Panel attacks Brussels bid plans

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The Independent Online
The Takeover Panel yesterday launched its latest salvo to prevent Brussels interfering in domestic bids and deals by issuing a vehement attack on a proposed EU directive that would replace Britain's current non-statutory system of takeover regulation. The directive would also create a new, strictly legal framework for mergers and acquisitions.

The Panel's offensive against the directive, which replaces a previous failed attempt to harmonise European takeover rules five years ago, coincides with the completion of consultation periods at both the Department of Trade and Industry and the House of Lords European sub-committee. Unless the directive is blocked it is scheduled for implementation in April 1998.

Noel Hinton, deputy director general of the Takeover Panel, said the proposed directive, put forward by the European Commission in February, was a recipe for tactical litigation in takeover bids and called for the continuation of a non-legal system that had, he claimed, served British shareholders well since the City Code on Takeovers was introduced 28 years ago.

He added: "We have a tried and tested system of regulating the conduct of takeover bids which works very well, in large measure because it is non-statutory, whose well-being and continued functioning would be jeopardised by the consequences of adopting this directive."

The Panel believes that because takeovers are fast-moving and complex, and throw up a wide variety of unique circumstances, a rigid set of legal requirements would be inappropriate and lead to costly and disruptive litigation which would ultimately discourage takeovers.

The Panel also believes that, with the vast majority of European bids carried out in the UK, a British regulatory authority is better placed to provide efficient supervision.

As well as throwing the current flexible system of regulation into jeopardy, the Panel also believes a proposed right to compensation, in the case of a breach of takeover rules, is inappropriate: "What is necessary is the ability to act quickly to remedy a potential breach rather than seek to recompense a person after the event, when it might well be too late."

The latest European Commission proposal replaces an earlier version, which was put forward in 1989 and formed part of a programme of measures featured in the 1985 White Paper on the completion of the Internal Market.