Don’t shoot the messenger

Why mergers and acquisitions highlight, not cause, the UK’s economic issues

19 June 2018

By John Dudding

Kraft and Cadbury; Pfizer and AstraZeneca and Melrose and GKN: Major takeovers of British companies tend to generate suspicion if not outright hostility among media and politicians. Where this opposition crystallizes into a policy recommendation, it is that Government allows itself to prevent deals through some form of public interest test. Yet since current policy was set in 2002, no Business Secretary has signalled any intention to change it. Most recently, Greg Clark has been no exception.

With Brexit potentially freeing regulatory constraints, and Government required to review their policy by April 2019, now is the time to explore the growing gap between policy and public debate, and to decide whether change is needed. In this paper, we explore this gap and question whether a public interest test would solve the problems raised. We find it would not. Current takeover policy is based on the economic evidence and battles for a corporate sector that better delivers inclusive growth should be fought elsewhere.