Mergers, Take-Overs and Monopolies (Control) Bill, 1978: Committee Stage (Resumed) .

Debate resumed on the following amendment:
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.".
—(Deputy Kelly).

: On the last occasion I had explained to the House the purpose of this amendment. I am not very keen on it from the drafting point of view, but if the Minister is susceptable to the idea behind it I am sure his advisers will think of a better way of framing it. The object of the amendment is to provide some statutory basis for the informal consultations which I understood the Department advisers told some deputation could be expected in practice to replace in most cases the formal procedures laid down in the Bill.

: It is proposed to have informal consultations, to try to give guidance and a general indication of the likely attitude that would be taken, but if these informal expressions of view were to become binding in some way on the Minister, obviously he and his officials would be loathe to have these informal discussions. In such circumstances they would be no longer informal, and for this reason and in order to further what the Deputy and I both desire it would be better not to write in such a provision.

: I see that point, but the idea was that these informal consultations if they amounted more or less to a green light for the enterprise involved would mean that formal clearance from the Department would come much quicker.

: In a matter of days.

Amendment, by leave, withdrawn.
Section 5 agreed to.
SECTION 6.

: As amendment No. 20 is consequential on No. 21, both amendments can be discussed together.

: I move amendment No. 20:

In page 7, subsection (1), line 2, to delete ", subject to subsection (2),".

This amendment is for the purpose merely of removing a couple of words which would be consequential on amendment No. 21 being accepted. The proposal in No. 21 is to delete the existing subsection (2) in section 6 and to substitute a somewhat different subsection. The existing subsection provides for extension of the relevant period for examination of a proposal of periods up to a total of three months. This was considered desirable to cater for the small number of difficult cases where investigation by the Examiner and inquiries by the commission would be called for. However, as it is proposed now to remove the commission from involvement in the merger and take-over aspects of the Bill, the power to extend the relevant period does not appear to be necessary. The net effect of the amendment is that the Minister will now have three months plus a remote possibility in certain limited circumstances of an extension of a further month where further information is sought to examine a proposal. The proposal to shorten the period very substantially is contained in the proposal to delete section 9, and to a great extent amendment No. 21 is in turn consequential on that and amendment No. 20 is consequential on No. 21.

Amendment agreed to.

: I move amendment No. 21:

In page 7, lines 7 to 11, to delete subsection (2) and substitute the following subsection:

"(2) Where a person involved in a proposed merger or take-over which is being investigated by the Examiner under section 8 applies, by virtue of that section, to the High Court for a declaration under section 15 of the Act of 1972, the period beginning on the date of the application and ending on the date of the decision of the High Court, or (where that decision is appealed) the date of the decision of the Supreme Court, on the application shall, notwithstanding any other provision of this section, not be reckoned in calculating the relevant period for the purposes of this section.".

Amendment agreed to.
Section 6, as amended, agreed to.
SECTION 7.

: I move amendment No. 22:

In page 7, paragraph (b), lines 19 and 20, to delete "or to such of them as the Minister may indicate,".

This provision was included in the Bill as published to cater for a situation in which although the Minister might be satisfied with a proposal regarding a number of criteria he might wish to have further information in relation to a few criteria. However, as the Minister's decision is to be taken now following consideration of the examiner's report alone rather than a report both of the examiner and of the commission, it is necessary that the Minister should have available information on how the proposal will operate in relation to all of the criteria involved. This amendment would ensure that that information would be available. It is consequential on the shortening of the period by excluding the Restrictive Practices Commission from the procedures.

: I have no objection to the amendment, but is it the intention in regard to the notification to the examiner that all the criteria be listed? I do not know whether the Department have a view on this. Is it the idea to give the examiner an inkling beforehand of the Minister's view in respect of each of the criteria by, for example, listing each one and adding a note to the effect that there was no objection?

: The examiner would be asked to express a view on a proposal in the light of each of the criterion, but he would have power to consider the proposal in terms of each criterion.

: Is it the intention that the Minister's apprehension or anxiety would be subjoined to each criterion?

: In practice the better way of approaching the matter would be to give the examiner a free hand at the start and to allow him pick out what he thinks are the most relevant criteria.

Amendment agreed to.
Section 7, as amended, agreed to.
SECTION 8.

