A number of issues relevant to postings on these pages have been raised during the campaigning for the UK general election. For example, following Kraft’s acquisition of Cadbury, the Labour government proposes to raise the voting threshold for such deals from a simple majority to two thirds of shareholder votes and to exclude from voting any shares acquired since the bid was announced. This would at least slow down some such deals, but as the Liberal Democrats claim, would go nowhere near re-imposing a ‘public interest’ test which would give ministers the power to intervene in deals deemed to be against the public interest. Such a test was abandoned in 1992 with the support of both main parties. But public interest is a vague and inadequate hurdle for such deals, especially when likely British governments will claim the preservation of free and open markets is the prime public interest. So electrical supply company Chloride, and bus and train operator Arriva, the latest targets of foreign bidders, can expect little protection. Unlike, for example, their German counterparts, whose employee stakeholders have 50% representation on the supervisory board and would be able to provide some protection against bids which were against the long term interests of the company, as opposed to the short term interests of its shareholders. UK law requires directors should take the interests of all stakeholders into consideration, not just what the government of the day regards as the public interest.
Another issue that has caused some debate in the run up to the election is the Liberal Democrats’ proposal to again separate commercial banking from hedging and speculative activities, and to tax and regulate the latter differently from traditional banking. This would have the added benefit of breaking up some firms which are currently ‘too big to fail’. The two main parties are united in their objections to this approach, presumably for fear it would reduce London’s attractions as the world’s largest hedging base, and some might leave. However, hedge funds may find the United States even less comfortable. And most G20 nations are moving in that same direction. The days when ‘socially useless’ hedging enjoys total freedom may be numbered.