§ Mr. John Cronin (Loughborough)
I beg to move, in page 4, line 20, after "agreement", to insert:in force at any date after the first day of January, nineteen hundred and fifty-six.If left unamended the Clause will have the effect, of providing that only those restrictive agreements will be registrable which are actually in force at the time when the President of the Board of Trade determines. Clause 7 (2) says:The foregoing subsection shall come into force on such date as the Board of Trade may by order appoint, and different dates may be appointed under this subsection in relation to agreements of different classes.We on this side of the Committee feel that that is a rather unsatisfactory situation. All cases of restrictive agreements which were and have been in operation on and since 1st January of this year should be given the maximum possible publicity.
There are various reasons for this. First, it is only just and fair that other restrictive practices which will be registrable as the Clause is drafted at present should not suffer by comparison. If the Clause is left unamended in this respect many restrictive practices will cease to be operated, and the general public, the Registrar and the Restrictive Practices Court will know nothing of their nature. It is only natural that those restrictive practices which are the least desirable will be the ones which will cease to be operated, and the result will be that many restrictive practices registered at a later date under the terms of the unamended Clause will receive unfavourable comment to an undeserved extent in comparison with the ones which escape. That would clearly be unjust, and it is very important not only that justice should be done but should manifestly be done.
There are other important aspects of this matter. The Registrar should have the widest knowledge of all restrictive practices which operate at the present time. If numerous restrictive practices are terminated and are not registrable there will be a serious gap in the Registrar's knowledge and experience, and the same consideration will apply in the case of the Restrictive Practices Court. It is essential that the fullest possible opportunity should be given to the Registrar 1991 and the Court to use their experiences effectively, and they can do so only if they have an adequate knowledge of all restrictive agreements as practised now.
There is yet another aspect of the matter which I mention with some diffidence, because it is largely a legal one. We have to think in terms of this Measure being operated in hundreds of years' time. It is very important that the judges who make decisions then should have a clear idea what they have to decide upon. One of the important tenets of judicial interpretation, I believe, is that when there is doubt, the mischief rule is employed. The mischief rule provides that when there is any doubt as to the interpretation of a Statute it is customary for a judge to assess what Parliament really intended to do, in the light of the mischief which it is intended to remedy. Judges in the near and remote future can have a clear idea of the actual mischief involved only if all restrictive practice agreements which are operating at present are registered and given full publicity.
§ 4.30 p.m.
§ Mr. Thorneycroft
The effect of the Amendment would be to make subject to registration agreements which were in existence on 1st January, 1956, and were subsequently dropped before the passing into effect of the Bill. Not only would they be registered but they would be liable to be called up and examined in front of the courts. I hope that the Committee will not press us to accept that. Let us deal with the living rather than the dead in this matter. It will be a formidable task to deal with effective agreements. Let us deal with those and do not let us clutter up the register with a lot of driftwood which has been forgotten and finished.
What I liked about the speech of the hon. Member for Loughborough (Mr. Cronin) was his statement, with which I agree, that many of the practices will never be put on the register. That is one of the most admirable effects of introducing the Bill—that many industrialists, as we know, have been looking at their arrangements and searching their minds whether they are necessary in this modern age. A great number of them will be put away and never heard of 1992 again. If we can get rid of restrictive practices that way it is much more satisfactory than all the courts and tribunals than any of us can create.
While appreciating the hon. Member's argument, I hope he will agree, on reflection, that the Amendment would make our task more difficult. As it is the wish of both sides of the Committee to get on with the job, I hope he will enable us to do so by not pressing the Amendment to a Division.
§ Mr. Douglas Jay (Battersea, North)
While appreciating the force of the President's argument, may I ask him two questions? No doubt it is desirable that by frightening the associations or industrialists with the tedious prospect of registration—I am merely accepting the right hon. Gentleman's argument—some restrictions should be abolished without anybody having to examine them. We see the force of that, and that is why, in our alternative, we proposed registration over a much wider field than that for which we proposed abolition.
Nevertheless, does not the right hon. Gentleman think it may be of value to the Registrar, and, indeed, the Board of Trade, to have as wide a knowledge as possible, not merely of agreements which are in force but of agreements which have been in force? It has been said by some critics that the weakness of the Bill is that the Registrar will not know enough about what is going on over the whole field of industry and will not have sufficient evidence by which to investigate where a restriction might be in operation but not registered.
Secondly, is it clear in the Bill—and by virtue of which words—at what date an agreement has to be in force in order to be subject to registration? We understand the Bill to mean that it has to be in force at the time at which it becomes registrable. If that is so, could the President explain by virtue of which subsection that is laid down?
§ Mr. Turner-Samuels
I am quite certain that my hon. Friends would not wish to press this Amendment if, in the end, it proved to be otiose. Suppose an agreement has been in operation prior to the operative commencement of the Act. When the Act is passed, in what way could its provisions be made effectively to apply? I am looking particularly at 1993 Clause 15. This troubles me, because the whole Amendment would be otiose without it. I should like the President to consider the point, although he may not be able to answer now.
If, of course, any part of the provisions of the Bill could seize upon a retrospectively dated agreement to operate for the benefit of the public against some monopolistic action which is harming the public, I should be all in favour of the Amendment, but if the Amendment will merely be redundant and a pious resolution, then it will simply clutter up the Bill, if accepted, with something completely unnecessary and confusing. If the Amendment could serve a real purpose, that would be one thing; but, particularly looking at Clause 15, it seems to me—
§ Mr. Turner-Samuels
With great respect, this is a question whether any restrictive agreement which began before the coming into operation of the Act should be included, and I referred to Clause 15 because that is the operative Clause which might apply, if the Bill applied at all.
§ The Temporary Chairman
The hon. and learned Member is asking the Minister to explain the effect of Clause 15, and he is not in order in doing that at this stage.
§ Mr. Turner-Samuels
With great respect, I am asking the Minister to consider, not the effect of Clause 15, but whether this Amendment can serve any useful purpose. If it served any useful purpose I would support it, but I cannot see how it would do so. If it does not do so, and the President confirms that it does not do so, I cannot see its use.
§ Mr. P. Thorneycroft
The hon. and learned Member for Gloucester (Mr. Turner-Samuels), with his customary skill, has put his finger unerringly on the problem. The Amendment could serve no useful purpose because if the arrangement were dead, all the other paraphernalia of the Bill would operate on something which had already passed away. I am a fair-minded man: there might be some academic interest in registering such practices, but, in my view, that would be 1994 wholly outweighed by the enormous extra work we should put on what will be already an overworked machine. The machine will not suffer from starvation. It is more likely to suffer from surfeit, if anything. In those circumstances, I hope that the Amendment will not be pressed to a Division.
§ Mr. Thorneycroft
It is Clause 7 (2) which has this effect when an order is made bringing a particular category of arrangements into the realm of registration. In that order itself is prescribed the date by which they must be registered. If they are dropped beforehand, they need not be registered. But if they are carried on after the date specified in the order, as laid down in Clause 7 (2), they are caught within the mischief of the Clause.
§ Mr. Turner-Samuels
In my submission, Clause 32 (2) covers this point, because it says:This Act (except subsection (1) of section seven and section twenty-two) shall come into force on the expiration of the period of one month beginning with the date on which it is passed.I take it that would be a relevant test for fixing the date.
§ Mr. Thorneycroft
That is so, but the point here is the appointed day when a particular arrangement becomes registrable, which is dealt with in Clause 7.
§ Mr. W. J. Taylor (Bradford, North)
I can well understand the affection of the right hon. Member for Battersea, North (Mr. Jay) for retrospective legislation, but it was not clear from what he said what action was to be taken after the registration of the practice which may have been in existence on 1st January, 1956. The right hon. Gentleman did not say what he would do with that information, which I submit, would be purely historic. There was nothing illegal about a practice which 1995 was in existence on that day. If the arrangement is not effective at that date, then it disappears altogether from the scene, and there is no point in going round snooping into things past and done with. Industry will take heed of the terms of the Bill, and will decide what is to continue or discontinue. There is really no point in going beyond 1st January and registering a lot of practices which will never appear in industry again. I therefore hope that the Committee will reject the Amendment.
§ Mr. Donald Wade (Huddersfield, West)
May I put a suggestion to the right hon. Gentleman in the form of a question? If the Amendment is not accepted, will the Registrar, when the case is brought before the Court, have any power to ask for information about changes in the agreement that have been made, say, over a period of twelve months prior to registration, since that information might throw some light on the underlying purposes of the agreement?
§ Mr. Wilfred Fienburgh (Islington, North)
I am very much impressed by the excessive modesty and diffidence of the President on this question, because certainly at some time in the future he will have to make a political justification for this Bill. I should have thought that one of the means by which he could attempt to make a political justification for the Bill was at some subsequent Election, when, surely, the party opposite will be searching for every shred of evidence to prove that they had wisely governed this nation, and when he might be able to point out the number of restrictive practices and improper agreements which had been dropped by the silent pressure of his legislation. He might be able to sustain a case for his legislation, and that is why I am impressed by his modesty and diffidence in not wishing to sustain himself by adopting this proposal.
On the whole, he may not expect that there will be a great deal of evidence forthcoming on these lines, and, therefore, would rather not have the whole of this matter exposed to public light. If it were only a matter of the retrospective tidying-up of certain holes and corners in economic and industrial history, I should not support the Amendment, but surely there is another factor which is concerned.
1996 When I go to my doctor for medical attention, I have to search my memory and disclose to him all the illness which I have had previously. He requires that information in order the better to judge my present condition. Therefore, surely, if we are asking the Registrar, who has a certain investigatory capacity, to maintain not only a register but a general supervisory rôle over restrictive agreements in industry, it is just as well that he should be provided also with a measure of the past history, which might indicate to him something which may be wrong today.
Therefore, I should think that, when any new task is undertaken, when any Minister is taking up a Ministerial post for the first time, any doctor is investigating a strange complaint, or any industrialist is moving into a new industry, one of the first things which he wants to know before he sets about the task is what has been going on before, because only if he knows something of what was going on before will he be properly armed to exercise his important functions both in the present and in the future.
I think there is some substance in the point that we should have on record the restrictive practices structure in industry prior to the introduction of the Bill as a general guide to the nature of restrictive practices in industry, from which the Registrar, the general public and the Minister himself might be able to make certain deductions which will be valid for the present and important for future policy.
§ Sir J. Barlow
I do not think we can assume that the connection which the hon. Member for Islington, North (Mr. Fienburgh) suggested between his own illnesses and restrictive practices is valid in any way. It seemed to me that he was looking into rather different fields.
We are told that there are many restrictive practices which should be changed or dropped altogether. I believe that, very fortunately, many so-called practices have already passed out of existence, and before this Bill becomes an Act I hope and think that many more will do so. What we are afraid of, from the practical point of view, is whether, as soon as these courts begin sitting, they will be rather overwhelmed with work until they have established their case law. It would 1997 be very unwise to consider things which have perished in the past, because the courts should consider things which may be against the public interest in the present and in the future. For that reason, I hope that the President will resist this Amendment.
§ Dr. Reginald Bennett (Gosport and Fareham)
May I take up the point made by the hon. Member for Islington, North (Mr. Fienburgh)? He says that when he goes to his doctor, his doctor needs the details of his past history in order to treat his existing illness, but he only goes when he has an existing illness. In this case, the Amendment suggests dealing with practices which have ceased and become historical.
§ Mr. Fienburgh
I sometimes go to my doctor when I wish to take out an insurance policy, and he wishes to ensure that the insurance company does not wrongly insure me. I suggest that that is the true parallel. We are trying to ensure the nation against the imposition and retention of restrictive practices, and, therefore, in pursuance of that duty, it is proper for us to know what illnesses there were endemic in the body politic, industrial and economic before we begin investigating a case.