: I move amendment No. 23:

In page 7, between lines 25 and 26, to insert the following subsection:

"(2) A report of the Examiner under subsection (1) shall state his opinion as to whether or not the proposed merger or take-over concerned would operate against the common good in respect of any of the scheduled criteria."

This amendment is to delete the second subsection and to substitute the new one proposed here. The amendment is necessary in order to reflect the new status of the examiner's report, which will now be the only report considered by the Minister before deciding on a proposal referred for investigation. Under the Bill as read a Second Time the Restrictive Practices Commission were obliged to express their opinion in this regard and this takes cognisance of the new situation.

Amendment agreed to.
Section 8, as amended, agreed to.
SECTION 9.

: It is proposed to delete section 9. This proposal involves amendments Nos. 24, 25, 30, 31 and 33. These amendments are related and will be discussed together.

: I have already referred to this and explained that the effect is to remove the Restrictive Practices Commission from the machinery for examining proposed mergers and take-overs. The commission will still be concerned in investigations into apparent monopolies. As regards the mergers control machinery, the position now will be that there will be only one referral to the examiner and consequently the Minister will be required to consider only one report before making a decision in regard to a proposal. Before he would normally have made the decision without referring it if he were going to prohibit a proposed merger or take-over. The amendment will have a substantial impact on the period which the Minister will have to consider proposals and this is reflected in the earlier amendment to section 6, which, as amended, will now provide for a maximum period of three months. The amendment should therefore go a long way towards easing one of the major concerns expressed about the Bill as published, that is, that there was a possible maximum period in certain cases of up to seven months and under the 1974 Bill that it would have been even longer—ten I think. This reduces the maximum period very substantially. I would like to reiterate that while three months is the maximum period under the Bill I would not envisage, except in the most exceptional circumstances, the consideration taking that long. That would only happen in very difficult cases.

: That is an improvement and I accept it.

Section 9 deleted.

SECTION 10.

: I move amendment No. 24:

In page 7, subsection (1), to delete lines 49 to 52, and in page 8, to delete lines 1 to 3, and to substitute the following:

"10.—(1) (a) The Minister having considered a report of the Examiner under section 8 (1), may, if he thinks that the exigencies of the common good so warrant, after consultation with any other Minister of the Government appearing to him to be concerned, by order prohibit a proposed merger or take-over either absolutely or except on conditions specified in the Order."

Amendment agreed to.
Section 10, as amended, agreed to.
Section 11 agreed to.
SECTION 12.

: I move amendment No. 25:

In page 9, subsection (1), line 9, to delete "other Minister concerned" and substitute "other Minister of the Government appearing to him to be concerned".

Amendment agreed to.
Section 12, as amended, agreed to.
Sections 13 and 14 agreed to.
SECTION 15.

: Amendments Nos. 26 and 29 are related and will be discussed together.

: I move amendment No. 26:

In page 10, subsection (1), line 52, after "1971," to insert "the Building Societies Act, 1976,".

In view of the decision taken earlier on this Stage to include building societies in the scope of the Bill and as the Building Socities Act, 1976 contains provisions relating to unions of societies and transfers of engagements between two or more societies registered under it, it is necessary to ensure that these provisions will not be interpreted in such a way as to relieve enterprises of the obligation of notifying the Minister in writing of all proposals for mergers or take-overs to which the Bill applies. This is really consequential on amendment No. 1.

Amendment agreed to.

: Amendments Nos. 27, 27a, 27b, 27c, 28, 28a, 28b and 28c are cognate and will be discussed together.

: I move amendment No. 27:

In page 11, subsection (3), line 12, after "the amalgamation of" to insert ", or the transfer of engagements between,".

The Bill as published unintentionally applied only to an amalgamation of two or more societies and not to a transfer of engagements, the effect of which is as much a merger in the sense of the Bill as is an amalgamation. The proposed amendment, and the long list which the Leas-Cheann Comhairle read, would have the effect of avoiding what would otherwise be an anomaly. It is purely technical. Our attention was drawn to it by the draftsman. It arises from the fact that the phraseology is used in the 1976 Act about amalgamations and transfers of engagements.

Amendment agreed to.

