Mergers and the evolution of patterns of corporate ownership and control: The British experience

Business History

Volumn 46, Issue 2, 2004, Pages 256-284

  Cheffins, Brian R ^a  

^a UNIVERSITY OF CAMBRIDGE   (United Kingdom)

Author keywords

[No Author keywords available]

Indexed keywords

CORPORATE STRATEGY; FIRM OWNERSHIP; MERGER;

EURASIA; EUROPE; UNITED KINGDOM; WESTERN EUROPE;

EID: 2942582312     PISSN: 00076791     EISSN: 17437938     Source Type: Journal    
DOI: 10.1080/0007679042000215124     Document Type: Article

References (404)

1. L. Hannah, Rise of the Corporate Economy (London, 1976, 2nd edn. 1983). Subsequent references to this book are to the 2nd edition.
2. See, for example, L. Hannah, 'Mergers in British Manufacturing Industry, 1880-1918', Oxford Economic Papers, Vol.26 (1974) pp.1-20.
3. L. Hannah, 'Takeover Bids in Britain Before 1950: An Exercise in Business "Pre-History'", Business History, Vol.16 (1974), pp.65-77.
4. For a thorough survey of mergers covering the post-war period, see J.G. Walshe, 'Industrial Organization and Competition Policy', in N.F.R. Crafts and N.W.C. Woodward (eds.), The British Economy Since 1945 (Oxford, 1991), pp.335-80.
5. On the twentieth century in general, see J.F. Wilson, British Business History, 1720-1994 (Manchester, 1995), pp.102-3, 144-8, 154-5, 194-214, 224-6, 233-9.
6. G. Jones, 'Big Business, Management, and Competitiveness in Twentieth-Century Britain', in A.D. Chandler et al. (eds.), Big Business and the Wealth of Nations (Cambridge, 1997), pp.118-19, 128-30.
7. D.J. Jeremy, A Business History of Britain, 1900-1990S (Oxford, 1998), pp.195-229.
8. Mergers have also been discussed in treatments of related topics. See, for example, S. Toms and M. Wright, 'Corporate Governance, Strategy and Structure in British Business History', Business History, Vol.44 No.3 (2002), pp.98-106.
9. The literature is too voluminous to cite. For an overview, see D.K. Denis and J.J. McConnell, 'International Corporate Governance', Journal of Financial and Quantitative Analysis, Vol.38 (2003), pp.21-9.
10. On the terminology, see B.R. Cheffins, 'Law as Bedrock: The Foundations of an Economy Dominated by Widely Held Public Companies', Oxford Journal of Legal Studies, Vol.23 (2003), p.2.
11. On why these dates are appropriate, see N.R. Lamoreaux, The Great Merger Movement in American Business, 1895-1904 (Cambridge, 1985), p.1.
12. See, for example, H. Hansmann and R. Kraakman, 'The End of History of Corporate Law', Georgetown Law Journal, Vol.89 (2001), pp.449-59.
13. See, for instance, A.D. Chandler, Scale and Scope: The Dynamics of Industrial Capitalism (Cambridge, MA, 1990), p.79.
14. W.G. Roy, Socializing Capital: The Rise of the Large Industrial Corporation in America (Princeton, 1997), p.254.
15. B.R. Cheffins, 'Mergers and Corporate Ownership Structure: The United States and Germany at the Turn of the 20th Century', American Journal of Comparative Law, Vol.51 (2003), p.473.
16. On why examining developments in the UK is instructive with respect to comparative corporate governance, see B.R. Cheffins, 'Putting Britain on the Roe Map: The Emergence of the Berle-Means Corporation in the United Kingdom', in J.A. McCahery et al. (eds.), Corporate Governance Regimes: Convergence and Diversity (Oxford, 2002), p.148.
17. J. Armour, B.R. Cheffins and D.A. Skeel, 'Corporate Ownership Structure and the Evolution of Bankruptcy Law in the US and the UK', Vanderbilt Law Review, Vol.55 (2002), pp.1704, 1714-20.
18. See, for example, M.J. Roe, Strong Managers, Weak Owners: The Political Roots of American Corporate Finance (Princeton, 1994).
19. J.C. Coffee, 'The Rise of Dispersed Ownership: The Roles of Law and State in the Separation of Ownership and Control', Yale Law Journal, Vol.111 (2001), p.1.
20. R. Rajan and L. Zingales, 'The Great Reversals: The Politics of Financial Development in the 20th Century', Journal of Financial Economics, Vol.69 (2003), p.5.
21. See, for example, Roe, Strong Managers, p.4.
22. Coffee, 'Rise', p.33.
23. Cheffins, 'Putting Britain', p.152.
24. L.A. Bebchuk and M.J. Roe, 'A Theory of Path Dependence in Corporate Ownership and Governance', Stanford Law Review, Vol.52 (1999), pp.143-6.
25. M.J. Roe, 'Rents and Their Corporate Consequences', Stanford Law Review, Vol.53 (2001), pp.1463, 1487.
26. J.C. Coffee, 'The Future as History: Prospects for Global Convergence in Corporate Governance and its Implications', Northwestern University Law Review, Vol.93 (1999), pp.641, 647, 652, 683.
27. R. La Porta et al., 'Investor Protection and Corporate Governance', Journal of Financial Economics, Vol.58 (2000), pp.4-6.
28. N.R. Lamoreaux, 'Entrepreneurship, Business Organization, and Economic Concentration', in S.L. Engerman and R.E. Gallman (eds.), The Cambridge Economic History of the United States, Vol.II: The Long Nineteenth Century (Cambridge, 2000), pp.412-13.
