§ 9.10 p.m.
§ The Minister of Health (Mr. Marquand)
I beg to move,That the Draft Monopolies and Restrictive Practices (Dental Goods) Order, 1951, a copy of which was laid before this House on 5th June, be approved.This is the first Order proposed to be made in accordance with the provisions of the Monopolies and Restrictive Practices (Inquiry and Control) Act, 1948, and it relates to the first industry to be investigated by the Commission set up by that Act. In this industry and trade there are little more than 6,000 employees but the products it produces and distributes are valued at about £6 million every year, and they are goods which are vital to the practice of dentistry. They include not only artificial teeth but precious metals, other forms of filling, dentists' equipment, instruments, and so on.
My right hon. Friend, the Secretary of State for Scotland, who is to be associated with me in this Order if approved by the House, and I have a great interest in what goes on in this industry. Without these products a satisfactory dental service in this country could not exist, and we must be alert to safeguard the public interest, because the National Health Service has greatly affected this industry and trade. The Health Service began in July, 1948, and the Report on the Supply of Dental Goods tells us that retail sales of dental goods in 1949 were 60 per cent. higher by value than they were in 1948. That is a measure of the vast difference in the production and trade of this industry made by the National Health Service.
I think that all who have read the Report must have admired the skill with which the Commission unravelled the story, and the clarity with which they described the workings of the trade and industry. It seems to me that the Report described a small but thoroughly typical piece of capitalism. The Commission said:We have been impressed by the high sense of responsibility which prevails throughout the industry for the provision of the best quality of goods and of service to the dentist.They speak of the moderation of the men who control the trade association in the industry, yet they find that the prices of 636 some of the industry's products are too high, that there is restriction of entry into the industry and a consequent absence of free competition, and that certain objectionable practices contrary to the public interest are prevalent. That situation is evidently due, not to the villainy of any individuals but to the natural law that capitalist industry, left to itself, free of control, abandons free competition and moves towards monopoly.
I need not weary the House with a long description of what facts the Report finds about this industry. I will refer to only some of the significant findings. They find, for example, that the Dental Manufacturing Company and the Amalgamated Dental group of companies together supplied 68 per cent. of the dental goods bought in the United Kingdom; that the members of the Association of Dental Manufacturers and Traders supplied 89 per cent. of dentists' requirements in these goods; and that exclusive dealing clauses have formed the core of the Association's arrangements throughout.
In paragraphs 59, 60 and 61 the Commission go into some detail about the rules of the Association of Dental Manufacturers and Traders, which it refers to as A.D.M.T. It says:Regulation 8 obliges all members to adhere to the retail prices fixed by the manufacturers or sole agents. Regulation 2 obliges manufacturer members to fix retail prices for all the dental goods which they supply. Regulations 66 and 68 are the exclusive dealing clauses. … Regulation 66 precludes any member from supplying dental goods to any person in the United Kingdom who is not a member, except at retail prices. Regulation 68 precludes any dealer member of the A.D.M.T. from buying certain listed types of dental goods, except from a fellow member.It goes on to say:… that these two Regulations, if used in conjunction with restrictions on admission to membership, can also serve to prevent the entry of competitors into the industry.It is in keeping with the spirit of that type of clause in the Articles or rules, that Rule No. 4 states that:… no Co-operative Society, whether registered under Act of Parliament or not, shall be eligible for membership.It follows also, to quote again the words of the Commission, thatIt is contrary to the rules of the A.D.M.T. for hospitals to be supplied with goods at wholesale prices, however large their purchases and whether or not they are prepared to buy direct from manufacturers.637 The Association had so tight a control over the industry, that even the powerful I.C.I., when it developed a new material to be used in dentistry, to quote paragraph 138 of the Report,felt obliged to join the A.D.M.T. and to submit to its rulings in order to get satisfactory distribution of their dental products.The Commission adds:Throughout, the A.D.M.T. applies its rules inflexibly.The Commission, therefore, says about the A.D.M.T. thatWe consider that it restricts competition within the meaning of Section 3 of the Act.They go on to describe the various restrictive practices used and conclude:All these practices obtain their force and effectiveness through exclusive dealing and the collective boycott.They also say:Our main objection to the collective enforcement of resale price maintenance lies in the fact that, in the view of the A.D.M.T., it can only be made effective if there is exclusive dealing and the power of boycott.I have used throughout, in order that it may not be said that I attempted through my own prejudices or in any other way to colour the Report, almost entirely the words the Commission itself has used in this very admirable and clearly expressed Report to describe what went on in this industry.
The Commission, having found these facts, recommend that the Amalgamated Dental Group should itself reduce the prices of porcelain teeth, which the Commission said were too high, and should reconsider its arrangement for the distribution of dental burs in the light of their Report. They also recommend that the Association of Dental Manufacturers and Traders should itself review its rules, regulations and policy.
I am glad to say that the retail prices of porcelain teeth were voluntarily reduced from the 2nd April by 5 to 20 per cent., and the restrictive part of the agreements concerning burs has been voluntarily waived by the Amalgamated Dental Company. In addition, other firms in the industry have indicated that, in the matter of prices of acrylic teeth and denture materials, they will consider the Commission's criticisms and recommendations. I will say no more about that, save that we hope that the industry will fully realise its responsibilities in these respects.
638 The Association has set up a committee to review its rules and policy. The Government stand ready to help the Association in doing that and will be glad to render any assistance and comment on any proposal it may have to make. We consider that this review, in accordance with the Commission's recommendations, should be left to the Association itself. We trust that after it has been completed, if necessary, as I say, with Government help, it will not be necessary to introduce any further legislation to correct any abuses. So much for the recommendations of the Commission, in which they, as it were, invited the trade association to put its house in order.
