§ 5.41 p.m.
§ Mr. Skeffington-Lodge (Bedford)
It is not very often that a matter raised by one of one's constituents is a matter of national importance. Such a development, however, has occurred in the case of one of my constituents who wrote to me about two months ago concerning the extreme difficulty he was experiencing in increasing his business in the matter of oil sales. The practice which I wish to condemn in this House tonight is one in the motor trade whereby recom- 34 mendations regarding the use of branded lubricating oils in passenger cars, in commercial vehicles and in agricultural tractors are actually purchased by interested parties, thus denying a customer freedom of choice and confining those who purchase these motorcars, commercial vehicles and tractors to the use of a particular branded oil.
This same policy has recently been extended even to the users of diesel engines and to other static prime movers. My constituent who first took up this matter with me told me that when he called on firms manufacturing these motorcars, commercial vehicles and agricultural tractors he found it was impossible to do business with them. He asserted, I think quite rightly, that in the long run this practice of a back-stairs arrangement in regard to the recommendation of branded oils is calculated to eliminate from the lubricant market all but the biggest and the most influential sellers of oil. I may add that the biggest and most influential sellers of oil in this country are foreign controlled. The fact, too, that they are the most heavily capitalised is another thing that puts at a serious disadvantage British manufacturers who want to play a straight bat.
I would like to describe first of all the restrictive methods at which I have hinted and at the same time outline the consequences for British industry. Secondly, I want to indicate an alternative and freely competitive scheme which, with the blessing of the Government, might be mutually agreed on by all oil and motor manufacturers operating in this country at the present time. Lastly, I hope to evoke from the Minister who is to reply his disapproval of the practices which I shall expose and a promise of such action to help as may be open to him.
Naturally, I am not proposing to put my foot into it by advocating any fresh legislation. To do so would simply mean that you, Mr. Speaker, would immediately rule me out of Order. But there are aspects of this matter which arise and which I think fall well within the purview of the Monopoly (Inquiry and Control) Act which was recently passed by this House. In making my case I shall, as far as possible, omit the mention of, at any rate, the names of individuals and of firms. I feel that it might be some- 35 what embarrassing if 1 started to refer to them. The fact is, however, that for some considerable time now a group of lubricating oil companies which I might appropriately call the "Big Five" have been paying motorcar, commercial vehicle and agricultural tractor makers large sums of money In order to have their oils exclusively recommended to the public, or to the users of these vehicles by the manufacturers concerned.
Under this arrangement the products of other concerns, no matter how good their quality may be, no matter how excellent may be the service offered, are excluded entirely from approval and recommendation. Such a scheme obviously makes it quite impossible for other refiners of lubricants outside the actual ring to enter the market at all, a market which is largely a new market, at any rate in the matter of agricultural tractors. For the reason that the capital of at least two of the companies in the "Big Five" is 100 per cent. foreign held and they are largely Americanised as a result, the general effect is to foster the sale of foreign lubricants both at home and abroad, and to restrict the sale of British manufactured oils— and this at a time when we are wanting to step up exports and make ourselves as self— sufficient and self-supporting as possible.
Exports of lubricating oils from Britain in pre-war years were very considerable indeed and in 1947 they were close on 30 million gallons, worth some £31¾ million. I have been assured by the Ministry of Fuel and Power that they are most anxious, and rightly so, to encourage oil exports from this country at the present time. But if these back-stairs arrangements which I have mentioned—I might even call them under-the-counter methods —are widely indulged in, as I have reason to believe they are, by powerful vested interests and if they are allowed to operate against oil manufacturing concerns which are entirely British, I for one feel that it is time to make a firm protest. The poor unfortunate customers, of course, know little or nothing of what is going on.
Let me give the House some concrete facts to prove my case. In one case £100,000 a year is changing hands. Where a single oil company has made an 36 approach to a car manufacturer and where that approach has not had the desired outcome, a joint approach has been made by the "Big Five" and the exclusive recommendation obtained as a result of that approach has then been shared among all the companies participating. The brands recommended are usually specified in the makers' instruction books. Most disgraceful of all, they are often accompanied by an implied warning that the use of other brands of oil will invalidate guarantees. If that is not a restrictive practice, I do not know what is.
§ Mr. Erroll (Altrincham and Sale)
The hon. Member is making a very serious charge. Is he really suggesting that the oil companies are making a series of corrupt payments to secure the peddling of their oils?
§ Mr. Skeffington-Lodge
I do not suggest any such thing. I have not used the word "corruption" nor am I indicating that a corrupt practice has been indulged in. What I say is that a restrictive practice has been indulged in. That is very different from a corrupt practice.
§ Mr. Orr-Ewing (Weston-super-Mare)
I think the hon. said that in one case a sum of £100,000 had changed hands. What exactly does he mean by that? Is he implying that £100,000 has been paid by way of bribery from the oil companies in order that motorcar manufacturers should adopt their oils? If not, what was the point of the remark?
