Editor: Pat Williams. E-mail pwilliams@creditman.co.uk
John Arnold. E-mail jarnold@creditman.co.uk
Site: Business Credit Management UK
URL: http://www.creditman.co.uk
Issue: 140
Dated: 19 December 1999
We are going to take a break to spend some valuable time with our families and friends. The next edition of the Business Credit News UK will be on the 9th January 2000.
In this weeks edition you will find the following topics.
UKINVESTMENT INTO BRITAIN JUMPS BY 90 PER CENT TO REACH NEW RECORD HIGH
Overseas investors have given a big vote of confidence in Britain's business environment with investment flows into the UK rising by a record breaking 90 per cent in 1998. Investment rose from 15.13 billion in 1997 to a new high of 18.26 billion last year. This is the largest net inward investment flow ever recorded. The USA continued to be the largest investor in the UK with investment flows of 0.255 billion in 1998, over half of the total.
Overseas investment stock also rose by 20 percent in 1998. The largest contributor to this rise was the United States, recording a 15.11 billion increase. Investment from Europe increased by 0.252 billion to18.2.2 billion.
Outward investment from the UK was also at record levels at the end of 1998 with the stock of UK direct investment overseas standing at03.00.7 billion a rise of15.1.6 billion on the level recorded in 1997. The flow of direct investment by UK firms in subsidiary and associate companies rose to a record15.1.7 billion in 1998.
Trade and Industry Secretary Stephen Byers said:
"Foreign investment is essential for the long-term health of the British economy and I am delighted that more foreign companies are choosing to invest in the UK than any other country in Europe. I firmly believe this is because we offer the best combination of business benefits for investors. The high level of expansions by existing investors is a clear vote of confidence in the UK economy and its workforce.
"The Invest in Britain Bureau, the national investment agencies in Scotland, Northern Ireland and Wales and the new English Regional Development Agencies already encourage and support inward investment across the country. I want to see that continue. I want to make Britain a world class powerhouse of innovation and technological expertise, where every part of the country has a thriving business environment bringing jobs and wealth to the people who live there."
Commenting on the UK's record outward investment Mr Byers said:
"Our record levels of investment overseas underlines the global strength of UK business. Its world class performance in most major and developing markets is particularly impressive."
Foreign Office Minister for Investment John Battle said:
"This is good news for Britain. Inward investment from overseas creates and underpins British jobs, revitalises local economies and fuels British prosperity. Persuading foreign investors to come to Britain ensures we stay competitive in the global economy. That we are attracting inward investment demonstrates that our development of an innovative, knowledge driven, competitive edge is really winning through."
The Invest In Britain BureauBBBB) - the joint DTI and FCO organisation responsible for promoting the whole of the UK as the premier investment location in Europe published figures in July which highlighted the surge in investment through new projects, expansions by existing investors, and mergers and acquisitions activity.
ThBBBB results showed an increasing emphasis on high quality, knowledge driven investment.
The Invest in Britain Bureau is the only Government agency promoting the whole of the UK as an inward investment location. Its principal aim is to attract, retain and add value to investment by communicating the benefits of the UK as the first choice in Europe for potential investors, and their influencers world-wide. It identifies and approaches potential investors and assists them with all aspects of locating and expanding in the UK. Jointly managed by the FCO and DTI, thBBBB operates through its network of overseas offices in FCO posts, and with its partners in development agencies throughout the UK.
CBI COMMENT ON LAST WEEKS INFLATION FIGURES
Kate Barker, CBI's Chief Economic Adviser, said last Tuesday:
"There is nothing in the figures to set alarm bells ringing at the Bank of England. The CBI's services sector survey, published, signalled some continued downward pressure on prices and the short-term inflation outlook is pretty favourable."
She said that crucial earnings figures out soon will need to be watched closely, but a rise in interest rates next month was unlikely.
MANUFACTURING ORDERS STAY BELOW NORMAL IN DECEMBER DESPITE EXPORT IMPROVEMENT - CBI
Total manufacturing orders remained broadly unchanged in December compared with the previous three months, according to a survey by the Confederation of British Industry out last Thursday. However export demand improved over the last month. Although still weak, export order books are the least negative in a monthly survey since June 1997.
The latest CBI monthly Industrial Trends Survey showed that total order books are still below normal, although with the exception of September, they are the least negative in a monthly survey since March 1998. Thirty-two per cent of manufacturers said their order books were below normal, while 17 per cent said they were above normal, giving a balance of minus 15 per cent. This is broadly unchanged from November (-16) and October (-18).