29. T.R. Navin and M.V. Sears, 'The Rise of a Market for Industrial Securities, 1887-1902', Business History Review, Vol.29 (1955), pp.106-12.
30. A.A. Berle and G.C. Means, The Modern Corporation and Private Property (New York, 1932), p.5.
31. Chandler, Scale, pp.75-8.
32. G. Bittlingmayer, 'Antitrust and Business Activity: The First Quarter Century', Business History Review, Vol.70 (1996), pp.367-8.
33. H.A. Marquand, The Dynamics of Industrial Combination (London, 1931), pp.40-45.
34. For data, see Lamoreaux, Great Merger, pp.2-4.
35. Coffee, 'Rise', p.29.
36. Cheffins, 'Mergers', pp.15-16.
37. Another useful test would be to evaluate what occurred in major economies where insider/control-oriented arrangements continued to prevail. Developments occurring at the turn of the twentieth century in Germany support the thesis that mergers matter with respect to ownership structure. See Cheffins, 'Mergers', pp.494, 501.
38. Armour et al., 'Corporate', pp.1704, 1750-54.
39. G. Stapledon, 'Australian Sharemarket Ownership', in G. Walker et al. (eds.), Securities Regulation in Australia and New Zealand (North Ryde, NSW, 2nd edn. 1998), p.243 (citing 1994 statistics).
40. M. Faccio and L.H.P. Lang, 'The Ultimate Ownership of Western European Corporations', Journal of Financial Economics, Vol.65 (2002), pp.378-83.
41. Hannah, 'Mergers', pp.2-3.
42. Ibid., pp.5-7, 18.
43. Chandler, Scale, p.287.
44. Hannah, 'Mergers', pp.10-11.
45. Hannah, 'Mergers', pp.11-12.
46. A.D. Chandler, The Visible Hand: The Managerial Revolution in American Business (Cambridge, MA, 1977), pp.336, 338-9.
47. N. Fligstein, The Transformation of Corporate Control (Cambridge, MA., 1990), pp.108-10.
48. Chandler, Scale, pp.73, 246-8, 286-7.
49. J.L. Clapham, An Economic History of Modem Britain (New York, 1938), pp.227-8.
50. T. Kempner, K. Macmillan and K. Hawkings, Business and Society: Tradition and Change (London, 1974), p.35.
51. On the United States, see G. Bittlingmayer, 'Did Antitrust Policy Cause the Great Merger Wave?', Journal of Law and Economics, Vol.28 (1985), pp.104-7.
52. On Britain, see Chandler, Scale, p. 247 (quoting a senior executive in Imperial Tobacco, Britain's dominant tobacco company, saying that the structure of the firm was like 'the Thirteen States of America, who, when the Federal Constitution was first adopted, gave the central government as little authority as possible').
53. G.R. Carter, The Tendency Towards Industrial Combination (London, 1913), p.333-4.
54. H.W. Macrosty, 'Business Aspects of British Trusts', Economic Journal, Vol. 12 (1902), p.354.
55. P.L. Payne, 'The Emergence of the Large-scale Company in Great Britain, 1870-1914', Economic History Review, Vol.20 (1967), pp.527-32.
56. On this label, see Chandler, Scale, p.12.
57. Hannah, Rise, pp.22-4.
58. Jeremy, Business History, p.204.
59. P. Wardley, 'The Emergence of Big Business: The Largest Corporate Employers of Labour in the United Kingdom, Germany and the United States c. 1907', Business History, Vol.41 No.4 (1999), pp.94, 102, 107.
60. The mining sector experienced only a handful of corporate amalgamations during the merger wave and consolidation of railway companies was prohibited between 1880 and the early 1920s. See Jeremy, Business, p.201.
61. P. Wardley, 'The Anatomy of Big Business: Aspects of Corporate Development in the Twentieth Century', Business History, Vol.33 No.2 (1991), pp.286-7.
62. Hannah, Rise, p.94.
63. L. Hannah, 'Visible and Invisible Hands in Great Britain', in A.D. Chandler and H. Daems (eds.), Managerial Hierarchies: Comparative Perspectives on the Rise of the Modern Industrial Enterprise (Cambridge, MA, 1980), p.43.
64. Hannah, Rise, p.123.
65. Y. Cassis, Big Business: The European Experience in the Twentieth Century (Oxford, 1997), pp.35-46.
66. Walshe, 'Industrial', p.342.
67. Wilson, British, pp.146-57.
68. M.W. Kirby, 'The Corporate Economy in Britain: Its Rise and Achievements Since 1900', in M.W. Kirby and M.B. Rose (eds.), Business Enterprise in Modern Britain: From the Eighteenth to the Twentieth Century (London, 1994), pp.150-51, 155.
69. G.G. Jones, Corporate Governance and British Industry', University of Reading Department of Economics Discussion Paper in Economics and Management, No.399 (1998-99), p.3.
70. Chandler, Scale, pp.358, 369, 377-8, 388, 392.
71. Walshe, 'Industrial', p.336.
72. A.D. Chandler, 'The Growth of the Transnational Industrial Firm in the United States and the United Kingdom: A Comparative Analysis', Economic History Review, Vol.33 (1980), p.404.