§ Mr. Skeffington-Lodge
I said that in one case of which I know £100,000 has been paid by an oil manufacturing company to a motorcar manufacturer in return for that manufacturer specifying that the oil manufactured by the oil company should be used in the motor vehicles produced by him.
§ Mr. Orr-Ewing
When a charge of that sort is made, is it not usual, Mr. Speaker, for actual names to be mentioned? It is a charge of corrupt practice.
§ Mr. Speaker
That is entirely a matter for the consideration of the hon. for Bedford (Mr. Skeffington-Lodge). I cannot order him to give names.
§ Mr. Skeffington-Lodge
I do not think that I have said anything which is out of Order. If I had, Mr. Speaker would have stopped me. Nor have I suggested that any corruption is involved. I have said that what is happening is restrictive in its operation. Of course, the whole thing is leading to a strengthening of the grip on the retail market which is already held by the "Big Five." Incidentally, it is also creating a monopoly and putting us very largely into America's pocket in a permanent way in this direction just at a time when we are struggling, with American aid, to become economically self-sufficient. To me, that does not make sense.
There is ample proof of my general proposition in extracts from letters which I have here. I do not want to inflict many of them on the House, but I would like to quote from one or two. I have here a letter from a car manufacturer. He was written to in the first instance by a British oil lubricating firm with the object of the British firm doing business with him. The extract from his letter states:
While agreeing your products may be equal to or better in quality than any other brand of oil at present being marketed, the writer regrets that we are unable to consider your request to do business due to prior commercial agreements and commitments with various other companies.Another car manufacturer, in reply to the same sort of approach, wrote:As far as recommending your oils is concerned, we are not in a position to do this as we are under agreement with the 'Five Companies' Arrangement' to recommend their oils only. From them, as you no doubt are aware, we receive certain benefits.A letter from an agricultural tractor manufacturer states:
In general, we find that for all practical purposes there is no appreciable difference between oils supplied by any of the well-known firms and therefore the question of recommending oils for use on tractors becomes for us merely a question of finance.An extract from a representative's report after discussion with the chief engineer of a large engineering concern states:
The managing director made an agreement with the 'Big Five' for recommendations, but the chief engineer told me today that he believes that this is being regretted as it was not previously realised how binding this agreement is.38 I also have with me various catalogues put out by motorcar manufacturing firms which prove my point. I wish to quote from one of them an appropriate extract. which is:
To obtain the most satisfactory service from your car at all times it is essential to use only high quality lubricants— this point cannot be over-emphasised. It is important, also that the recommended grade of oil is used as indicated in the following chart of suitable lubricants.In the same pamphlet under the heading, "List of recommended lubricants," one finds that every single one is an oil marketed by one of the "Big Five." In the Ferguson Tractor Instruction Book the use is suggested of two grades of oil, a first and a second grade from each of the usual five companies. The book omits all mention of other oil suppliers, including the company with the largest sale in the agricultural trade at the moment. That is significant.
I ask hon. Members to imagine the effect of all this on the buyer of new machines, and especially on the owners of those 2,250,000 cars and goods vehicles which are now on the roads, not to speak of the 200,000 tractors which are now actually licensed. The user of every car, tractor and commercial goods vehicle is careful to read, mark, learn and digest his instruction book, and he is most careful to use the oils therein specified. Little does he know when he reads that book that his freedom of choice has been restricted for him beforehand, and that private enterprise is being throttled by a state of affairs which is forbidden in America as well as elsewhere. To contend that the purchase of recommendations is merely fair advertising is to fly in the face of the facts.
There is absolutely no free competition for the small firm in a market in which the big wealthy manufacturer, unknown to him, brings pressure to bear on the consumer in his choice. The ruthless and powerful interests indulging in this practice in this country are creating a complete monopoly. The irony of it is that the inciters of the scheme, and those furthering it, have their roots in free enterprise America where it is entirely banned. Every car bearing plates recommending lubricants other than British is supporting foreign trade. Every catalogue printed, every lubricating chart made available to motorists and tractor drivers. 39 and every filter cap carrying the name of a branded oil is merely contributing to the fastening of a monopolistic practice round our necks. Of course, the cost of competing with all this is quite outside the range of ordinary British firms.
In my opening remarks I said that I hoped to be able to put forward an alternative plan under which a manufacturer can indicate to his customers the type of lubricant to be used in the machines which he may make. In that connection I refer to America. In America the Society of Auto-motive Engineers lays down certain specifications regarding lubricants. These relate to the one really vital characteristic of the oil to be used-namely, its viscosity. By viscosity, I mean simply its thickness or resistance to flow. Once the viscosity of the oil to be used has been laid down, then, I contend, the situation should be the same here as in America, and the customer should be left free to buy the brand he likes from any reputable supplier. In fact, however, real freedom of choice is denied him, and it is denied him by some secret arrangement of which he knows absolutely nothing.