§ Mr. Cronin
The debate has taken a somewhat medical turn. On this matter, I am, perhaps, not on wholly unfamiliar ground. It seems to me very important, when diagnosing and treating illnesses, to have a very large fund of knowledge of all previous illnesses, because medical science advances on such experience. So I think that this Amendment would serve a very useful purpose. It is important to provide this information, so that reports on restrictive practices may be available to the Registrar, the Restrictive Practices Court and the general public.
We on this side of the Committee realise that the Bill, when it becomes law, is going to run into some serious difficulties. It will be difficult to operate, and we therefore feel that we want to do all 1998 we can to help towards the successful operation of the Bill. I am quite content to accept the President's reasonable assertion that the Amendment will tend to increase the work of the Registrar. Obviously he will have his hands excessively full and have work which will last for many decades.
In the circumstances, therefore, with a desire to lessen that work, I beg to ask leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ The Temporary Chairman
I think that it would be for the convenience of the Committee if, with this Amendment we discussed the next Amendment, in page 4. line 20, after "between", to insert:any members of any of the following classes of persons that is to say",that in page 4, line 24, to leave out "mutual" and insert "any"; that in the same page and line, to leave out "mutual" and that in line 25, to leave out "whether identical or not".
§ Mr. Wade
It might be helpful to the Committee if I first dealt very briefly with the Amendment in page 4, line 25, and that which seeks to have omitted the words "whether identical or not". I would only ask for those words to be omitted if the word "mutual" were omitted. The word "mutual" is one of those which are used rather loosely in the English language, and I am not quite sure what was the intention of the right hon. Gentleman in inserting it in the Clause.
If the effect of inserting it is that agreements will be registrable only where all parties to the agreement have undertaken precisely the same conditions, then I think that its use would be unfortunate. Furthermore, it would appear to be inconsistent with the use of the words "whether identical or not". "Mutual" is somewhat misleading—or at any rate a little difficult to interpret—and I submit that the Clause would read better and the context would be clearer if that word were omitted, in which case I do not think that it would be necessary to use the words "whether identical or not".
1999 Perhaps I may now turn to the main part of my series of Amendments. At the outset, may I say that if the Amendment in page 4, line 20, which seeks to delete "between persons" and to insert:to which one or more of the parties is a person".is not acceptable to the Committee, I shall wholeheartedly support the Amendment immediately following it in the name of the hon. Member for Gosport and Fareham (Dr. Bennett). However, one cannot support both at the same time, and for reasons which I shall explain I hope that the Committee will accept the Amendment standing in the name of my hon. Friend the Member for Bolton, West (Mr. Holt) and myself. I hope that we may have some assurance from the Minister in this regard.
There are three objectives underlining these Amendments, and I apologise for having to raise what are really three issues—there are two major issues in one Amendment—but I have not been able to devise any wording which would enable me to raise the different issues in separate Amendments. The first objective is that agreements which are registrable under the Clause should not be limited to agreements between members of one class; that is to say, between one manufacturer and other manufacturers or between one wholesaler and other wholesalers. On my reading of the Clause, there is some doubt as to whether the agreements which are registrable are so limited. It is important that there should be no misunderstanding about this—that it should be quite clear that an agreement may be capable of being registered even though the parties to it may not all be of one class; that there may be included parties who are, say, manufacturers or wholesalers or retailers.
§ Mr. Philip Bell (Bolton, East)
Does the hon. Member intend by his alteration to include firms which are carrying on business in this country and have an agreement with a firm carrying on business outside the country?
§ Mr. Wade
I appreciate the point which the hon. and learned Gentleman has raised and, if I may, I shall deal with it a little later.
If the Clause were so limited it would provide an obvious loophole. One would 2000 only have to add to the agreement a party who was not a member of the same class—wholesaler, retailer, or manufacturer—and the result would be that the agreement would not be capable of being registered. I do not think that that can have been intended, but I should be very much obliged if the right hon. Gentleman would clear up that point.
The second point is, I think, equally important. I am anxious to ensure that Clause 5 shall cover agreements between one member of one class and one or more members of another class. This is not an academic point at all. It will materially affect many firms, the independence of some of which is being threatened today.
I am aware of the provisions of Clause 6 (2). I am aware that an agreement between a supplier and a distributor, or between a manufacturer and a retailer, and relating solely to the manufacturer's or supplier's goods, and only to his goods, would be excluded, but I am thinking particularly of agreements between manufacturers and distributors which contain clauses restricting the right of the distributor to stock other goods supplied by other suppliers—because that is of a different nature. I use the word "distributor" because I think that it is used in the Bill, but by it I intend to include, of course, retailers as well as distributors such as garage proprietors. That seems to me to raise a matter of very considerable importance, and I will give two illustrations.
The first illustration is that of the agreements drawn up by petrol companies. There are various agreements, dependent upon whether the petrol companies have acquired the freehold of the garage and upon other circumstances, but I think it is clear that many of these agreements introducing exclusive dealing do not now, or may not in the future, always relate only to the petrol itself. One has only to look around to see what has been happening during the last two years—to see the growth of the tied garage—and, having regard to what has happened in other countries and to the recent trend here, I think it is fair to say that there is a very real danger of the independent garage proprietor being wiped out of existence.
I shall not press that aspect of the matter at any length, because we are not 2001 today concerned with the rightness or wrongness of those particular agreements or their effect upon the public interest. We are considering whether or not they should be registrable under the provisions of Clause 5. I will, if I may, just quote from one letter from a garage proprietor who mentions the effect of the exclusive dealing policy of the petrol companies upon many independent garage proprietors. He wrote:I can see that a business that has been in existence for more than forty years is going to completely disappear, and I am afraid the same will apply to a garage in the village which has been in existence even longer than my own garage.5.0 p.m.
We have to consider the terms of these agreements in considering whether they should be registered. I could quote clauses from agreements which have been drawn up by petrol companies, from which it is clear that the garage proprietor has been compelled to enter into conditions affecting the supply of lubricating oil, tyres, batteries and other accessories supplied by other suppliers, goods in which the petrol companies themselves did not deal.
It would be fairer that I should take a hypothetical case. It is not my task today to condemn particular agreements. I will take a hypothetical case in order that the Committee may decide whether or not it would be registrable under the Clause. It is the case of oil supplier A entering into an agreement with garage proprietor B. In that agreement there is a condition whereby B may obtain his accessories only from suppliers nominated by A. Let me call the accessory suppliers C. There may or may not be an agreement between A and C. The question is whether the agreement between A and B is registrable.
The combined effect of the agreement between the oil companies, the garage and the nominated suppliers of accessories, may be very restrictive indeed. I am wondering whether agreements of that nature will be registrable. If they are not, I would ask the Minister under what conditions they will be subjected to any form of inquiry. It may be possible for the whole question to be brought before the Monopolies Commission, but I am not sure whether, under the Bill in its present form, that will be possible.
2002 If the Minister gave some kind of assurance that he intended to refer certain cases to the Commission, that might relieve the minds of independent garage companies who feel that their future is threatened. In any case, however, agreements of this restrictive nature should be subject to registration. I have instanced petrol companies and garages only as an illustration. Let me give one other example.
A good example is to be found in the case of agricultural machinery. The shortest way I can put this matter before the Committee is to quote from a letter. My correspondent said:The position of the agricultural machinery business is rapidly deteriorating, as the 'long line' manufacturers, chiefly American-controlled companies, are seeking to tie up their distributors on exclusive agreements which prevent them from dealing with 'short' line manufacturing companies, i.e., smaller companies who make one or two machines.He then goes on to point out:The expression 'long line' means that the company makes or wholesales a complete range of agricultural machinery whilst the 'short line' manufacturers concentrate on one or two specialised machines.Finally, he says:If this position is taken to its logical conclusion we shall soon reach a state of affairs in this industry where the best distributors will be tied to the 'long line' American manufacturers whilst the British firms will lose their home market and will consequently be unable to compete in the export markets.
§ Mr. Godfrey Lagden (Hornchurch)
Is the hon. Gentleman aware that his correspondent is incorrect in stating that. If the American companies to which he referred were actually doing as he says, they would be breaking their own antitrust laws, which would be a very serious state of affairs.
§ Mr. Wade
From my own investigation it appears that this has happened. I will make further inquiries, because I feel very uneasy about it, but it does appear to be happening.
I believe that some of these agreements introduce an even more serious form of restrictionism than some of those drawn up by trade associations which will be registrable under the Clause. I believe that these agreements affect a considerable area of industrial activity, and that the consequences may be very serious. It would be very unfortunate if they did not come under the provisions of the Bill. I 2003 hope that I am pushing against an open door, but at the moment I am a little doubtful.
The third objective, about which the hon. and learned Member for Bolton, East (Mr. Philip Bell) asked, I will deal with very briefly, and then conclude. This matter may be more controversial. It is where two or more businesses enter into an agreement with each other and with firms in other countries. So far as the two firms in this country are concerned their agreement would be liable to be registered. When I say "in this country" I mean carrying on business within the United Kingdom. To that extent it means that international cartels may be the subject of examination by the courts in so far as they affect the two or more firms in the United Kingdom.
Suppose, however, one firm in this country were so powerful, having many subsidiaries, that it was not necessary for it to enter into any agreement with any other firm in this country, or perhaps because there were no serious competitors. Nevertheless, it enters into agreements with firms carrying on business overseas outside the United Kingdom; then the agreements will not be subject to registration. For this reason there will be a temptation for firms to become "interconnected bodies"—to use the expression in the Bill—in order to avoid registration. I submit that no harm would be done in amending the Bill so that where one firm enters into an international agreement which is restrictive within the terms of the Bill, it should be required to register it.
The Court could not make any order affecting the firms outside the United Kingdom, but there is no harm in investigating the agreement, and, if it is found that it is clearly contrary to the public interest, making an order providing that the firm carrying on business in the United Kingdom should cease to be a party to the agreement. That is the third objective of my Amendment. A good example of the type of case is that provided by the British Match Corporation, which was investigated by the Monopolies Commission. It may be that the type of case that I have been speaking about will in future still be investigated by the Monopolies Commission, but I am a little uneasy about the way in which the 2004 functions of the Commission are being whittled down.
Be that as it may, I cannot see any harm in so amending the Clause as to ensure that international agreements to which a British firm is a party should, subject to all the other conditions of the Bill, be registrable by virtue of the Clause. Those are the three objectives. Perhaps it is rather too much to expect the Minister to give an assurance that he will accept all three. If even two of them were accepted, I should feel that the discussion on this subject had proved worth while. I ask the Minister most seriously to consider the points which I have made. If these Amendments—I call them Amendments because this Amendment is really three in one—are not accepted, I fear that the Bill will be gravely weakened.
§ Dr. Bennett
I have my own little Amendment on the Paper, in line 20, after "between", to insert:any members of any of the following classes of persons that is to say".I commend it to the attention of the Committee, but I think that the hon. Member for Huddersfield, West (Mr. Wade) and myself are, in our various ways of expressing ourselves, at one in our objectives. I am attempting to explore, on similar lines to the hon. Member, and I am asking, by the wording that I suggest, what is the extent to which the provisions of Clause 5 go beyond merely horizontal agreements, so to speak, and include, as it were, agreements vertically in the tree of distribution of products.
I am preoccupied principally with the question of the petrol distributing industry, which seems to me to be expanding so very fast and, perhaps, so recklessly that it might almost seem to be running amuck. Therefore, I feel that we want to see whether what is going on in that industry is indeed to the benefit of anybody but the petrol companies themselves. We should perhaps look back to see what has happened before.
I think there would be no doubt that the President of the Board of Trade would say that any attempt to carve up the field of distribution, as under the Achnacarry agreements of 1928, would certainly come under the Clause. However, I am assured by interested parties 2005 in the petrol companies that these agreements have lapsed, and indeed that the carve-up is no longer anything like a stable one, and that the petrol distributing industry cannot be considered at present on those grounds, although there has been a fairly recent parallel in Sweden, where a very efficient carve-up was discovered.
