There is one good reason why government should not decide who should in the future owns the assets of Astra Zeneca. That is the government does not own them, someone else does. If you want to live in a free society you need to permit private property, and allow people to sell and buy property as they see fit.
There has been a bipartisan agreement for many years that the government should only intervene to stop a takeover of a company if the takeover damages competition too much in the marketplace. Then government does intervene to prevent the accumulation of monopoly power by private interests. This settlement has also been reinforced by EU Competition Law. The last Labour government decided to make our competition law comply fully with emerging EU rules and requirements, which too are based on the prime aim of preventing damage to c0mpetition in the market. Monopolies are bad things, allowing companies to overcharge, provide a bad service, and fail to invest and innovate. That’s something the public sector knows all about from some of its own activities.
There have been few exemptions to the primacy of competition as the sole criterion to intervene. Media plurality is said to be one of them, yet this is really a reinforcement of the importance of anti monopoly provisions in the area of newspapers and tv channels. The main aim is to keep these markets competitive or to encourage more competition. They do not seem to apply to state broadcasters, in the usual asymmetric EU way.
Defence businesses may also operate under stricter and more comprehensive rules. In practice anyway government has a major role in deciding whether a defence business takeover or merger goes ahead, as the state is the main customer. It would be odd indeed if someone sought to buy out a defence business in the UK that the UK government did not like, as they would not be able to sell the product to the home market, and the overseas sales are heavily regulated by the government. Sensitive technologies of importance to UK defence are protected by official secrets laws.
There is now also an additional criterion allowing government to intervene if a merger might threaten the stability of financial markets. Again this is little more than an underlining of the competition rules in the banking and financial sectors. Only very large mergers are likely to cause problems under this clause, and they could also be ruled out on the grounds of market share in most cases as well. Anyone seeking to buy a financial business would be well aware that it has to remain a regulated business, where the Financial regulators can force any requirements on the business they like when it comes to capital and conduct.
Mr Miliband now says he wants a national interest catch all clause br0ught back. He might find this is against the EU law on this topic, which could cause him some embarrassment as a good European enthusiast. He will also need to explain on what grounds government should intervene apart from competition under this new clause, and try to persuade us how a government Minister would be a better judge of these things than the owners of the company concerned. He will also need to reassure us that this is not some further anti rich foreigner rant of the kind we are becoming used to from his party. It is always easy for a company to make all sorts of generous promises to the workforce and about investment plans when trying to buy a company, but nothing to stop them changing their mind after the event or if circumstances change.
There are good foreign takeovers of UK companies and bad ones. I do not defend the right of foreign interests to buy UK companies on the grounds that the new owners will always be successful business people, or that they will always act in the interests of a UK workforce. Like British owners of businesses, some will prove talented and resourceful backers of the businesses they buy, and will grow them successfully here. Some will grow them worldwide. Some will do badly, or will strip assets out, just as some home spun entrepreneurs do. I just don’t think government Ministers would be good at deciding who are the good guys to be trusted and who the bad. Nor do I think British owners of businesses will prosper as much or work as hard if they know they will not be allowed to sell to the best bidder when the time comes.