Tomorrow, the Motor Show opens at Earls Court. It seems to me very appropriate at this time to ask the Minister who will reply to this Debate, in collaboration with the motor industry itself, to devise some method of indicating the right oils for certain purposes which will remove the restrictive tendency which I have described and condemned. Why not ask the British Standards Institute to assist in this vital matter? Unless something is done and done quickly, the many British firms which are now engaged in this sphere of our trade will be gradually squeezed out, and, more important still, British efficiency, healthy competition and private enterprise in a most important phase of our home and overseas trade ultimately will be killed completely.
I hope that the Minister, when he replies, will deal with this matter in a sympathetic way, for I can assure him, as a result of many contacts, that, among the British lubricating oil firms, there is a strong feeling that they are being unfairly treated as a result of the restrictive practices which I have discussed. If 40 we take a leaf out of America's book in the direction of banning them we shall have done a very good thing.
§ 6.3 p.m.
§ Mr. Erroll (Altrincham and Sale)
If we did not know of the complete integrity of the hon. Member for Bedford (Mr. Skeffington-Lodge), some of us might be tempted to imagine that he was a spokesman for one of the disgruntled oil supplying companies which have apparently been unsuccessful in securing that their oils are recommended by the motor car manufacturers. It is interesting to find that the hon. Member for Bedford is so strong in his advocacy of free enterprise, and we on this side of the House are delighted to welcome a convert from whatever quarter. In this particular field of oil recommendations, the hon. Member for Bedford stated that it did not make sense. We have, indeed, been delighted on many occasions in past Sessions of Parliament by the naive remarks of the hon. Member for Bedford, and this is but one further example of the way in which he has taken insufficient trouble to acquaint himself with the facts, and, on insufficient knowledge, has declared that the subject-matter of this Debate does not make sense.
There is a very good reason why certain oils are recommended by motorcar manufacturers, and, indeed tractor manufacturers, particularly when we consider the importance of their exports all over the world. They have to consider whether the oil which they might recommend can, indeed, be supplied in any part of the world to which they may be exporting their vehicles, and under all conditions. It is no good, stating on the oil filler of one's vehicle that a certain oil should be used, if one finds that it is not available, for example, in Denmark, to which country one is intending to export one's vehicle.
§ Mr. Skeffington-Lodge
Will the hon. Gentleman meet my objection to the use of branded names in this direction? It would be much more sensible if the firm concerned specified the type of oil rather than a particular brand.
§ Mr. Erroll
As regards the branded names, with which I will deal, this is a practice which has been widely adopted by the Co-operative Wholesale Society in order to distinguish its goods from those 41 of other manufacturers. Let us have branded names, because they are a guarantee of uniform quality to the purchaser, who has not the time to study the technical details of lubrication science. I am sorry that the interruption of the hon. member for Bedford did not attempt to deal with what is one of the most important points in this matter—that any oils recommended by the motorcar manufacturers must be universally available all over the world. It is no good recommending a small local brand of lubricating oil for vehicles which are going all over the world.
Apart from the question of supply, when a vehicle manufacturer is developing his engine, he is particularly anxious to ensure that the engine will operate with a suitable oil. He therefore seeks, at an early stage of research and development, the active co-operation of a firm manufacturing lubricants to ensure that he does not, at any time, design an engine in such a way that it cannot be lubricated satisfactorily by existing and available lubricants. It is natural, therefore, that he should tend to go to large firms with adequate resources and other facilities which can give him specialist advice on lubrication technique, without which he cannot hope to design an engine of the maximum possible efficiency.
There are two important factors which converge to produce the recommendation which the hon. Member for Bedford views with such suspicion, and these two factors are collaboration on the design and development side of the engine itself, and, secondly, the availability of particular oils the world over and not merely in certain restricted localities.
§ Mr. Warbey (Luton)
Will the hon. Gentleman explain why, according to the many examples which have been quoted by my hon. Friend, it should be necessary for this collaboration with the motor manufacturers to take the form of a sum of money, or that the lubrication manufacturer should pay a sum of money to the motor manufacturer who recommends the use of his particular oil?
§ Mr. Erroll
I must say that I thought the evidence produced in that direction was singularly flimsy and unsatisfactory. I am not in a position to deny absolutely the charges which have been made, but I would like to say that they are quite 42 unfounded and that the evidence so far produced to support them is extremely unsatisfactory and certainly would not stand up to the test of a court of law.
§ Mr. Skeffington-Lodge
Will the hon. Gentleman admit that it is generally known in the motor trade that these practices are widely indulged in? Will he deny that?
