Deputy McGahon gave me notice of his intention to raise the matter of the proposed acquisition of Cooley Distillers by the Irish Distillers Group and the implications of such proposal for the workforce in Counties Louth and Westmeath and for competition in the whiskey trade.
Adjournment Debate. - Proposed Takeover of County Louth Distillery.
With your permission, Sir, I would like to share my time with my constituency colleague, Deputy Kirk.
Is that agreed? Agreed.
I thank you, Sir, for giving me an opportunity of raising a matter which I believe to be a scandal. While the matter involves a relatively small company, it is the implications involved that prompted me to raise it on the Adjournment. I ask the Minister to refer the matter of the proposed acquisition of Cooley Distillers Limited by the Irish Distillers Group to the Competition Authority.
Many questions relating to the case merit an answer. A small number of people will share in a handout of £9.5 million. A total of 200 shareholders, of which 38 per cent are directors, will be paid £9.5 million, while the unfortunate workforce of about 30 in County Louth and 20 in Kilbeggan in County Westmeath will literally be thrown on the scrap heap. As a believer in free market enterprise and capitalism, I have to say that is the unacceptable face of capitalism. I ask the Minister, as a committed socialist, to examine the matter thoroughly.
The Minister is committed to Fianna Fáil now.
He is a socialist and he is also my first cousin, although I have apologised to the nation for that.
The disturbing aspect of this matter is that £4.5 million of taxpayers' money was used through the BES scheme to fund Cooley Distillers. I suggest that there was definite collusion between the directors of that company and the Irish Distillers Group — now a French company — to kill off competition. They are not just killing off competition but the livelihoods of 50 workers who have a bleak future ahead of them. That must be unacceptable to any party in this political forum. Again, I ask the Minister to examine the matter carefully.
Some 18 months ago Deputy O'Malley prevented an independent takeover of The Sunday Tribune on the grounds of a monopoly and competition and this is a similar case. Despite the fact that four other companies were interested in amalgamating with Cooley Distillers and providing distribution as well as investment to keep the plants open, the directors of the Cooley company played ball with the Irish Distillers Group to satisfy their own interests but not those of the workforce. In a period of 12 months three offers were made by Irish Distillers to stymie opposition. I am speaking also from the point of view of consumers. While I do not drink whiskey, a friend of mine is a connoisseur of the spirit and I am concerned about his right to have a choice. For those reasons I again query why Irish Distillers were prepared to pay £25 million — £9.5 million plus £11 million for available stocks — to purchase a company that otherwise would have gone into liquidation in six months.
I thank Deputy McGahon for giving me an opportunity to join him in raising this matter on the Adjournment. It is not an untruth to say that there is considerable concern in north Louth and in the Cooley peninsula generally at the probable closure of the Cooley distillery. For historians who may be interested, the distillery was originally an alcohol factory established when potato growing was at its height in the Cooley area. In recent years, with the support of the BES scheme, people invested heavily to upgrade the premises. It is with great sadness that we now learn it has been sold to Irish Distillers and hear from a spokesperson that "the purchase was merely a defensive measure" and that it is their intention to close down the premises. This will involve serious job implications. Those working in the distillery were looking forward to a secure employment future, but that security has evaporated before their eyes.
Those familiar with the geography of that part of the country will realise that the Cooley area is surrounded by the sea on one side and by the Border on the other. While there is a strong work ethic in the area, secure employment is not readily available. Therefore, it is with great regret that we learn the distillery is about to close. I am looking forward to the response from the Minister for Enterprise and Employment to this problem. Hopefully, it will be possible to find alternative use for the premises which will provide employment but, if not, I hope the Minister can provide alternative employment for the people displaced as a result of the takeover.
I am informed that Irish Distillers Group has agreed to make an offer of £1.80 per share for the whole of the issued share capital of Cooley Distillery plc. Cooley, a public company, is not listed on the Stock Exchange. In acquiring Cooley, Irish Distillers will assume responsibility for the bank debt and creditors of Cooley. I understand the BES shareholders in Cooley will be given the option of selling their shares at a later date and that Irish Distillers will honour the trading agreements between Cooley and the various BES whiskey maturing companies.