: I move amendment No. 27a:

In page 11, line 19, after "amalgamation" to insert "or transfer of engagements".

Amendment agreed to.

: I move amendment No. 27b:

In page 11, line 22, after "amalgamation" to insert "or transfer of engagements".

Amendment agreed to.

: I move amendment No. 27c:

In page 11, line 26, after "amalgamation" to insert "or transfer of engagements".

Amendment agreed to.

: I move amendment No. 28:

In page 11, subsection (4) (a), line 31, after "the amalgamation of" to insert ", or the transfer of engagements between,".

Amendment agreed to.

: I move amendment No. 28a:

In page 11, line 38, after "amalgamation" to insert "or transfer of engagements".

Amendment agreed to.

: I move amendment No. 28b:

In page 11, line 41, after "amalgamation" to insert "or transfer of engagements".

Amendment agreed to.

: I move amendment No. 28c:

In page 11, line 45, after "amalgamation" to insert "or transfer of engagements".

Amendment agreed to.

: I move amendment No. 29:

In page 11, between lines 48 and 49, to insert the following subsection:

"(5) (a) A union of two or more societies which are registered under the Act of 1976, a transfer of engagements between two such societies or an undertaking by one such society to fulfill the engagements of another such society (being in each case a proposed merger or takeover to which this Act applies) shall not be registered under section 25 (2), 26 (2) or section 27 (6) of the Act of 1976 until either—

(i) the Minister has stated in writing that he has decided not to make an order under section 10 in relation to the proposed union, transfer or undertaking, or

(ii) the Minister has stated in writing that he has made a conditional order in relation to the proposed union, transfer or undertaking, or

(iii) the relevant period within the meaning of section 6 has elapsed without the Minister having made an order under section 10 in relation to the proposed union, transfer or undertaking, whichever first occurs.

(b) In this subsection `the Act of 1976' means the Building Societies Act, 1976.".

Amendment agreed to.
Section 15, as amended, agreed to.
SECTION 16.

: I move amendment No. 30:

In page 11, subsection (1), lines 51 and 52, to delete "and enquiries under section 5 of the Act of 1972 held by virtue of section 9 (1)".

Amendment agreed to.

: I move amendment No. 31:

In page 12, subsection (2), line 5, to delete "or enquiry".

Amendment agreed to.
Section 16, as amended, agreed to.
Section 17 agreed to.
SECTION 18.

: Amendment No. 32 has been ruled out of order.

Amendment No. 32 not moved.
Section 18 agreed to.
Section 19 agreed to.
SCHEDULE.

: I move amendment No. 33:

In page 12, to delete line 37 and substitute the following:

"Criteria for purposes of section 7 (b) and 8 (2)".

Amendment agreed to.

: Amendments Nos. 34 and 36 are related and will be discussed together.

: I move amendment No. 34:

In page 12, lines 44 to 46, to delete paragraph (c).

The reason I put down these amendments—I foreshadowed them when speaking on Second Stage—is because as I said then, these criteria are all very fine but some of them conflict with each other. I recognise that a similar conflict was apparent in the 1974 Bill. It is questionable, in my view, that the House should dispatch a schedule of criteria which the Minister or an examiner will have to consider in which no clear priority is even attempted. I realise it is not easy to decide where to lay the priority but just to fling this schedule of different criteria in front of an examiner will lead to him ignoring the two. My suggestion, and I do not claim much for it, is a better way of doing it. Criterion (c) is the one on which the IDA have laid most emphasis in their March 1978 bulletin, in an article about a rationalisation programme for Irish industry. This rationalisation is essentially one which will very frequently take place by means of mergers and amalgamations. That must be a desirable objective for industrial development. One reason for an amalgamation or merger, and there is no need to be shy about saying this, is to effect economies. One sort of economy is, I regret to say, getting the same amount of work done with fewer pairs of hands to pay. That is a regrettable fact of industrial life. Nonetheless it is one of the things held out as being desirable in this Schedule. Criterion (c) is:

The extent to which the proposed merger and take-over would be likely to affect employment and would be compatible with national policy in relation to employment.