Export order books remain well below normal, but to the least extent in a monthly survey for two and a half years. Forty per cent of manufacturers said their export orders were below normal, with 13 per cent saying they were above normal, giving a minus balance of 27 per cent. This compares with minus 33 per cent in November and minus 35 per cent in October.
Sudhir Junankar, CBI's Associate Director of Economic Analysis, said: "The improvement in export demand compared with earlier in the year has been helped by a reviving world economy and more favourable economic conditions in Euro land. However sterling has strengthened further against the euro and continues to handicap UK exporters. Despite thYD2K uncertainties, manufacturers remain fairly upbeat about boosting production into the New Year. The results of our January quarterly survey should allow us to judge what impact, if any, the much hyped millennium-related effects have had on companies' expectations."
Output expectations are positive for the fifth month in a row, and to a greater extent than that recorded in October and November. Thirty-one per cent of firms expect output to rise over the next four months while 17 per cent expect it to fall, giving a positive balance of 14 per cent compared with only six per cent in November.
Stocks of finished goods were broadly unchanged over the last month. Stock levels in the last two surveys have been more than adequate to meet expected demand, but to the least extent in a monthly survey since May 1995, with the exception of September's figure. The balance of nine per cent of firms reporting excess stocks is now well below the long-term average in a monthly survey, suggesting that future improvements in demand are likely to be reflected in higher output.
Manufacturing firms still expect domestic prices to fall over the next four months, but apart from November's figures, expectations are the least negative in a monthly survey since March 1998.
Stephen Byers, Trade and Industry Secretary of State has outlined a move to increase accountability in export controls.
Parliament will have an opportunity to examine legislation imposing controls on the export of strategic goods, including military, security and paramilitary goods and technology. New Orders made under the Import, Export and Customs Powers (Defence) Act 1939 will be laid before both Houses of Parliament, giving them the opportunity to consider and debate the content of the Orders.
In answer to a Parliamentary Question tabled by Martin O'Neill MP, Chairman of the Trade and Industry Committee, Mr Byers said the Government is introducing this measure pending the introduction of a new Export Control Bill which will provide for formal Parliamentary scrutiny of export control legislation.
He later added:
"The export of arms is a matter of considerable public interest and concern. The Scott Report on arms to Iraq emphasised the need for transparency and accountability in the operation of export controls. This Government strongly agrees with Sir Richard Scott's view that export control Orders should be subject to parliamentary scrutiny.
"Our White Paper on Strategic Export Controls, published in July 1998, contains a proposal to make this a requirement under the new primary export control legislation which we are committed to bringing forward.
"The Government will announce its plans for a new Export Control Bill once the review of the White Paper proposals has been concluded. However, pending this announcement, I believe it is right that any further Orders made under the Import, Export and Customs Powers (Defence) Act 1939 should be laid before Parliament. I have therefore accepted the recommendation in the Trade and Industry Committee's Report on Strategic Export Controls to this effect. This means that Parliament will from this day have the opportunity to consider and debate new export control Orders."
Copies of the White Paper are available from the Stationery Office and on the DTI's Export Control Organisation Website: www.dti.gov.uexportsol
PRICE-FIXING ARRANGEMENT IN FOAM RUBBER MARKET UNCOVERED BY THE OFT
An arrangement whereby the three main manufacturers of foam rubber in the UK exchanged information with each other regarding their pricing intentions has been unearthed by the Office of Fair Trading.
The OFT's Cartels Task Force discovered that Vitafoam Ltd (a subsidiary of British Vita plc) of Rochdale, Lancashire, Carpenter plc of Glossop, Derbyshire, and Recticel Ltd of Alfreton, Derbyshire, met at an industry social event at a Chepstow golf club where, during the course of the day, various assurances were sought that price rises of 8% for block foam and 4% for reconstituted foam that Vitafoam, the market leader, was about to announce, would be matched by similar announcements from Carpenter and Recticel.
The arrangements emerged after foam convertors who were customers of the three manufacturers, complained to the OFT that they had received virtually identical price increase letters from each manufacturer within days of each other.
John Bridgeman, Director General of Fair Trading said: 'Foam rubber is used extensively as upholstery in the manufacture of furniture. These price increases were originally intended to be implemented in October 1998 and it is likely that they would have been passed on to consumers in terms of more expensive furniture. The law does not prevent manufacturers in a relatively small market like this adapting their prices to match those of their competitors. However, such decisions must be reached independently by each company without any discussion with its competitors. In this case, the three companies appeared to reach a private understanding that ensured that they all announced the same percentage price increases at or around the same time.