Finally, the Commission said:We recommend that these practices of exclusive dealing and collective boycott be prohibited.This Order, which I am asking the House to approve tonight, is the instrument of that prohibition. The Order provides, in paragraph 1, that it shall come into operation 28 days after it is made. Paragraph 2 defines certain terms used in the Order. Paragraph 3 renders unlawful the making or carrying out of agreements for the withholding of dental goods or orders for dental goods from persons or providing persons with dental goods onlyon terms and conditions which are less favourable than those applicable in the case of other persons,where the agreement wasintended or likely to have the effect of limiting the number of persons carrying on business in the United Kingdom as suppliers of dental goods or any description thereof,or where the agreement provides for the maintenance of retail prices. Paragraph 3 further makes it unlawfulto procure the making or carrying out of any agreementso rendered unlawful. This paragraph is intended to prevent for the future the practice of exclusive dealing which the Commission found so objectionable and which they found to be one of the main features of the operation of the A.D.M.T., throughout its history.
The question has been raised whether this paragraph would make illegal an agreement whereby a manufacturer engages to sell the whole of his output to one distributor or to sell goods specially made to order only to the person who 639 placed the order. This Order is not intended to make such agreements illegal, and in our view it does not do so. Nor would it prevent it being a condition of an agreement between wholesaler and dealer that the dealer will resell the goods only to the actual consumer. Correspondence has passed between the solicitor to my Department and the solicitor to the Association.
I trust that the right hon. Gentleman who is to deal with the Order from the other side of the House has found that the terms of the correspondence, which I have attempted to summarise in the last few words, are satisfactory. If he is not completely satisfied with what I have said, no doubt he will develop that point. The Lord Advocate is here to deal with it further, if it be necessary.
Paragraph 3 having dealt with the practice of exclusive dealing, paragraph 4 makes it unlawful to procure the boycotting of a supplier of dental goods on the ground that the supplier sold goods in the United Kingdom at less than the fixed prices. The effect of the two paragraphs together is to make the devices of exclusive dealing and collective boycott unlawful only in this context which the Commission have strongly criticised, that is, where they are used to enforce resale price maintenance and to restrict entry to the trade.
Paragraph 5 secures that resale price maintenance operated by an individual vendor should not be unlawful. In short, the order seeks to carry out the recommendations of the Commission itself, and it does not go beyond those recommendations. That we have done deliberately because we decided that it would not be right in this Order to go beyond the recommendations made by the Commission. The Order is made under the Monopolies and Restrictive Practices Act, and the Commission itself operated under that Act, discharging its duty very effectively indeed, and we thought that in the first Order made under the Act it would be right and proper to confine ourselves to matters recommended by the Commission to be prohibited by order and not to seek to go beyond those.
We felt that if we were to go beyond recommendations of that kind it would be more appropriate to do so by general 640 legislation which would apply to other, or to all, industries. Since that decision was made, we have laid before the House the White Paper on Resale Price Maintenance which announced the Government's intention to go in general, for the whole of industry, beyond what the Order does for the dental goods industry. It would not be in order to discuss that tonight, but the House will have an opportunity later.
To complete the explanation, it is provided, I think, in Section 11 of the Order, that no criminal proceedings can be taken for a contravention of the Order. The remedy for any person who suffers injury owing to the contravention of the Order is in the civil courts, and compliance with the Order will be enforceable by civil proceedings by the Crown in the way of an injunction or other appropriate procedure. I am sorry: I should have said that this is provided for in the Act, I have become confused between a section of the Order and a section of the Act. It is the Act of Parliament itself which lays down that proceedings shall be taken in the civil courts. The Order will be enforced under the provisions of Section 11 of the Act, which makes civil proceedings the correct and only procedure.
It was suggested in the early stages of public discussion upon this matter, when some Questions were placed on the Order Paper, that there was no need to make this Order and that now that the objectionable practices prevalent in this industry and trade had been brought into the daylight and fully exposed to public view, the Association could safely have been left to itself to eliminate them all. That is not the Government's view. The Government hold that it is right and proper to make the maintenance of exclusive dealing and the collective boycott an offence.
Those who say they have no intention of persisting in these practices clearly cannot complain that they are harmed. They will have the satisfaction of knowing that if in future they closely abide by the findings of the Commission they will get into no trouble and that anybody else who tries to do what has been done in the past will be prevented from doing so. Thus they have some protection if their assertions are correct that they will do this in any case.
641 Nor can the Government accept the argument that it would be better to wait until more reports about other industries are available. The machinery of this Commission, set up under the Act of 1948, has admittedly been slow. My right hon. and learned Friend the President of the Board of Trade said that at this Box only a day or two ago. As it has been slow, there would be no sense in our waiting for a lot of other reports. We intend instead to speed up the machinery of the Commission and to act as quickly as possible on the reports we have received and which we expect shortly to receive. We must free the consumer and the shopkeeper from price rings and boycotts. This Order is a first step, and a first step is always a significant step, along a road which we intend to follow to the end. I hope, therefore, that the House will approve the Order.
§ 9.31 p.m.
§ Mr. Hopkin Morris (Carmarthen)
May I ask the right hon. Gentleman a question before he sits down? Why is it that the Minister of Health is introducing this price fixing Order dealing with a monopoly restriction? Why is it not introduced by the President of the Board of Trade?
§ Mr. Marquand
Because the Act lays down that a competent authority may make orders under Section 10 of the Act, and for this industry, whose products are entirely used for health purposes, very largely the National Health Service, in England and Wales, I am the competent authority, and in Scotland my right hon. Friend the Secretary of State is the competent authority.
§ 9.32 p.m.
§ Mr. Padley (Ogmore)
This order deals with resale price maintenance and its relationship to monopoly practices in the dental goods industry. In view of my close interest in resale price maintenance by virtue of my association with the principal trade union catering for distributive workers, it would be as well if I safeguarded my position by explaining the reason why I support the Order before the House.