Irish Distillers has already received undertakings to accept the offer from shareholders holding more than 51 per cent of the shares in Cooley. I believe that the formal offer will be posted to shareholders on 15 October.
Irish Distillers Group has notified the Competition Authority of their proposed acquisition of Cooley Distillers under the Competition Act, 1991. Under the Act the Authority may certify that in its opinion the notified arrangements do not offend against section 4 (1) of the Act. Section 4 (1) prohibits and renders void all arrangements which have as their object or effect the prevention, restriction or distortion of competition. If the Authority considers that the notified arrangements do offend against section 4 (1), consideration is then given to the question of whether the arrangements qualify for a licence under section 4 (2). The Act sets out strict criteria which must be satisfied in order to gain a licence of exemption. To qualify, the arrangements must contribute to improving the production or distribution of goods or the provision of services or to promoting technical or economic progress while allowing consumers a fair share of the resulting benefit. They must not impose on the undertakings concerned terms which are not indispensable to the attainment of those objectives or afford undertakings the possibility of eliminating competition in respect of a substantial part of the products or services in question.
It is important to note that all four conditions must be satisfied in order to obtain a licence. A licence is granted for a specific period and may be subject to such conditions as may be attached to and specified in the licence.
As the Competition Authority is independent in exercising its statutory duties under section 4 of the Act we must await the outcome of its deliberations in this case.
The Deputy raised the referring of this proposal to the Competition Authority. In this regard I presume the Deputy is referring to my functions under the Mergers, Take-overs and Monopolies (Control) Act, 1978, as amended. This Act imposes a strict requirement on businesses considering mergers or take-overs to notify such proposals to the Minister for Enterprise and Employment in advance of putting them into effect. Under the Act, any proposal which exceeds certain financial limits must be notified. These limits currently apply where the value of the gross assets of each of two or more of the enterprises involved in the proposal is not less than £10,000,000 or where the turnover of each of those two or more enterprises is not less than £20,000,000. These financial limits do not apply to enterprises engaged in the printing or publishing of newspapers who are obliged to notify all proposals regardless of the level of turnover or gross assets of the parties.
Parties to a merger that falls within the scope of the Act are required to notify the details of the proposal in writing to the Minister for Enterprise and Employment, otherwise they face serious fines. In addition, it should be noted that title to any assets or shares does not pass until I have stated that I do not propose to prohibit it either absolutely or subject to conditions, or in the absence of such a statement, until a period of three months has elapsed from the date of notification or from the date of receipt of such further information as may be required.
In all but a very few cases the proposal is allowed to proceed without referral to the Competition Authority. In cases where the merger is seen to have potentially damaging effects I can refer it to the Competition Authority for a report. When I receive the report I have three options. First, I can allow it to proceed as planned; second, I can allow it to proceed subject to amendments or conditions, or third, I can prohibit it.
Regarding the case raised by the Deputy, no notification under the mergers and take-over legislation has been received by me regarding the proposed acquisition of Cooley Distillers by Irish Distillers Group. If the proposal comes within the remit of the Act there is an obligation on the parties to make a notification.
In this instance the scale of the Cooley operation may be such as to leave it outside the remit of the mergers Act. Ultimately, however, this is a matter for the parties concerned to determine. I can assure the Deputy that each merger or take-over proposal which falls to be examined under the mergers legislation is carefully considered on its merits before any final decision is taken by me.
I have been contacted by the Irish Distillers Group on this matter. I will note the points raised in the House and ensure the matter is given full consideration by the relevant authorities, including my Department because the Deputy and his colleague from Louth raised the matter and because he is my first cousin, notwithstanding his outrageous views on a variety of matters. On the basis of what I read to date I share the concerns expressed by the Deputy and I am sure they are shared by many people. I assure the House I will do all I can to ensure that the principles of competition which I espouse will be upheld.
On a point of order, and I do not wish to delay Deputy O'Malley, it would be appropriate to record the fact that the two Ministers present departed from the normal courtesies of the House by not circulating their scripts.
I have no control over such matters.