'Businesses should be particularly careful about what they discuss with their competitors and what information they exchange, even informally. The exchange of commercially sensitive information between competitors is, in many cases, caught by the Restrictive Trade Practices Act 1976 and will certainly be caught by the Chapter I prohibition of the Competition Act 1998 when it comes into force on 1 March 2000. Under the new Act all such anti-competitive agreements will be prohibited and parties to them will be liable to financial penalties of up to 10 per cent of their UK turnover. Businesses in general should note that ignorance of the law will not be a defence against financial penalties or claims for compensating damages once the new law comes into force.'
Under the Restrictive Trade Practices Act 1976 (the Act), particulars of agreements made before 9 November 1998, between persons carrying on business in the UK in the supply of goods and services, must be furnished to the Director General of Fair Trading for registration if two or more parties to the agreement accept certain kinds of restriction on their commercial freedom. In the case of agreements made on or after 9 November 1998, particulars must be furnished only when they contain price-fixing restrictions. For this purpose, an agreement need not be contractually binding; oral and informal agreements may be caught. Failure to furnish particulars of an agreement within the time limits specified by the Act renders the restrictions void and unenforceable. In addition, anyone adversely affected by the operation of such an agreement may have grounds for action in the civil courts.
The Competition Act 1998, which was enacted on 9 November 1998, will replace the Restrictive Trade Practices Act. This new Act prohibits anti-competitive agreements and behaviour such as price-fixing and abusive conduct by dominant firms. These prohibitions will take effect on 1 March next year. The Act provides the Director General with new powers to investigate breaches of the prohibitions and to impose penalties of up to 10 per cent of UK turnover. These powers should lead to a more efficient and effective competition law regime.
As part of the campaign to identify secret price-fixing and market-sharing cartels, the Office has an Investigation Unit whose role it is to investigate allegations of cartel activity. It can be contacted on a 24-hour telephone/fax hot-line number: 0171 211 8888.
The OFT publishes a wide range of consumer leaflets which are available free from: OFT, PO Box 366, Hayes UB3 1XB
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From 20/12/1999 to 07/01/2000 Number of Creditor meetings : 207 Section Company Time Venue 138 Scotland - Interim Liquidator calling Creditors Meeting 20/12/1999 North Ayrshire Developments Ltd 11.00 am Glasgow 21/12/1999 Inner Workings Group Plc 11.00 am Glasgow 22/12/1999 Adamspack Ltd 10.30 am Glasgow Paterson Associates Ltd 10.30 am Glasgow 23/12/1999 A & J Roofing Specialists Ltd 11.00 am Glasgow Gas Max Ltd 10.00 am Glasgow 23 Administrator Calling a meeting of Creditors 20/12/1999 Decacia International Ltd 02.30 pm London Quadrillion Publishing Ltd 10.00 am Guildford 21/12/1999 Birtley Construction Ltd 11.00 am Newcastle-u-Tyn 22/12/1999 Parkdale Group Ltd 11.00 am Reading 23/12/1999 Burwood Plc 10.30 am Watford 30/12/1999 Dun-Fab Ltd 10.00 am Sheffield 07/01/2000 Cheeks Ltd 03.00 pm London Cherokee Leisure Plc 10.00 am London Club 64 Ltd 03.45 pm London Club Cherokee Ltd 01.00 pm London Paradepress Ltd 12.00 pm London Watford Ltd 11.00 am London 48 Receiver calling unsecured Creditors Meeting 20/12/1999 Ensign Ltd 10.30 am Newcastle-u-Tyn R N Manufacturing Ltd 03.00 pm