§ Mr. JayI beg to move Amendment No. 17, in page 4, line 5, at the end to insert:
For the purposes of this section goods shall be deemed to be used as loss leaders where they are sold by a dealer at a price less than the cost at which they were supplied to him plus two per cent. if he is a wholesaler or five per cent. if he is a dealer other than a wholesaler.The Amendment relates to the definition of what, for the purposes of the Bill, is referred to as a loss leader. In our view it would help in the laudable aim of simplifying the procedure and making it easier for the Court and the judges concerned to reach the decision that they are required to reach.When the Bill was first introduced the Minister defined a loss leader as the sale of goods at or below the cost of purchase by the retailer or the supplier. It was pointed out to him that that was really a quite inadequate definition, because a retailer might sell slightly above the cost at which he had bought the goods but nevertheless make considerable losses. The right hon. Gentleman therefore substantially amended the Bill in Commit- 364 tee and inserted as a definition of a loss leader, a reference to the motive of the retailer. Subsection (2) now reads:
The reference in this section to the use of goods as loss leaders is a reference to a resale of the goods effected by the dealer, not for the purpose of making a profit on the sale of those goods, but for the purpose of attracting to the establishment at which the goods are sold customers likely to purchase other goods or otherwise for the purpose of advertising the business of the dealerIf the Amendment were accepted the right hon. Gentleman's subsection would remain but, in addition, there would be a simple arithmetical test which could be applied at least in some cases, thereby making the whole argument less vague and ambiguous, and shortening it. We suggest that where the goods were sold at not more than 5 per cent. above the cost in the case of a retailer and 2 per cent. in the case of a wholesaler it should be presumed without further argument that the goods were being used as a loss leader. It would not be necessary in that case to argue what were the motives of the retailer, or what they might have been.I would have thought that the Amendment, put forward in addition to the 365 right hon. Gentleman's criterion and not instead of it—leaving the main criterion of motive—would short-circuit a great deal of argument where it was possible to do so. I should have thought it an improvement. I cannot see what good reason there is for not having this simple solution of the problem where it is practicable and retaining the right hon. Gentleman's motive for other cases where this arithmetical test would not apply. I hope the right hon. Gentleman may accept the help that we are offering him in order to improve the Bill.
§ Mr. HeathThe Amendment proposed by the right hon. Member for Battersea, North (Mr. Jay) of a loss leader is a recasting from the Amendment which he moved during the Committee stage discussions as an Amendment to my Amendment which recast this is the form of what is known as the Canadian approach. On that occasion it was rejected by the Committee, but we did discuss the possibility of having two criteria concerned with this point. As the right hon. Gentleman rightly said, the recasting of this Clause during the Committee stage discussions has established as a test of motive that loss leader selling has taken place if the dealer has sold not in order to make a profit but for advertising or to attract customers.
One of the grounds which I put before the Committee as being one on which we abandoned the original approach for this approach was in order to give greater flexibility and avoid some of the difficulties which the rigid approach was bound to create. The right hon. Gentleman is still suggesting that we should try to combine the two approaches in one context. There is a particular difference in the recasting of this Amendment. The original Amendment, as moved during the Committee stage discussions, would have had the effect that it would have been presumed that loss leader selling had taken place in any case where a dealer sold goods at a price below the price quoted or a fixed price to which a certain percentage had been added. It was 2 per cent. in the case of a wholesaler or 5 per cent. for dealers other than wholesalers.
366 In the original form this presumption would have been capable of rebuttal. As recast in the present Amendment it goes further and says that such a sale must in all circumstances be regarded by the court as a loss leader sale; so that in a way it has become even more rigid than in the original form of the Amendment to which I took exception when it was put forward in the new context and rephrasing of the Clause as a whole. So I do not think that it would be possible for me to advise the House to accept this as an addition to the criteria for loss leadering.