This is important, because there is much misunderstanding of the nature of resale price maintenance in the dental 642 goods industry as well as elsewhere. I myself have been misunderstood and not a little misrepresented in recent times. I support this Order as a Socialist who is wholeheartedly in favour of public action to prevent the exploitation of the public by monopolies, and I am prepared to support this Government in any action similar to the present Order which will bring prices down at the expense of the monopolists.
But we should look carefully at the Order. My right hon. Friend referred to paragraph 5, but I want to direct the attention, particularly of hon. Members on this side of the House, to the precise terms of the Explanatory Note which interprets this Order for laymen. It reads as follows:This Order renders unlawful certain kinds of agreement which may be described broadly as those relating to the collective enforcement of resale prices in respect of dental goods, and those the effect of which is to restrict the number of persons carrying on business as suppliers of dental goods. The Order leaves untouched the right of an individual to fix and maintain retail prices in respect of goods which he supplies.That is a policy which I advocated in this House 12 months ago, when resale price maintenance was discussed. Naturally, therefore, I give enthusiastic backing to the Order which is before us tonight.
There are two kinds of resale price maintenance. The Monopolies Commission, which investigated this industry, came to the conclusion—in my view, rightly—that exclusive dealing, collective boycotts and similar weapons were being used by a monopoly group against the public interest. Therefore, the Commission recommended that an order similar to this one should be brought in by the Government. But the Commission, in investigating resale price maintenance in this industry, also came to the conclusion that, on balance, the maintenance of the price of a branded article by a producer was not against the public interest. Consequently, the Government, in following the recommendation of the Monopolies Commission, specifically exclude resale price maintenance in so far as a single firm fixes the end price for its branded goods.
I ask hon. Members, including my hon. Friends on this side of the House, to note that that is the finding of the 643 Monopolies Commission when it has investigated this subject over a long period of time. I ask them to note also that the Monopolies Commission and the Order now before the House follow broadly the view of the Lloyd Jacob Committee Report—the Report of the body of experts which the Government appointed some years ago to investigate this practice of resale price maintenance.
It is true, as my right hon. Friend has said, that a White Paper which was published yesterday puts forward a rather different view to that contained in the Order the Government are placing before us tonight. Without paragraph 5—on the right of the firm to maintain the price of a branded product—I might feel that some poor fellows earning £5 or £5 10s. a week in the distributive trades, rather than the monopolists, would be called upon to bear any reduction in prices; but because paragraph 5 is in the Order, I am able to give it enthusiastic support.
In my view, it is doubtful whether the Order goes far enough in tackling the problems of capitalist monopoly. I was very pleased to hear my right hon. Friend describe the innate nature of a capitalist economy and the way in which free competition merges into monopoly. Twelve months ago, on the Floor of the House, I declared my belief as a Socialist that not even a Labour Government, by Act of Parliament or by Order, could make semi-monopolists compete with one another.
I therefore wish to put to my right hon. Friend the point that it may well be that in the not distant future the Government will find it wise to bring to the House additional proposals, possibly of a measure of public control over the prices charged. For my part, I think it would be an improvement on the present Order if the firm which is to have the right to maintain the standard price of its branded product, were compelled to register the article and the price with the Board of Trade, and that if it were decided that the price would not be enforced unless the firm agreed not to regard dividends paid by co-operative societies and deferred discounts paid by other traders as a form of discount.
I would go further still. Given the facts revealed in the Monopolies Commission's investigation of this industry, I 644 am not at all sure that the more forthright Socialist remedy would not be for the Government to acquire at least a 51 per cent. holding in some of the firms in this industry.
§ Mr. Speaker
We are dealing with the Order and what is in this Order, which is dental goods and nothing else.
§ Mr. Padley
With respect, Sir, I was only trying to illustrate my point.
I will conclude on this note: that if this is a sample of the kind of legislative enactment which the Government intend to bring forward to reduce prices I as a Socialist, in spite of the partial reservation I have made, will give it wholehearted support.
§ 9.41 p.m
§ Mr. Linstead (Putney)
I shall not follow the hon. Member for Ogmore (Mr. Padley) very far beyond saying that I and others on this side of the House will look forward with interest to the speech he may make should the House debate the White Paper on Resale Price Maintenance which has been issued recently by the Government. I have no doubt he will obtain a copy of today's HANSARD which he will doubtless find useful when he prepares his remarks for that occasion.
I think that anyone who has read with care the Report of the Commission, which was the foundation of this Order, must feel that the practices to which they draw attention—the practices of this trade association—could scarcely provide a more complete example of an association which has exercised virtually a complete control over an important industry. They will find in those practices examples of almost every type of restrictive practice which has been criticised from time to time in this House and elsewhere and I personally will certainly accept the general conclusions of the Commission without serious question.
I do, however, rather agree with the hon. Member for Ogmore when he separates the question of resale price maintenance from other restrictive practices which, in many trade associations, have crystallised round it. I believe that resale price maintenance—provided that the prices are fair—taken by itself, is a trade practice which need not be open to objection, but it is when they crystallise 645 round the practice of resale price maintenance the sort of practices we are discussing tonight—the practices, for example, of exclusive dealing, the maintenance of excessive prices, Star Chamber methods of enforcement, and so on—that we get a state of affairs in which intervention is necessary.
So far as the dental industry is concerned it is quite clear that they have encrusted around themselves practices which make it essential for the Government and for the House to give some attention to it. I would, however, say this: we are tonight dealing with the industry somewhat unexpectedly and subjecting it to a good deal of rough handling. Just for that reason it is fair that the House should look very carefully at what it is doing. Here is an industry which has for years past been doing what is perfectly legal. It is an industry which has, since objections were pointed out to it, done its best in a very short time to put its house in order.