If the petrol distributing industry does not come under the Bill on that account, then I should like to be satisfied to what extent we can find that the well-known Solus system of garage distribution can be brought within the terms of the Bill. I understand that petrol, as used for vehicles on the road nowadays, is pretty well a drug on the market and very hard to sell. It is a by-product, the main product being bunker fuel for ships and such heavier fractions. I appreciate that it is hard to sell, and I sympathise with the petrol companies about the very energetic measures that they have to take to get rid of the stuff; but I regret to say that it seems that in consequence American methods of high-pressure salesmanship have been brought in. They were introduced into this country by the Esso Company not many years ago. Those methods have been copied by others, and the other companies have apparently cornered an even greater percentage of the market in their implementation of the Solus system.
§ 5.15 p.m.
§ Mr. Philip Bell
I do not know whether my hon. Friend has had a communication from the Motor Accessories Manufacturers' Association, but if he has perhaps he will have observed, curiously enough, that the one company of which it speaks in praise is Esso. It says that that company does not indulge in restrictive practices.
§ Dr. Bennett
I think that my hon. and learned Friend and I are slightly at variance there. The Esso Company first introduced the Solus system of tying a garage for the exclusive sale of its petrol, but owing to the existence of the American anti-trust laws it was possible for that company to be prosecuted in America for monopolistic activities in this country. Therefore, it is much more chary of some of the other restrictive activities to which I hope to refer later, and about which Shell Mex and other companies are being, I think, somewhat careless.
2006 I do not say that the Solus system is necessarily objectionable in itself, but there are two things that we must expect from it. One is that, instead of having in any locality one filling station with six pumps all selling different petrol, we must now have six elaborate petrol stations in the same locality. That does not seem to be economically exactly in keeping with the position of the country at the moment. The other point about which I have most serious misgivings is that once a petrol company has tied a garage to sell its petrol exclusively, it is now proceeding to try to tie up the sales of all other things.
If anybody wishes to mention the parallel with tied houses, so far as public houses are concerned, I would say that the parallel would exist only if the public house, as well as selling beer, sold all the food that was necessary for housekeeping in the village, all the medical attention, the drugs that were needed and all the surgical and hospital treatment.
§ Dr. Bennett
The beer would not have to be good if the house were tied as thoroughly as that.
This system with petrol seems to go much further than any of the other systems which anybody has tried with tied houses. It is attempting to tie up the sale of other products, and I ask the President of the Board of Trade to say whether he considers that the restrictions in the Solus system are regarded as mutual restrictions. There is no doubt at all that the dealer is tied good and proper. The restrictions on him are not hard to find, but it is a little difficult to see whether the restrictions on the petrol company are in any measure substantial.
So far as I can see, the only restriction that the petrol company lets itself in for is that of paying to the Solus site dealer 3d. a gallon—or up to that—more in profit than would be paid to another dealer with a mixed site. It costs the company up to 3d. a gallon more to sell petrol from a Solus site. Of course, we pay that and, although the petrol companies say that distribution in this way is cheaper, I suggest that it is only cheaper for them. As 90 per cent. of the sites are now Solus sites, surely we have a 2007 problem her which needs very close attention.
I should like to know from my right hon. Friend whether that restriction amounts to enough to be dealt with under Clause 5. If it does not, I would point out that, although Esso started the Solus system, there is no doubt that there is now a very large linked group which is now by far the most successful and powerful of the Solus site proprietors—the Royal Dutch Shell and their associates, such as B.P., running with National Benzole. As these two large enterprises are undoubtedly collaborating with each other, although of course it would be very difficult to say that any of the arrangements are necessarily written arrangements, I feel that there we have a horizontal agreement which may very well come within the terms of the Clause. These two great corporations control between them an estimated 62 per cent. of the whole output of petrol, so I feel that we have something very serious about which to take action.
I ask my right hon. Friend whether he considers that to be a way in which the petrol distribution industry deserves to be brought under this Bill. I would not ask him necessarily to go as far as New Zealand has gone in the matter of legislation, New Zealand having passed a law which prevents petrol companies from having any share in any of the distributive outlets through which they sell their petrol. I should, however, like my right hon. Friend's assurance that we have the petrol companies in mind under this Bill. Although I am not moving my minor Amendment, I certainly support the principle behind the Amendment with which mine is being considered.
§ Mr. Jay
I think we have reached a point in the Bill when, whatever we think of the major issues which we have debated or have still to debate, we are all trying to help the President of the Board of Trade to make his Bill work in the way in which he intends it to work.
What we wish to know, in particular—and I think I am in agreement with the whole of the Liberal Party present—is what the word "mutual" means and what would be the effect of omitting that word from the Clause. Those of us who are laymen in this matter approach this 2008 discussion between lawyers with rather a long spoon, if I may say so. I am, therefore, trying to ascertain clearly what is the meaning of this tricky word "mutual."
We know that in the phrase "our mutual friend" the word "mutual" is incorrectly used and that the correct adjective would be "common." It is a little harder to say what "mutual" does mean. I have looked it up in the Concise Oxford Dictionary, which says that it would properly be usedof feelings, actions, &c. felt, done, by each towards the other.I take "by each" to mean "by all". In the case of the phrase, "mutual admiration society", it says that it means aset of persons who overestimate each other's merits.That, clearly, would not apply to the present Cabinet. It means that each member of the group has to overestimate the merits of each other.
If we turn to the Bill and ask in that sense what the word "mutual" means in this Clause—and although this is rather tricky verbally, I agree with the hon. Member for Huddersfield, West (Mr. Wade) that it is a matter of great importance in relation to the total effect of the Bill—we are confronted with the phrase:… an agreement under which mutual restrictions … are accepted.The President of the Board of Trade will remember that the Monopolies Commission, in its joint report which gave rise to this Bill, made a distinction at the beginning between agreements on the one hand between sellers where there was no reciprocal obligation accepted by buyers, and, on the other hand, agreements where, in return for certain obligations by buyers, what is called reciprocal obligations were accepted by the sellers. I take it that the agreements which did not imply in that sense a reciprocal obligation are not excluded from this Bill. I hope I am right about that, but we would like to have it quite clear, since the Commission described certain important types of agreement as reciprocal agreements.
Assuming for the moment that the President of the Board of Trade can satisfy us on that, I should like to ask 2009 him a question which is, no doubt, in the minds of some other hon. Members who have put down Amendments. If mutual restrictions have to be accepted and if a mutual restriction, according to the dictionary definition, is one accepted by each of the group in question, then does it mean that in order that an agreement should be registerable under this Bill, the restrictions, whatever they are, have to be accepted by every party to the agreement?
If that were so, so far as I can see as a layman, it would only be necessary for ten people to get together and make an agreement, and if five of those ten accepted certain restrictions which the other five did not accept, since the restrictions provided for under the agreement would not be mutual, the whole of such an agreement would be outside the scope of this Bill. If that were so—and I hope the right hon. Gentleman can assure us that it is not, and can explain why—it would be easy, by getting a few sleeping partners, or men of straw, or whatever the phrase is, to get round the whole Bill from the start.
I think the right hon. Gentleman will say that this point, which was already in the mind of the hon. Member for Gosport and Fareham (Dr. Bennett), is covered by the words in line 24, page 4, of the Bill:under which mutual restrictions … are accepted by the parties carrying on business as aforesaid or any of them …I take it—and perhaps the right hon. Gentleman will assure us—that the words "or any of them" make sure that if the agreement is such that only some and not all of the parties to the agreement accept the restrictions, then it is covered by the Bill in virtue of those words.
But if that is so, what puzzles us is this. If that difficulty is covered by those words, why is it necessary to have the word "mutual" in the Clause at all? We seem to have reached the point when a restriction, in order to make an agreement registrable, has to be a mutual restriction entered into by some of the parties to the agreement. If that is correct, exactly what does "mutual" mean? We know it does not mean "identical." What would be the effect if the rest of the Clause remained the same and that word were omitted?
2010 To give an example of the last part of the problem, I should like to ask a question about the petrol companies. Suppose the position were that one of the large petrol companies entered into an agreement with a single garage. Of course, it might enter into other agreements with other garages, but this agreement would be just between the petrol company and a garage by which that garage undertook to sell only petrol supplied by that large petrol company. If that were the agreement, as far as I can see there could be no mutual obligation entered into by the supplier.
§ Mr. Jay
Yes, except possibly the extra 2d. on the price of petrol. In that case, if the petrol combine chose to leave that out of the agreement, it could make itself exempt from the Bill. I doubt whether this Committee would wish to leave agreements of that kind out of the scope even of registration. I think we ought to be clear on that point.
I should have thought, without entering into the whole of this controversy over the petrol companies, that a situation in which every separate retail outlet for petrol is tied up with one of the producers would, after a time, make it almost impossible for any independent competing producer of petrol, if one were to arise—and there are usually some all over the world—to get his petrol sold or distributed in this country at all. Therefore, I do not think that it is by any means an unimportant matter. I am sorry to ask the President of the Board of Trade a number of tricky questions, on not all of which my interpretation may be correct, but we want to be quite clear about the effect of this word "mutual."
§ 5.30 p.m.
§ Mr. P. Thorneycroft
It might be convenient to the Committee, while I have some of these questions fresh in my mind, that I should answer them now. I make no reproach to the right hon. Member for Battersea, North (Mr. Jay) for putting to me some questions. I agree that at this stage they are proper questions, ones which are not arguing the principle but are trying to make the Bill a workmanlike Measure.
As the Bill is drafted, Clause 5 says what is in and Clause 6 says what is 2011 out. I think that at this stage this is a convenient way of dealing with this question. I am not saying that after listening to all the arguments at a later stage one might not do some redrafting, but I think that at this stage it is rather helpful to deal with the problems in that order, first, the groups of Amendments on the question of what is in and caught by the mischief to Clause 5 and, later, going on to Clause 6, and saying what is specifically left out.
Clause 5, which is the target of this particular group of Amendments, says what is in. Paraphrasing the Clause, it says that mutual agreements or arrangements dealing with the matters referred to in paragraphs (a) to (e) are in, and that they have got to be mutual agreements or arrangements. Most of the argument has been directed to the use of the word "mutual". By "mutual" we mean the acceptance by one party of a restriction because another party accepts a restriction. That is a simple and direct definition of what we mean. If it is said that the word does not mean that, I am quite prepared to listen to the argument, but that is what we intend—the acceptance by one party of a restriction because another party accepts a restriction.
I would point out, in answer to the point made very pertinently by the hon. Member for Huddersfield, West (Mr. Wade), that restrictions need not be of the same kind. That is the purpose of the words "whether identical or not". I hope very much that the Committee will retain the words "whether identical or not" within the Clause, because I fear that a great number of the arrangements with which the Court will be dealing will, in fact, be those in which some people are retailers, some are producers, and there are quite different types of restriction accepted by various classes of person.
§ Mr. Thorneycroft
I am not being in the least critical of the Amendments. If I may say so, they are extremely helpful Amendments—not that I shall accept them—because, unless such Amendments are put on the Notice Paper, it is really 2012 impossible to explain the details of what is our purpose here.
§ Mr. Thorneycroft
May I be allowed to finish this point?
We are dealing with what are mutual arrangements in the sense that I have described. If we dropped the word "mutual" we would throw the field open very wide indeed. There is hardly any arrangement in commerce which does not involve a restriction of some sort or other. All industrialists and commercial men in the country are accepting restrictions upon their freedom of action all the time. It is the normal part of a contract, or arrangement, or any sort of commercial activity that one accepts some kind of restriction. Unless we import into this Clause the idea of mutuality—which sometimes may amount to a ring in the strict sense of the term, that is to say, with everyone on one side of the fence—and an obvious example is of producers in a common price ring accepting mutual restrictions; but it may, of course, go wider than that and include people who are not only producers but distributors as well—unless we import that idea we shall be bringing within the mischief of Clause 5 virtually every commercial arrangement in the country.