I agree with a national policy to secure full employment but to hand to an examiner a set of criteria two of which go in opposite directions is an untidy way of doing this job. I may not have solved the problem in the amendment which I have suggested but it is not right for either House to make a kind of perfunctory obeisance in the direction of full employment on the one hand and of business efficiency on the other and leave it for somebody else to sort out without giving an indication here of what the main priority must be. We will go along with any measure directed towards achieving full employment. This measure has a principal objective relating to the control of mergers, monopolies and take-overs but at the same time that is embedded in an industrial situation in which the encouragement of mergers and amalgamations is recognised to be important. Therefore, this is the wrong context in which to be striving to protect employment. There are other ways of doing that, but to hold up this criterion to an examiner and say "Shoot down a proposed merger if you think it will result in the loss of too many jobs" is seeking to achieve an objective by the wrong means.

: Amendment No. 36 is related to amendment No. 34 and we will discuss the two of them together.

: On the face of it, there is a conflict between these two concepts but the decision which would have to be made in a case will be based on a balance of the advantages and disadvantages involved. Priorities will be difficult to establish and they will depend on the circumstances in each case. It would not be helpful to the examiner or to the Minister to have these two criteria fused as is proposed in the two amendments. It does not necessarily follow that every merger must result in a loss of employment. There are mergers which create employment. It does not follow either that if there is some loss of employment the examiner or the Minister should regard that as the overriding consideration. Some mergers could result in limited loss of employment which would guarantee for a reasonably long time the existence of the other job in the merged undertaking. When one considers re-equipment grants and things of that kind, one is frequently paying a great deal not to increase employment and sometimes to decrease it when doing so would guarantee the continued and hopefully permanent existence of the great majority of the jobs in the enterprise which otherwise might be in jeopardy if the re-equipment or the merger had not taken place.

While I see Deputy Kelly's point it would be easier to keep these two criteria separate. Tacking on the employment consideration simply as an adjunct to (e), the question of Government policy in regard to rationalisation and greater efficiency and so on, would degrade in some way the importance of the employment aspect. I would like to feel that the examiner and the Minister of the day would have the employment aspect at least equally before their minds as the question of efficiency and rationalisation.

: I understand what the Minister is saying, but if he were the examiner and was looking at a proposed merger which had been referred to him and was looking at this schedule of criteria, would he envisage reporting adversely on the proposed merger if it meant the loss of say 20 per cent of the combined employment of the two enterprises? It seems that an examiner might feel constrained to forbid a merger if it would have this result. I agree with the Minister that most mergers will lead towards improved efficiency and will guarantee so far as it can be done whatever employment remains. Obviously the combined firms will be a more powerful economic unit but as these criteria stand they seem to leave it up to the examiner to decide for himself. If an examiner happens to be a man who thinks that employment should come first and business efficiency second, or that employment for the existing work force should be guaranteed first and let the firm fend for itself in less favourable conditions three or five years from now, it might lead him to recommend adversely against a merger if he found that perhaps 10 per cent, 15 per cent or 20 per cent of the combined workforce would be made redundant.

On all sides of the House we have the same sentiments in relation to employment but the present form of these criteria, even though I recognise that they have had much the same form since 1974, will leave it open to an examiner to make recommendations on a basis which may surprise whatever Minister is in charge. I would ask the Minister to look again at these criteria to see if this matter could be remedied by perhaps putting in a further subsection in the part of the Bill dealing with the examiner's function which would instruct him to weigh these criteria, one against the other, in the way the Minister has outlined. As far as I know there is nothing in the Bill which requires the examiner to consider all the criteria. As it stands the Bill might entitle him to shoot down a merger on the criteria that 20 per cent of the workers will be made redundant if the merger goes through. I will withdraw this now because I have made my point sufficiently, but I would ask the Minister to look at these criteria again.

: The criteria are of equal value. The fact that they are in a certain order here does not give them any order of priority.

: I know that, but there is nothing in the Schedule or anywhere else in the Bill as far as I know which forbids the examiner to report adversely on the basis of an adverse finding on one criteria alone. I agree that most examiners would tend to strike a balance between the criteria but there is nothing in the Bill which directs them to do so.

: Deputy Kelly will recall that this morning I moved amendment No. 22, the effect of which was to ask the examiner to look at all the criteria. As it had been previously drafted, the examiner could have been directed to look at only some of them.