73. W. Lazonick, Business Organisation and the Myth of the Market Economy (Cambridge, 1991), p.48.
74. Chandler, Scale, p.388.
75. Chandler, 'Growth', p.404.
76. Jeremy, Business History, p.208.
77. Ibid., p.204.
78. Hannah, Rise, pp.94, 176-7.
79. S. Aaronovitch and M.C. Sawyer, Big Business: Theoretical and Empirical Aspects of Concentration and Mergers in the United Kingdom (London, 1975), p.124 (providing statistics on the number of firms, together with their share price value, which disappeared over three-year intervals).
80. Hannah, Rise, pp.93-4.
81. Jeremy, Business History, pp.205-6, 209.
82. Toms and Wright, 'Corporate Governance', pp.99-100.
83. J. Littlewood, The Stock Market: 50 Years of Capitalism at Work (London, 1998), p.164.
84. Jeremy, Business History, p. 199.
85. On the end of this merger wave, see Littlewood, Stock Market, pp.209-10.
86. P. Sargant Florence, Ownership, Control and Success of Large Companies: An Analysis of English Industrial Structure and Policy, 1936-1951 (London, 1961), pp.70-73.
87. Chandler, Scale, pp.235-7, 291-4, 390.
88. A. Colli and M.B. Rose, 'Families and Firms: The Culture and Evolution of Family Firms in Britain and Italy in the Nineteenth and Twentieth Centuries', Scandinavian Economic History Review, Vol.47 (1999), pp.31, 37.
89. Hannah, 'Visible', p.53.
90. This data provides at best qualified support for the proposition that families remained important shareholders since there is evidence which indicates that in UK companies family board representation has traditionally been disproportionately large as compared to share ownership: J. Franks, C. Mayer and S. Rosst 'The Origination and Evolution of Ownership and Control', ECGI Finance Working Paper 09/2003 (2003), p.12.
91. Hannah, Rise, pp.130-31.
92. Hannah, 'Takeover Bids', pp.67-8.
93. Colli and Rose, 'Families', p.40.
94. Florence, Ownership, pp.186-7.
95. Colli and Rose, 'Families', p.40.
96. G. Turner, Business in Britain (London, 1969), pp.221, 239.
97. Jones, 'Corporate Governance', p.14. See also Jones, Big Business, p.118.
98. M.G. Blackford, The Rise of Modern Business in Great Britain, the United States and Japan (Chapel Hill, NC, 2nd edn. 1998), pp.191-2.
99. Turner, Business, pp.232-5.
100. P.L. Payne, 'Industrial Entrepreneurship and Management in Great Britain', in P. Mathias and M.M. Postan (eds.), The Cambridge Economic History of Europe, Vol.VII, The Industrial Economies: Capital, Labour and Enterprise, Part I (Britain, France, Germany, and Scandinavia) (Cambridge, 1978), p.222.
101. See also Jeremy, Business History, p.216.
102. W. Davis, Merger Mania (London, 1970), pp.12, 91.
103. Franks et al., 'Origination'.
104. Ibid., pp.3, 11.
105. Ibid., pp.30, 32.
106. B. Cheffins, 'Comparative Corporate Governance and the Australian Experience', in I. Ramsay (ed.), Key Developments in Corporate Law and Trusts Law (Chatswood, NSW, 2001), p.29.
107. For empirical evidence illustrating the correlation, see Faccio and Lang, 'Ultimate', pp.381-3.
108. S. Claessens, S. Djankov and L.H.P. Lang, 'The Separation of Ownership and Control in East Asian Corporations', Journal of Financial Economics, Vol.58 (2000), pp.105-7.
109. Aaronovitch and Sawyer, Big, pp.146-50.
110. P.E. Hart and R. Clarke, Concentration in British Industry, 1935-75 (Cambridge, 1980), pp.50-53, 55-61, 97-9.
111. A. Hughes and A. Singh, 'Mergers, Concentration, and Competition in Advanced Capitalist Economies: An International Perspective', in D.C. Mueller (ed.), The Determinants and Effects of Mergers: An International Comparison (Cambridge, MA, 1980), pp.17-20.
112. Hannah, Rise, pp.149-50.
113. Ibid., pp.128-31, 150, 438. On the proportion of takeovers that were hostile as opposed to friendly between the 1960s and the 1980s, see Ibid., pp.149, 243.
114. J. Franks and C. Mayer, 'Hostile Takeovers and the Correction of Market Failure', Journal of Financial Economics, Vol.40 (1996), p. 165.
115. R. Nuttall, 'Takeover Likelihood Models for UK Quoted, Companies', Nuffield College (Oxford) Economics Working Paper 1999-W6 (1999), pp.4, 14.
116. For an overview of some of the major contributions to the discourse, see R.F. Himmelberg, 'Does Antitrust Matter? A Comparative History of Antitrust Policy and the Evolving Corporation in Britain and the United States', Reviews in American History, Vol.21 (1993), pp.273-8.