§ Mr. Thorneycroft
Will the hon. and learned Member please allow me to finish this point?
It is particularly important not to throw Clause 5 too wide because it must be remembered that, in principle, all the arrangements under Clause 5, according to our intention, should not immediately or altogether, but in time be registered and called up for examination. It is for that reason that we have set this particular limit on the matter.
§ Sir L. Ungoed-Thomas
I am much obliged to the right hon. Gentleman for giving way. I know it is very difficult to put this matter clearly before the Committee, because it is so complicated. The right hon. Gentleman says that this may involve all kinds of industrial arrangements because they all involve restrictions of one kind or another, but surely that is not the case. I suggest that the danger he has mentioned is not a sound point, because the restrictions are 2013 identified by paragraphs (a) to (e) and, therefore, we do not wander outside the restrictions in paragraphs (a) to (e) and do not include all kinds of restrictions into which commercial firms enter. Therefore, the point made by the right hon. Gentleman is not an answer to my right hon. Friend the Member for Battersea, North (Mr. Jay).
My right hon. Friend addressed himself to mutuality or, as the President put it so clearly, an acceptance of restriction by A because B accepts a restriction. The point involved—a very narrow one—is why should the quid pro quo for the restriction accepted by A be a restriction accepted by B when the perniciousness of the restriction can be equally objectionable whether it is mutual or not?
§ Mr. Thorneycroft
The hon. and learned Member has put the point very clearly to me. What he has said is absolutely accurate. If we did not have the word "mutual," it would be restricted to what is set out in paragraphs (a) to (e), but I would invite the attention of the Committee to what is set out in those paragraphs. They cover almost everything in commerce: prices to be charged, terms and conditions to be applied, quantities and descriptions, processes of manufacture, and persons or classes of persons. That is the very stuff of commerce, and if we permitted any of those restrictions to be made registrable we would make chaos of the Bill. We have to apply a limit to this matter.
I may say that in this matter we benefited from the experience of the Monopolies Commission and the majority Report and the minority Report with reference to reciprocal arrangements, which are a good example of mutuality. It is subject to exceptions, of course. That is all in Clause 6, to which we shall be coming later. We have sought to direct our attention, and the attention of the Committee, to the things that really matter, the things which have been dealt with in Report after Report by the Monopolies Commission—common price rings, exclusive dealing and all those arrangements which are the agreements for collective discrimination. Those are the matters which are appropriate for discussion by the Court.
May I now deal specifically with the particular point that was put to me, because it is a rather good example, of 2014 the petrol companies? Let us imagine that petrol company A has, or seeks to have, a tied house—in effect, rather like a brewer. I am not expressing any judgment as to whether this is right or wrong, nor, I think, does anybody else in the Committee do so. We are just taking this as what happens in the world. A petrol company, like a brewing company, might say, "We will have a tied house and we will have a sole agency for our particular petrol"—I am leaving aside accessories for the moment—"at a certain garage". Sole agency arrangements are, of course, widespread in this country. It is a perfectly normal commercial arrangement.
If I am asked whether sole agency arrangements are intended to be dealt with in the Bill, the answer is, "No". The answer is absolutely clear—no. We do not want that, for a number of reasons. First, sole agency arrangements serve a perfectly good commercial purpose, and, secondly, the Registrar would never get started if he were dealing with the sole agency arrangements.
Some companies might go even further and say not only that they will have a tied house with regard to their petrol, but will impose other conditions on the garage: namely, that the garage will be able to sell only certain accessories. If I am asked whether there is a mutual arrangement in that case, the answer is, "No". We can debate whether there ought to be a mutual arrangement or not, but in a normal case the answer is, "No".
I can imagine circumstances in which there would be a mutual arrangement. It is conceivable that the petrol companies had agreed amongst themselves to do this, or that they had agreed with the suppliers of the accessories to do this, in which case there would be a registrable arrangement. But I am taking the normal case, the one that was put to me, in which there was no arrangement of that kind and there was simply the judgment of petrol company A that it wished to do this particular thing and it came to these arrangements, first with one garage and then with another, in perhaps 40 or 50 separate contract arrangements. If I am asked whether on my definition there is mutuality, the answer must be that there is not.
In those circumstances, assuming that there is no arrangement of any kind, 2015 assuming that that particular situation is outside the mischief of Clause 5, is there anything else that could be done about it? I think the answer is probably, "Yes". If it is done on any scale at all, it is probably within the mischief of the 1948 Act. Indeed, I believe that that is, in fact, the case with these petrol company arrangements.
This is what that Act states in Section 3:Conditions to which this Act applies shall be deemed … to prevail as respects the supply of goods of any description if …Subsection (2) states that(a) at least one-third of all the goods of that description which are supplied in the United Kingdom … are supplied by or to any … such two or more persons as are described in subsection (2) …The two or more persons referred to in subsection (1) … are any two or more persons who"—these are the important words—whether voluntarily or not, and whether by agreement or arrangement or not, so conduct their respective affairs as in any way to prevent or restrict competition in connection with the production or supply of goods of the description in question …Under that Section, not in a normal sole agency arrangement, but in the case of a situation such as is alleged to exist on a large scale in the petrol companies, in which accessories were being tied over a very big field, it would seem to fall within the mischief of the Monopolies Commission. That is why we have retained the Monopolies Commission so as to deal with that type of case. I am not prejudging what is happening in the petrol world, but am dealing with it only as a class of case.
If I might summarise the argument, the Amendments which are put forward are put, as always, with the best intentions in the world. They are put in a desire to catch within the net an ever wider degree of questionable devices which might conceivably be going on. I beg those who move the Amendments to proceed with a little caution. If we throw the field open as wide as all that, we shall never be able to concentrate upon the job which we really intend to do.
What we intend to do is to proceed as expeditiously and as clearly and fairly as possible in respect of arrangements 2016 which, we have found from experience, are biting on industry—the price ring, collective discrimination and the like. In all those arrangements, the idea of mutuality as I have described it is really inherent. If we drop that, or drop at least the idea of mutuality, we shall be losing the essence of the Clause.
I urge the Committee, therefore, to keep that sense of the Clause. If there are other cases in which one person or body corporate, however it may be described, or group of people within the terms of Section 3 (2) of the 1948 Act is engaged in methods which are restricting competition, I suggest that the right course is to use the existing machinery, which we preserve in the Bill, for dealing with them on an ordinary monopoly basis.
§ Mr. Eric Fletcher (Islington, East)
I have listened with great care to what the President of the Board of Trade has said. Without pretending to have arrived at any final view on the matter, I concede that what the right hon. Gentleman said about mutuality has a great deal to recommend it. I want him, however, to address himself to another aspect of this series of Amendments, and, in particular, to the first of the Amendments, which has been moved by the hon. Member for Huddersfield, West (Mr. Wade).
I approach the subject in precisely the same spirit as the way in which the President of the Board of Trade has just spoken. He said that he is trying to bring within the scope of the Clause agreements and vicious practices which have come to light as the result of the activities of the Monopolies Commission during recent years.
It seems to me that unless the first of these Amendments—which is designed to substituteto which one or more of the parties is a person carrying on business within the United Kingdomfor the existing requirement in the Clause that both the parties to an agreement must carry on business within the United Kingdom—is accepted, the door will be opened to a very wide field of undesirable agreements, to say the least, being entirely without the scope of the Clause; and they will escape registration.
These matters can often best be explained by an illustration, and for this purpose the best illustration I can give 2017 is that of the match industry. I put it earnestly to the President of the Board of Trade that he will very seriously fail in achieving the object, which I credit him with wanting to achieve, of bringing within the scope of his net these vicious restrictive practices which he wants to cease, unless he makes the registering of agreements apply to trade between one person trading in the United Kingdom and another person outside the United Kingdom. It seems an unnecessary limitation of Clause 5 to stipulate that an agreement must be registered only if both parties to the agreement carry on business in the United Kingdom.
I think that the matter can best be explained by reference to the match industry. As the President of the Board of Trade well knows, the match industry was referred to the Monopolies and Restrictive Practices Commission two or three years ago. Its report has been published. The conclusion, I think unanimous, of the Commission, according to paragraph 214 of its Report was that… the system as a whole operates, and is likely to operate, against the public interest as respects the supply both of matches and of match-making machinery.One finds in the Report, and particularly in the appendices to it, that the whole of the match industry in this country is controlled by a trading agreement.
The agreement, which is published as Appendix 4 is between the British Match Corporation Limited, an English company carrying on business in this country, and Svenska Tändsticks Aktiebolaget of Jönköping, Sweden. It is that agreement which prescribes the whole of the restrictions under which the supply and manufacture and distribution and everything else of matches in this country is worked.
The agreement stipulates, for example, that the home trade shall be carved up between the British company and the Swedish company. The agreement provides this kind of clause—Each party shall use its best endeavours to reduce and prevent the sale in the British Isles of competitive matches.It is that agreement which stipulates that one company shall have a monopoly of a certain percentage of the match industry in this country, reserving the residue to the other with provisions for compensation payable by the British company if 2018 it exceeds the sale of matches which it is allowed by the agreement.
There are restrictive practices of all kinds in this agreement, designed to stop the importation into this country of competitive matches whether from Russia or Belgium or wherever it may be. The agreement is also designed to stop expansion of British manufacture by the British company. In other words, here is a typical agreement which has been condemned by the Monopolies Commission, full of the restrictive practices of the very type which the President of the Board of Trade states that, as a result of his experience, he is anxious to stop.
I do not think that the right hon. Gentleman can deny that as Clause 5 stands, that agreement would not be registrable. Nor are the other agreements to which the Monopolies Commission's Report refers. There are a great number of other commodities in the country where this kind of control, with all its evils, is basically carried out by agreements between British and foreign companies similar to that between the British Match Company and the Swedish company.
§ Mr. Philip Bell
I have read the Reports to which the hon. Member refers, though not in detail, but is not the position that the British company is submitting? Is it not the case that it does not want the restrictive practices, but they are forced upon it? How are we to stop foreign companies dictating their own terms?
§ Mr. Fletcher
There are all kinds of ways of dealing with that problem. The Government have a whole armoury of weapons at their disposal to regulate both the export and import trade, and they could be given further power, if necessary, to prevent the British public suffering because prejudicial terms are imposed, if that is the case, by a foreign company on a British company requiring it to assist in preventing competition.
On reflection, that is a very helpful intervention on the part of the hon. and learned Member, because the whole object of the Bill is to enable us to free British industry from some of the restrictions which hamper it at present. As will be seen from further Amendments, we are not merely concerned with goods 2019 manufactured and then distributed wholesale and retail in this country, but we are concerned also with goods imported into the country and which, because of the terms on which they are imported, are subject to onerous restrictions.
Clause 5 deals with restrictions and I am pressing the Amendment because, whether or not we can deal with the evils revealed, we can at least ensure that the evils themselves are brought to light. They can be brought to light only if they are registrable under Clause 5. I urge the President not to exclude from registration under the Clause agreements such as that in the match industry which are the cause of the whole trouble reported by the Monopolies Commission.
There is a very good parallel to this in the United States, under the Sherman Act and its successors, as the President of the Board of Trade knows very well. Although we are not adopting the machinery of the Sherman Act, I think that the President will agree that we are attempting by a different method to secure the same objective—to liberalise trade—and, as the right hon. Gentleman knows, there is no limitation of this kind in the United States. The anti-trust laws aim at and have succeeded in catching agreements made between United States companies and companies carried on outside the United States. If the United States Legislature had not secured the ability to do that by its legislation, a great many of the monopoly and anti-trust practices which have been exposed in the United States might not have been so exposed.
