Cadbury’s takeover leaves a bad market-driven taste

By Andrew Pakes / @Andrew4MK

We shouldn’t really be surprised that the Cadbury’s Board has decided to accept its latest takeover offer. The real surprise is how far the media has painted the story as a battle between the plucky independent company and a hostile competitor.

Even though we are only on our first steps of recovery from the global recession, international capitalism is still in fine form. This latest takeover should serve as a reminder that markets don’t have morals unless they are enforced. And that requires regulation and active government – precisely the qualities David Cameron complains we have still have too much of. If current regulations weren’t much help now imagine how bad it would be under a different government.

It might sound strange but I feel proud to be part of a country that produced Cadbury’s. It is an iconic brand with a strong identity and progressive history. And it produces chocolate. Whilst I will argue that it is the Co-operative and smaller ethical retailers that have led to the drive to fair trade, it was symbolic that Dairy Milk also decided to adopt the label. In part that was because the company was UK-owned and focussed on its customer base. I doubt those pressures while remain once the aggressive-market driven philosophy of Kraft are taken to heart under the new management.

The takeover also makes it more likely that the new owners will care less about UK production. Unite and other unions are right to be concerned about the future of the 7,000 jobs that Cadbury provides across the UK and Ireland. Kraft had already maxed out its own company credit card before setting its sights on Cadbury. Now it is payback time. The likely implications are job losses and a transfer of business functions and productions out of the UK.

It was so obvious that the Cadbury’s management would accept a renewed financial offer for the company that the media story of the last few days has been quite surreal. It was simply business and tough rhetoric in the face of driving up Kraft’s offer and maximising short-term financial interests. Yet the media seemed determined to paint the picture of the determined British company fighting for its future. With our current market regulations this kind of takeover should not be surprising. There are very few limits on major investors raising capital on the financial markets and then going on a spending spree.

Following the impact of the global recession, however, I would have at least expected a more critical media from the outset. If we want to create a more sustainable economic base we need a more engaged debate about the kind of market society that we want. I am not the only one shocked at how quickly the future of a major UK brand can be decided, or waiting to see how large the bonuses payments or share options will be for the Board members that recommended the offer.

Coming out of the recession we still have the opportunity for a genuine debate about what kind of capitalism we want. Business does not have to carry on as usual. In the early days of this government we used to talk a lot more about the stakeholder society. More recently, there has been a focus on mutualisation and involving customers. These are important issues. The public has a desire to see restraint and a sense of fairness installed in the financial institutions following the banking collapse. Unless we lead this debate on a broader level into business, manufacturing and the recovery, Cadbury’s will not be the last takeover that leaves a bad taste in the mouth.

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