: Can we take it that the Minister would propose to retain a discretion of his own even in the event of an adverse report founded on one criterion?

: The examiner only gives his opinion or advice. He will not make the decision. That will have to be done by the Minister.

: If I were involved in one of the enterprises I should prefer to get a favourable report from the examiner before the matter arrived on the Minister's desk. However, I have made my point.

Amendment, by leave, withdrawn.

: I move amendment No. 35:

In page 12, lines 47 to 48 to delete paragraph (d).

I see no virtue in this criterion because I do not know what is the national policy on regional development. Whatever might be said about having criteria that are in conflict, it might be possible to resolve that problem by directing an examiner to weigh one criterion against the other. However, I see no virtue in making a pious gesture that more or less signals to the nation that we know there are such things as regions and that we think there should be a national policy for them when no such identifiable policy exists. I realise that some parts of what might broadly be called a national policy are conducted with a regional colouring, that the IDA have a regional mode of operation and that there are special areas in the country that get special treatment for Gaeltacht and other purposes. Looking at the matter from the point of view of two enterprises that may be considering a merger, what are they to take out of the expression "national policy for regional development"? What does it mean to them?

Does it mean that with regard to a merger in the Gaeltacht the people concerned will be in a strong or a weak position to have that merger approved because of a regional policy? It is impossible to say. For example, the IDA publish a programme in which is envisaged the creation of a certain number of jobs as a target for certain regions. If a merger looks like creating or destroying employment in any region in such a way as to put off course the IDA target, does it mean that the merger will have an adverse report? I have no objection to criteria being laid down that have to do with the industrial policy of the IDA, and I have no objection to the Gaeltacht or weak and disadvantaged areas being taken into account, but I think the criteria should make sense to a businessman who is contemplating a merger. As it stands this criterion makes no sense.

: I agree with the Deputy that to a great extent it could be said that there is no specific stated regional policy at the moment. As the Deputy is aware, the last statement of policy in this area was that issued in 1972 by the then Government. Regional issues were largely ignored in the period from 1973 to 1977 but the present Government have indicated clearly that they are strongly committed to a comprehensive policy for regional development. This was evidenced by the clear allocation of responsibility for this policy to the new Department of Economic Planning and Development. I understand that the Minister for Economic Planning and Development, in the exercise of his functions in this regard, will indicate in the House today in reply to parliamentary questions a number of initiatives regarding the formulation of a coherent policy for regional development. It is desirable that there should be a national policy in this area, and I am satisfied that the Minister will ensure that such a policy will be formulated with the minimum of delay.

I consider it most desirable that accord with a policy of regional development should be included as a criterion against which the proposed mergers or take-overs should be considered. In the course of his speech on Second Stage, Deputy Desmond stated clearly the reasons why the Minister should have regard to matters of a regional policy nature when considering proposals for mergers. Accordingly, for these reasons and for the reasons given by Deputy Desmond I do not propose to accept the amendment.

: We have not as yet had a party political debate but I reject absolutely the implications in what the Minister has said regarding the period of office of the National Coalition Government. I am not going into this in detail because the Minister avoided doing so, but I want to point out that I reject and repudiate what he has said.

: The facts speak for themselves.

: To be told by the Minister that one of his colleagues will answer questions soon from which the general lines of a future policy may emerge is not an answer to an objection I made regarding the form of legislation now going through the House. I wish all the best to the Minister for Economic Planning and Development in his hopes for regional development, but they may take a long time to cast even in the form of a White Paper or a Green Paper let alone in legislation that a businessman can understand. In the meanwhile quite likely this Bill will have become law. I have not been unreasonable in regard to amendments but I cannot withdraw this amendment. It was intended by me to be a complaint against a nonsensical gesture that will only mislead people.

Question: "That the words proposed to be deleted stand" put and declared carried.
Amendment declared lost.
Amendment No. 36 not moved.
Schedule, as amended, agreed to.
Title agreed to.
Bill reported with amendments.

: When is it proposed to take Report Stage?

: I do not know if it is necessary for me to give notice, but I may have to apply to the House for leave to recommit one or more sections of the Bill.

: That will arise on Report Stage.

Report Stage ordered for Wednesday, 7 June 1978.