We are anxious that the Clause should not be subject to any unnecessary limitations. I realise what the President of the Board of Trade said about mutuality and we do not desire to register every commercial agreement, but there is no need to limit the Clause to agreements between United Kingdom companies and I earnestly hope that the right hon. Gentleman will accept the Amendment.
§ 6.0 p.m.
§ Sir James Hutchison (Glasgow, Scotstoun)
Whatever may be the merits of the case which the hon. Member for Islington, East (Mr. E. Fletcher) has been delineating in connection with the match industry, I hope that my right hon. 2020 Friend will stand firm on what he said earlier, namely, that if we reduce this to one company trading with another company, or other companies, abroad we are striking at the basis of international trade.
To my knowledge, I have never been in any restrictive agreement and I have sold British tyres in France for many years. I have bought French products and sold them over here. In every agreement there was a restriction which would fall within the terms of this Bill—either as to the prices to be charged or the prices to be paid or the amount of processing that was to be done to those or other items either in this country or in the country abroad. All were part of the agreement, and without such agreements we would not be able to get people to take up agencies or buy goods and process them.
In every agreement between one concern and another there must be conditions of these kinds if trade is to be carried on at all. There is nothing restrictive in that. As the President of the Board of Trade has said, it is the ordinary meat of straightforward trading. Nor are any rings set up by this practice. Whatever may be the method of dealing with a consortium or cartel of the type of the match industry, in my submission it would do the greatest damage to the trade of this country if these Amendments were accepted.
§ Mr. Irvine
The President of the Board of Trade in his speech on this Amendment has made much clearer than it was before the intention of the Government in this Clause, but it is open to doubt whether that intention, so clearly explained by the right hon. Gentleman, is clearly expressed in this Clause, and as the right hon. Gentleman has indicated that it may prove necessary for certain drafting alterations to be made.
It is clear from what he said that an agreement between a person carrying on business as a producer for one part, and a person carrying on business in wholesale for the other part, is an agreement registrable under the Bill if it is one dealing with matters referred to in paragraphs (a) to (e). I regard that as an important revelation. On my reading of the Clause I thought that the wording of the Amendment put down by the hon. Member for Gosport and Fareham (Dr. Bennett) was merely declaratory of what 2021 was intended to be the provision in the Bill. My reading of the Clause was that the agreements which were registrable were agreements dealing with matters referred to in paragraphs (a) to (e) but agreements arrived at between persons belonging to a class that is, for example, between producers or agreements between retailers.
It is important and welcome to us on this side of the Committee to hear that this is not so, because the effect is that this Clause is wider than we had feared and wider than we had interpreted it. I do not think that in its present form the matter is made sufficiently plain, with great respect both to the Government and to the draftsman. It is undesirable that a matter of this importance should depend upon whether the word "or" is to be read as having a disjunctive or conjunctive sense. I hope, therefore, that the matter may be made crystal clear so that the intention of the Government, as explained by the President of the Board of Trade, may be clearly expressed in the Bill.
There are one or two matters arising out of this Clause to which I want to refer. On my reading of the Clause, it is not at all clear whether, if an agreement is reached between the members of an association upon matters arising under paragraphs (a) to (e), that agreement will be registrable under the Bill. It is true that elsewhere in the Clause, in subsection (3), provision is clearly made that there may be mutuality in the sense of the Clause between members of an association. Members of an association, as members, may by virtue of their membership, or otherwise, agree upon mutual restrictions which will be effective also as applying to the association as a whole.
It is interesting, and, in my view, important, to observe that the express provision about the membership of an association is confined in the Clause to applying to the case where an association enters into an agreement with another association or with another person. The right hon. Gentleman will appreciate the point. However, I venture to think that it is not clear in the Bill.
I will recapitulate briefly. Is it quite clear that where members of a trade association get together and among themselves reach an agreement on matters referred to in paragraphs (a) to (e), such 2022 an agreement by the members of the association is registrable? Again, there is this further matter which needs clarifying. I believe that it is open to doubt, under the Bill, whether an agreement which is not in writing can be registrable. It is true that there is provision in Clause 8 (3, b)—
§ The Deputy-Chairman (Sir Rhys Hopkin Morris)
The hon. Member is going beyond the scope of this Amendment.
§ Mr. Irvine
I would be greatly obliged, Sir Rhys, if I may point out what I submit is the relevance of the provision. It is this, that whether or not agreements not in writing are registrable under the Bill very greatly affects the merits of the issue as to whether agreements reached between members of an association are to be registrable under the Bill. The reason is that it is a great deal more difficult to establish the existence of an agreement dealing with restrictive practices, which is not in writing, where that agreement is reached between members of an association as distinct from one between an association and another person.
That, I venture to submit with great respect, is the relevance of that point, and I would be grateful to hear in that connection—and relevantly, as I submit it is, to this Clause—whether agreements not in writing can be registrable.
§ Mr. Philip Bell
The hon. Member for Huddersfield, West (Mr. Wade) said frankly that his first Amendment was an endeavour to catch an agreement between a company carrying on business in England and one abroad. The difficulty is to remember that we are not talking about transactions between vendor and purchaser of goods. Perhaps that was why my intervention seemed to be misleading.
If there is a deal between two companies concerning a product and sale—say, hair oil from France to England—stipulating that it must only be sold in expensive hotels, that is a term attaching to the sale of goods which could not be caught by this Clause. It is restrictive and comes under Clause 6 (2).
Suppose a French company and an English company got together and the English company wanted to sell razors and the French company shaving soap 2023 and they said, "Together, in the English market, we will never sell one without the other." That is an agreement not about the terms of the sale of particular articles but about how the market shall be divided up. I should have thought that that was the sort of thing the hon. Member had in mind when he said he wanted the words enlarged. It would be the case of one person carrying on trade in the United Kingdom and buying, say, shaving soap from France and making an agreement that he would only sell it with his own razors.
I am trying to discover an example of what the hon. Gentleman had in mind. I wonder whether the example that I have given is a suitable one. How do two such companies fall to be treated? We can only enforce provisions so far as a British company is concerned by saying that it must not sell the goods, must not sell the goods on such terms or must not enter into that sort of agreement. We can only, in a sense "iron curtain" the other company out. If we cannot take any steps against the other country, we can only tell the English firm that it cannot enter into that sort of agreement. At first sight, that seems rather attractive.
However, it is difficult to believe that if the alleged agreement were onerous and unprofitable a British company would enter into it. It is also difficult to believe that others would not enter into competing agreements. I find difficulty in believing that a British company, dealing with a foreign company, would voluntarily enter into an arrangement which damaged the market. If it did so, I am sure some other body would soon break into the market.
§ Mr. E. Fletcher
I gave the specific case of the British Match Corporation. Will the hon. and learned Gentleman say whether he would be in favour of that agreement being excluded from registration?
§ Mr. Bell
It is difficult to say whether or not I should be in favour of it. It was a monopoly operating in England and within the seizin of our courts, but I do not know how far it would involve taking action in some other court. The 2024 position was that a number of suppliers of matches in England set up a monopoly of their own having in their own pocket the wholesaler in Sweden, but a number of firms got together and carved up the market. If one person had been dealing with the Swedish firm, and had to submit to certain terms imposed by the Swedish firm, it would seem difficult to stop it if we did not like it.
I should have thought that the competition of trade would have stopped it rather than any step taken under the Commission. I am not in theory against this, but I am worried about the practice of it. Is it possible for us to stop restrictive practices in England when there are two parties concerned and one is English and one is foreign? Perhaps the President of the Board of Trade can explain in more detail what sort of agreements have not been covered and why they are not covered. As I understand, the Bill does not cover the one referred to by the hon. Member for Huddersfield, West.
§ Mr. Wade
The British Match Corporation was considered by the Monopolies Commission. I take it the hon. and learned Member would not object to that investigation. The effect of my Amendment would be, I think, that the case of the British Match Corporation would constitute the creation of an agreement which would be registrable, because the Corporation was a party to an agreement to which one or other of paragraphs (a) to (e) apply.
There is another point. Suppose there was not one body but two bodies—the British Match Corporation and another match corporation carrying on business within the United Kingdom—which were parties to the international agreement. I understand that just because there were two organisations concerned and not merely one—there being no other differences—the agreement would be registrable.
§ 6.15 p.m.
§ Sir Leslie Plummer (Deptford)
I am encouraged to enter the debate because the President of the Board of Trade was so forthright and helpful in the reply given to the hon. Member for Gosport and Fareham (Dr. Bennett) when he put the specific points about the behaviour of the petrol companies, and also because 2025 the President said that the inquiries which were being made and the questions which were being asked were useful at this stage.
I wonder whether the President would be good enough to advise me on the position in which a company like the Imperial Tobacco Company would find itself in respect of its arrangements with wholesale and retail, particularly retail, tobacconists in this country, and whether it would be registrable under paragraph (b).
There is a difference between this arrangement and what was described in relation to the petrol companies by the hon. Member for Gosport and Fareham. The petrol companies were setting up exclusive Solus agencies. There is a difference, but it does not disguise the fact that a restrictive practice is being carried on. In the interests of the tobacconists in my constituency, I should like to know whether the net of Clause 5 will catch them.
I will describe the agreement. Only if I am specific can the President give me any advice. The Imperial Tobacco Company is an amalgamation of scores of companies. Not being a lawyer, I do not know whether it is a company within the meaning of the Clause. Nevertheless, it is a well-established trading company, operating a great number of individual companies and selling a great number of varieties of cigarettes and tobaccos, and so on. It is its practice, after it has accepted through the Tobacco Trade Association an application from a tobacconist that he should be given supplies, to offer a bonus agreement whereby the tobacconist is paid a bonus of 5s. for every £100 worth of purchases he makes on the understanding that he shall devote an unspecified part of his window display to the products of the Imperial Tobacco Company. This means that there is no exclusiveness about it; nevertheless, the tobacconist is in the situation that he has agreed, in return for the small margin of bonus, to give displays in his window to the products of the Imperial Tobacco Company.
What happens? The Imperial Tobacco Company uses a force of field officers who go round and decide, in the interests of the company, whether they are satisfied with the window display and whether the amount of space devoted to the products of other independent companies 2026 is right or wrong according to the judgment of the company. Behind this inspection is, of course, the sanction of the stop order. It has not been used to any great extent for some time, but, nevertheless, it is there.
That means—and this is why this subject is so important in respect of Clause 5—that the small manufacturer who decides that he wants to come into this market is virtually denied the opportunity of displaying his product. The tobacconist is not a free agent, nor is the manufacturer of a new cigarette who is unable to get the displays, to which at least in the interests of fair competition, if no more, he is entitled; for today no man can sell a new brand, or any brand, of goods unless he can get the sort of advertising in the place where the goods themselves are sold.
It works very harshly indeed against a new man and works, not excessively—that is an exaggeration—but harshly against the shopkeeper who is trying, naturally enough, to extend his business and who finds, by virtue of the agreement, which he may not have too clearly understood when he signed it, that he is himself restricted to the sales of the product of one particular company. Does the President of the Board of Trade regard an agreement such as this as good or bad? Is it registrable?
It is different from the actual cases which have been put before him, because there is no problem of exclusivity about it. Nevertheless, it is a restrictive practice which restricts the operation of new entrants into the trade and it restricts the activities and individual enterprise of the particular shop keeper. If these agreements, which seem to me to have little mutuality about them, are not to be registrable, I fear that the Bill will lose a great deal of the force which we hope will be put into it.
§ Mr. Reader Harris (Heston and Isleworth)
I want to refer for a moment to the Amendments designed to obtain the registration of agreements which might exist between the petrol companies and petrol stations, whether owned by the companies or by dealers. I understand that the President of the Board of Trade said that such agreements should not be registered and would not fall to be registered. I think that, on balance, he is right about that, because, clearly, if they 2027 were to be registrable, the Registrar would be flooded out with tens of thousands of agreements and would need to have the Restrictive Trade Practices Court sitting not in three parts, but in about a hundred and three parts, to get through all the agreements.
