Labour plans bid overhaul
Friday 10 May 1996
A draft document on competition policy says Labour recognises the present framework for investigating takeovers causes special problems for a bidder under investigation.
It concludes that: "In a fast changing market, it may be necessary for new rules to be put into place in order to ensure that the bidding company has some protection during the interim period in order to eliminate the unfair advantage gained by other prospective bidders who may not be under investigation by the competition authorities."
The Government has normally allowed rival bidders free rein to make takeover offers during an inquiry, unless their bids also raise competition questions and merit a separate referral to the Monopolies and Mergers Commission.
There have only been occasional exceptions, such as when GEC and British Aerospace bid for VSEL. Both bids were referred to the Monopolies and Mergers Commission, even though only one reference was justified on competition grounds. Labour's proposal appears to put an automatic block on all bids if one is referred.
Labour's competition proposals, which have to be approved by the party's senior policymakers before they can appear in an election manifesto, also include a change in the burden of proof during merger investigations.
Industry View, page 22
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