§ Mr. Erroll
If that is the case, the evidence so far produced is extremely inadequate to support such a serious charge as was made earlier in the Debate. There is one final point on the question of lubricating oil supply. The suggestion has been made that these practices— yet to be proved— are indulged in by American companies but not by their British counterparts and British firms manufacturing lubricating oil. I think the House needs to examine this point carefully to make sure whether the facts are as stated. The real point is that lubricating oil is imported from America or from dollar sources, and that crude oil is imported from dollar countries and refined in this country, so that it really makes very little difference whether the firm is British or American. The sources of the raw material of lubricating oil are, in almost all cases, dollar areas. Crude oil, or dollar lubricating oil, is brought here and blended to form a British proprietary lubricating oil, and that is the practice of some smaller British lubricating manufacturers, in whose defence the hon. Member for Bedford tried to speak so convincingly. I suggest that it would have been much better if this Debate, which is a poor one for the first day of a new Session, had never been started.
§ 6.10 p.m.
§ Sir Peter Bennett (Birmingham, Edgbaston)
I do not propose to go over the ground covered by my hon. Friend the Member for Altrincham and Sale (Mr. Erroll) except to emphasise the fact that the universality of oil supplies all over the world is of the greatest importance. Lubricating oil, in one form or another, comes from overseas. Therefore, the suggestion of the hon. Member for Bedford (Mr. Skeffington-Lodge) that this is some sort of an American plot is rather beyond the point. I was very surprised at the play he made of "under-the-counter" and other restrictive practices. I appreciate. 43 of course, that he has taken up this question, as any one of us might do, at the request of a constituent, but I think he has gone beyond limits which are either advisable or necessary. Actually, there is nothing new in what he has been telling us. To my knowledge, these terms of trade have been going on for 20 years, and longer. It has been the regular practice for oil companies to compete for business, and for motorcar manufacturers to buy in the lowest market for financial reasons.
What are the inducements given? A manufacturer considers what are the export rebates, and so forth. He considers which is the cheapest oil and the amount he will get in rebates, in special allowances, or as advertising charges. All these things are taken into account. The oil companies are anxious to develop their trade all over the country, and, indeed, throughout the world. They are prepared, if a manufacturer is willing to place a contract with them and to make recommendations for the use of their products, to make a payment which comes off the price. There is nothing mysterious about that; it all comes down to the price which a motorcar manufacturer pays for his oil.
A point to which I am coming, and about which it is apparent from his remarks that the hon. Member for Bedford knows nothing, is the suggestion that any old oil will do. He suggested that there might be some specification of viscosity. Imagine a lady driver having to carry around with her a book of words giving the analysis of the oil she needs for her car.
§ Mr. Skeffington-Lodge
I must deny that I suggested that consumers just ask for any oil, irrespective of its quality. I never suggested any such thing. Will not the hon. Member admit that I stated that there should be proper specifications prepared by an authorised organisation so that people would know what oil to buy?
§ Sir P. Bennett
I was saying that when the hon. Member interrupted me. I said that any old oil will not do; I did not say that he said so. He suggested that there should be a book or a card which a driver could carry round with him stating the specification of the oil to be used in his vehicle. But any old oil would be supplied under those conditions. I doubt 44 whether the hon. Member for Bedford, or any other hon. Member, realises what a very difficult technical problem this is. I happen to know because, as the House is aware, I am interested in the starting and regular turning of engines.
Before the war, my organisation was, as far as I know, the only one in this country which had a refrigerator big enough to accommodate a lorry. Hon. Members may ask what is the importance of that? It is that oils have a way of changing their nature under the influence of cold, and that, therefore, they need a great deal of investigation and research. At the outbreak of war we had to bring all the oil companies into consultation so as to develop an oil which would not freeze or lose its qualities when used in vehicles exported to the Continent. We found that the majority of the oil supplies in this country would not be suitable if used in war vehicles overseas. The Parliamentary Secretary can verify what I am saying if he takes the trouble to look up the records at the Ministry of Supply for the year 1939. The oil companies had to beg the use of our refrigerator for testing their oil in order to make certain that it would be suitable, because the oil being supplied for use in this country would not have been suitable for use in the severe winter conditions of the Continent. I mention this to show that it is not a simple case of restriction for restriction's sake. A great deal of money is spent on research in order to get the right article. The motor manufacturer, having got the right article, wants to know that it will be used, and the oil companies are willing to make certain payments in order that they may recover their ordinary expenses. This is a practice which is known throughout the trade, and I am surprised that the hon. Member for Bedford should have devoted such eloquence to what is, in my view, a mare's nest.
§ 6.6 p.m.
§ Mr. Orr-Ewing (Weston-super-Mare)
I very much regret that the hon. Member for Bedford (Mr. Skeffington-Lodge) should have raised this matter in the manner in which he did. I am not concerned with either the motorcar industry or oil interests, but I am very concerned to see that British products which are sound and good get the best fuel supplied to them, so that their users may get the 45 right performance from them. Nothing could be worse than that a British engine should have to run on a lubricant which is not suited to it. What the hon. Member for Bedford has said would seem to imply that he is thinking that a wider margin of error can be allowed for in specifications of lubricants than is, in fact, the case in respect to modern engines. I cannot imagine that there is any other reason for his having raised this matter, because, after all, the examples which he quoted were such as are known to most of us in this House.