Sutton 21/12/1999 H B S Trophies Ltd 02.30 pm Birmingham Howard (106) Ltd 02.30 pm Birmingham 22/12/1999 Selsett Engineering Ltd 10.30 am Leeds Warwick Garages Ltd 11.00 am Newcastle-u-Tyn 23/12/1999 Allied Entertainments Group Ltd - The 10.00 am London Astral Consumer Electronics Ltd 11.30 am Manchester Astral International Ltd 10.30 am Manchester Beverley Pig Products Ltd 03.30 pm Hull Crimescan Ltd 10.30 am Old Fletton Moss House Care Home Ltd 10.00 am Tankersley Multiscore Ltd 03.00 pm Nottingham Newbald Pigs Ltd 03.30 pm Hull Smis Ltd 11.00 am London Whirlow Brook Care Home Ltd 10.00 am Tankersley 07/01/2000 BMD International Ltd 11.00 am Manchester 84 N. Ireland - Creditors Voluntary Liquidation 20/12/1999 DMD Electronics Ltd 03.00 pm Dungannon 95 Members converting to Creditors Voluntary Liquidation 04/01/2000 Diptek Ltd 11.45 am London 98 Creditors Voluntary Liquidations 20/12/1999 A B Dixon Industrial Flooring Ltd 11.30 am Altrincham Applied Photosynthetics Ltd 10.15 am Manchester Axiom Holdings Ltd 12.00 pm London Betalite Design Ltd 11.00 am Birmingham Birch Retail Project Management Ltd 11.15 am Bately Burn Fireclay Co Ltd - The 10.30 am Newcastle-u-Tyn Claytons Of Leicester Ltd 11.00 am Nottingham Compass Screening & Services Ltd 10.00 am Leeds Continental Camping & Leisure Ltd 03.30 pm Eastbourne County 2000 Ltd 11.00 am London D & S Interiors Ltd 11.00 am Grantham Dinnington Colourways Ltd 02.00 pm Sheffield Dynamarketing Ltd 02.30 pm Glazebrook Elmhedge Ltd 11.30 am Glazebrook Far Out Fashions Ltd 12.00 pm London Fox Computer Services Ltd 10.30 am Salisbury G & T Meats Ltd 11.00 am Wolverhampton Gerrard-Bram (NW) Ltd 11.00 am Liverpool Helpform Ltd 10.00 am Dundee IGM Security Ltd 11.00 am Southport Imagination by M&M Design Promo Ltd 03.00 pm Billericay JHB Hocknell & Son (Engineers) Ltd 10.30 am Birmingham Kenny of London Ltd 04.00 pm London Keystone Fabricators Ltd 03.00 pm Sleaford London and City Consultants Ltd 03.30 pm Brighton Marnel Ltd 11.00 am London Meeting Systems International Ltd 11.15 am Pinner Network Select Communications Ltd 12.30 pm London Newport & Dist Work Mens Clb & In Ltd 10.30 am Stockton-on-Tee P M L Engineering & Building Serv Ltd 12.00 pm London Paint Safe Ltd 01.30 pm London Peak Fashions Ltd 12.00 pm Derby Phillip Matthews Construction Ltd 12.30 pm Watford Picton Cleaning Services Ltd 11.30 am Liverpool RPM (GB) Ltd 03.30 pm London Readydraw Ltd 11.30 am Warwick Springfern Ltd 12.00 pm London Stone Coatings Ltd 10.30 am Walsall Sussex Logistics Ltd 11.00 am Brighton Theatre In The Downs (The Playhse Co L 03.00 pm Swindon Waddell Scaffolding Ltd 12.30 pm Sheffield Yorkshire Environmental Services Ltd 12.00 pm Manchester 21/12/1999 A P Engineering & Construction Ltd 11.00 am Northampton Aerial Maintenance (Liverpool) Ltd 03.30 pm Southport Alexton Separates Ltd 03.00 pm London Amrock Ltd 12.00 pm West Drayton Anco Communications Ltd 11.30 am Wembley Armitage & Rhodes Ltd 02.00 pm Manchester Beechpoint Ltd 10.00 am Birmingham Bence Holdings Ltd 11.00 am Liverpool Blast Tech (UK) Ltd 10.30 am Lewes Chene Ltd 02.30 pm Fleet Design House 2000 Ltd 12.00 pm Caernarfon Door Stop Ltd - The 12.00 pm Glasgow Dove Marketing Ltd 11.15 am Gerrards Cross Edenrose Properties Ltd 11.30 am Hertford Egerton Boiler Installation Serv Ltd 11.30 am Preston Elegant Building Co Ltd 11.00 am Wolverhampton Euroscene Services Ltd 10.30 am Bury-St-Edmunds Fento Building Services Ltd 02.30 pm London Fleet Supply Ltd 11.00 am London Goodscene Ltd 11.30 am Crewe Hendersons (Kitchens & Bedrooms) Ltd 12.00 pm Manchester Kelson Electrical Contracts Ltd 10.15 am Bately Ledgegold (1996) Ltd 11.00 am Birmingham Lion Leisure Ltd 11.30 am Paisley