The definition originally in the Bill was a definition on cost. This is one which adds an arbitrary margin to the definition solely in terms of the price actually paid. There are, of course, difficulties about this. No margin is applicable to all trades and all dealers. It has to be an arbitrary margin if the right hon. Gentleman is proposing to add one. Secondly, any definition of this kind cuts particularly harshly in respect of small traders who do not benefit from the most favourable buying terms, because in their case the mark-up percentage is added to the higher price and therefore the difference between them and the larger dealer with a larger discount becomes even greater. This was one of the fundamental reasons why we felt that the original Clause in the Bill had a great weakness.
§ Mr. JayIf that criterion were put in in addition to the criterion of the right hon. Gentleman, surely that would add a little too much.
§ Mr. HeathWith respect, I do not think that is the case, particularly in the form it is recast in which it is bound to be taken as a criterion of loss leadering and is not open to rebuttal at all. It removes the element of flexibility that we have been able to bring into the Clause as recast and approved during the Committee proceedings. I therefore suggest that we should still rely on Clause 3 as it is recast, and should not try to combine the two forms of criteria of loss leadering—the form in the Bill now and the one we had originally. I advise the House not to accept the Amendment.
§ Question put, That those words be there inserted in the Bill:—
368§ The House divided: Ayes 118, Noes 183.
369| Division No. 93 | AYES | [10.30 p.m. |
| Ainsley, William | Hannan, William | Redhead, E. C. |
| Allen, Scholefield (Crewe) | Harper, Joseph | Rees, Merlyn (Leeds, S.) |
| Barnett, Guy | Hayman, F. H. | Roberts, Albert (Normanton) |
| Beaney, Alan | Holman, Percy | Robertson, John (Paisley) |
| Blackburn, F. | Holt, Arthur | Rodgers, W. T. (Stockton) |
| Blyton, William | Hooson, H. E. | Short, Edward |
| Bowden, Rt. Hn. H. W. (Leics, S. W.) | Houghton, Douglas | Silkin, John |
| Bowen, Roderic (Cardigan) | Howell, Denis (Small Heath) | Silverman, Julius (Aston) |
| Braddock, Mrs. E. M. | Howie, W. | Skeffington, Arthur |
| Bradley, Tom | Hoy, James H. | Slater, Mrs. Harriet (Stoke, N.) |
| Broughton, Dr. A. D. D. | Hughes, Cledwyn (Anglesey) | Slater, Joseph (Sedgefield) |
| Butler, Herbert (Hackney, C.) | Hughes, Hector (Aberdeen, N.) | Small, William |
| Carmichael, Nell | Hynd, John (Attercliffe) | Smith, Ellis (Stoke, S.) |
| Craddock, George (Bradford, S.) | Irvine, A. J. (Edge Hill) | Sorensen, R. W. |
| Crossman, R. H. S. | Irving, Sydney (Dartford) | Spriggs, Leslie |
| Cullen, Mrs. Alice | Janner, Sir Barnett | Stewart, Michael (Fulham) |
| Dalyell, Tam | Jay, Rt. Hon. Douglas | Stonehouse, John |
| Darling, George | Jones, Elwyn (West Ham, S.) | Stones, William |