Moreover, it is an industry against which Government action is being proposed in isolation without even having regard to the contents of the recently published White Paper on resale price maintenance, without having regard to the position of other industries where the same practices may be in force and without having regard to the recommendations of the Lloyd Jacob Committee. One cannot help getting the impression that the Government were looking for an industry of which they could make an example, and here they have found an example ready made for them.
It may be expedient from time to time that an industry should be made to suffer for the sake of the community and it may be that here is an industry that deserves it—
§ Mr. Mulley (Sheffield, Park)
Does the hon. Member not agree, in view of his earlier remarks, that the community has already suffered a loss at the hands of the industry?
§ Mr. Linstead
If the hon. Gentleman would allow me to finish the sentence, he will see the force of the remark that I was making.
If it is expedient that an industry should suffer, very well it must suffer, but let us remember that it is an expedient, and 646 that it is not necessarily a principle when we take one industry in isolation. I can understand the feeling of Members opposite but this is, after all, the House of Commons. We are tonight proposing to take action which I think has not previously been taken in regard to legislation. I therefore suggest that it is not a matter which should be hurried, but that it is a piece of legislation which, for the sake of the people against whom it is directed, we ought to be prepared to examine.
I have no doubt that other Members of the House have received, as I have, a statement from the Association giving their views. Although I do not agree with those views it is not improper that the three objections which the Association raise to the proposed Order should be briefly mentioned to the House so that both sides of the question may be before us. The Association say, first, that this Order is unnecessary because they are able, by altering their own rules, as the Minister pointed out, to do much of what this Order proposes to do. I do not agree, but they are entitled to that point of view. I would agree with the Minister that more than the alteration of the internal rules of the Association is necessary.
They go on to say that the Order is oppressive because they are being selected for priority treatment from many industries where there may be similar practices. There, they are on firmer ground. There is first a reservation by two members of the Monopolies Commission in which they say that they think further experience should be gained before an example should be made of one industry. I cannot help thinking that if these practices are to be declared illegal they should be illegal either anywhere or nowhere. In other words, if they are illegal in the dental industry they should be illegal in other industries where they are permitted. To that extent I feel that this Association have some ground for objecting to what is happening.
The last thing the Association have to say is that this Order, in spite of the fact that it has had to be withdrawn at least once, to be looked at again by the lawyers, is still obscure. I hope that my hon. and learned Friend the Member for Chertsey (Mr. Heald) will succeed in catching your eye, Sir, and will be able to elaborate the drafting point which the 647 Minister approached with considerable diffidence. I hope that that particular point, about sole agency, will not be left in doubt.
Before we decide that we are tackling this problem the right way this type of Order must be looked at in relation to the industrial situation as it is today. We in this country are committed for a long time to a tripartite state of industry—the nationalised industries, private industry and the great industrial Departments of the State like the Board of Trade and the Ministry of Labour. It is necessary for those three parts to be in harmonious relationship one with the other.
I believe that is much more likely to be brought about not by statutory orders of the type which the Minister is asking us to approve tonight but rather by what I would call codes of good practice accepted by private and public industry and by the great Departments of State. That is the way I think they should live together and work harmoniously.
It has been said that it is only in the sphere of private industry where the abuses of monopolies are to be found. I am not prepared to subscribe to that view. I am not prepared to say that an Order of this kind should be limited to private industry. The principal harm of monopolies is the fact that power is in the hands of a few people, whether they be private or public monopolies. The system of outlawing certain practices by orders of this type does not seem to me to be the happiest or most fruitful way of encouraging unity among the three sections of our industrial front.
The best which may be said of this Order is that it might be justified on the particular facts of this case. I hope we shall learn some useful lessons from it, which may be negative as well as positive, as to how the whole problem of industrial monopoly in both public and private spheres can be approached in a statesman-like way.
§ 9.55 p.m.
§ Mr. Henry Brooke (Hampstead)
I am one of those who deplore restrictive practices wherever they are to be found. I am always ready to welcome effective action—I stress the word "effective"—to deal with them and, where they are 648 nationally undesirable, bring them to an end. I have been disappointed at the course of the debate so far, because the Minister seems to have failed to tell the House fully and frankly what were the real reasons which actuated him in determining to bring this Order forward.
I do not claim, and I expect that I am in company with most hon. Members present, that I am in any sense an expert on the doings or the misdoings of this industry. I am a small consumer of some of its products, and I have read the extremely interesting Report of the Monopolies Commission. That Report left me wondering what was the most far-sighted action for a Minister to take towards making certain that some practices which were, I think, proved in that Report to be contrary to the public interest were brought to an end.
As I understand it, the Association told the Minister that it was prepared to revise its rules and regulations on the general lines recommended in the Report The Minister replied that he was not very interested, because he intended to lay this Order. I hoped that at that point in his speech he would proceed to develop the reasons which were operating in his mind at that moment. We have not yet had that from him.
§ Mr. Marquand
I did say, I thought clearly, that I knew that the Association had set up a committee for the purpose of revising its rules, that I was willing to offer help if necessary, and that I was looking forward with interest to the revision produced.
§ Mr. Brooke
The Minister also said that the Government view was that it was right to make these practices an offence.
The question to which Parliament has to address itself is whether we will get further in pursuance of the public interest by the method proposed tonight, than we will by seeing how far we can effectively proceed by voluntary action on the part of the Association. This is an open question, to which I think we ought to direct our minds.
We have heard time and again from the Treasury Bench, when Government representatives have been resisting Amendments, that in their view it was unnecessary to put the point at issue into an Act of Parliament. They have said that, surely, everybody would accept the 649 assurance of the Government that, in fact, whatever was concerned would be done, and that there was no need to write it into the law. When anybody from the Treasury Bench says that to me in future I shall, if I am in order, point to this item this evening and say that on this occasion the Government have been proceeding on the exactly contrary basis, asserting that voluntary assurances cannot be relied upon to go far enough.