117. Bittlingmayer, 'Did Antitrust', pp.86-91, 116-18.
118. Chandler, Visible, pp.316-17, 332-4.
119. T. Freyer, Regulating Big Business: Antitrust in Great Britain and America, 1880-1990 (New York, 1992), pp.23-6, 76, 97-102
120. Lamoreaux, Great Merger, pp.14-16, 29-34, 45-6, 60-62, 84-6.
121. Chandler, Visible Hand, p.316.
122. C.S. Tippetts and S. Livermore, Business Organization and Public Control (New York, 2nd edn. 1941), pp.366-8.
123. R.F. Bensel, The Political Economy of American Industrialization, 1877-1900 (Cambridge, 2000), pp.314-15.
124. Freyer, Regulating, pp.22-3.
125. On the terminology, see Tippetts and Livermore, Business Organization, p.367.
126. Freyer, Regulating, pp.23-4.
127. Carter, Tendency, pp.32-3, 183.
128. H.B. Thorelli, The Federal Antitrust Policy: Origination of an American Tradition (Stockholm, 1954), pp.267-8.
129. United States v. Trans-Missouri Freight Ass'n, Vol.166 (1896) U.S., p.290.
130. United States v. Joint Traffic Ass'n Vol.171 (1898) U.S., p.505.
131. Lamoreaux, Great Merger, pp.45, 62, 87, 109-10,116,188.
132. Fligstein, Transformation, pp.59-65.
133. United States v. E.C. Knight, Vol.156 (1895) U.S., p.1.
134. Freyer, Regulating, pp.91, 101-2, 136-7, 155-6.
135. Bittlingmayer, 'Did Antitrust', pp.87-9.
136. Fligstein, Transformation, pp.69-73.
137. Northern Secs. Co. v. United States, Vol.193 (1904) U.S., p.197.
138. M.W. Watkins, Industrial Combinations and Public Policy: A Study of Combination, Competition and the Common Welfare (Boston, 1927), p.36.
139. J.W. Markham, 'Survey of the Evidence and Findings of Mergers', in National Bureau of Economic Research, Business Concentration and Price Policy (New York, 1955), p. 167.
140. See, for example, Freyer, Regulating, pp.20-35, 83-90.
141. Blackford, Rise, p.62.
142. D.C. Mowery, 'Firm Structure, Government Policy, and the Organization of Industrial Research: Great Britain and the United States, 1900-1950', Business History Review, Vol.58 (1984), pp.516-17.
143. Freyer, Regulating, pp.21-2.
144. Turner, Business, pp.33-4.
145. Carter, Tendency, pp. 146-59.
146. Freyer, Regulating, p.24.
147. W.R. Cornish, 'Legal Control Over Cartels and Monopolization, 1880-1914: A Comparison', in N. Horn and J. Kocka (eds.), Law and the Formation of the Big Enterprises in the l9th and Early 20th Centuries (Gottingen, 1979), pp.283-5, 288.
148. T. Freyer, 'Legal Restraints on Economic Coordination: Antitrust in Great Britain and America, 1880-1920', in N.R. Lamoreaux and D.M.G. Raff (eds.), Coordination and Information: Historical Perspectives on the Organization of Enterprise (Chicago, 1995), pp.184-92.
149. Freyer, Regulating, p.25.
150. Differences in the legal environment might not have been the only factor affecting the stability of anti-competitive alliances. On the possibility that American manufacturers were less likely to adhere to agreements to restrain competition because concepts of honour and deference counted for less, see T. Freyer, 'The Sherman Antitrust Act, Comparative Business Structure, and the Rule of Reason: America and Great Britain, 1880-1920', Iowa Law Review, Vol.74 (1989), pp.1014-16.
151. M.J. Sklar, The Corporate Reconstruction of American Capitalism, 1890-1916: The Market, the Law, and Politics (Cambridge, 1988), p.164.
152. A.D. Chandler and H. Daems, 'Administrative Coordination, Allocation and Monitoring: Concepts and Comparisons', in Horn and Kocka (eds.), Law, p.48.
153. Turner, Business, p.39.
154. Clapham, Economic, pp.213-14, 301-18 (noting, though, that there continued to be many sectors of the economy where competitive conditions remained robust).
155. Turner, Business, p.39.
156. Clapham, Economic, pp.301-2.
157. Hannah, 'Mergers', p.14.
158. G.R. Carter, The Tendency Towards Industrial Combination (London, 1913), p.33.
159. M. Keller, 'The Pluralist State: American Economic Regulation in Comparative Perspective, 1900-1930', in T.K. McCraw (ed.), Regulation in Perspective: Historical Essays (Boston, 1981), pp.64, 69-70.
160. A. Booth, The British Economy in the Twentieth Century (Houndmills, 2001), p.107.
161. See above, notes 41 to 45 and related discussion.
162. Hannah, Rise, pp.42-43, 135.
163. Freyer, Regulating, pp.179, 215-17.
164. A.F. Lucas, Industrial Reconstruction and the Control of Competition: The British Experiments (London, 1937), p.352.
165. Hannah, Rise, pp.43-7.
166. Freyer, Regulating, pp.185-7, 195, 213.
167. D. Swann et al., Competition in British Industry Restrictive Practices Legislation in Theory and Practice (London, 1974), p.40.
168. Hannah, Rise, pp.47-8.
169. Swann et al., Competition, p.42.
170. Kempner, Macmillan and Hawkins, Business, p.97.
171. Lucas, Industrial Reconstruction, pp.3, 65.
172. H. Mercer, Constructing a Competitive Order: The Hidden History of British Antitrust Policies (Cambridge, 1995), p.49.
173. S. Pollard, The Development of the British Economy, 1914-1990 (Frome, 4th edn. 1992), pp.79-81.
174. Mowery, 'Firm Structure', pp.516-17.
175. G.C. Allen, British Industry (London, 1944), p.21.
176. P. Fitzgerald, Industrial Combination in England (London, 1927), pp.3-7.
177. See also J. Foreman-Peck, Industry and Industrial Organisation in the Inter-War Years', in R. Floud and D. McCloskey (eds.), The Economic History of Britain Since 1700, Volume 2: 1860-1939 (Cambridge, 2nd edn. 1994), p.389 (estimating that, by the late 1920s, one-fifth of all employees worked in industries covered by market-rigging arrangements.)
