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Is the government playing more political games over Cadbury?

The Business, Innovation and Skills Committee Inquiry into Company takeovers, mergers and acquisitions in the UK has caught the attention of the financial press this week. Specifically, Business minister Ian Lucas has confimed that the government could intervene if a proposed £10.5 billion acquisition of Cadbury was seen to break existing competition laws. Whether the government would have any have grounds for blocking the proposed takeover is debateable and the authorities are attracting accusations of political points scoring as we approach the general election.

Despite the fact that the UK government, and the unions, are openly discussing a situation which may or may not happen there is no way that the government can block any takeover of Cadbury simply because they don't like the potential outcome. If there are no competition issues then it is highly unlikely that the government would have grounds for blocking any potential takeover.

The truth is that the unions are becoming more and more involved in UK government policies and strategies as we approach the election. There is obvious concern about potential job losses in the UK if the acquisition by Kraft Foods goes through but ultimately we live in a free market and the UK stock market is one of the most respected in the world. Government interference would not be appreciated by domestic or overseas investors.

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