“There’s no difference between any of them” is, we’re often told, how electors view the political parties. But ever since the days of “Butskellism” there have been more similarities than differences between the parties.
And while there is not a revolutionary gulf between the 2010 election Labour manifesto and Conservative manifesto, there are some clear differences. One significant difference for business interests is on takeovers.
Labour holds that many takeovers are good for neither predator nor prey and that the system needs reform. By contrast the word “takeover” doesn’t even appear in the Conservative manifesto.
Labour is playing to the gallery, substantially orchestrated by the Unite trade union’s anger over Kraft’s hostile takeover of Cadbury. Labour wants to introduce a higher threshold of support among shareholders to agree a takeover; increasing it from a half to two thirds. It also says that the case for limiting the right to vote to those on the register before a bid “should be examined”.
Labour is clearly throwing a sop to unions, leftwingers and little Englanders, upset about losing control of a British-owned chocolate manufacturer. But it is short on specifics and clearly wants to avoid joining France in regarding the British equivalent of yoghurt makers as a strategic interest of the national economy.
No one is seriously proposing the “Cadbury’s Law” that the unions were looking for. Nevertheless, Labour is more likely to place some restrictions on takeovers, even if they turnout to be a lot weaker than its supporters hope for and that business fears. A two-thirds rule would enable at least some inefficient managements to use minority coalitions of shareholders to protect themselves from proper scrutiny, and dismissal. But it is not in the interests of businesses or the UK economy to enable blocking minorities to protect weak, inefficient or incompetent management.
Earlier this year, the Takeover Panel announced a consultation on the Takeover Code to look at how shareholders decide on the merits of takeovers. Labour’s manifesto partly pre-empts this consultation and should the Conservatives win the election, it may never see the light of day. But the political difficulties that come with some takeovers cannot be wished away.
Most business takeovers run their course without much discussion beyond the City pages of newspapers, but there will be some that run the risk of public controversy and a minority Conservative Government or one with only a small majority could come under political pressure to protect, so-called, vital British interests.
Under such circumstances, whether a takeover bid is accepted or resisted, all parties involved will need to explain proactively to all stakeholders, the case for or against a bid. Whoever forms the next Government will not thank the combatants in takeover battles for dragging them into political controversy. If that happens, they may yet find the Takeover Panel stepping into the ring to call time out.