Londons Grand Christmas Parade Ltd 02.30 pm Egham M F E Ltd 11.00 am Chatham March Group Plc 11.00 am London Masterform Ltd 11.00 am London Michael Self Marketing Ltd 11.00 am Todwick Midland Motor Components Ltd 11.30 am Dudley Mouse & Keyboard Ltd - The 12.00 pm London Network Evolution Ltd 11.30 am London New You Clinic Ltd - The 10.00 am London P Van Zelst & Son Ltd 12.00 pm Manchester Park Summit Ltd 11.00 am Southport Pennine Wanderer Ltd 03.00 pm Watford Premier Baby Direct Ltd 02.30 pm Eastbourne R W Hattee Construction Ltd 11.00 am Sheffield Riverbay Designs Ltd 03.00 pm Stoke-on-Trent Rowan Building Contractors Ltd 12.00 pm Manchester Samuel Jellyman (Cannock) Ltd 11.30 am Aldridge Select Windows Ltd 03.00 pm Royston Simon & Simon (Lampshades) Ltd 04.00 pm Manchester Sutton Executive Centre Ltd 11.30 am Birmingham Team Project Management Ltd 02.30 pm Marlow Tickled Pink Ltd 10.30 am Bromsgrove WWW.Com.Internet Ltd 10.15 am Liverpool Woods of Worcester Ltd 12.00 pm Worcester 22/12/1999 Advanced Network Consulting Ltd 11.30 am London Advisory Serv (Clinical & General) Ltd 11.30 am London Adwell Construction Ltd 03.00 pm London Alexander Metal Co Plc 11.00 am Wolverhampton Beever Anchorlyte Ltd 10.30 am Halifax Blue Chip Management Ltd 10.30 am Gloucester Case Technology Ltd 11.30 am Watford Cleland Motorsports Ltd 10.30 am London Clogs Ltd 10.30 am Reading Conner Systems Ltd 12.00 pm London Conway Computers Ltd 11.00 am Bristol Eccentric Engineering Ltd 12.00 pm Cardiff Environmental Acoustics Ltd 11.30 am Leicester F S Clapton Ltd 03.30 pm London Hariom Ltd 02.30 pm London Healthworks Ltd 10.15 am Leeds Huband Electrical Supplies Ltd 11.00 am Birmingham Independent Education Brokers Ltd 11.00 am Redhill Laceknit (1989) Ltd 10.30 am Nottingham Lawrence T C T Knife Co Ltd 10.30 am Sheffield M & N UPVC Products Ltd 10.00 am West Bromwich Malvern I T Ltd 11.30 am Glazebrook Mellowcraft Furniture Ltd 11.00 am Brighton Millennium Sales Associates Ltd 10.30 am London Music Mania Ltd 01.30 pm Warrington New Granada Leeds Ltd 02.00 pm London Pip Balfe Interiors Ltd 10.30 am Bromsgrove Pound World South West Ltd 03.00 pm Bristol Primewise Ltd 12.00 pm London Protocast Ltd 10.30 am Manchester Q A I Ltd 10.15 am Stockton-on-Tee Quest Design Print Ltd 11.00 am Northwich Quickset Ltd 03.30 pm Lutterworth R and D Auto Manual Transmissions Ltd 11.00 am Warmsworth Rotherside Environmental Services Ltd 10.30 am Sheffield Southern Property Care Services Ltd 10.15 am Worthing Starlink Ltd 02.00 pm London Synetica Knowledge Technologies Ltd 10.30 am Hove Tudor Headwear Ltd 10.30 am London Vibronoise Ltd 11.30 am Altrincham Welling Auto Panels Ltd 03.00 pm London Worklease Ltd 11.00 am London 23/12/1999 Asprey Harris Ltd 01.00 pm London BPM Moving Image Ltd 11.30 am Altrincham Cavegreen Ltd 10.00 am London D N Distribution Ltd 11.30 am Birmingham Frank Starkey Ltd 11.30 am Birmingham Horndon Hardwoods Ltd 10.30 am Guildford Manor Construction (North East) Ltd 11.30 am Darlington Mercury Express (UK) Ltd 10.00 am Liverpool Mercury Express London Ltd 10.00 am Liverpool N P Trimmings (London) Ltd 10.30 am London Nile and Mackenzie Ltd 10.30 am London Peter Fischer & Associates Ltd 10.15 am Sutton Premia Ltd 11.25 am Corby Processing Concepts Ltd 11.30 am Leicester Safelow Ltd 01.30 pm Carnforth Service Inns Development Ltd 11.45 am Sutton Service Inns Ltd 11.15 am Sutton Take Three Printers Ltd 03.00 pm Welling Trafalgar Building Services Ltd 11.00 am London U C M Worldwide Ltd 12.00 pm London UKR Resourcing Centre Ltd 11.00 am Manchester Vonand Ltd 11.30 am Manchester Waterfront Contracts Ltd 11.00 am Birmingham Wong Singh Jones Ltd 11.30 am Stanmore 24/12/1999 Creative