Again, it struck me that in his speech the Minister hardly mentioned the fact that the Report of the Monopolies Commission was not unanimous. That is one of the most interesting elements in the problem that we are discussing. It calls for a balancing of judgment, as between the majority of the Commission, who recommended that an Order should be made, and the minority, who after pointing out that there had not been any very grave abuse of the Association's powers, expressed the opinion that it would be wrong to enact ad hoc legislation against this industry.
I do not think that the fact that the Government have just published a White Paper excuses them from explaining more fully why they rejected the recommendation in the minority Report and decided that an Order was the right course. One cannot help wondering, or raising the question, whether it was political prejudice that played any part in influencing their decision. If it was not, then Parliament is entitled to know in greater detail what the motives were.
§ Mr. James Hudson (Ealing, North)
Does the hon. Gentleman consider that it would be political prejudice that led the majority to take an entirely different view to the minority on that point?
§ Mr. Brooke
I am taking a more serious view of the question at issue than, I think, some hon. Members. I am exceedingly anxious to make sure that Parliament shall be right, because this, as has been said, is a unique occasion. It is the first time that the machinery incorporated in the Monopolies and Restrictive Practices (Inquiry and Control) Act is being operated, and we shall all be watching with the greatest interest to see what the practical outcome is going to be. The words that we speak tonight will be of little effect. What will really make history is the success or failure of the Order which the Government are 650 proposing to carry through, and we can only test it by results.
I was not asking the Government to accept, without question, the minority recommendation. I was asking them to explain why and on what grounds they rejected the minority in favour of the majority Report. I think we need serious discussion of the handling of a difficult economic problem; at any rate, a problem on which there is obviously something to be said on both sides. We have the Minister injecting political prejudice by describing this affair as a "small but thoroughly typical piece of capitalism," and I wished that the Minister at that moment had remembered his university connections in the old days, when, I am sure, he taught his students to approach all economic questions with as little previous prejudice in their minds as possible.
§ Mr. Marquand
That was exactly what I was doing. I was remembering my university days, and, perhaps, I might mention, since it is now out of print, that I wrote a book upon the subject. That is why I found this particular industry an example of a typical piece of capitalism.
§ Mr. Brooke
Nevertheless, I think that the Minister, in using those words, was injecting an element of prejudice into the atmosphere of the House, and what he said was as irrelevant to the practical question we have to decide as it would be if I were to seek to answer him by pointing out that the A.D.M.T., in order to bring itself within the Trade Union Acts, had to include in its objects that of imposingsuch restrictive conditions on the conduct of the trade as may be deemed expedient by the Association.It is not only capitalism which knows something about restrictive practices and restrictive conditions.
Finally, I hope that we shall hear from the Government something more about the practical possibility of the individual manufacturer maintaining resale prices for his goods, after collective arrangements have been rendered illegal. The Minister will recollect that this was a question raised in a leading article in "The Times" shortly after his original Order was laid. In that article "The Times" said:The Association claimed that its collective price maintenance was necessary for individual price maintenance. There are good 651 reasons for believing that for this trade this is true in the present state of the law, and that the effects of the present Order may be on balance disadvantageous in the absence of legislation strengthening the power of individual manufacturers to enforce price maintenance agreements.'I think it is a pity that the Minister in his introductory speech did not deal with that point. He claimed credit for the fact that the Order did not prohibit action for price maintenance by individual manufacturers, but did not address himself at all to the criticism that, in fact, his Order may render that impossible.
I hope the Minister will not regard my speech as being a wholly hostile one, because I am most anxious that before the end of this debate we should get to the level of impartial economic consideration. My own view is that the wielding of the big stick is not always the best solution for these difficult problems, and that it is often the person who sees how far Tie can get by voluntary action and by carrying others along with him by persuasion who, in the long run, achieves more in the public interest than the man who has immediate recourse to legislative action.
§ 10.7 p.m.
§ Mr. Lionel Heald (Chertsey)
I have no connection, either personal or professional with the dental industry. Indeed, I feel that I may have had too little connection with it in the past, and for that reason I may have to have considerable connection with it in the future. But I have no connection which prevents me from speaking in quite an impartial way about it tonight. I am in complete agreement with the hon. Member for Ogmore (Mr. Padley). One does not require to be a Socialist to agree with him that we should do our best in this House to carry into effect the recommendations of the Monopolies Commission, which was set up in 1948 with the approval of all parties. As we agreed here last Friday, it is desirable that we should do everything possible to carry its recommendations into effect.
I think we ought to realise what we are doing here this evening. Subparagraphs 2, 4 and 6 of paragraph 3 of this Order contain the words, "It shall be unlawful," and, therefore, we as the House of Commons are altering the law this evening. My hon. Friend the Mem- 652 ber for Hampstead (Mr. H. Brooke) talked about bringing in the law. With the greatest possible respect to my hon. Friend, I would point out that we are not bringing the law in, but are altering the law in a fundamental respect.
I myself having had the privilege of taking part in a small way in altering the law of England—I have been trying to do so for nearly seven months now, and am very hopeful that before the end of this week that process may be sonsummated—contrast that with what we are doing this evening. This flimsy piece of paper which I hold in my hand was deposited on 5th May and is being dealt with tonight. It is altering the law; it is making something unlawful which today is lawful and the House should consider carefully what it is doing.
The Minister has told us that there are two things which the Monopolies Commission have recommended should be made unlawful—collective enforcement of prices and exclusive dealings; and I suggest to the House that we must be very careful to see that this Order is not doing any more than that. The Minister has told us that the Order is designed to enforce the prohibition of those two things. Does it do that or does it do more? I have the greatest doubt about it. The terms of the first draft Order, which was laid on 16th March, were hopelessly ambiguous and went miles beyond the recommendations of the Commission. That Order appeared day after day on the Order Paper of the House. Eventually it disappeared so that it could be redrafted.