Many of us have owned motorcars for a number of years, although I must admit that most of the cars which I own or buy are so old that the instruction books concerning them have been lost long ago. I occasionally see more fortunate people, such as hon. Members opposite, buying new cars and they, of course, receive instruction books with them, giving the most suitable type of oil to use. However, I would remind hon. Members that there is no compulsion on any purchaser of a motorcar to use the oil mentioned in the instruction book, but surely, the fact that a well-known brand of oil is mentioned in an instruction book sets a standard which cannot be set in any other way in the popular mind.
We are not only dealing with the user of the car, but also with the garage, whether it be a large concern in the middle of a city or a small business in the country, where the sole knowledge in the possession of the proprietor with regard to lubricants is culled from lubricant charts supplied by the different oil manufacturers.
§ Mr. Skeffington-Lodge
Does the hon. Member contend that British oils are not second to none, because in many years experience I have found them to be as good as, and in many cases better than, others. What has the hon. Member to say about that?
§ Mr. Orr-Ewing
I am delighted to know that in spite of this intensive propaganda to which I know he is very susceptible from hon. Members opposite—
§ Mr. Orr-Ewing
—and despite the propaganda of the big oil companies to which 46 he objects so much, the hon. Member for Bedford still buys British oils. I do not think for one moment that he is an exception. I think that many other people would like to buy British oil. If it were the case, as he says, that nobody bought these British oils, how is it that these companies exist at all? Of course, they continue to exist, and everybody recognises that many of their products are admirable, which is why people continue to buy them. What I say is that the standard set for a particular engine is best set in the public mind and in the minds of the garage proprietors in the country as a whole by quoting as an example a well— known brand in wide circulation which is available everywhere.
I am not going to traverse the ground concerning details of imports of oils which go to make up lubricating oils in this country, but it is very doubtful if more than a very small proportion indeed of the so— called British oils which the hon. Member has mentioned do in fact emanate at all points from sources within the United Kingdom. I think it is misleading the House to a considerable degree when the hon. Member tries to make this a question of British oils versus American oils, and says that for that reason we should try to avoid quoting in any recommendation an oil which emanates from the United States of America or from a dollar source. That is not the point at all, and I think that in honesty, the hon. Member for Bedford will agree that that side of the argument had much better be left out.
I very much regret the hon. Member's implication of improper practice. I do not pretend to know anything about the ramifications and details concerning the payments to which he referred, but the fact that they are openly made, and the fact that this is well known to the trade, rather rules out the sort of implication which was inherent in the hon. Member's speech. He said that he knew of a case in which £100,000 had changed hands, and the implication, from the manner in which he said it, was that that £100,000 had changed hands improperly.
§ Mr. Skeffington - Lodge indicated dissent—47
§ Mr. Skeffington-Lodge
The implication was that the consumer did not know of these behind-the-scenes details, and that what was going on was restrictive in the sense that the consumer was placed in the position of having to use an oil the recommendation for which had been paid for by means of that large sum of money.
§ Mr. Orr-Ewing
I think the hon. Member has merely repeated the complete fallacy under which he seems to be labouring. He has just said that the consumer has to use a certain oil. The consumer does not have to do anything of the sort. There is no compulsion of any kind on him, nor is there any compulsion on any garage proprietor to supply any particular kind of oil. The recommendation sets a standard. Then the hon. Members says that it is done "under the counter," and that nobody knows anything about it. Does anybody know everything about what is paid for every part of a motorcar, let alone what is paid for the ingredients that go into the making of the oil and all its processes? To imply that the fact that nobody knows exactly what is paid, whether it is by way of trade rebate or anything else, makes it dishonest, is not worthy of the hon. Member for Bedford for whom I have the greatest respect, and I wish he would not make that sort of statement. It does not do British industry any good, and I know that he has the welfare of British industry at heart. Why does he not come to the House and ask Questions instead of making statements containing unpleasant implications of that sort?
I hope we shall get a satisfactory reply from the Parliamentary Secretary which will clear up the situation. We should bear in mind that a very high proportion indeed of the motorcars and internal combustion engines manufactured in this country go to the export trade, and that what is done by manufacturers has to be done with an eye to the success of the project in the export markets so as to make it easy for the user of the car or the engine in the foreign country to get all he wants in the simplest possible way and, at the same time, in a manner which will not be detrimental to the British product. If the hon. Member had had that in mind, I do not believe he would have raised this matter at all.
§ 6.25 p.m.
§ The Joint Parliamentary Secretary to the Ministry of Supply (Mr. Jack Jones)
First and foremost, I want to thank those hon. Members who have taken part in this Debate for the courteous way in which they have put their points, and to express the hope that at all times any Member of this House who feels that some particular minority section of an industry is being unfairly dealt with, will maintain the right to put forward that point of view.