Impressions Ltd 10.30 am London Kudos Fashions Ltd 11.30 am London 30/12/1999 Permier Leisure (Kent) Ltd 12.00 pm London Presentation Services (Bristol) Ltd 11.00 am Corsham Whitehurst Engineering Ltd 11.00 am Dunfermline 04/01/2000 Feenix Ltd 02.30 pm Stoke-on-Trent Magna Industries Ltd 02.30 pm Salisbury 05/01/2000 Ales Direct (Lancs) Ltd 12.00 pm Blackpool 06/01/2000 Brown & Rowan Ltd 12.00 pm Witney M H P C Associates Ltd 11.30 am London MSC Developments (Sussex) Ltd 10.15 am Hove Manor Park Decorating & Building Ltd 10.30 am Doncaster 07/01/2000 Hartland Construction Services Ltd 11.30 am London Rochester Management (UK) Ltd 12.30 pm London
TW LW TW LW
USA 1.60 1.63 Canada 2.37 2.41
Austria 21.82 21.86 Portugal 317.86 318.59
France 10.42 10.42 Belgium 63.96 64.10
Finland 9.42 9.44 Italy 3069.60 3076.99
Germany 3.10 3.10 Sweden 13.61 13.65
Holland 3.49 3.50 Switzerland 2.54 2.54
Spain 263.81 264.40 Ireland 1.25 1.25
Australia 2.50 2.55 Denmark 11.80 11.82
Hong Kong 12.43 12.68 Euro 1.58 1.58
Africa Com 9.82 10.03 Saudi Arabia 6.00 6.11
India 69.58 70.86 Malaysia 6.08 6.19
Singapore 2.67 2.73 Norway 12.79 12.91
Japan 165.15 167.75
TW This week LW Last week.
Costain a takeover target of 7% shareholder Skanska, the Swedish Construction Group, since Intria of Malaysia decided to sell its 37% stake, is rumoured to have attracted the attention of Taylor Woodrow amongst others.
Dawson Holdings announced pre-tax profits of 19.8 million pounds, after exceptional credit, on turnover of 823.6 million, for the fifty three weeks ending 2nd October 1999. Earnings per share stand at 16.8p.
First Choice announced pre-tax profits of 46.9 million pounds, after exceptional charge, on turnover of 1,466 million, for the year ending 31st October 1999. Earnings per share stand at 10p.
Rumours of a takeover bid for Marks & Spencer, caused a sharp up-turn in its dwindling share price. However before long the shares fell once again as expected bidders failed to emerge.
DHL, the international express-delivery firm, announced plans for an IPO to sell 23% of the company before the middle of 2001. Japan Airlines is selling a 20% stake in DHL and retaining a 6% holding; this will be added to a 3% stake sold by Nissho Iwai and held by DHL in an investment trust.
Source - The Economist
Perrier Vittell, the French bottled-water company, whetted taste buds by announcing that it would launch a new European bottled mineral water in 2000. However, the company revealed little about the new product in order to "maintain the suspense".
Source - The Economist
MERGER CLEARANCE
PROPOSED MERGER BETWEEN ANGLO AMERICAN PLC AND TARMAC PLCKim Howells, Minister for Competition and Consumer Affairs, has decided, in accordance with the advice of the Director General of Fair Trading, to request the European Commission to refer to the UK authorities the proposed acquisition by Anglo American plc of Tarmac plc under Article 9 of the EC Merger Regulation. This is currently being considered under the EC Merger Regulation.
Dr Howells said;
"I consider that the proposed merger raises competition concerns in distinct markets in the UK which warrant further investigation. I am therefore requesting the European Commission to refer the case to UK."
If the Commission refers this merger to the UK authorities, it will be considered under the merger provisions of the Fair Trading Act.
The proposed merger between Anglo American plc and Tarmac was notified to the European Commission on 23 November 1999 under the terms of the EC Merger Regulation (Council Regulation 4064/89 as amended by Council Regulation 1310/97). In accordance with Article 19 of the Regulation the UK received a copy of the notification on 24 November 1999.
