank Act, 1971 they are excluded. They are subject to the control of the Central Bank who have all the powers they need to look at them.
If I agree to section 2 does it prevent me from putting down an amendment on Report Stage?
If the amendment is appropriate for Report Stage it can be put down. The amendment must arise substantially from the discussion. The Chair can never say in advance whether or not an amendment would be accepted.
I want to be sure that by agreeing to the section I am not stopping myself from putting down an amendment on Report Stage.
That is all right.
Question put and agreed to.
Section 3 agreed to.
SECTION 4.
Question proposed: "That section 4 stand part of the Bill."
Has the Minister considered the problems of a legal kind which the Incorporated Law Society submitted to him in regard to the bearing of section 4 on an innocent purchaser?
The Attorney General advises me that the sort of people the Incorporated Law Society were talking about have a remedy at common law quite separately from whatever remedy would arise under this section. Their rights to damages are not curtailed.
Question put and agreed to.
SECTION 5.
I move amendment No. 19:
In page 6, after line 52, to insert the following subsection:
"(4) Nothing in this Act shall prevent any enterprise or enterprises from seeking, or the Minister from giving, an indication of the Minister's view of a suggested merger or take-over in advance of its being proposed (within the meaning of this Act); and a favourable expression of his view by the Minister in such advance consultation shall be a factor which shall bind the Minister, if a proposed merger or take-over in the terms suggested is thereafter notified to him under this section, not to make an order such as is envisaged by section 10 of this Act.".
The purpose of the amendment is to make formal what I understand to be the Minister's intention. I have the impression, from a couple of things he said, that his intention is to permit the Department to interview confidentially or correspond confidentially with people who are contemplating a merger and to give them an informal green light which would not relieve them from the obligation of notifying the merger but which would for practical purposes ensure that they would be given a go-ahead formally within a minimum time thereafter. If that is the official intention it is very good.
The amendment is an attempt to put this operation on a formal basis, rather than an informal basis. I tried to draft it in such a way as to suggest that there might be an informal consultation between the interests involved and the Minister in advance of the moment when a proposer merger, within the meaning of the Act, comes about, in other words when the parties are still talking about terms and things like that, that is before a formal proposed merger such as would oblige notification arises. The object is to try to put the Minister in a situation that if he or his Department have given the green light to his suggestions in advance of the moment when the proposed merger in the strict sense of the Act arises there is no way of going back on that, in other words, leaving the parties in a situation of having proposed something in the expectation that it would be ratified officially and they now find that a different attitude is being taken.
Progress reported; Committee to sit again.
Business suspended at 1.30 p.m. and resumed at 2.30 p.m.