However, I cannot let this occasion pass, without saying that there is very grave concern in the motor world at the possible extension of the policy whereby petrol stations can extend their influence until they have every retail outlet, or are in the position where they can dictate to the retail outlets where they will obtain typres, batteries, and other accessories. I think that the hon. Member for Gosport and Fareham (Dr. Bennett) was speaking chiefly from the point of view of oil, but I should like to mention other things.
I am in favour of anything which helps the small man, the small trader and dealer, to retain his independence; but so many are losing their independence. At present, they are not getting much help from the Chancellor of the Exchequer, who persists in maintaing the credit squeeze, which means that if a small dealer wants money to extend or improve his premises he cannot go to the bank, because he is not allowed to borrow money from the bank, and he is, therefore, at the mercy of the large petrol companies, which will say that he can have so many thousands of pounds "on condition"—and I emphrasise "on condition."
I have read with interest the denials which have been issued by the Shell Mex Company and the B.P. Company, in which they say that they have not entered, and do not propose to enter, the market as suppliers of accessories. They say that on dealer-owned stations dealers are free to purchase these things where they like. That may well be true, but it is also the fact that they have stated that all the operator is asked to do—and they say this possibly with their tongues in their cheeks and possibly a little naively—is to co-operate with the Shell Company in promoting sales of tyres, batteries and accessories.
That has a sinister ring about it. It can mean anything or nothing. The prisoners in the prison in Moscow—
§ The Deputy-Chairman
The hon. Member is widening the debate. The Amendment deals with registration.
§ Mr. Harris
This matter was raised when you were out of the Chair, Sir Rhys, by the hon. Member for Gosport and Fareham. I was leading up to say that I hope that somewhere in the Bill this whole problem could be dealt with, even if it cannot be dealt with now.
§ Mr. Harris
If these Amendments are carried, this point will be dealt with, but I understand that the President of the Board of Trade has said that he will not accept them, so the point will not, therefore, be dealt with. I want to inform him of the great concern which will be felt if these agreements are not dealt with. I hope that later they can be dealt with under that part of the Bill which deals with the Monopolies Commission. I should like to have an assurance on those lines.
§ Mr. Turner-Samuels
If the Committee is to have a useful and practical result from the discussion, it should stick to the question of the language of the Clause, which, after all, is vital. The President of the Board of Trade will agree that the Clause refers to agreements to which Part I of the Bill is to apply. The subject matter of Part I deals with the registration and judicial investigation—and, I repeat, judicial investigation—of restrictive trading agreements. That becomes very important in relation to the issue raised by the hon. Member for Scotstoun (Sir J. Hutchison) about agreements between traders in this country and wholesalers abroad.
I am quite certain that the President will agree that the language of Section 5 (1), because of its importance and of the primary nature of its principle and situation in the Bill, ought to be scrutinised very closely. Of course. I quite agree that we should not, as it were, use a magnifying glass to it, but all the time we are considering these words we must remember that it is not what we in the Committee might think they mean. This Clause will be subject to judicial interpretation and we have to be clear that the words are tight enough, that they are not so 2029 loose that when they come under the scrutiny of judicial examination and legal interpretation, they will allow agreements, which should be caught, to escape, and the public interest, which the Bill is primarily designed to serve, damaged in consequence.
It must be obvious to the President of the Board of Trade, when he brings to the phraseology of the Clause not only his political experience, but his legal training, that the Clause is not as tightly drawn as it should be, and that there is a looseness about it which might well enable the escape of agreements which should properly be caught and which he would wish, in his desire to carry out the purpose of this legislation, to be caught.
It is quite clear that the Amendment moved by the hon. Gentleman the Member for Huddersfield, West (Mr. Wade) is a proper Amendment. I cannot believe that the President will seek to exclude it. My hon. Friend gave a most apposite example of an agreement in which the objection to which I am referring would apply; but I am not seeking to confine my argument to any specific type of agreement at all because, in my submission, the field is so wide that this matter ought to be broadly considered. To descend to specific agreements would narrow discussion rather than leave it open, as it ought to be, in order that the real implications of the words of the Clause can be appreciated and the possible consequences injurious to the public interest be avoided.
On the threshold of this matter, merely giving the language of the Clause a cursory glance, it is quite clear that it would exclude agreements which ought to be caught. The fact that the Clause deals with restrictive matters does not mean, I hope, that it has to have a restrictive connotation. I think the President will agree—as, I am sure, would the Attorney-General also, if he were paying attention—that there will be agreements, essential agreements, agreements affecting the public interest, agreements which any reasonable man would at once say ought to be caught, which will not be caught if the language of this Clause is allowed to remain as loose as it is now.
Let us, as I say, consider the matter without mentioning any specific agreements. 2030 It is perfectly clear that any agreement the structure of which provides for one party in England and one party abroad—or two or three; it does not matter—will not be caught by this Clause. Of course, if the President could demonstrate that it ought not to be caught, and that no deleterious consequences would ensue as a result, then the matter would be at an end.
We have heard it stated from the benches opposite that there is a multiplicity of agreements, as, indeed, common sense would tell us, which are made between persons in this country and persons abroad, and that all, or, at all events, the great majority of those agreements, contain either covenants or clauses which have a restrictive effect in all manner of directions, and, in particular, as regards price or restriction in supply, which very closely and profoundly affect the public, very often to its cost. In my submission, on the most ordinary interpretation of the language of this Clause, giving it its natural meaning, those agreements would be excluded.
Such exclusion must be wrong, and, now that the matter has been brought to the attention of the President, to allow it to go by default would mean that it is being deliberately done. I cannot see the logic of saying that an agreement between parties here having certain clauses injurious to the public should be registered, examined and dealt with, while an agreement entered into with a party abroad which is equally injurious to the public interest in this country ought not to be dealt with or should be allowed to escape. I cannot see the logic or sense in that, and I do not think that the public will, if that is permitted, at all appreciate it.
Certainly, every time people put their hands in their pockets to buy commodities covered or supplied by these agreements, they will wonder why agreements between people in this country should be dealt with and restrained, whereas agreements which embrace and give profit to people abroad to the detriment of the public here are left unrestrained. I therefore urge the President that he should say that where any cartel or agreement of any kind exists which is made with people or firms abroad and which, by its terms, means that someone here is a party to it, it not being an agreement solely 2031 between people in this country, that agreement shall be included in this Measure for registration.
It has been asked what impact the word "mutual" has in the context in which we find it. The word "mutual" becomes very significant following upon the considerations which I have mentioned as applying to agreements which are not caught, as I suggest, owing to the narrowness of the language of this Clause. That word "mutual" implies a state of affairs between two people in this country; it also has in this Clause a geographical connotation. As between one person in this country and another person abroad, its meaning and effect would produce an entirely different result. In other words, the concept of mutuality would have its proper effect only when applied to an agreement between two people in this country, because there would be mutual restrictions there which would be subject to registration, to examination by the Court, and to an order of the Court.
Any mutual relationship between a person here and another person abroad would be in an entirely different position because then the word "mutual" would not catch that type of case at all. I therefore agree with the hon. Member for Huddersfield, West when he says that for the word "mutual" the simpler, wider and more efficacious word "any" should be substituted.
On this part of the matter, I ask the President to give his best attention to this question to see whether those criticisms and comments are justified and whether they provide material for correction in the operation of the Clause. The President of the Board of Trade, whose ability, of course, we in this Committee all admire, is a most skilful advocate; even when he is not convincing others, I am quite certain that he is invariably convincing himself. He tried to show that notwithstanding the reasons I have given of this particular Clause, it would, nevertheless, be effective to catch the mischief at which it is intended to aim. To prove this he set out ingeniously to demonstrate the manner of catchment through another Act altogether. That was the Monopolies and Restrictive Practices (Inquiry and Control) Act of 1948.
2032 There, I consider that the President made a point which was shrewd, although it was fallacious and cannot be sustained. That Act, as has been said, in future will deal only with restrictive agreements of an individual character and also restrictive agreements with regard to exports. I rate the President's intelligence and discernment much too high to believe that he is unaware that the point we are discussing has nothing to do, or may have nothing whatever to do, with overseas trade at all. Notwithstanding that it is between parties, one of which is located in this country and the other abroad, it may be that the agreement deals entirely with business and trade in this country and not with trade overseas at all. In those circumstances, the provisions of the 1948 Act would have no application whatsoever.
I ask the President—he has been very fair so far about this matter—to consider that aspect. I agree that, could the right hon. Gentleman be satisfied that certain agreements could be dealt with adequately by the 1948 Act, and if the objections which we are raising and the defects to which we have drawn attention could be omitted or remedied because they would be caught under the 1948 Act, that would be another matter. But inevitably there are restrictive agreements such as I have mentioned which have nothing to do with overseas trade at all, and those agreements would not be caught.
I wish to say a word about another point which was referred to by the hon. Member for Scotstoun (Sir J. Hutchison) and the hon. and learned Member for Bolton, East (Mr. Philip Bell). They asked the question: how can we stop foreign restrictions in an agreement? The simple answer is by preventing the trader here from entering into them. That may be a perfectly simple thing to say but a very difficult thing to do, and indeed, if we could, it may even prove harmful to the country. Although there may be some restrictions in an agreement of this kind which are burdensome to the public it may nevertheless be desirable to enter into it because it concerns a particular commodity which is required by the public, and which would not be available unless the agreement were entered into.
The answer to that, as I am sure the President will agree, is that it is not a 2033 question of what can be done to stop such a restriction, if the restriction be one which it is impossible to avoid without harming the country. The position would be that if the agreement had to be registered under this Bill it would come before the Court. It is expressly provided by the Bill that it does not necessarily follow that, because there is a restriction in an agreement which is registered that the Court will condemn it. The mere fact that there is a restriction does not, under this Bill, mean the end of the agreement. It is for the Court to examine the matter and to make an order; to determine whether the restriction has a disadvantageous effect or is inimical to the public interest. If, after considering all the facts and implications, the Court decides that the agreement is one which, though it is burdensome and may mean excessive prices, but involves a commodity essential to the country, then the Court can and probably would refuse to interfere with that agreement or order that it should be invalidated.
Those are the points which I have felt it essential to make and which I ask the President to consider with care in order to see whether this Clause may be so redrafted as to make its language closer and safer, so as effectively to satisfy the criticisms which have been made of it.
§ 6.45 p.m.
§ Mr. Robert Edwards (Bilston)
I am encouraged to make a modest contribution to this discussion by the statement of the President that he would welcome any suggestions for strengthening the Clause. I am also encouraged by the comments of two hon. Gentlemen opposite on the question of international cartels in which a British firm may be linked with a firm in another country.
I wish to ask how in this Clause we may deal with agreements not to produce; agreements between a group of firms whereby one firm will cease to produce in order that another firm may have a monopoly. That practice has been operated in many sections of the chemical industry. There was an agreement whereby whole sections of the chemical industry producing caustic soda and sulphuric acid were closed down by agreement. How can we deal with a dangerous conspiracy of that kind which creates an artificial monopoly and forces up prices based on shortage?
2034 I do not know how we can deal with restrictive practices which are not in the form of a written agreement. How do we deal with restrictive practices arising from a resolution at a conference and where there is no signed agreement? How do we deal with the many restrictive practices which are common knowledge but are not reduced to writing? How do we deal with a restrictive practice which it is known exists but which is arranged at a champagne dinner at the Savoy Hotel? There are many practices of that nature which harm our economy, and I could give many examples without mentioning firms by name.
For example, firm A in the chemical industry is producing important chemicals and has four customers. A new director is appointed to the board, and he decides to expand production and get more customers. He is told by his co-directors that firm B would not like the idea of their increasing production and expanding trade. But the new and enthusiastic director contacts firm B. Firm A is all set to increase production, but after a lunch at the Savoy, the new and enthusiastic director goes back to his firm and nothing more is heard about expanding production or of obtaining new customers for firm A.