| Davies, G. Elfed (Rhondda, E.) | Jones, J. Idwal (Wrexham) | Swain, Thomas |
| Davies, Ifor (Gower) | Jones, T. W. (Merioneth) | Swingler, Stephen |
| Dempsey, James | Kenyon, Clifford | Taylor, Bernard (Mansfield) |
| Diamond, John | Lawson, George | Thomas, Iorwerth (Rhondda, W.) |
| Dodds, Norman | McBride, N. | Thompson, Dr. Alan (Dunfermline) |
| Duffy, A. E. P. (Colne Valley) | MacColl, James | Thomson, G. M. (Dundee, E.) |
| Edwards, Rt. Hon. Ness (Caerphilly) | MacDermot, Niall | Wainwright, Edwin |
| Evans, Albert | McInnes, James | Watkins, Tudor |
| Fernyhough, E. | MacPherson, Malcolm | Weitzman, David |
| Finch, Harold | Mapp, Charles | Wells, William (Walsall, N.) |
| Fitch, Alan | Mayhew, Christopher | White, Mrs Eirene |
| Fletcher, Eric | Mellish, R. J. | Wilkins, W. A. |
| Foley, Maurice | Mitchison, G. R. | Willey, Frederick |
| Foot, Michael (Ebbw Vale) | Neal, Harold | Willis, E. G. (Edinburgh, E.) |
| Fraser, Thomas (Hamilton) | Noel-Baker, Rt. Hn. Philip (Derby, S.) | Wilson, Rt. Hon. Harold (Huyton) |
| Galpern, Sir Myer | Oram, A. E. | Winterbottom, R. E. |
| George, Lady Megan Lloyd (Crmrthn) | Owen, Will | Woodburn, Rt. Hon. A. |
| Ginsburg, David | Padley, W. E. | Woof, Robert |
| Gordon Walker, Rt. Hon. P. C. | Pavitt, Laurence | Yates, Victor (Ladywood) |
| Gourlay, Harry | Pentland, Norman | |
| Grey, Charles | Popplewell, Ernest | TELLERS FOR THE AYES: |
| Griffiths, David (Rother Valley) | Price, J. T. (Westhoughton) | Mr. Charles A. Howell and |
| Probert, Arthur | Mr. McCann. | |
| NOES | ||
| Anderson, D. C. | Dance, James | Heath, Rt. Hon. Edward |
| Awdry, Daniel (Chippenham) | Deedes, Rt. Hon. W. F. | Henderson, John (Cathcart) |
| Barlow, Sir John | Donaldson, Cmdr. C. E. M. | Hendry, Forbes |
| Barter, John | Doughty, Charles | Hiley, Joseph |
| Bell, Ronald | du Cann, Edward | Hill, Mrs. Eveline (Wythenshawe) |
| Bennett, F. M. (Torquay) | Eden, Sir John | Hill, J. E. B. (S. Norfolk) |
| Biffen, John | Elliot, Capt. Walter (Carshalton) | Hobson, Rt. Hon. Sir John |
| Bingham, R. M. | Elliott, R. W. (Newc'tle-upon-Tyne, N.) | Hocking, Philip N. |
| Birch, Rt. Hon. Nigel | Emery, Peter | Holland, Philip |
| Bishop, Sir Patrick | Errington, Sir Eric | Hornsby-Smith, Rt. Hon. Dame P. |
| Black, Sir Cyril | Fell, Anthony | Hughes Hallett, Vice-Admiral John |
| Bossom, Hon. Clive | Finlay, Graeme | Hughes-Young, Michael |
| Bourne-Arton, A. | Fisher, Nigel | Hulbert, Sir Norman |
| Box, Donald | Fletcher-Cooke, Charles | Hurd, Sir Anthony |
| Boyd-Carpenter, Rt. Hon. John | Gibson-Watt, David | Jackson, John |
| Braine, Bernard | Gilmour, Ian (Norfolk, Central) | Johnson, Eric (Blackley) |
| Brewis, John | Gilmour, Sir John (East Fife) | Jones, Arthur (Northants, S.) |
| Brown, Alan (Tottenham) | Glover, Sir Douglas | Kaberry, Sir Donald |
| Bryan, Paul | Glyn, Dr. Alan (Clapham) | Kerans, Cdr. J. S. |
| Buck, Antony | Glyn, Sir Richard (Dorset, N.) | Kerr, Sir Hamilton |
| Campbell, Gordon | Gough, Frederick | Kershaw, Anthony |