This happens to be my birthday, and I should like to use a happy birthday pouring a little oil on one or two troubled minds, particularly the troubled mind of my hon. Friend the Member for Bedford (Mr. Skeffington-Lodge). There seem to be two main issues in the points which my hon. Friend has raised. The first is whether or not this practice of which he complains is a monopolistic or restrictive practice in the strict sense of the meaning of those words, and if, in fact, it could be construed as being harmful to the public interest. That appears to me to be the major point at issue. As has been amply demonstrated by the hon. Members for Edgbaston (Sir P. Bennett) and Altrincham and Sale (Mr. Erroll), these arrangements arise from trade practices as we have known them and as they have grown up and have become part and parcel of the British way of trade during the past centuries.
Whether or not we agree with the way in which these things have happened in the past is another matter, but I am certainly doubtful, and so are my colleagues, particularly my right hon. Friend, whether this particular trade practice does come technically—and I use the word "technically" advisedly—within the scope of the Monopolies and Restrictive Practices (Inquiry and Control) Act, 1948; and if that Act applies, I am doubtful whether it could be held to prevail in the supply of oil simply on account of the arrangements which have been referred to by my hon. Friend. I agree that morally, on the surface, this may appear to be a case which requires complete investigation and thorough looking into. My Ministry are prepared at all times to have a very fair and unbiased look at any case which any hon. Member many care to raise, but we believe that the arrangement to which reference 49 has been made, is not of the type which is intended to be covered by the Monopolies and Restrictive Practices (Inquiry and Control) Act.
The House will appreciate that my concern is with the motor industry and its success, particularly from the point of view of its export programme, and I believe that I can persuade my hon. Friend the Member for Bedford and the rest of the House that the picture is not quite so black as has been portrayed. The specifying of a named brand of oil is, to my mind, the only way in which a motorcar manufacturer can make recommendations—I use this word very definitely—to the person who purchases his cars. The House knows that although a steel worker, I have always been particularly interested in technical research in regard to steel and engineering generally. There has been a tremendous amount of research in regard to what type of oil suits what type of engine and synchronising the two so as to get the best possible performance in order that cars may be sold abroad and on the home market with satisfaction to all concerned.
I am not an expert on this particular phase of British industry, but I am always willing to learn. I have furnished myself with a small library, like my hon. Friend the Member for Bedford, and have gone very carefully into the facts affecting the question of lubrication. I have read carefully the British and American views on this subject. I have a very valuable document which is a resume of the results of research by four British and four leading American firms, and under the heading "Correct lubrication" it says:use only the recommended oils and greases.The document goes on to say that the correct lubrication of any piece of machinery is of the utmost importance and, as every hon. Member knows, the question of lubrication is vital to the performance, life, maintenance and so forth of any engine. The use of inferior oils or unsuitable oils would inevitably bring discredit on the manufacturers and, indeed, it would not give the owner of any particular car the results he wanted to achieve.
I am not suggesting to the House for one moment that all oils other than those recommended to be used by motorcar 50 buyers, are bad oils. I am satisfied that, with competition in oil—and we want to see it—there are British firms producing oils which have not yet been given the same opportunity of use and the same opportunity to be found suitable or otherwise as that given to some of the better known and more widely used brands of oil. So far as the question of restrictive practices is concerned, this would be my personal opinion about it: after other oils have had the same opportunity of proving their value by comparison with oils which have already had the test, if restrictions were placed on the use of these oils, that would be construed in my mind, at all events, as a restrictive practice.
§ Mr. John Hynd (Sheffield, Attercliffe)
Might I take the Minister up on that? It is precisely the point my hon. Friend the Member for Bedford (Mr. Skeffington- Lodge) made. What these car manufacturers are doing is that they are saying, "You should use only this particular brand of oil." They do not permit any alternative, nor do they suggest any alternative, whereas other firms do give alternatives which can be used. If what the Minister has said is correct, then the whole case made by my hon. Friend the Member for Bedford has been substantiated.
§ Mr. Jones
I used the word "recommend"—they recommend certain brands. No motorcar manufacturing company can dictate to any purchaser what oil he shall use. The purchaser of any car, of any make, is entitled to buy whatever oil he likes wherever he likes. He takes the risk if he does not take advantage of the recommendations and instructions, or indeed the information, which is made available to him by the manufacturer of that particular car, who says that, after research, he makes a certain recommendation. Any person is entitled, and I repeat this with emphasis, to buy oil contrary to the recommendation of any motorcar manufacturer. Personally, I could not over-emphasise the folly of using bad oils and bad lubricants. Everybody knows the reason why it is folly. I do not want to go into the technical data because the hon. Member for Altrincham and Sale (Mr. Erroll) mentioned some of the effects which could result from the use of oils of lesser quality or the use of so-called cheap lubricants.
