COMMERCIAL-IN-CONFIDENCE
CONFIDENTIAL AND MARKET SENSITIVE
21 The MMC, by contrast, is well-equipped to make such assessments, and can also look into wider issues such as the possible benefits from rationalisation mentioned above. I conclude therefore that it is in every way preferable for the MMC to make a thorough' examination of the case. If they then recommended that the mnerger should be permitted to proceed, with or without divestments of branches, there would have been the most searching and public testing of Lloyds' assumptions.
VIEWS OF THIRD PARTIES
22 A wide range of business, employee and consumer interests
particularly those representing small businesses - have expressed concern about the diminution in competition, and possible job losses, expected to result from a Lloyds/Midland merger. None was favourable to Lloyds, or adverse to HSBC (several representations supported their bid). Concerns about employment and the possible loss of service in rural areas were also expressed. The Annex contains the details.
HSBC'S BID FOR MIDLAND
23 I now turn to the remaining aspect on which I need to advise you relating to HSBC's bid - that is whether you should seek an exit of this case to UK jurisdiction (and hence make an MMC reference) under Article 21(3) of the ECMR. The case for this has been promoted most strongly by Lloyds. In summary, the main arguments are that HSBC's bid should be referred to the MMC because of : i) concerns about prudential matters and possible detriments arising from the "foreign" nature of HSBC and in particular its position in Hong Kong and the post-1997 situation; and ii) if Lloyds is referred to the MMC, the need to ensure "evenhandedness" in the regulatory treatment of the two rival bids.
24 I have examined these arguments carefully and have been assisted in this by the views of other departments, in particular the Foreign and Commonwealth Office (FCO), and of the Bank of England (the Bank) (see Appendices 1 and 2 to the Annex). On the first argument, the advice of the Bank of England (in regard to prudential matters) is that it is, or shortly will be, satisfied on all prudential issues. There does not appear to be reason for further action on these grounds. It is moreover doubtful whether any further consideration of them would be an appropriate matter for the MMC rather than the Bank. On the Hong Kong issue, the FCO are also satisfied there are no public policy grounds for an MMC
CONFIDENTIAL AND MARKET SENSITIVE
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COMMERCIAL-IN-CONFIDENCE
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