Pfizer/AstraZeneca and the Public Interest: Do Vince Cable’s Foreign Takeover Proposals Prescribe the Right Medication?

August 12, 2014

(by David Reader) When US pharmaceutical giant Pfizer sought to acquire its UK-listed counterpart AstraZeneca earlier this year, discussion centred around the supposed adverse impact that the merger could have on the UK’s science base, particularly in light of Pfizer’s questionable track record for asset-stripping and cutting investment in R&D. Although the proposed £69 billion takeover ultimately crumbled, the prospect of Pfizer returning with an improved offer later in the year has led many to ask whether the UK should adopt a tougher stance on foreign takeovers that threaten the national interest. The UK’s Business Secretary, Vince Cable MP, has since proposed new safeguards to counteract these perceived threats – but do they represent the best course of action in practice? Read the rest of this entry »

Ofcom: A Credible Solution to Bias in Media Public Interest Mergers?

February 16, 2014

(by David Reader) On 4 February, the House of Lords Select Committee on Communications published its Report on Media Plurality proposing a number of changes to media ownership regulation in the UK. Among the most notable is the proposal to grant decision-making powers to the media regulator, Ofcom, in mergers raising potential media plurality concerns. At present, this role is performed by the Secretary of State but, as has been noted in a previous post by Andreas Stephan, the ability of politicians to undertake this role impartially has recently been called into question. In particular, the close contact between a NewsCorp lobbyist and a Special Adviser to (the then Culture Secretary) Jeremy Hunt during the NewsCorp/BSkyB assessment, as exposed by the Leveson Inquiry, highlights the sheer extent to which politicians can be subjected to undue influence in the media sector. Re-allocating the decision-making role to Ofcom could overcome this problem, but it could equally amount to substituting one problem for another. Read the rest of this entry »

Competition concerns mean Lloyds should be required to float HBOS following failure to divest branches to the Co-op

April 25, 2013

[by Bruce Lyons] It has just been announced that the sale of 632 Lloyds branches to the Cooperative Bank has fallen through.  Some people thought this would have created a competitive market structure in UK retail banking.  The lessons from research on divestitures by the US FTC, EU DG Competition and academics suggest otherwise.  In particular, necessary conditions for a divestiture package to restore competition include that the package must not be carved out of an existing business, it must have sufficient scale and scope, and it should not be sold to a weak buyer.  The proposed sale of branches to the Co-op met none of these basic requirements.  Why not?  And is there a way forward from here? Read the rest of this entry »

Monitor’s Advice to the OFT and the New Healthcare Regulation

February 20, 2013

(by Mary Guy)[1] On 11 February, Monitor (the UK’s independent regulator of NHS foundation trusts) published its advice to the Office of Fair Trading (OFT) regarding the anticipated merger of Poole Hospital NHS Foundation Trust and The Royal Bournemouth and Christchurch Hospitals NHS Foundation Trust (hereafter “the Dorset FT merger”). This is the first NHS merger to be assessed on competition grounds under the Enterprise Act 2002 (EA02) merger provisions as implemented by the Health and Social Care Act 2012 (HSCA 2012). It has been referred by the OFT to the Competition Commission (CC), which will produce its final report by June 24, 2013. Read the rest of this entry »

Beware of Siren Advice for Political Control of Foreign Mergers

November 2, 2012

(by Bruce Lyons) Lord Heseltine, a former UK trade minister, has just published a review, invited by the Prime Minister, titled ‘No stone unturned in pursuit of growth’.  One of the stones he proposes to turn is to empower government ministers to intervene in foreign acquisitions of British companies “to ensure our long term industrial capabilities are given proper consideration”.  The objective would be to negotiate commitments to build R&D capacity in the UK, develop domestic supply chains and develop the skills base against a threat to prohibit the merger.  This siren call might sound enticing, but it would not be wise to listen. Read the rest of this entry »

Ofcom’s Report on Measuring Media Plurality – The Outstanding Questions

July 2, 2012

(by Michael Harker) On 19 June, Ofcom published its report on the future of the media plurality rules. The process began in October last year, with the Culture Secretary, Jeremy Hunt asking the regulator a series of questions including: the metrics for the measurement of media plurality across platforms, the use of absolute limits on news market shares, and controversially whether there should be provision for a plurality review in the absence of a merger trigger.  Against the backdrop of the derailed News Corp/BSkyB merger, and the Leveson Inquiry’s probing of the Culture Secretary’s role in that bid, the Report and its recommendations may have important implications for the way in which media plurality is secured in the UK.  Read the rest of this entry »

The Hunt/Murdoch Affair: Why a Secretary of State Should Have No Role in Merger Control

April 30, 2012

(by Andreas Stephan) This week there is continued pressure on the UK Culture Secretary, Jeremy Hunt, to resign. This follows revelations that his department was communicating with a News Corporation lobbyist at the time of its proposed acquisition of BSkyB,  precisely when he was meant to be acting in an independent and impartial manner.  This follows a media sting that revealed the apparent personal prejudice, this time against NewsCorp, which led to the Business Secretary, Vince Cable, being stripped of the role.  Such incidents highlight why it may be inappropriate to retain even the limited role of the secretary of state in UK merger control in relation to public interest considerations. Read the rest of this entry »


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