178. Wilson, British, p.155.
179. Walshe, 'Industrial', pp.338, 342,361.
180. Lucas, Industrial Reconstruction, pp.2, 64-5.
181. Allen, British, pp.20-21.
182. Booth, British, p.111.
183. Lucas, Industrial Reconstruction, pp.339-41.
184. Hannah, Rise, pp.29, 31.
185. Foreman-Peck, 'Industry', p.386.
186. G.C. Allen, Monopoly and Restrictive Practices (London, 1968), p.54.
187. Forman-Peck, 'Industry', p.389.
188. Allen, Monopoly, p.54.
189. R.C. Michie, 'The Stock Exchange and the British Economy, 1870-1939', in J.-J. van Helten and Y. Cassis (eds.), Capitalism in a Mature Economy: Financial Institutions, Capital Exports and British Industry, 1870-1939 (Aldershot, 1990), p.105 (noting the effect the business climate had on profits).
190. Wilson, British, pp. 155-6.
191. Turner, Business, p.55.
192. C. More, The Industrial Age: Economy and Society in Britain 1750-1995 (Harlow, 2nd edn. 1997), p.347.
193. Mowery, 'Firm Structure', p.517.
194. L. Hannah, 'Introduction: Business Development and Economic Structure in Britain since 1880', in L. Hannah (ed.), Management Strategy and Business Development: An Historical and Comparative Study (London, 1976), pp.12-13.
195. A.D. Chandler, 'The Development of Modern Management Structure in the US and UK', in Hannah, Management, p.48.
196. See above, notes 31 to 33 and accompanying text.
197. L.H. Haney, Business Organization and Combination (New York, 1921), pp.302-7.
198. W.Z. Ripley, 'Introduction', in W.Z. Ripley (ed.), Trusts, Pools and Corporations (Boston, 1905), pp.xvii-xvii.
199. C. van Hise, Concentration and Control: A Solution to the Trust Problem in the United States (New York, 1912), pp.71-2.
200. Bittlingmayer, 'Antitrust', p.391 (discussing the E.I. DuPont Powder Company).
201. J.C. Bonbright and G.C. Means, The Holding Company: Its Public Significance and its Regulation (New York, 1932), p.71.
202. Freyer, Legal, pp.198-200.
203. In theory, if a merger was merely a sham, the transaction could have been attacked for abusing the corporate form: Bittlingmayer, 'Did Antitrust', pp.106-7. English courts, however, have typically been reluctant to 'lift the corporate veil' and disregard corporate personality (e.g. Salomon v. Salomon [1897] Appeal Cases, p.22), so a legal challenge of this sort was unlikely.
204. On Chandler, Scale, pp.292, 375.
205. Sklar, Corporate Reconstruction, pp.164-5.
206. Payne, 'Emergence', p.536. Another possibility is that insufficient drive and ambition on the part of those organising mergers played a role.
207. See, for example, Hannah, 'Mergers', p.13.
208. Payne, 'Emergence', pp.534-5. The impact which corporate leadership had on merger activity during the opening decades of the twentieth century is discussed in more detail below. See notes 167 to 173 and accompanying text.
209. See above, notes 57 to 59 and related discussion.
210. 11 &12 Geo.6, c. 66. Swann et al., Competition, p.51.
211. D.C. Elliot and J.D. Gribbin, 'The Abolition of Cartels and Structural Change in the United Kingdom', in A.P. Jacquemin and H.W. de Jong (eds.), Welfare Aspects of Industrial Markets (Leiden, 1977), pp.351-2.
212. J.D. Gribbin, 'The Post-War Revival of Competition as Industrial Policy', Government Economic Service Working Paper No. 19 (London, 1978), pp.17-22, 55.
213. D. Gerber, Law and Competition in Aventieth Century Europe: Protecting Prometheus (Oxford, 1998), pp.215-16.
214. 4 & 5 Eliz. 2, c. 68.
215. Allen, Monopoly, pp.90-92.
216. Gerber, Law, pp.217, 220.
217. E. Victor Morgan, Monopolies, Mergers and Restrictive Practices: UK Competition Policy, 1948-87 (Edinburgh, 1987), pp.17-21.
218. Allen, Monopoly, p.96.
219. Elliot and Gribbin, 'Abolition', p.354.
220. R.E. Caves, 'Market Organization, Performance, and Public Policy', in R.E. Caves (ed.), Britain's Economic Performance (Washington, DC, 1968), p.307.
221. Gerber, Law, p.219.
222. Gribbin, Post-War, pp.24-5.
223. Morgan, Monopolies, Mergers, p.23. For a detailed breakdown of agreements registered up to 1963,
224. see S. Broadberry and N. Crafts, 'Competition and Innovation in 1950s Britain', Business History, Vol.43 No.1 (2001), pp.101-4.
225. Walshe, 'Industrial', p.363.
226. Broadberry and Crafts, 'Competition', p.102 (saying that, up to 1963, of the 140 restrictive practice agreements that were taken to court that involved price-fixing arrangements, 132 were struck down or modified).
227. Allen, Monopoly, pp.96-7, 101.
228. Elliot and Gribbin, 'Abolition', pp.354-5.
229. Gribbin, 'Post-War', pp.24-5.
230. There would only be a penalty if an affected party sought to bring a private action for damages: Walshe, 'Industrial', p.364. On the non-disclosure loophole, see D.F. Channon, The Strategy and Structure of British Enterprise (Boston, 1973), p.26.