I could not help being struck by the fact that this matter had not received the most careful consideration, because the Minister who introduced the Order, which is to alter the law, talked about paragraph 11 of the Order, which does not exist; and it almost suggested that the matter had not quite received the careful consideration that His Majesty's Government would usually be expected to give to an Order which alters the law of England.
Consequently, we approached the matter with a certain amount of suspicion. We approach it with perhaps more suspicion when we find at the beginning of the debate this evening the Minister of Local Government and Planning, the Eminence Grise, who appeared on 653 Friday and supervised the activities of the President of the Board of Trade; but the President of the Board of Trade, who is responsible for everything to do with monopolies, is tactfully absent this evening. That makes one a little suspicious about the proceedings.
If we look at the terms of the Order itself we find an Explanatory Note, presumably intended for the enlightenment of Parliament and the country, which contains this statement:The Order leaves untouched the right of an individual to fix and maintain retail prices in respect of goods which he supplies.That occurs on the evening of the day when we have all been studying a document which says that His Majesty's Government think it is wrong to leaveuntouched the right of an individual to fix and maintain retail prices.Thus, when we are asked to alter the law of England in those circumstances, we approach the matter with a certain amount of care—we will not say suspicion, because we sympathise with right hon. Gentlemen opposite when they find themselves in the position which they occupy at the present moment, after a speech by the hon. Member for Ogmore which, I think, made the position so plain. We look at the Order with some care.
There are two matters in the Order which cause anyone concerned with the law some alarm. I do not think one would say that the terms of the Order are obscure, but one thing occurs to me—and I may be entirely wrong about this; we shall no doubt have the advantage of legal assistance, and the fact that this is derived from a law which is one under which we do not usually proceed will not make it any less valuable to us. We shall be interested to hear what it is.
I think the terms of the Order are fairly clear, but I ask the House to look what it says. After all, if any apology is needed, we are altering the law and I suggest that we are entitled just to look at it for a moment or two before we do so. What does it say?It shall be unlawful to make or carry out any agreement to which this Article applies, if that agreement is intended or likely to have the effect of limiting the number of persons carrying on business in the United Kingdom as suppliers of dental goods or any description thereof.654 The agreement to which the Article applies is, in effect, any agreement between two or more people which regulates the conditions under which goods are supplied. Let us suppose that we have an agreement such as is common in everyday trade in this country under which a manufacturer, to keep his factory fully employed, contracts to sell the whole of his output to a single distributor. How could anybody possibly say, according to the normal common sense of the English language, that that does not come under that paragraph 3? It does come under that. After all, the law is not always an ass, and it deals with the common sense of the English language, and we can all interpret it without a trained lawyer. I say that there is not the slightest doubt that that comes within paragraph 3.
Is it intended to cover that or not? If it is intended to cover that, then I think the House ought to consider very, very seriously indeed whether it should not vote against this Order. In that particular case I happen to have been favoured with a letter from the Ministry of Health in which it is said that that is not the intention, but I do want to point out that it is not the slightest use having a letter from the Ministry of Health or from the President of the Board of Trade or the Attorney-General saying that something is not the intention.
The judge in court has to decide what is the position, and if tonight we say that it shall be unlawful to do something the judge will not pay the slightest attention to anything said by anyone in Whitehall, notwithstanding how much more such a person may know about anything than anybody else in the country. Therefore, it is a matter for most serious consideration by the Government whether they ought to ask this House to pass an Order which clearly and unambiguously prohibits something which ought not to be prohibited because it is not within the mischief intended to be covered.
There is a second example which is equally clear. It is a normal condition in a contract of sale for a wholesaler and a retailer to agree that the retailer will resell the goods only to the actual customer, bearing in mind that there are very many retail outlets and that there is a danger otherwise of jobbing among 655 retailers and the very process of multiplication of middlemen which is so often objected to by hon. Gentlemen on the Government benches. That is a perfectly common and usual practice. I say without the slightest hesitation that that is covered by paragraph 3 of the Order as it stands.
Again, I refer to the letter on that second point. It says:With respect, it does not seem to me that a condition such as you describe is intended or likely to have the effect of limiting the number of persons carrying on business in the United Kingdom.Of course it is. That is what it is for, and there is not the slightest doubt that it would have that effect.
There are two examples of cases which are forbidden by this Order by which we are altering the law and making two things illegal which the solicitor to the Ministry of Health says it is not intended to cover. I suggest that that is a very serious thing indeed. It shows the danger of this form of legislation, and it shows more than that: it shows the hopeless muddle that the Government are in over this present business. Look at the position tonight. Who is it who is responsible tonight? The Minister of Health. Who is the man who is supposed to be dealing with monopolies, and who is parading about the country making speeches about it? The President of the Board of Trade.
The first order ever made under the Act dealing with monopolies is being considered—a great moment; and we are told all about it. Where is the boss? He is not here. The answer is, because he is not the boss. The boss is here, of course—the Minister of Local Government and Planning—although it is very difficult to know what business it is of his, anyhow.
I do ask the Government to take this matter quite seriously, because I ask them to come back again at the end to where we were at the beginning. We are altering the law, and we are altering the law with this wretched piece of paper—which is so insignificant that I have now lost it altogether. It is an Order with none of the ordinary procedure of Parliament. It is a flimsy piece of paper, so flimsy that the right hon. Gentleman did not even know what the contents were. I ask the Government to consider what they are doing.
§ 10.20 p.m.
§ The Lord Advocate (Mr. John Wheatley)
The hon. Member for Hampstead (Mr. H. Brooke) implored the House to restore the debate to an impartial level. I can only wish that his hon. and learned Friend the Member for Chertsey (Mr. Heald) had listened to his adjurations, because the hon. and learned Gentleman attempted to advance a legal criticism of this Order. I would remind him that in our experience in the courts legal arguments are seldom advanced by resort to personal abuse.