51 My hon. Friend the Member for Bedford referred to the American practice. as suggested and laid down by the Society of Auto-Motive Engineers in the United States—the practice of recommending oils by S.A.E. numbers without mentioning brands. I would ask my hon. Friend to realise that these numbers are merely standards of viscosity as laid down by this American Society and very wide variations of quality are possible within those numbers. There is no guarantee even in those numbers of the period for which the oil will retain this viscosity. I think hon. Members will agree that this method leaves a lot to be desired from the point of view of the motorcar manufacturers, and I am not certain that it is satisfactory even from the point of view of the customer.
There is one further point about the arrangements which exist in this country. Looking through the hand-books which I have here, I find that six major motorcar manufacturers draw a distinction between recommending and approving. They make certain recommendations and then I find that, in the event of the particular oil which they recommend not being available, they give a complete list of alternative oils, some of which are the products of the companies which I believe are the cause of this Debate tonight. There does not appear to be what I would call venomous discrimination. They do give these alternatives in these handbooks, which will be available to my hon. Friend the Member for Bedford if he has not already seen them; I imagine he has already seen them, but if not I will see he has them for his perusal and satisfaction.
The question of payment is an important point and one which should be completely cleared up. We are all—at least at present we are—entitled to have our preferences and industry is free to enter into various forms of commercial advertising arrangements. I cannot see that it is unnatural for a manufacturer to recommend by name certain oils which, as I have already said, and as I repeat, he has tested and found satisfactory for use in the particular engines which go into the cars he is selling. I see no reason why, under these arrangements, a company which has made trade arrangements under the present laws, should not be able to accept a payment 52 which as has been suggested by the hon. Member for Edgbaston (Sir P. Bennett), is a payment towards the cost of research and is made by mutual trade agreement affecting the companies concerned.
Recommendations which are made by the motorcar manufacturers would lose their value as advertising matter if they were made on too wide a scale. If they recommended everybody's oil, the recommendation would lose its value. Instead. having gone through all the research, they make these particular recommendations. I think I am right in saying that the majority of cases which my hon. Friend quoted are from those particular oil companies who find that certain producers of cars and other vehicles have refused to recommend their particular brand of oil. I want to thank my hon. Friend for these cases he has mentioned; I have seen the letters he has received and he has been scrupulously fair about this. I believe this to be common trade practice. The car producers simply say, in other words, that they are satisfied with the oils which they have tested and which they recommend to the customers, who buy the cars, vehicles and tractors, as what they believe to be in the best interests of the user of the vehicle. Speaking as a practical fellow, I suggest that any firm which went out of its way to recommend the use of something which detracted from the performance of the vehicle they manufactured, would be bringing trouble upon themselves. That is ordinary logic and ordinary horse-sense. Generally, as the House knows, I try to base my case on the use of these very important unrationed commodities.
The next point which arises is the question of supporting American oil companies to the detriment of British oil interests, which was another very strong point my hon. Friend made in what was not exactly an attack but was a number of observations on this aspect of British industry. I have here one of the instruction books of one of the largest British vehicle producers and it recommends, naturally, only one brand of oil, blended by a British company. Then the handbook reiterates what the others have said that, when the oil is not available "we approve the use of the following makes," and they go on to name eight other brands, two American and six British, including the name of the company which, 53 I believe, was responsible for the origination of the complaint made to my hon. Friend and the introduction of this case on to the Floor of the House.
I could go on for a long time to talk technicalities about these things but I do not intend to do so. I should like to mention one further point for the information of hon. Members, a point which I would ask them to bear in mind. It is very important, particularly where our export programme is concerned. I have been known to make statements about the use and misuse of steel, in particular, in trade articles which have gone abroad and have earned us a bad name. I am particularly anxious that everything that leaves this country is fit to bear the name of Britain on it; and it is particularly important that British motor manufacturers, in sending out their products, should be in a position to recommend the type of oil which, to their minds, after consideration of all this research, will give our British motorcars the highest possible peak performance, and satisfaction to our overseas customers. That is more vital today, because of our export programme than ever it was before.
To summarise the position. The arrangements that I have spoken about do not appear—and I want my hon. Friend to know that I am sincerely convinced—to be a matter that comes legally within the Monopolies and Restrictive Practices (Inquiry and Control) Act, or that should go to the Commission. Initially, they formed a kind of advertising. Of course, if they were carried to improper lengths and were operated in a discriminatory fashion, the question would arise, whether the oil firms concerned were using fair or unfair methods of competition. I am bound to confess, that having gone carefully through the whole of the letters, and the letters I have received from the motorcar manufacturers, which were conveyed to my hon. Friend, and from which it appears that no illegal construction could be placed on the matter, I feel a little unhappy about the picture. I must, however, emphasise that no statutory action can be taken at present against those arrangements, which may appear morally to be unfair competition, but which certainly do not involve monopoly or restrictions.