231. G. Symeonidis, The Effects of Competition: Cartel Policy and the Evolution of Strategy and Structure in British Industry (Cambridge MA, 2002), pp.28, 53 (downplaying its significance).
232. Walshe, 'Industrial', p.364.
233. Allen, Monopoly, p.101.
234. Symeonidis, Effects, pp.32-3, 41-4.
235. G.C. Allen, British Industry and Economic Policy (London, 1979), p.158.
236. Freyer, Regulating, p.297.
237. For additional background on contemporary opinion, see Wilson, British, p.199.
238. W. Mennell, Takeover: The Growth of Monopoly in Britain, 1951-61 (London, 1962), p.113.
239. R.W. Moon, Business Mergers and Take-Over Bids (London, 5th edn. 1976), p.26.
240. Hannah, Rise, p.149.
241. Walshe, 'Industrial', pp.338, 364.
242. Swann et al., Competition, pp. 174-5. See also Davis, Merger, p.12 (outlining how product market competition constituted a catalyst for mergers in the 1960s).
243. Gerber, Law, p.220.
244. Gribbin, 'Post-War', pp.28, 33-4.
245. Chapter 50.
246. Wilson, British, p.199.
247. Gerber, Law, p.220.
248. Wilson, British, pp.199-201.
249. Gribbin, 'Post-War', pp.32-4, 38.
250. J. Fairbum, 'The Evolution of Merger Policy in Britain', in J. Fairbum and J. Kay (eds.), Mergers and Merger Policy (Oxford, 1989), pp.195-200.
251. Fair Trading Act 1973, c. 41.
252. Hannah, Rise, pp.154-5.
253. Gribbin, 'Post-War', pp.32-3, 38.
254. See, for example, Hannah, Rise, pp.148-50.
255. Freyer, Regulating, pp.272-3, 297, 330.
256. Kempner et al., Business, p.106.
257. M.A. Utton, The Political Economy of Big Business (Oxford, 1982), pp.136-7. Not all commentators agree, however. See, for example, Toms and Wright, 'Corporate Governance', pp.101, 120.
258. Wilson, British, p.199.
259. Elliott and Gribbin, 'Abolition', pp.356-65.
260. Symeonidis, Effects, pp.146-7, 312-13. For an overview of related empirical work on the impact of the 1956 legislation, see Gribbin, 'Post-War', pp.25-6.
261. Symeonidis, Effects, pp.89-90, 329.
262. See above, note 64 and accompanying text.
263. Markham, 'Survey', pp.166-7.
264. G.J. Stigler, 'Monopoly and Oligopoly by Merger', American Economic Review, Vol.40 (1950), pp.23, 28-9.
265. R.L. Nelson, Merger Movements in American Industry, 1895-1956 (New York, 1959), pp.93-5.
266. Chandler, Visible, pp.331-2.
267. Navin and Sears, 'Rise', pp.106-7.
268. Navin and Sears, 'Rise', pp.129, 133.
269. E.D. Durand, The Trust Problem (Cambridge, MA, 1915), p.61.
270. E. Jones, The Trust Problem in the United States (New York, 1924), pp.283-4.
271. J.W Jenks and W.E. Clark, The Trust Problem (Garden City, NY, 5th edn. 1929), pp.186, 194.
272. Roy, Socializzing, pp.249-50.
273. G. Porter, The Rise of Big Business, 1860-1920 (Wheeling, IL, 2nd edn. 1992), pp.82-3.
274. On the terminology and on the role played by the promoter, see Thorelli, Federal Antitrust, p.279.
275. A.D. Noyes, The Market Place: Reminiscences of a Financial Editor (Boston, 1938), p.179. In certain industries, the services of a promoter were unnecessary since a viable horizontal consolidation could be organised with the participation of a relatively small number of firms: Lamoreaux, Great Merger, pp.114-15.
276. Navin and Sears, 'Rise', pp.129-30.
277. L. Neal, 'Trust Companies and Financial Innovation, 1897-19141, Business History Review, Vol.45 (1971) pp.35,41.
278. Lamoreaux, Great Merger, p.111.
279. Nelson, Merger, pp.94-5.
280. A.D. Noyes, Forty Years of American Finance (New York, 1907), pp.286-7.
281. See above, notes 60 to 63 and accompanying text.
282. Wilson, British, p.194.
283. R.J. Briston and R. Dobbins, The Growth and Impact of Institutional Investors (London, 1978), pp.19-29.
284. S.J. Prais, The Evolution of Giant Firms in Britain: A Study of the Growth of Concentration in Manufacturing Industry in Britain, 1909-70 (London, 1981), pp.118-20.
285. Walshe, 'Industrial', p.347.
286. Prais, Evolution, pp.124, 135.
287. On the general bias at the time, see Wilson, British, p.194.
288. Littlewood, Stock Market, p.122.
289. Channon, Strategy, p.234.
290. G. Owen, From Empire to Europe: The Decline and Revival of British Industry Since the Second War (London, 1999), p.397.
291. Prais, Evolution, p.130.
292. G.D. Smith and R. Sylla, 'The Transformation of Financial Capitalism: An Essay on the History of American Capital Markets', Financial Markets, Institutions & Instruments, Vol.2 No.2 (1993), p.20.
293. Navin and Sears, 'Rise', p.129.
294. Marquand, Dynamics, p.80.
295. Noyes, Forty, p.294. On the 'New Era' terminology,
296. see Noyes, Market Place, pp.176, 197.
