Byers to unveil plans to take politics out of merger rulings

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The Independent Online

Stephen Byers, the Secretary of State for Trade and Industry, will today announce sweeping plans to take the politics out of merger decisions by allowing independent competition authorities to rule on whether takeover bids should be blocked or allowed through.

Stephen Byers, the Secretary of State for Trade and Industry, will today announce sweeping plans to take the politics out of merger decisions by allowing independent competition authorities to rule on whether takeover bids should be blocked or allowed through.

The decision comes 18 months after the Government outlined its intention to implement a corporate equivalent of its radical plan to give independence to the Bank of England in the setting of interest rates.

Under the new proposals the decision to refer a merger or takeover to the Competition Commission will be made by the Office of Fair Trading, although the formal referral will still be made by the secretary of state.

The Commission's decision will then be final, as opposed to the current system under which ministers have the power to overrule. However, the secretary of state can intervene if a merger or takeover is deemed to be against the public interest.

As the new regime will require primary legislation, the changes will not be formally adopted within the lifetime of the current Parliament. That would push their full implementation back to 2002.

However, it is understood that the Government is likely to adopt the new guidelines in principle immediately.

Business groups such as the Confederation of British Industry have been broadly supportive of the proposals. There has been concern in the past when some of Mr Byers predecessors, such as Margaret Beckett, gained a reputation for surprising the markets by regularly ignoring the advice of the competition authorities. The Government has since conceded that it is not the state's job to "second guess boardroom decisions".

But Mr Byers himself has been guilty of ignoring his officials' advice. An example included his decision to refer the takeover of Cable & Wireless's cable interests by NTL after the Commission had found no case to answer. There has been a concern that some decisions have been politically motivated rather than based strictly on economic and competitive criteria. The 18 month inquiry into supermarket profits, which gave the sector a clean bill of health earlier this month, was seen as a case in point.

The Government first announced its plans to overhaul the system in March 1999 and issued a consultative document two months later.

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