54 This Government are in no position to legislate on the fairness or unfairness of the particular form of competition that has been mentioned. It is agreed that this is a trade practice spread over the years, and that has grown up. It may be looked upon by some hon. Members as being morally unsound, but legally it is in order, and that is the point we have to keep in our minds. It may well be that in the future, in the published reports of the Monopoly Commission, we may get some further light on this question. We certainly shall in a few years' time—indeed, possibly in some months' time—come to know very much more about such trends and such practices than we do today. At the moment, as Members of the Opposition particularly know. we are feeling our way with regard to restrictive practices and so on. We believe, at all events on this side of the House, that the passing of the Monopolies and Restrictive Practices (Inquiry and Control) Act is a big step forward. I agree that even the Opposition expedited the progress of that particular Act and helped it through. We must try to walk well before we run on this question.
Finally, I would say to my hon. Friend that my right hon. Friend is anxious to give satisfaction on these matters, that this is not the end of the story, and that, although this Debate was discredited by the hon. Member for Altrincham and Sale as being a bad Debate, it is not the end of this question. We shall continue to take a live and keen interest in the subject, and to try to give satisfaction, not only to individual Members who raise these matters on the Floor of the House, and, indeed, to Members of the Opposition, too, but to the whole country.
Mr. Gammons (Hornsey)
Do I understand from what the hon. Gentleman has said that, while he approves of this practice in a strictly legal point of view, he still doubts its morality?
§ Mr. Jones
I made the statement that I was a little unhappy, having regard to the information we have received from the motorcar manufacturers and others, and that, morally, there may appear to be some case for consideration in order to be perfectly satisfied. I, as a junior Minister and a Member of the Government, want to be at all times absolutely 55 satisfied. We shall try to investigate this matter and try to give satisfaction to all concerned.
§ 6.45 p.m.
§ Mr. John Hynd (Sheffield, Attercliffe)
I should like to make clear, in view of the question that has just been interposed here, that some of us are far from satisfied as to the morality of this situation. I am glad that this matter has been raised by my hon. Friend the Member for Bedford (Mr. Skeffington-Lodge) tonight. I think it is necessary that the Ministry of Supply and the Government generally should watch very carefully some of these tendencies to which attention has been drawn. It is true that this kind of practice has been operated in business and trade for a very long time. It was really interesting and remarkable to hear some of the efforts made by hon. Members opposite to try to squash this thing and prevent it from being raised at all. It was only recently that a Member of the party opposite made the rather remarkable and illuminating statement that the gentleman who operates in the black market is doing something quite natural and logical because he is assisting in the natural process of private enterprise. Precisely according to that opinion, we have had the same kind of tone in hon. Members opposite tonight of astonishment and disgust at hearing the suggestion that money was changing hands, until it was shown by one hon. Member that that was, in fact, happening.
What is the point that has been raised? I have said it is true that these practices have been going on a long time and are well known. There is no professional sportsman who has to buy a ball or stick of any kind. Such goods are provided, and are provided by particular firms, on condition that the player allows his name to be used in the advertising of the products. We know very well that some film stars get payment or some kind of recompense for allowing their photographs to be published alongside pictures of cakes of soap, and for allowing it to be suggested that they use only that kind of soap; although nothing of the kind 56 is the case. We are discussing the question of motorcars and oils. I do not think anybody objects to that kind of practice going on there, or that a particular kind of oil should be recommended for a particular kind of car, as being best for that car. All right. There are few people naive enough to believe that that is the only kind of oil that will do. As the Minister said, many of these firms do, in fact, have charts showing alternative oils that can be used if the particular oil recommended cannot be obtained. No one objects to the recommending of the supply of that particular kind of oil.
What my hon. Friend has called attention to, however, is a new tendency which goes very much further, and in which a motor company publishes in its book that a particular oil is the only kind of oil that should be used, and gives a whole range of a particular brand of oil for the different needs of the car. That is, at least, unfair. I do not know myself of any such case where that is specifically stated. However, it is, at least, clearly unfair, and it gives the impression—it has given some of my motoring friends the impression—that unless the owner of the car uses that stated kind of oil his guarantee is gone. That impression has reached the garages. I know of a case in which it was said at the garage that they had not there the kind of oil recommended in the book, and that it would be as well for the car owner to go somewhere else for it because he might break his guarantee if he did not use that particular oil.
That is not, as the Minister said, strictly illegal, but I suggest that the public are being deliberately misled into believing that reputable brands of oil, other than those recommended, ought not to be used, and are not good enough. To give this impression is to get pretty near the bounds of morality, and I think it is deplorable that such attempts should have been made, as have been made from the opposite side of the House, to cover this up. I am glad of what the Minister said at the end of his speech, that he considers that this kind of thing will have to be carefully watched. I hope it will be by the Commission set up under the new Act.