297. Cheffins, 'Mergers', pp.26-9.
298. On the performance of stock prices in the M see B. Taylor, 'Global Financial Data: Stock Market Indices, 1800-1995', available on the internet at http://xnet.rrc.mb.ca/tltc/Workshop_H&R/ Microsoft_Mentors_Program/Stock%20Market%20Indices.htm. On the data set, see 'Long Term Stock Market Database', available on the internet at www.globalfindata.com, under the headings Data Access/Global Stock Market Database/Encyclopedia. On the speculation in mining shares, see Noyes, Forry, pp.243-4.
299. Noyes, Forty, p.260.
300. W.P. Kennedy, Industrial Structure, Capital Markets and the Origins of British Economic Decline (Cambridge, 1994), pp.144-7.
301. P. Cain, 'The City of London, 1880-1914: Tradition and Innovation', in J.-P, Dormois and M. Dintenfass (eds.), The British Industrial Decline (London, 1999), pp.197-9.
302. See also Wilson, British, pp.121-23 (summarising the literature).
303. For an example of a plan formulated in the early 1890s to consolidate the coal industry which collapsed in part because of lack of investor support, see Clapham, Economic, pp.219-20.
304. A.E. Cutforth, Methods of Amalgamation and the Valuation of Businesses for Amalgamation & Other Purposes (London, 1931), p.232.
305. Cutforth, Methods, p.212.
306. Levy, Monopolies, p.299.
307. For further background on the point, see Hannah, Rise, pp.65-6.
308. M.A. Utton, 'Some Features of the Early Merger Movements in British Manufacturing Industry', Business History, Vol. 14 (1972), p.54.
309. A.T.K. Grant, A Study of the Capital Market in Britain from 1919-1936 (London, 2nd edn. 1967), pp.135, 143, 144.
310. Hannah, Rise, p.59.
311. L. Hannah, 'Managerial Innovation and the Rise of the Large-Scale Company in Inter-war Britain', Economic History Review, Vol.27 (1974), pp.268-9.
312. Hannah, Rise, p.59.
313. W.A. Thomas, The Finance of British Industry (London, 1978), p.29. Even prior to World War I, there were instances where there was ample investor backing for merger activity. See M. Dintenfass, The Decline of Industrial Britain, 1870-1980 (London, 1992), pp.42-3.
314. K. Wilson, 'The New Issue Market as a Source of Finance for the UK Brewing and Iron and Steel Industries, 1870-1913', in Y Cassis, G.D. Feldman and U. Olsson (eds.), The Evolution of Financial Institutions and Markets in Twentieth-Century Europe (Aldershot, 1995), p.221.
315. Kirby, 'Corporate', pp. 158, 161 (making this point in relation to the post-World War II period).
316. From 1929 to 1948, companies had to distribute the information to shareholders but not to the public at large: B.R. Cheffins, 'Does Law Matter? The Separation of Ownership and Control in the United Kingdom', Journal of Legal Studies, Vol.30 (2001), p.472.
317. On the innovative nature of the relevant requirements, see Littlewood, Stock Market, pp.35-6.
318. D.B. Buckley, Buckley on the Companies Acts (London, 12th edn. 1949), p.965.
319. Kirby, 'Corporate', p.159.
320. Payne, 'Emergence', p.528 (quoting the editorial writer of The Engineer, from the 23 June 1899 issue). See also Macrosty, 'Business', p.356.
321. Carter, Tendency, p.265. See also p.333.
322. Hannah, 'Mergers', p.13.
323. Payne, 'Emergence', pp.534-5.
324. S. Sherwood, 'Influence of the Trust in the Development of Undertaking Genius', Publications of the American Economic Association, Vol. 1 (1900), p.165. Similar observations were made about the merger promoters of the time: see, for example, Macrosty, 'Business', p.356.
325. Payne, 'Emergence', p.537.
326. Hannah, Rise, pp.28-30, 37-8.
327. Kirby, 'Corporate', pp.146-7.
328. Fitzgerald, Industrial, p.189.
329. Hannah, Rise, pp.70, 121.
330. Hannah, 'Managerial', pp.254-5.
331. Wilson, British, pp.148, 151, 154-7, 177.
332. Chandler, Scale, pp.330, 390-92.
333. Lazonick, Business, p.48.
334. Payne, 'Industrial', pp.217-19.
335. See, for example, Kennedy, Industrial, pp.6-10.
336. Dintenfass, Decline, pp.1-3, 9-11. The occurrence of decline cannot, however, be taken for granted. For an overview of the debate on the point, see M. Dintenfass, 'Converging Accounts, Misleading Metaphors and Persistent Doubts: Reflections on the Historiography of Britain's "Decline'", in Dormois and Dintenfass (eds.), British, pp.7-26.
337. Chandler, Scale, pp.291-4.
338. D.H. Aldcroft, 'The Entrepreneur and the British Economy, 1870-1914', Economic History Review, Vol.17 (1964), pp.113-14, 118, 124-5, 127-8.
339. D.S. Landes, 'Technological Change and Development in Western Europe, 1750-1914', in H.J. Habakkuk and M. Postan (eds.), The Cambridge Economic History of Europe, Volume VI. The Industrial Revolutions and After: Incomes, Population and Technological Change (I) (Cambridge, 1965), pp.563-6.
