CITY AND SUBURBAN
BTR and Pilkington: a case to be heard in the public interest
CHRISTOPHER FILDES
The days are running out for the decision which will put its stamp, for the New Year, on the relations between gov- ernment, the City and industry. Paul Chan- non must now decide whether to send BTR's £1,200 million bid for Pilkington to the Monopolies Commission. He will be advised by Sir Gordon Borrie at the Office of Fair Trading but is not bound by that advice: the decision is his, as Secretary of State for Trade. Once a bid is referred to it, the Commission's scope is wide. It has to consider, not whether the bid would create a monopoly, but whether it would tend to operate against the public interest. That question ought to be asked, and is being asked already, because this bid is being seen as the test case for the argument pitched between industry and its institu- tional shareholders: is the City's view too short-term, does it not give research and development the time to pay off? On my left, BTR, the conglomerate, our best consistent example of the managerial act of extracting glamorous results from ungla- morous businesses. On my right, Pilking- ton, the specialist, a world-class business in its chosen field, its success going back to its invention of float glass. BTR, with de- volved management working to tight busi- ness plans under the eye of a London head office nicknamed the Kremlin: Pilkington, one of our few big businesses to be run where it started, in its company town of St Helens. There is here what the House of Commons would call a definite matter of urgent public importance. Is it a matter which the handful of businessmen, academics, and trade unionists who make up a Monopolies Commission should be asked to consider? On questions of com- petition and market share they are the right people to ask. On broad questions of public interest? Ministers complain that, asked such questions, they never give the same sort of answer twice. Members of the Commission agree: ask them that sort of question, they say, and you must not be surprised to get odd answers. All the same, the signs are of a shift in policy away from the pure doctrine laid down by Norman Tebbit when he was in Mr Channon's chair that the sole test of public interest was to be competition. We have seen bids referred (for Allied Breweries, for Impe- rial Continental Gas) because their finan- cing raised questions which were deemed to need answers. GEC, for all its clout in Whitehall, saw its bid for Plessey referred. London International's bid for Wedgwood was referred, after some good lobbying by local MPs — a reference narrowly founded on competition in the market for fine china, but effectively concerned with the future of a famous British name. There was a short-term versus long-term argument: brokers' circulars from the bidder's camp pointed out how much more money could be made out of Wedgwood by concentrat- ing production (and by not paying bills). The most recent sign of change comes from Sir Gordon Borrie himself, who has been talking of a transfer of the burden of proof, so that it would be for the bidder to show that his plan was in the public interest. Ministers, certainly, are looking for ways in which these questions of public interest can be examined, and for the moment the Commission is all they have. They must see a strong case for sending BTR's bid to the Commission — not to stifle the bid, but to allow argument, and in particular to give BTR the chance to stand its ground and fight. BTR's chiefs argue that Pilkington's reputation as a research-based business is built on one major success which is now 30 years old, that it is Pilkington and not BTR which has bought competitors up and shut them down, that research and develop- ment are like any other business cost — to be judged by what they produce. The case — both sides' case — should be heard.
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