EU Merger Control

Richard Fuller Excerpts

Tuesday 3rd November 2015 General Committees

[Nick Boles]

Those are two excellent questions. On the first, I remind the hon. Gentleman that the Government’s response to the White Paper specifically suggested that the priority should be to ensure that all EU member states should have, as we do already, a domestic regime for the review and, if necessary, control of the acquisition of minority shareholdings. If they did, we could be satisfied that issues relating to the putative purchase of one German airline by another would be covered. Although the hon. Gentleman is of course right to say that consumers in the broader EU might be affected by such a transaction, they are unlikely to be affected more than consumers in the market in which those two companies have their operational bases. I believe that Germany does have a national regime on minority shareholdings, but many other states do not. If such a regime is present, it should be capable of reflecting the interests of consumers from across Europe.

On the second point, the hon. Gentleman is right that tax dodging can be a driving force behind acquisitions, but it is not specifically about competition. Ensuring that the taxes due are received is an important issue of public interest, but it is not for the competition regime, which is about protecting consumers’ interests, to be the adjudicator in such a situation. I am unable to explain the detail to him, but many discussions are taking place at all sorts of levels about the problem of shifting profits around the world. Indeed, the Chancellor has made some fairly robust proposals about how that can be discouraged in the UK.

[Richard Fuller (Bedford) (Con)]

It is a pleasure to see you in the Chair, Mr Hanson. I have never taken part in a European scrutiny process, so this may be a naive question from me. Will the Minister confirm whether the proposals amount to everything in the EU’s 10-year review of merger policy? Is this the output from that review, or is it just the contentious piece? Is the purpose of the 10-year review that this will then lay the groundwork for the next 10 years?

[Nick Boles]

My understanding is that the White Paper reflects the sum total of the proposals that the Commission wanted to make following the review. It is worth acknowledging that there was a loose throwaway line at the end of the White Paper that seemed to suggest that, in the perfect future envisaged in Brussels, the EU would control everything, but the White Paper contained no such specific proposal. We have responded to all the proposals, as I have outlined. This is not in the Commission’s work plan for the current year, so we do not anticipate early action to take any of the proposals forward. There is certainly no indication of the Commission coming forward with other broader, more far-reaching proposals.

[Richard Fuller]

I thank the Minister for that. On the understanding that the proposals are it and that they look forward for the next 10 years and not wanting to drag the Minister too far into hypotheticals, will he confirm that the rules on mergers apply to the single market and not to the eurozone? We are likely to see a substantial change in the eurozone over the next 10 years with much more consolidation and co-ordination of fiscal policies. The concern with the merger policy is the emergence of a North American Free Trade Agreement-type arrangement in which we end up being Canada, but all the decision-making rules on mergers are produced by one set of countries that have much more common fiscal and economic frameworks. Will the Minister comment on this set of policies and the broader set of merger policies from the review in the light of those likely changes over the next 10 years?

[Nick Boles]

I am going to resist the urge to speculate in an area in which I can claim little expertise. I simply point out to my hon. Friend that this country retains strong laws and, more importantly, strong institutions that will continue to act under the policies and guidance set out by the UK Parliament. I do not anticipate anything that might happen in the eurozone undermining our own regime. The EU regime applies to the single market. As my hon. Friend will be aware, our right hon. Friend the Chancellor is very busy today seeking to secure guarantees that the single market will not be shanghaied by the eurozone for its own purposes and that there will be protections for those of us who are enthusiastic participants in the single market but will never be members of the eurozone. I am sure that that would include any attempt—not that we have any indication that there will be one—to dilute the regime or overburden it for the sake of eurozone members. We would resist such an attempt very strongly, but we have no sense that that is on the agenda.

[Richard Fuller]

My final question relates to trade treaties, particularly the transatlantic trade treaty, which will create a broader market in which there will be free and open competition. What is the likely impact of the application of this measure to a treaty with the United States and other countries? Has the United States been part of the consideration of this measure or of the overall merger policy in the European Union?

[Nick Boles]

I will not even venture to give an answer off the hoof, because that is not a subject considered in the White Paper, but I am happy to write to my hon. Friend and copy in members of the Committee on that question.

Motion made, and Question proposed,

That the Committee takes note of European Union Document No 11976/14, a Commission White Paper: Towards more effective EU merger control, and Addenda 1 to 3; and supports the Government’s approach of questioning the proposal to widen scope of the EU Merger Regime (EUMR) to include acquisitions of non-controlling minority shareholdings, given that the evidence does not suggest it is justified.—(Nick Boles.)