340. Wilson, British, p.177.
341. Wardley, 'Anatomy', pp.271-4, 289-90.
342. P. Wardley, 'The Emergence of "Big Business", 1890-1921', ReFRESH (Summer 2001), pp.7-8.
343. Wardley, 'Anatomy', pp.278, 288.
344. Wardley, 'Emergence ... 1907', pp.92, 94, 100.
345. Wardley, 'Emergence ... 1921', pp.7-8.
346. S. Pollard, 'Entrepreneurship, 1870-1914', in Floud and McCloskey (eds.), Economic History, pp.66-8, 71.
347. For summaries of additional sources, see Payne, 'Industrial', pp.208-9.
348. Wardley, 'Anatomy', pp.269-71.
349. Blackford, Rise, pp.61-2.
350. Payne, 'Emergence', pp.524-5.
351. S.N. Broadberry, The Productivity Race: British Manufacturing in International Perspective (Cambridge, 1997), pp.90-92, 96, 98, 102.
352. Allen, British, p.18.
353. Broadberry, Productivity, pp.98-101, 104, 127.
354. Allen, British, p.18.
355. Turner, Business, pp.32-3.
356. S.P. Keeble, The Ability to Manage: A Study of British Management (Manchester, 1992), pp. 150-51 (acknowledging that the merger activity ofthe period put substantial strain on managerial capacity).
357. Hannah, Rise, p.151.
358. Owen, From Empire, pp.421-2.
359. C.A.R. Crosland, 'The Private and Public Corporation in Great Britain', in E.S. Mason (ed.), The Corporation in Modern Society (Cambridge, MA, 1959), p.266.
360. B.R. Cheffins, Company Law: Theory, Structure and Operation (Oxford, 1997), p.119.
361. Littlewood, Stock Market, p.86.
362. On Hugh Fraser, see Davis, Merger, pp.27-31.
363. On Jim Slater, see Littlewood, Stock Market, pp.163-4.
364. Franks and Mayer, 'Hostile', pp.164, 175-7, 180.
365. Nuttall, 'Takeover', pp.31-2, 34.
366. Broadberry, Productivity pp.118-20.
367. Turner, Business, p.431.
368. Quoted in Keeble, Ability, p.151.
369. See above, notes 181 to 184 and related discussion.
370. Hannah, Rise, p.146.
371. Kirby, 'Corporate', p.158.
372. Blackford, Rise, p.191.
373. Chandler, 'Development', p.49.
374. Walshe, 'Industrial', p.346.
375. Prais, Evolution, pp.69-71, 85-6.
376. A. Peacock and G. Bannock, Corporate Takeovers and the Public Interest (Aberdeen, 1991), p.29.
377. Hannah, Rise, p.149.
378. Swann et al., Competition, p.173.
379. Moon, Business, pp.26, 35-8.
380. See also G.D. Newbould, Management and Merger Activity (Liverpool, 1970), pp.107-8, 116-17 (acknowledging the point but relying on survey evidence to say that most managers during the late 1960s did not explicitly compare the merits of internal versus external growth before proceeding with a merger).
381. Quoted in Davis, Merger, p.235, see also pp.136, 144.
382. Davis, Merger, pp.235-6.
383. Economist, 10 Jan. 1970, p.13.
384. Newbould, Management, p.206.
385. See also Wilson, British, p.208.
386. Swann et al., Competition, p.174.
387. Newbould, Management, pp. 162-75.
388. See also Swann et al., Competition, p.176.
389. For an overview of the evidence, see Walshe, 'Industrial', pp.352-4.
390. S. Nyman and A. Silberston, 'The Ownership and Control of Industry', Oxford Economic Papers, Vol.30 (1978), pp.82-7 (saying that 45 per cent ofthe top 250 UK companies by net assets or sales had a shareholder owning a block often per cent or larger and 56 per cent were 'owner-controlled' in the sense that there was a single investor with a stake exceeding five per cent).
391. J. Scott and C. Griffe, Directors of'Industry: The British Corporate Network 1904-76 (Cambridge, 1984), pp. 102-11 (saying that 58 per cent of Britain top 200 non-financial companies had a shareholder or unified group of shareholders owning 10 per cent or more of the shares).
392. A. Francis, 'Families, Firms and Finance Capital: The Development of UK Industrial Firms with Particular Reference to Their Ownership and Control', Sociology, Vol.14 (1980), p.1.
393. Cheffins, 'Does Law', p.468.
394. J. Scott, 'Corporate Control and Corporate Rule: Britain in an International Perspective', British Journal of Sociology, Vol.41 (1990), pp.360-67.
395. J. Scott, Corporations, Classes and Capitalism (Oxford, 2nd edn. 1985), pp.83-4.
396. Littlewood, Stock Market, pp.344, 355, 411 (noting, though, that the total for 1984 was only half of the volume for 1968 and 1972 once inflation was taken into account). The trend was, if anything, stronger in 1987 and 1988: Walshe, 'Industrial', pp.349-50.
397. Wilson, British, pp.236-7.
398. Walshe, 'Industrial', p.367.
399. Morgan, Monopolies, pp.23-4, 40-43.
400. Gerber, Law, pp.277, 302-3.
401. F. Voigt, 'German Experience with Cartels and Their Control During Pre-War and Post-War Periods', in J.P. Miller (ed.), Competition, Cartels and Their Regulation (Amsterdam, 1962), pp.190-200. Subsequently, merger control became the central focus of German competition law: Gerber, Law, pp.305-6, 327.
402. With respect to merger activity, during 1967 there were 1,068 British mergers reported in the financial press, compared with 12 from Germany. See Newbould, Management, p.29.
403. On Germany's governance arrangements and the insider/control-oriented label, see Wilson, British, p.71.
404. Cheffins, 'Does Law', pp.461-2.