The shareholders of Cadbury swallowed the Kool-Aid last month and sold out to US food giant Kraft. The loss of this iconic British firm triggered an anguished debate about the public-interest implications of selling UK plc into foreign ownership. Lords Mandelson and Myners pitched in with some politically restrained squeaks of protest about the national interest, too late to make a difference to Cadbury. The truth is that there's little ministers can do, having abandoned the legislation that let governments intervene in takeovers.
The Monopolies and Mergers Commission used to judge takeovers on whether they were contrary to the public interest, but as it morphed into the Competition Commission, this criterion was seen as too woolly. The only grounds on which a takeover might be rejected today is if it involves a substantial lessening of competition.
Faith in the power of the market to deliver consumer benefits was such that the ability of the politicians to intervene to protect the public interest was removed, killing such notions as 'national champions', fair distribution of employment across the country and concern for the environment. The Fair Trading Act was replaced by the Enterprise Act. The names say it all.
In the halcyon days before the recession, it was deeply unfashionable to talk about the public interest in relation to business. Some enlightened companies - strictly in the context of corporate social responsibility, of course - might have ventured a few words in the annual report about their obligations to a wider community of stakeholders, but, generally, public interest was seen as the reserve of social regulators and the third sector.
Before the credit crunch, it was not an issue that our water companies were owned by the Australians, our airports by the Spanish and our power industry by the French. It was activity that mattered, not ownership. There were huge fees to be earned by the hordes of advisers swarming around the foreign takeovers and private equity buy-outs that characterised the boom times. Management teams collected juicy bonuses, and union concerns about the loss of British jobs were easily dismissed. The City ruled, OK.
But then came the financial crisis and the fall of Lehman Brothers. The golden boys and girls of the Square Mile carrying their cardboard boxes out onto the street as the US owners pulled the plug became a defining image of the credit crunch. Now they knew how the car workers of Jaguar and Land Rover and the steel workers of Corus felt when Indian-owned Tata cut thousands of jobs at these firms. Suddenly, foreign ownership wasn't such a good idea, as Lehmans repatriated billions of dollars to the US, leaving UK staff unpaid and unemployed.
In the global downturn, Britain has suffered a greater outflow of foreign investment than almost any other country. Where once the Wimbledon Effect prevailed (it didn't matter that the top players were foreign, as long as we staged the biggest and most glamorous tournament), now we have begun to feel the pinch as they take their balls and leave Centre Court.
Foreign owners of companies like Corus have no loyalty to the UK and will move operations to where it's cheapest to do business, regardless of the social and cultural impact of plant and business closures. The 'flexible' workforce that drew them in also makes it easy for them to leave.
Why has this takeover provoked such a rush of sentiment? Warm memories of childhood treats are part of it, but there's more to it than that. Analysts expect Kraft to break Cadbury up and sell off up to a third of its operations to pay down the debt used to finance the acquisition.
Financially, it may make sense for shareholders interested in a quick return, but companies like Cadbury are national institutions - they're part of our culture and identity. As they fall into foreign ownership, along with many other household names like ICI, Pilkington Glass and Scottish & Newcastle Breweries, a little bit more of our Britishness is eroded. Anxiety about national identity is dangerous if it leads to xenophobia and chauvinism - which the BNP is only too happy to exploit.
No one wants to put up the barricades to foreign capital, which has enhanced the vitality and strength of our economy over the years. But it is too easy for British companies to be acquired by overseas owners. A change in the governance rules on takeovers would help. Only long-term holders of stock should be able to vote on a takeover, so that opportunistic speculators, who often pile in at the first sniff of a hostile bid, are less able to influence the outcome.
We could also consider introducing something like the Committee on Foreign Investment in the US (CFIUS). This body looks at any foreign investment that could involve control of 'critical infrastructure' in the US, and is able to veto mergers, acquisitions and takeovers if a 'key asset' is thought to be at risk of foreign ownership. In recent times, the emphasis has been on national security concerns and defence-related investments, but 11 areas of economic activity are deemed to form part of the national infrastructure that come under the committee's jurisdiction, including food and telecoms.
Cadbury was a great British company that took 200 years to build. It had an honourable tradition of engagement with its workers and its community. It was well run and profitable, and yet, in less than six months, it fell to a determined overseas predator, funded by a bank owned by the British taxpayer. How can this be in the public interest?
- Baroness Kingsmill CBE has been a non-executive director of various private and public boards. She is a non-executive director of British Airways and Korn/Ferry International.