Under Article 9 (2)(a) of the EC Merger Regulation a Member State may inform the EC Commission that a merger threatens to create or to strengthen a dominant position as a result of which effective competition will be significantly impeded on a market within that Member State, which presents all the characteristics of a distinct market.
If the Commission considers that a merger threatens to create or to strengthen a dominant position as a result of which effective competition would be significantly impeded on a distinct market within that Member State it shall either:-
The UK has made five Article 9 requests to the Commission for a case to be referred to the UK authorities. These requests were in the cases of Exxon Corporation/Mobil Corporation (1999), Electricite de France/London Electricity PLC (1999), Redland plc/Lafarge S.A (1997), GEHE and Lloyds (1996) and Tarmac/Steetley (1992).
PROPOSED NEWSPAPER TRANSFER: NEWSQUEST MEDIA GROUP LTD / THE CLARION
The Secretary of State for Trade and Industry has been asked to consent, (under section 58(4) of the Fair Trading Act 1973), to the transfer to Newsquest Media Group Ltd of The Clarion, without a report from the Competition Commission (CC). Anyone wishing to comment on the proposed transfer should write by 6th January 2000 to:
Competition Policy Directorate 1,
Department of Trade and Industry,
Room 634,
1 Victoria Street,
LONDON,
SW1H 0ET.
The Fair Trading Act 1973 (sections 57-62) provides that the transfer of a newspaper to a newspaper proprietor whose newspapers, including the titles to be transferred, have an average paid-for circulation per day of publication of 500,000 or more copies, shall be unlawful and void unless a transfer is made with the written consent of the Secretary of State. The circulation figures for papers owned by Johnston Press Plc means such consent is required.
A reference to the Competition Commission (CC) is normally required before consent is given but there are some exceptions to this rule. For example, under section 58(4), where each of the newspapers to be acquired has average sales per day of publication of not more than 50,000 copies, or, under section 58(3), where the newspaper concerned is not economic and either the paper is to close, or if it is to continue the case is urgent.
An application made under sections 58(3) or 58(4) may, as in this case, be "expressed to depend" on the Secretary of State exercising his discretion to give consent without requiring a report from the CC. In such cases the Secretary of State is limited to giving or refusing consent. If consent is refused the parties may make another application, which is not dependent on consent being given without a CC inquiry. Alternatively they are free to submit an amended proposal if they wish.
In coming to a decision the Secretary of State will have regard to all matters which appear relevant (for example competition, concentration of ownership, efficiency and employment), amongst which will always be the need for accurate presentation of news and free expression of opinion. This is the approach the CC takes in investigating a proposed newspaper merger and reporting to the Secretary of State on whether or not it may be expected to operate against the public interest.
The parties to the proposed transfer are:
Newsquest Media Group Ltd,
Newspaper House,
34-44 London Road,
Morden,
Surrey,
SM4 5BR.
Mr S R Crane and Mrs V I Crane,
30 Queen Street,
Redcar,
Cleveland,
TS10 1BD.
The titles to be transferred are:
Free weekly newspapers:
The Clarion.
STEPHEN BYERS CLEARS THE PROPOSED ACQUISITION OF NATIONAL WESTMINSTER BANK PLC BY THE ROYAL BANK OF SCOTLAND
Stephen Byers, Secretary of State for Trade and Industry, has decided on the information at present before him not to refer the proposed acquisition of National Westminster Bank Plc by the Royal Bank of Scotland to the Competition Commission.
Mr Byers made his decision in accordance with the recommendation of the Director General of Fair Trading (DGFT).
Announcing his decision, Mr Byers said:
"The DGFT has advised me that this merger does not raise concerns which would warrant reference to the Competition Commission under the provisions of the Fair Trading Act 1973.
"The banking sector is of central importance in its own right and for the economy as a whole. I have considered the DGFT's advice carefully, and am persuaded that the merger will not raise competition concerns in the banking sector that would warrant a reference. The parties face significant competition from other institutions over a range of their services and I do not believe that the merger would give them a significant increase in market power that would merit a referral."
The proposed merger qualifies for investigation under both the assets and share of supply tests of the Fair trading Act 1973.
PROPOSED INVESTMENT BY FRANCE TELECOM SA IN NTL
Stephen Byers, Secretary of State for Trade and Industry, announced on the 16 December that he has decided not to refer the proposed investment by France Telecom (FT) in NTL Incorporated (NTL) provided FT give undertakings to remedy the competition concerns.