This is really a historic occasion, because I think that, for the first time in our history, the Government and Parliament are waging legislative war on the monopolists of this country. There are two aspects of this draft Order which we have to consider; one is the policy underlying it, and the second is the actual framing of the Order itself.
§ Mr. Speaker
The right hon. and learned Gentleman is now speaking of policy. We can deal only with what is in the Order, and I do not think that policy can be discussed now. I had to interrupt an hon. Member earlier for talking about policy. I am not prepared to allow a discussion about policy.
§ The Lord Advocate
With respect, I was not going to develop the question of policy. I was merely about to say that there were two aspects, the question of policy and the question of the actual framing of the Order.
What is contained in this Order is a reflection of the recommendations of the Commission's Report. Accordingly, in deciding whether or not we should accept this draft Order, the first thing we have to decide is whether we are justified in introducing this Order, in view of the Commission's Report. I think it was conceded by the hon. Member for Putney (Mr. Linstead) that every type of restrictive practice which has been complained of in this House was found to be present in relation to this particular monopoly—exclusive dealing, excessive prices, and Star Chamber methods of dealing with refractory members. The hon. Member finished up by saying that, in these circumstances, in his opinion—and as far as I could gather he was speaking for the Opposition—State interference was justified. That, of 657 course, is perhaps not strange, because the force of the evidence and the circumstances make such a conclusion inevitable.
In these circumstances. I could hardly understand the criticism of the hon. Member for Hampstead when he asked the Government to justify the introduction of this Order, because it seemed to me that his hon. Friend the Member for Putney had already given the answer in advance. By some strange reasoning the hon. Member for Hampstead said, "Ah! but there was a minority Report by two members of the Commission, and accordingly the Government should have given more consideration to the views of those two members than to the views of the six majority members." It is quite understandable that some people think that minority opinion is more important than majority opinion.
§ Mr. Brooke
I did not say what I am now being represented as saying. What I said was that there was a majority Report, and also a minority Report signed by two members, and that it would be helpful to the House if the Government would explain why they had not given attention to the views of the minority Report members.
§ The Lord Advocate
That really means one of two things. The suggestion is, either that we have never as a Government considered the views of the minority, or that we should have accepted the views of the minority. If the hon. Gentleman says it is the first. I cannot accept that. Surely he cannot expect the House to believe that the Government introduced this Order without giving full consideration not only to the majority Report but to the minority Report. It seems to me that the answer was already given by my right hon. Friend the Minister of Health in introducing this draft Order.
If we make this an Order with legislative effect, those who by administrative action would be prepared to conform to the new standards have nothing to fear. If, on the other hand, there are people who will not conform by a self-imposed discipline to the new standards, then we should have legislative instruments to deal with that particular kind of case.
§ Mr. Brooke
This is the first time that the Government have stated their 658 reasons, and that was what I was trying to elicit.
§ The Lord Advocate
My right hon. Friend said so, if not in the same terms, certainly in the same meaning. I do not wish to be controversial in this matter.
§ The Lord Advocate
The hon. and learned Gentleman says, "Why not?" Of course, one can be controversial. One could say that although lip-service has been given to the principle of this Order by certain hon. Members opposite, it was nothing more than lip-service. It would appear that they were willing to strike but afraid to wound so far as the monopolists were concerned.
What were the criticisms of the trade association as evidenced by the hon. Member for Putney (Mr. Linstead)? That this Order was unnecessary because there would be no hardship inflicted if it were not introduced. But would there not be? Are we entitled to assume that no people of this particular trade or industry would offend against the new self-imposed standards? Surely hardship would be suffered, not perhaps by the members of the Association, but by the public whose interest we try to protect, and whose protection it is the duty of the House to ensure.
It is said again by the trade Association, "Why pick out this particular industry? What about the other industries? Why should you settle on this and leave the others untouched?" If that is worrying hon. Members opposite, I think I can put their minds at rest. In due course, and the sooner the better, we shall catch up with the other industries where this exists. The third criticism was that the wording was still obscure. That brings me to the criticism of the hon. and learned Member for Chertsey.
May I point out to him, because apparently he did not appreciate it, that we are not just altering the law of England; we are altering the law of England and the law of Scotland in the one Measure. I am sure that if he had read the draft Order with that meticulous care which he tried to indicate he had done, he would realise that it was affecting the laws of both England and Scotland. Accordingly, I make no apology either to him or to the House for my appearance here at the Box, and I trust that the advice I 659 shall be able to give the House will be equally acceptable as that coming from any member of the English Bar.
His two criticisms were that the draft Order, in the first instance, included a category of people whom it was intended to exclude—the sole agents—and, secondly, that direct dealing between the manufacturer and the consumer would be struck at by the Order. I think that I have correctly interpreted his two criticisms. My advice to the House is that the Order does neither of these two things. One has to look not merely at one paragraph of the Order in isolation but at the Order as a whole, and to bring a person within the mischief envisaged by this Order the conditions set out in paragraph 3 (1) have to be satisfied.
It is only then we come to consider whether there has been a breach of either sub-paragraph (2) or sub-paragraph (4). In the first instance, we are dealing with the case of the sole agent, and it has to be determined that in no circumstances would the people concerned fall within the provisions of paragraph 3 (1). Looking at this broadly, as did the hon. and learned Gentleman, I would submit to the House that it cannot be said that the type of case he envisaged was covered by the type of agreement laid down:between two or more persons … which provides for requiring the parties to the agreement … either absolutely or to such extent or in such circumstances as may be specified or described by the agreement or determined in accordance therewith, to withhold from any persons so specified, described or determined. …It is too disingenuous to suggest that by describing B as the sole dealer in an agreement between A and B we are excluding every other dealer in the country. It is a question of perspective. If there is an agreement between A and B, A being the manufacturer and B the sole supplier in the first instance, we have not the type of agreement envisaged under paragraph 3 (1). When we come to consider the type of agreement under which the sole supplier will get all the goods from the manufacturer, but he in turn can distribute them to other dealers in the industry, we are not then withholding from "persons so specified, described or determined" the supplies of dental goods referred to.