There was an agreement relating to the fuel for jet engines. Two firms produced all the fuel for about two years. There was an unwritten agreement that one firm should fulfil the small orders and the other firm the large orders, and that there should be a fixed price. That practice was commonly known, and, I believe, was known to the Board of Trade. The Government, which used this product of the two firms, paid a high price for it. It was only when three other firms began to manufacture the fuel that the price was brought down very considerably.
How do we deal in this Clause with deliberate, calculated conspiracies against the economy of the nation and against the interest of the consumers, conspiracies which are not written into agreements but which are understood in industry and among the consumers? A little earlier today we were discussing the problem of petrol stations. There is an agreement relating to the supply of petrol to the Co-operative societies. 2035 It is not a written agreement, but no petrol company will supply, in the normal way, the Co-operative societies of this country which, after all, represent 11½ million consumers.
None of the petrol companies is allowed to supply the Co-operative societies with petrol for sale to their customers unless they agree to pay no dividends on the petrol which they sell. There is no written agreement. All that happens is that supplies of petrol to the Co-operative garages are withheld unless they agree to that no-dividend policy.
How do we deal in this Clause with conspiracies of that nature? How do we deal with the position of the federation which deals with the retailing of newspapers and which acts on resolutions taken at a conference? There is no agreement. The federation has what is known as a distance-limit policy, under which newspapers and periodicals are not allowed to go to shops or to Co-operative societies. It maintains a distance between each retailer.
The Committee will recollect that the Greene Committee on the Restraint on Trade reported in 1931 that the refusal to allow Co-operative societies to sell newspapers and periodicals to their members was in no way related to this distance-limit policy. It was due to pressure by the big wholesalers against the Co-operative societies, even though the societies had given an undertaking that no dividend would be paid on newspapers or periodicals. There is nothing in writing, but only a conference resolution.
Such policies affect millions of consumers all over the country. It is a characteristic British example of voluntary organisations representing 11½ million people being denied the right to sell petrol and newspapers, even though they have agreed to pay no dividend on the sales.
They are denied the right to sell certain gramophone records, even though there is no written agreement on the subject, unless they agree not to pay a dividend. They are denied the right to sell certain workmen's tools although, in the main, the Co-operative movement caters for workmen, unless they sign an agreement not to pay dividends on those sales. They 2036 are denied the right to sell to their members a whole range of electrical appliances. In every case there is no written agreement. These restrictive practices are based on conference resolutions and on understandings made in secret by the firms concerned.
Two hon. Members opposite dealt with the question of cartelisation and one of them, the hon. and learned Member for Bolton, East (Mr. Philip Bell) justified the example quoted by the hon. Member for Islington, East (Mr. E. Fletcher) of the match agreement between the British match monopoly and the Swedish monopoly.
§ Mr. Edwards
The point which the hon. and learned Member made was that the British match interest was the unconscious victim of pressure from the Swedish manufacturers.
§ Mr. Philip Bell
I explained that I had not gone into the details of the agreement. I said that I could not recollect the terms of the match agreement, and that I did not complain that it was condemned. I said that if there were only two parties to an agreement, one British and one foreign, I could not see how we could prohibit the agreement except by excluding what was to be imported and that that might be costly.
§ Mr. Edwards
I would only say that what the hon. and learned Gentleman said is not the opinion of the British match industry, which states that it has no complaints to make against the Swedish firm. Indeed, it says, quite rightly I think, that it was greatly helped technically. But the fact remains that two monopolies, one in Britain and one in Sweden, were able to control the match trade of this country to such an extent that the British match industry was not allowed to produce more than 75 per cent. of the matches required by British consumers, and that for every box of matches which it produced above that 75 per cent., it had to pay a fine to a monopoly in a foreign country.
I understand that the fines which the British match industry paid, even during the war, amounted to £50,000 a year. This money of ours went to Sweden because our match industry was not free 2037 during the war to produce the matches required by British consumers. Yet in this Clause conspiracies of that kind, which damage the whole world economy and keep it poor, are not, and cannot be, dealt with. Damaging agreements of that nature cannot be dealt with in Clause 5. I think that the Committee is entitled to hear from the President his considered replies to the points raised by myself and by my hon. Friends.
Between the wars, the British Iron and Steel Federation had an agreement with the steel barons of the Ruhr. Are agreements of this nature, which almost lost us the last war, not to be reportable and registered under this Clause? In 1938 our steel industry was restricted to the production of 10½ million tons of steel, whereas Germany's allocation was 25½ million tons of steel. At one period we were importing steel, because we were denied the right to produce more than the tonnage which I mentioned.
On every ton of steel we produced over the quota allocated to us by the international steel cartel, the British steel industry had to pay a fine. These deliberate calculated attempts to restrict production, forcing prices higher than they otherwise should be, and based on organised scarcity, are a danger to the economy of the country, and the Bill will be valueless now and for the future unless it is able to deal with matters of that nature.
I am sorry to have spoken for so long, but I was carried away by emotion and the flow of my thoughts, and I hope that the President, ignoring the enthusiasm of some of my remarks, will deal with the practical points which I have raised. I think that if he will have regard to the criticism which has been raised on the Clause, he will agree to strengthen this particular clause at a later stage.
§ Mr. Jay
The President of the Board of Trade spoke to us in a most plausible and persuasive manner, but I was not entirely satisfied that he answered the substance of the questions put to him.
In the first place he spoke of the word "mutual" as if it applied in the Bill to the agreement but, in point of fact, it is the restrictions which are mutual and not the agreement, according to the President's own Bill, and at this stage that is not entirely an unimportant point 2038 The first question which the President did not actually answer was this. I pointed out to him that in paragraph 30 of the Commission's Report on Collective Discrimination last summer, it spoke of certain agreements among suppliers which required them to discriminate in favour of certain buyers but where the buyers did not undertake any reciprocal obligation to discriminate in favour of the suppliers. That was category I in the Commission's scheme of things, where there was no reciprocal obligation involved. I assume that the right hon. Gentleman wanted to have it made clear that that quite large class of agreements and other agreements which are not in that sense reciprocal are not excluded from registration by the presence of this word "mutual" in the Bill.
The second question which we asked the President was whether, if there was an agreement between, say, ten people under which not all the ten but only three, four or five accepted certain restrictions which are in his sense mutual, that agreement would escape the Bill because the restrictions were accepted only by some and not by all the parties to it. I think that the answer is that it would not be excluded, but we want to get that point enirely clear.
The third question which has been raised by several hon. Members is whether this Clause and the definitions in it includes agreements not just between one producer and another producer, or one wholesaler and another wholesaler, but between the producer or producers on the one hand and certain wholesalers or retailers on the other. I understood from the drafting of the Bill that it did not exclude agreements between the different types of traders, if I may put it that way.
We have now also established usefully by this discussion that what the President called the "sole agency agreement" is excluded from the bill altogether. We therefore seem to have established the fact, and I doubt whether the whole Committee was clear about it at the start of the discussion, that if one or another of the large petrol companies which operate in this country was to make an agreement with every single garage selling petrol throughout the United Kingdom by which each single garage could 2039 sell only one type of petrol supplied by one or another of these companies, and if there were no mutual restrictions undertaken by the petrol companies, and if the companies had no agreement between one another, as I imagine they may not have, then that situation would be entirely outside the scope of the Bill.
Not merely would it be outside the possibility of determination under the Bill. It would even be outside the scope of registration. That is a rather remarkable comment on the Bill, if that should be what it really means. The President says, "It is all right in that particular because a situation of that kind would be covered by Section 3 of the Labour Government's 1948 Act." If that were so, it may perhaps be a tribute to the 1948 Act that it embraces a so much wider field than this Bill, but nevertheless my hon. Friends who considered this point before we put down this Amendment were in some doubt whether the 1948 Act would include a situation of that kind.
I find myself in this difficulty. The President says that in relation to this important field—and it would not only be the petrol companies that would be concerned—"It is not covered by this Bill but it can be dealt with under the 1948 Act". The trouble is, however, that he is not operating the 1948 Act at the present time.
When we ask him what he is doing about the Report on tyres which was the result of action under the 1948 Act, he tells us, "No action is being taken on all that while the Bill is going through". He may say that no action is to be taken in cases which are covered by the scope of this Bill, and that when we are concerned with an agreement which does not come under the Bill but comes under the 1948 Act, he does not feel himself inhibited from acting. If that is the argument we should like an assurance that in those cases he intends to take action under the 1948 Act during the passage of the Bill and during the initial stages of putting it into operation if it passes into law.
Can the right hon. Gentleman not give us an assurance that he will take some action under the 1948 Act in the matter of the petrol stations and garages which he tells us does come under the scope of that Act? Otherwise we are placed 2040 in the situation that when, by way of Questions or in other ways, we raise issues as to monopoly practices and ask the President what action he is to take, his answer will be "I am not going to do anything because this Bill is going through the House". Then when we come to discuss the Bill and ask the President whether this or that practice comes within its scope he will say, "Oh, no. It is not in the scope of the Bill at all, and we will deal with it in some other way". That does not seem satisfactory, and I hope that the President will answer some of these questions.
§ Mr. P. Thorneycroft
I shall try to answer briefly and frankly the very proper questions addressed to me. First, where only one class is concerned in the mutual restrictions, it is registrable. If a group of producers came to an arrangement -and there was no reciprocal agreement between them and the suppliers that would not mean that the producers' ring would not be registrable.
Secondly, the right hon. Member for Battersea, North (Mr. Jay) was quite right; it is "some" and not "all". That is to say, there may be an arrangement in which not every person accepted the restriction, but if some did that would be a registrable arrangement.
Thirdly, it is vertical as well as horizontal, that is to say it could be on one side of the fence but it could also straddle the fence if necessary, and apply to producers, wholesalers and retailers.
I think that most of the questions have been directed in one form or another to the single firm which comes to an agreement with someone outside this country. I will say a word or two about that. I do not want that sort of agreement to be covered in the Bill. I think the important consideration about this Clause is that we should be clear as to what we mean. I did not mean such an agreement to be within the Bill. If two firms have come to a mutual arrangement in this country and strike a bargain overseas, they are within the scope of the Bill. Under the Amendment which we are moving later, if an association in this country comes to an agreement with parties overseas—which is the normal cartel system—that also will be registrable under the Bill. There was that flaw in the Bill at the moment, but it will be put right by a later Amendment.
2041 The Bill will not deal with single firms, for reasons which I thought were very pertinently argued by my hon. and learned Friend the Member for Bolton, East (Mr. Philip Bell) and my hon. Friend the Member for Scotstoun (Sir J. Hutchison), namely, that it is part of a very normal trading practice for individual traders in one country to enter into arrangements with firms abroad which are to some extent restrictive but which bring very valuable returns to this country in the form of "know-how" and many other arrangements.
The American practice was cited, but it is pertinent to observe that at this moment evidence is being given before a Senate committee in the United States showing the damage which she is suffering because these agreements have to be registered, or are subject to inquiry in America. We do not want to fall into the same error.
The other fact which interested me was that all the examples which were given seemed to refer to very large, single firms or groups. One was the British Match Corporation. If ever there was a case properly subject to treatment by the Monopolies Commission, it was surely that. I am not saying how adequate are the steps which can be taken when dealing with a monopoly—we have often argued that matter—but the Match Corporation was clearly a monopoly, and to the extent that its arrangements restricted supplies in the home market it was inquired into by the Monopolies Commission, and certain actions pertinent to the agreement which it had signed were taken, and it had to agree to alter the arrangements which it had made with the Swedish Match Corporation.
Another example—in this case not connected with external trade—was the
§ Imperial Tobacco Company. It is not for me to say whether the arrangements of individual companies are right or wrong, but vast, single firms—and all the illustrations were of that sort of firm—seem to me quite clearly to fall within the general provisions of the Monopolies Act, 1948, and therefore properly liable to be dealt with by that Act.
