R v Monopolies and Mergers Commission, Ex parte Argyll Group Plc (Argyll Group Plc, Ex parte)

Under section 75(5) of the Fair Trading Act 1973, a prospective-merger reference may be laid aside if the actual arrangements under investigation at the date of the reference have been abandoned and replaced by arrangements that are significantly different. The replacement arrangements may themselves create a merger situation qualifying for investigation.

Whether the original proposal has been abandoned, rather than merely modified, is a question of fact and degree for the Commission. A defect in the internal authority by which a public body reaches its decision does not require judicial-review relief where the court’s discretion, informed by the purpose of the statutory process, public reliance, speed, finality and the applicant’s relevant interest, makes relief inappropriate.

Argyll, a minority shareholder in Distillers and a competing bidder, sought judicial review after the Chairman of the Monopolies and Mergers Commission concluded that the proposal covered by a reference concerning Guinness’s bid for Distillers had been abandoned. With the Secretary of State’s consent, the reference was laid aside and Guinness made a revised bid involving divestment of specified whisky activities.

Macpherson J refused the application. Argyll appealed, contending that the revised bid was merely a variation of the original proposal; that the Chairman had no authority to act alone; that Argyll had sufficient interest; and that relief should be granted. The central issue was the meaning of section 75(5) of the Fair Trading Act 1973.

1. Appeal dismissed. The Master of the Rolls, Lord Justice Dillon and Lord Justice Neill each concluded that section 75(5) had been correctly construed. The relevant proposal was the actual proposal to make the arrangements investigated at the date of the reference, not every future arrangement falling within the broad description in the reference.

2. The Master of the Rolls held that a reference concerns arrangements then in fact in progress or contemplation, although it must describe them generally because the Secretary of State may lack precise information. Lord Justice Dillon held that section 75(2) confines the statutory deeming process to those arrangements. Lord Justice Neill similarly held that the question under section 75(5) is whether the actual proposal under investigation was abandoned or merely modified.

3. Accordingly, a later proposal may justify laying the reference aside if it is significantly different from the original arrangements, even though it would also create a merger situation qualifying for investigation. Colourable changes will not suffice. The qualitative assessment is for the Commission as a matter of fact and degree. The court therefore rejected Argyll’s construction.

4. The Master of the Rolls, with whom Lord Justice Neill agreed on this issue, concluded that the Chairman had no statutory power to decide alone that the reference should be laid aside before a group had been appointed. The established administrative practice was sensible but could not create authority. Lord Justice Dillon found it unnecessary to decide that question.

5. All members of the court considered that Argyll had sufficient interest to bring the proceedings. Nevertheless, relief was refused in the court’s discretion. A properly constituted group could reach the same conclusion; the Secretary of State had consented and could have made a fresh reference; Guinness and others had acted on the announcement; and the statutory process required expedition and finality. The appeal was dismissed with costs, and leave to appeal to the House of Lords was refused.

• Court of Appeal (Civil Division): dismissed Argyll’s appeal: [1986] 1 WLR 763.
• High Court (Crown Office List): Macpherson J refused Argyll’s substantive application for judicial review on 6 March 1986.