| Chataway, Christopher | Gower, Raymond | Kirk, Peter |
| Chichester-Clark, R. | Grant-Ferris, R. | Kitson, Timothy |
| Clark, Henry (Antrim, N.) | Green, Alan | Lambton, Viscount |
| Clark, William (Nottingham, S.) | Gresham Cooke, R. | Langford-Holt, Sir John |
| Cleaver, Leonard | Grosvenor, Lord Robert | Leavey, J. A. |
| Cooke, Robert | Gurden, Harold | Lewis, Kenneth (Rutland) |
| Cordeaux, Lt.-Col. J. K. | Hamilton, Michael (Wellingborough) | Lilley, F. J. P. |
| Corfield, F. V. | Harris, Reader (Heston) | Linstead, Sir Hugh |
| Costain, A. P. | Harrison, Col. Sir Harwood (Eye) | Litchfield, Capt. John |
| Coulson, Michael | Harvey, John (Walthamstow, E.) | Lloyd, Rt. Hon. Selwyn (Wirral) |
| Crawley, Aldan[...] | Harvie Anderson, Miss | Longbottom, Charles |
| Dalkeith, Earl of | Hastings, Stephen | Longden, Gilbert |
| Loveys, Walter H. | Pickthorn, Sir Kenneth | Studholme, Sir Henry |
| Lucas, Sir Jocelyn | Pitt, Dame Edith | Summers, Sir Spencer |
| Lucas-Tooth, Sir Hugh | Pounder, Rafton | Tapsell, Peter |
| McAdden, Sir Stephen | Price, David (Eastleigh) | Taylor, Edwin (Bolton, E.) |
| MacArthur, Ian | Prior, J. M. L. | Taylor, Frank (M'ch'st'r, Moss Side) |
| McLaren, Martin | Prior-Palmer, Brig. Sir Guy | Temple, John M. |
| Maclay, Rt. Hon. John | Proudfoot, Wilfred | Thomas, Sir Leslie (Canterbury) |
| McMaster, Stanley R. | Quennell, Miss J. M. | Thompson, Sir Richard (Croydon, S.) |
| Marten, Neil | Ramsden, Rt. Hon. James | Tiley, Arthur (Bradford, W.) |
| Mathew, Robert (Honiton) | Rawlinson, Rt. Hon. Sir Peter | Tilney, John (Wavertree) |
| Maude, Angus (Stratford-on-Avon) | Redmayne, Rt. Hon. Martin | Touche, Rt. Hon. Sir Gordon |
| Maxwell-Hyslop, R. J. | Rees, Hugh (Swansea, W.) | Turner, Colin |
| Maydon, Lt.-Cmdr. S. L. C. | Rees-Davies, W. R. (Isle of Thanet) | van Straubenzee, W. R. |
| Mills, Stratton | Renton, Rt. Hon. David | Vaughan-Morgan, Rt. Hon. Sir John |
| Miscampbell, Norman | Ridley, Hon. Nicholas | Walder, David |
| More, Jasper (Ludlow) | Ridsdale, Julian | Ward, Dame Irene |
| Morgan, William | Roots, William | Webster, David |
| Neave, Alrey | Ropner, Col. Sir Leonard | Wells, John (Maidstone) |
| Nicholls, Sir Harmar | Scott-Hopkins, James | Whitelaw, William |
| Noble, Rt. Hon. Michael | Seymour, Leslie | Williams, Dudley (Exeter) |
| Orr, Capt. L. P. S. | Sharples, Richard | Williams, Paul (Sunderland, S.) |
| Orr-Ewing, Sir Ian (Hendon, North) | Shaw, M. | Wilson, Geoffrey (Truro) |
| Osborn, John (Hallam) | Smith, Dudley (Br'ntf'd & Chiswick) | Wise, A. R. |
| Page, John (Harrow, West) | Spearman, Sir Alexander | Wolrige-Gordon, Patrick |
| Page, Graham (Crosby) | Speir, Rupert | Woodnutt, Mark |
| Pannell, Norman (Kirkdale) | Stainton, Keith | Worsley, Marcus |
| Partridge, E. | Stanley, Hon. Richard | |
| Pearson, Frank (Clitheroe) | Stoddart-Scott, Col. Sir Malcolm | TELLERS FOR THE NOES: |
| Peel, John | Storey, Sir Samuel | Mr. Batsford and Mr. Pym. |