This is in accordance with the advice of the Director General of Fair Trading (DGFT).
Mr Byers said:
"This investment raises significant concerns in the supply of digital terrestrial transmission services in the UK for both TV and radio. If it went ahead, FT would have material influence in the only two companies operating in this market, Crown Castle UK and NTL. This clearly gives rise to competition concerns.
"I have decided that in this case the competition concerns can be met by requiring FT to fully divest its holdings in Crown Castle UK Holdings Limited, Crown Castle UK Limited and Crown Castle International Corporation.
"If FT agree to this course of action then there will be no reference to the Competition Commission. This is in line with the advice from DGFT and I have asked him to seek an undertaking to divest by January 25th 2000."
It is proposed that the divestment should be required within a period of three months of the undertakings being formally agreed. Interested parties are invited to make their views known on the appropriateness of these measures to remedy the adverse effects of the merger. Representations should be made in writing to the Office of Fair Trading by January 5th 2000. A second consultation will take place on draft undertakings, and a further announcement will be made after the DGFT has submitted further advice following the consultation periods.
Section 75G of the Fair Trading Act 1973 (inserted by section 147 of the Companies Act 1989 and amended by the Deregulation and Contracting Out Act 1994) enables the Secretary of State to accept undertakings as an alternative to making a merger reference to the Competition Commission. The Secretary of State must consider whether such undertakings remedy or prevent adverse effects of the merger specified by the DGFT.
Interested parties wishing to make representations on the contents and scope of the undertakings which should be offered by FT should do so in writing by 5pm on January 5th 2000 to Steve Lisseter, Office of Fair Trading, 15-25 Bream's Buildings, LONDON, EC4A 1PR
KPMG Consulting looks at the first steps to profiting from the Net
The e-business myths created by the rush to 'e-everything' in business must be eradicated if companies are to profit from commerce over the Net, according to Graham Oates, head of solutions at KPMG Consulting.
Speaking along side Steve Ballmer, President Microsoft Corporation, in Stockholm at the "How Digital is Your Company" briefing presenting the issues and strategies for E-commerce and Knowledge Management, Graham Oates commented: "The myths that are currently generated about e-business are based on the dramatic change brought about by companies' increased use of the Internet in the last five years. This e-revolution has shown how organisations can be run to different rules. But, eventually, the classic rules of business will reassert themselves in this virtual environment and the winners will be the ones that did it first, and did it best."
Graham Oates went on to outline his "top five myths" surrounding e-business and the truth behind them:
Price dominates customer decision making - as customers online have, in theory, unlimited access to information about sellers, price is assumed to be the dominant factor in purchasing decisions and e-commerce is assumed to become a guarantee of deflation. But this is not so! The brand, performance of the product and the quality of the service will still remain core to many decisions in purchasing.
The Internet is borderless - while the Internet itself may not be constrained by physical borders, the products themselves still need to be delivered. This can involve exporting and importing goods across different trade barriers and must take into account differing government legislation. For instance, a UK company may be able to access a US pharmaceutical web site and order goods, but not all drugs/medicines that are legal in the US are legal in the UK, restricting imports.
Barriers to entry are low - starting up on the Internet is relatively easy to do at the moment, but, with so many existing firms and new market entrants entering this medium, the issue will not be one of setting up online, but of finding the niche in the market to make an impact. Space dominance will deter competition; those companies who establish a presence now will be in a far better position than those who join later.
The middleman is dead - where e-commerce results in disintermediation, the middleman - usually the distributor - is assumed to disappear. But where one species disappears, another is formed; in this case the 'infomediary'. Placed between the supplier and the end-consumer, the infomediary's role will be to find both products for buyers and to find buyers - or potential buying groups - for sellers.
Internet businesses never make money - The reason why many Internet businesses are not currently making money is because the people who own them don't want them to make money. The current remit of Internet business is to achieve scale and acquire customers. This matters more than profit at the outset, as the incremental cost of the incremental transaction is negligible. This does not mean, however, that they will always lose money. Once the scale has been achieved, the profits will appear.
Graham Oates concluded: "The growing trend to 'e' everything in business is sweeping companies along a tidal wave of new technology, ways of marketing and channels to market. But, sooner or later, this wave will break. At the same time, the myths that have been formed around e-business will diminish as organisations reach their goal of performing in a virtual marketplace but one in which many of the traditional laws on economics will continue to hold sway."
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