§ Mr. Linstead
These agreements will always be two-sided. The manufacturer 660 will undertake certain obligations and one of these obligations will be not to supply to anybody except B. Surely that is the case which is struck at by this paragraph?
§ The Lord Advocate
No, because the paragraph says,to withhold from any persons so specified, described or determined,which means specified, described or determined in the agreement. In specifying B as the only supplier, we are not describing any other category of person, unless we are prepared to accept the argument that all the world except B is a category of people. No court would say that we are here defining a category of person within the meaning of paragraph 3 (1).
Assuming that persons come within the mischief of sub-paragraph (1), they would then require to satisfy the court that the provisions of either sub-paragraph (2) or sub-paragraph (4) had been vitiated. How could it be said that by appointing B as sole agent for the distribution of goods, we intend or are likely to have the effect of limiting the number of persons dealing in these goods in the United Kingdom? I submit there is no substance whatever in the first criticism of the hon. and learned Gentleman.
With regard to his second criticism, in relation to the case where the manufacturer supplies a dealer on the understanding that the dealer will transmit the goods direct to the customer and not to other dealers, I would repeat generally the arguments which I submitted in respect of the interpretation of paragraph 3 (1), without going into details. Let us look at the general practice in this matter.
Dealers do not look to fellow dealers for supplies of goods. Dealers are supplied by manufacturers or by sole agents and, in turn they, sell to the public. They do not normally sell to other dealers. Therefore, the other dealers are reliant not on their fellow dealers for their supplies but on the manufacturers or the sole agents or distributing agents. In those circumstances there could be no violation of the provisions of paragraph 3 (2) because, if the goods are available through these other channels, it would be impossible to prove in the court that the result of the policy was to limit the number of persons carrying on business as suppliers of dental goods.
661 In this connection, in relation to both this question and the previous question, the hon. and learned Gentleman apparently did not think it worth while to look at the provisions of paragraph 3 (3) which says that:In considering any question under the last preceding paragraph"—that is, sub-paragraph (2)—regard shall be had not only to the terms of the agreement but also to the surrounding circumstances and, in particular, the circumstances in the dental goods trade.That would enable the court to look at the whole of the surrounding circumstances to see whether the effect of either of the two types of agreement referred to by the hon. and learned Gentleman would have the effect of limiting the number of suppliers of dental goods. Against that background, I submit that there is no ground for the fear expressed by the hon. and learned Gentleman.
I trust that, as we are now dealing with the first of what may be a series of Orders in the warfare against the monopolists, price rings and restrictive practitioners in this country, the House will give unanimous approval to the Order.
§ 10.37 p.m.
§ Mr. R. S. Hudson (Southport)
We are indebted to the Lord Advocate for an explanation of the view which the Government take on this disputed matter of interpretation. Far be it from me as a layman to venture my neck into such a dispute.
Why we regard the Order with a certain amount of suspicion arises from the fact that we know that it is a very complicated subject and we also know—I do not think anybody on the Government benches denies it—that the original draft Order, which was supposed to carry out the recommendations of the Commission, was a subject of dispute not only between people outside but also between legal luminaries inside the Government between Departments. Although I am sure that the Attorney-General has devoted a great deal of attention to that, the fact remains that it appears to us that there is still some doubt on the matter.
After all, the Lord Advocate will be the first to admit that it does not depend on what he says; it depends on the view of the court. Clearly, this question can 662 only be resolved by the courts. I assume that, if by any conceivable chance someone brings an action against a firm on the basis suggested by my hon. and learned Friend the Member for Chertsey (Mr. Heald) and it proves that he is right, the Government would see no objection to bringing in an amending order to make quite sure that the views that they have expressed as being their intentions are eventually carried out.
The only other point I want to make relates to the Department which is bringing in the first order. The Minister of Health said that the main reason for which he was bringing in the order was that the industry provided the raw material for dentistry under the National Health Act. I do not think anyone would deny that, but it is, of course, a fact that his predecessor stated, some time ago, that they had submitted to the Monopolies Commission for inquiry a price-fixing cartel for dental goods because they knew very well that dentists were being held to ransom by a price ring. The fact is that the Monopolies Commission, after detailed investigation, did not find a shred of evidence bearing that out.
In paragraph 211, part only of which the right hon. Gentleman quoted, the Commission stated:We have been impressed by the high sense of responsibility which prevails throughout the industry for the provision of the best quality of goods and service to the dentists and by the general satisfaction with the existing situation expressed to us on behalf of the profession. It is clear that the British industry which can, if necessary, function independently of imports has been built up, and that it has coped remarkably well with the enormous expansion demanded by the National Health Service.The right hon. Gentleman said that the goods provided by this industry approached £6 million. I suppose that he has the latest figures, but the figures in the report did not approach that figure at all. Of the total products of the industry, quite a proportion—I think about one-quarter or one-third—is exported. If one takes that, and compares it with the cost of the dental service, which I believe was well over £60 million, I do not think a sum for raw materials of the order of £4 million in relation to £60 million can be described in the terms which the right hon. Gentleman's predecessor certainly desired the public to believe fitted the case.
663 I think it is only right to say that in fairness to the industry. Having said that, we agree that this Order carries out the recommendations of the Commission in respect of this particular industry. We shall regard it with interest as being the first of the Orders under the Monopolies Act. It will be a matter of great interest to hon. Members on all sides of the House to see how it is worked, and, in view of that, we do not propose to oppose the Order.
That the Draft Monopolies and Restrictive Practices (Dental Goods) Order, 1951, a copy of which was laid before this House on 5th June, be approved.