* Pressure grows on Cameron to protect British jobs
* British leader now wants commitments from Pfizer
* Any deal could undergo "public interest test"-minister
* Drugs companies must work with state health service
By Kate Holton
LONDON, May 8 The European Commission would
probably block any attempt by the British government to
intervene in Pfizer's proposed takeover of AstraZeneca
as Brussels itself would rule on a deal of that size,
competition lawyers say.
AstraZeneca has rejected the $106 billion bid to create the
world's largest pharmaceuticals business. However, Pfizer is
still pursuing its British rival, and political pressure is
growing on Prime Minister David Cameron to show he can protect
jobs should the New York-based company prevail.
Cameron initially signalled he would not interfere in the
bid. However, the Conservative leader - who faces a
parliamentary election this time next year - now says he wants
further commitments from Pfizer before giving his blessing to
any takeover of Britain's second largest drugs group.
He has also not ruled out a suggestion from his Business
Secretary Vince Cable that a takeover could be subjected to a
"public interest test" - one of the few occasions when ministers
can intervene in a country which prides itself on being open to
Any plan to invoke the public interest test on a
pharmaceutical deal, however, would be likely to come up against
the Commission, which allows intervention by European Union
national governments only in exceptional cases.
"Politically this is big because there are lots of jobs
involved and we're getting near an election," Anthony Woolich, a
competition partner at international commerce law firm, Holman
Fenwick Willan LLP, told Reuters.
"(But) I think it's going to be very hard for the government
to intervene. The whole point about the European Commission is
that where you have big mergers they should be regulated
centrally and individual member states should not be able to
intervene except on exceptional grounds."
TALK OF THE TOWN
Pfizer's offer has dominated British politics this week and
poses a challenge to Cameron who is often accused by critics of
favouring the interests of big business over workers.
The anti-EU UK Independence Party, which is forecast to win
European parliamentary elections later this month, could also
seize on any involvement by Brussels to back up its argument
that Britain has yielded too many powers to Europe.
Britain has been open to foreign investment since prime
minister Margaret Thatcher liberalised markets in the 1980s.
This is in contrast to France which in 2005 named dairy group
Danone as a company of strategic importance to shield it from a
feared takeover by PepsiCo.
But Westminster politicians have become wary since U.S.
group Kraft bought confectionary group Cadbury in 2010, winning
support by promising to keep open a British factory only to
announce its closure soon after the deal completed.
Pfizer, which would save billions of dollars in taxes by
shifting its domicile to Britain, has already pledged to
complete a new UK research centre, retain a factory and put a
fifth of its research staff in the country if the deal goes
However, Pfizer also drew criticism three years ago when it
shut most of its research work at a large R&D centre in
Sandwich, southern England, with the loss of nearly 2,000 jobs.
The government's position on the AstraZeneca deal cannot be
ignored by Pfizer, given the highly regulated nature of the
drugs sector and the need for pharmaceutical companies to work
closely with the state-run National Health Service.
"All governments are important stakeholders," said one
person familiar with Pfizer's thinking. However, Pfizer remains
committed to getting the deal done, he added.
Under EU law, takeovers are examined purely for the impact
they would have on competition in the sector, and not on jobs.
Member states can intervene in takeovers of defence
companies that affect national security as well as deals that
reduce the number of media owners and those that could
destabilise the financial system.
The British government would have to create a new category
if it were to invoke the public interest test in any AstraZeneca
takeover, aiming to impose legally binding terms on jobs and
facilities. While this could be done easily in Westminster, the
Commission would be unlikely to accept it.
"The EU merger regulation enables, for example, intervention
in media cases but it's not a carte blanche to bring in any kind
of public interest," Becket McGrath, a competition partner at
Edwards Wildman Palmer, said.
One top 30 shareholder in AstraZeneca told Reuters they were
unsurprised by the political involvement but did not expect the
Conservative-led coalition to turn "French".
"Without being too pedantic, the making of a cancer drug
versus the making of a chocolate bar is somewhat different," the
shareholder said. "Everybody gets excited with science and think
we (the UK) do pharmaceuticals quite well.
"This is why the politicians have got involved. (But) they
can't do that much, unless they change the law and become very
French about it, but under EU law they're not meant to."
(Additional reporting by Chris Vellacott and Ben Hirschler;
editing by David Stamp)