I move amendment No. 6:
In page 2, subsection (1), to delete lines 21 to 25 and substitute the following:
"(2) Section 4 shall not apply to a merger or take-over except where the combined undertakings would, on completion of the merger or take-over, represent 25 per cent or more of the relevant market in the State for the products or services affected by the said merger or take-over.".
The Minister proposes to delete the entire section and to refer the merger and take-over question to a body which he has established, the chairman of which was named some months ago. According to recent press reports, the chairman has now departed to Europe to take up a position as a judge of the Court of First Instance so presumably he cannot fulfil these functions. What will happen in relation to that?
In this amendment I am providing for the non-application of section 4 if, on the completion of a merger or takeover, the combined power of the merged entity represents less than 25 per cent of the relevant market. Because of the way in which the thresholds in the 1978 Act appear to have been applied, a large company taking over a small one seems to be exempt from the Act even though the combination of their assets and turnover might represent 50 per cent, 60 per cent or even 70 per cent of the market in that particular product. That was wrong and a larger dominant company taking over a small one should be subject to the provisions of the Act and should be approved by the Minister.
I operated this Act for a long time and there were instances where I felt cases of that kind should have been prohibited but there was not any power under the then legislation, because of the particular way it was interpreted, to do that. If some provision of this kind is not made under the law, particular sectors of industry or trade might have one large company and many smaller ones. The large company might have, say, 40 per cent of the market and 20, 30 or 40 small companies might have the other 60 per cent. The large company could kick off all of the smaller ones without ever being subject to the mergers and take-over legislation. Following a few years of that process, the large company would end up owning and controlling 100 per cent of the market which would be totally undesirable. The Minister should be in a position to prevent that happening and that was the thinking behind the amendment.
The existing section 2 proposed to restrict the application of section 4 of the 1991 Act with respect to mergers and take-overs. The Minister proposes to delete that section and I agree with him because when this matter was first discussed by the committee in 1994, he and I were of the view that it should be deleted because it was wrong. The Minister should take on board what I am saying because even though this section is being taken out, it does not cure what in practice appeared to have been unintended defects in the 1978 Act whereby a large dominant company can take over of its competitors without supervision or ministerial sanction if each one is below a certain threshold. That is unacceptable. If the body to which this matter is being referred consists of what I call IBEC types, which unfortunately might be the case to a large extent, it will see nothing wrong with a large dominant company being allowed to take over many smaller ones. We saw an instance of that last week in the newspaper industry. IBEC produced a report, which has no standing but which was given great prominence in certain newspapers as if it was an official report, and it found that a particular dominant newspaper group should be allowed take over any body it wishes. That is unacceptable. The setting up of the body proposed by the Minister — perhaps he will tell us who the chairman will be — will not be the solution to these problems if its idea of solving difficulties in this whole code is the prohibition of certain takeovers. I would like the Minister's views on that matter.