§ If we try so to draw the Clause that it includes these cases, in the process of doing so we shall bring in every ordinary, humble, sensible, day-to-day, commercial arrangement between a single firm and someone else which involves no mutual restriction whatever. I would advise the Committee, and in particular the hon. and learned Member for Leicester, North-East (Sir L. Ungoed-Thomas) to have confidence in the 1948 Act. It was a good one, and it has been extended by us. It may be that some cases will slip through the net both of this and the 1948 Measure, but my belief is that if the Bill deals with cases of mutual restrictions and we leave other big cases to be dealt with under the 1948 Act, we shall cover the vast majority of cases.
§ Mr. Wade
I appreciate the way in which the right hon. Gentleman has answered the questions which have been put to him, but my colleagues and I feel very uneasy about the wording of the Clause. In particular, we are uneasy about the way in which it may be interpreted by the courts. In those circumstances, whilst I appreciate the sincerity of the Minister, I do not feel justified in asking leave to withdraw the Amendment.
§ Question put, That "between persons" stand part of the Clause:—
§ The Committee divided: Ayes 208, Noes 174.2045
|Division No. 152.]||AYES||[7.14 p.m.|
|Agnew, Cmdr. P. G.||Bell, Ronald (Bucks, S.)||Cooper-Key, E. M.|
|Altken, W. T.||Bennett, F. M. (Torquay)||Cordeaux, Lt.-Col. J. K.|
|Alport, C. J. M.||Bennett, Dr. Reginald||Corfield, Capt. F. V.|
|Amory, Rt. Hn. Heathcoat (Tiverton)||Bidgood, J. C.||Crosthwaite-Eyre, Col. O. E.|
|Arbuthnot, John||Bishop, F. P.||Crowder, Sir John (Finchley)|
|Armstrong, C. W.||Bossom, Sir A. C.||Cunningham, Knox|
|Astor, Hon. J. J.||Boyle, Sir Edward||Curie, G. B. H.|
|Atkins, H. E.||Brooke, Rt. Hon. Henry||Dance, J. C. G.|
|Baldock, Lt.-Cmdr. J. M.||Brooman-White, R. C.||Deedes, W. F.|
|Baldwin, A. E.||Browne, J. Nixon (Craigton)||Doughty, C. J. A.|
|Balniel, Lord||Bryan, P.||du Cann, E. D. L.|
|Barber, Anthony||Buchan-Hepburn, Rt. Hon. P. G. T.||Duthie, W. S.|
|Barlow, Sir John||Burden, F. F. A.||Errington, Sir Eric|
|Baxter, Sir Beverley||Campbell, Sir David||Fell, A.|
|Beamish, Maj. Tufton||Channon, H.||Finlay, Graeme|
|Bell, Philip (Bolton, E.)||Cooper, Sqn. Ldr. Albert||Fisher, Nigel|
|Fleetwood-Hesketh, R. F.||Kimball, M.||Raikes, Sir Victor|
|Fletcher-Cooke, C.||Kirk, P. M.||Redmayne, M.|
|Fort, R.||Lagden, G. W.||Rees-Davies, W. R.|
|Foster, John||Lambert, Hon. G.||Ridsdale, J. E.|
|Fraser, Hon. Hugh (Stone)||Lancaster, Col. C. G.||Rippon, A. G. F.|
|Freeth, D. K.||Langford-Holt, J. A.||Roberts, Sir Peter (Healey)|
|Galbraith, Hon. T. G. D.||Leavey, J. A.||Rodgers, John (Sevenoaks)|
|Garner-Evans, E. H.||Leburn, W. G.||Roper, Sir Harold|
|George, J. C. (Pollok)||Legh, Hon. Peter (Petersfield)||Ropner, Col. Sir Leonard|
|Glover, D.||Lindsay, Martin (Solihull)||Schofield, Lt.-Col. W.|
|Godber, J. B.||Linstead, Sir H. N.||Sharples, R. C.|
|Gomme-Duncan, Col. Sir Alan||Lloyd, Maj. Sir Guy (Renfrew, E.)||Shepherd, William|
|Gower, H. R.||Lucas, Sir Jocelyn (Portsmouth, S.)||Simon, J. E. S. (Middlesbrough, W.)|
|Graham, Sir Fergus||Lucas-Tooth, Sir Hugh||Smithers, Peter (Winchester)|
|Grant, W. (Woodside)||McAdden, S. J.||Smyth, Brig. Sir John (Norwood)|
|Grant-Ferris, Wg. Cdr. R. (Nantwich)||Macdonald, Sir Peter||Spearman, A. C. M.|
|Green, A.||Mackeson, Brig. Sir Harry||Stanley, Capt. Hon. Richard|
|Grimston, Sir Robert (Westbury)||McKibbin, A. J.||Stevens, Geoffrey|
|Grosvenor, Lt.-Col. R. G.||Mackie, J. H. (Galloway)||Steward, Harold (Stockport, S.)|
|Gurden, Harold||McLaughlin, Mrs. P.||Steward, Sir William (Woolwich, W.)|
|Hall, John (Wycombe)||McLean, Neil (Inverness)||Stoddart-Scott, Col. M.|
|Harvey, Air Cdre. A. V. (Macclesfd)||Macpherson, Niall (Dumfries)||Studholme, H. C.|
|Harvey, Ian (Harrow, E.)||Maddan, Martin||Taylor, William (Bradford, N.)|
|Harvie-Watt, Sir George||Maitland, Cdr. J. F. W. (Horncastle)||Teeling, W.|
|Head, Rt. Hon. A. H.||Maitland, Hon. Patrick (Lanark)||Thomas, Leslie (Canterbury)|
|Heald, Rt. Hon. Sir Lionel||Markham, Major Sir Frank||Thomas, P. J. M. (Conway)|
|Heath, Rt. Hon. E. R. G.||Marlowe, A. A. H.||Thompson, Lt.-Cdr. R. (Croydon, S.)|
|Hill, Mrs. E. (Wythenshawe)||Marples, A. E.||Thorneycroft, Rt. Hon. P.|
|Hill, John (S. Norfolk)||Marshall, Douglas||Thornton-Kemsley, C. N.|
|Hirst, Geoffrey||Mathew, R.||Tilney, John (Wavertree)|
|Holland-Martin, C. J.||Maude, Angus||Touche, Sir Gordon|
|Horobin, Sir Ian||Mawby, R. L.||Vane, W. M. F.|
|Howard, Hon. Greville (St. Ives)||Monckton, Rt. Hon. Sir Walter||Vaughan-Morgan, J. K.|
|Howard, John (Test)||Moore, Sir Thomas||Vickers, Miss J. H.|
|Hudson, Sir Austin (Lewisham, N.)||Morrison, John (Salisbury)||Vosper, D. F.|
|Hudson, W. R. A. (Hull, N.)||Nabarro, G. D. N.||Wakefield, Sir Wavell (St. M'lebone)|
|Hughes, Hallett, Vice-Admiral J.||Nairn, D. L. S.||Walker-Smith, D. C.|
|Hughes-Young, M. H. C.||Nichols, Harmar||Wall, Major Patrick|
|Hutchison, Sir Ian Clark (E'b'gh, W.)||Nield, Basil (Chester)||Ward, Hon. George (Worcester)|
|Hyde, Montgomery||Noble, Comdr. A. H. P.||Ward, Dame Irene (Tynemouth)|
|Hylton-Foster, Sir H. B. H.||Nugent, G. R. H.||Waterhouse, Capt. Rt. Hon. C.|
|Iremonger, T. L.||O'Neill, Hn. Phelim (Co. Antrim, N.)||Watkinson, Rt. Hon. Harold|
|Irvine, Bryant Godman (Rye)||Ormsby-Gore, Hon. W. D.||Webbe, Sir H.|
|Jennings, J. C. (Burton)||Orr, Capt. L. P. S.||Whitelaw, W. S. I. (Penrith & Border)|
|Johnson, Dr. Donald (Carlisle)||Osborne, C.||Williams, R. Dudley (Exeter)|
|Johnson, Eric (Blackley)||Page, R. G.||Wills, G. (Bridgwater)|
|Johnson, Howard (Kemptown)||Pannell, N. A. (Kirkdale)||Wilson, Geoffrey (Truro)|
|Jones, Rt. Hon. Aubrey (Hall Green)||Partridge, E.||Wood, Hon. R.|
|Joseph, Sir Keith||Pickthorn, K. W. M.||Woollam, John Victor|
|Joynson-Hicks, Hon. Sir Lancelot||Pilkington, Capt. R. A.||Yates, William (The Wrekin)|
|Kaberry, D.||Pitt, Miss E. M.|
|Keegan, D.||Pott, H. P.||TELLERS FOR THE AYES:|
|Kerby, Capt. H. B.||Powell, J. Enoch||Mr. E. Wakefield and|
|Kerr, H. W.||Price, Henry (Lewisham, W.)||Colonel J. H. Harrison.|
|Kershaw, J. A.||Profumo, J. D.|
|Ainsley, J. W.||Clunie, J.||Forman, J. C.|
|Albu, A. H.||Coldrick, W.||Gaitskell, Rt. Hon. H. T. N.|
|Allaun, Frank (Salford, E.)||Collick, P. H. (Birkenhead)||Gibson, C. W.|
|Allen, Scholefield (Crewe)||Collins, V. J. (Shoreditch & Finsbury)||Gordon Walker, Rt. Hon. P. C.|
|Anderson, Frank||Corbet, Mrs. Freda||Grenfell, Rt. Hon. D. R.|
|Awbery, S. S.||Craddock, George (Bradford, S.)||Grey, C. F.|
|Bacon, Miss Alice||Cronin, J. D.||Griffiths, David (Rother Valley)|
|Baird, J.||Cullen, Mrs. A.||Griffiths, Rt. Hon. James (Llanelly)|
|Benson, G.||Darling, George (Hillsborough)||Griffiths, William (Exchange)|
|Beswick, F.||Davies, Rt. Hon. Clement (Montgomery)||Hale, Leslie|
|Bevan, Rt. Hon. A. (Ebbw Vale)||Davies, Harold (Leek)||Hall, Rt. Hn. Glenvil (Colne Valley)|
|Boardman, H.||Davies, Stephen (Merthyr)||Hamilton, W. W.|
|Bottomley, Rt. Hon. A. G.||Deer, G.||Hannan, W.|
|Bowden, H. W. (Leicester, S. W.)||de Freitas, Geoffrey||Harrison, J. (Nottingham, N.)|
|Bowen, E. R. (Cardigan)||Delargy, H. J.||Hastings, S.|
|Boyd, T. C.||Dodds, N. N.||Hayman, F. H.|
|Braddock, Mrs. Elizabeth||Donnelly, D. L.||Healey, Denis|
|Brockway, A. F.||Dugdale, Rt. Hn. John (W. Brmwch)||Henderson, Rt. Hn. A. (Rwly Regis)|
|Brown, Rt. Hon. George (Belper)||Dye, S.||Holmes, Horace|
|Burke, W. A.||Edwards, Robert (Bilston)||Houghton, Douglas|
|Burton, Miss F. E.||Evans, Albert (Islington, S. W.)||Howell, Charles (Perry Barr)|
|Butler, Herbert (Hackney, C.)||Evans, Edward (Lowestoft)||Hubbard, T. F.|
|Callaghan, L. J.||Fernyhough, E.||Hughes, Emrys (S. Ayrshire)|
|Carmichael, J.||Fienburgh, W.||Hughes, Hector (Aberdeen, N.)|
|Chapman, W. D.||Finch, H. J.||Hunter, A. E.|
|Chetwynd, G. R.||Fletcher, Eric||Irvine, A. J. (Edge Hill)|
|Irving, S. (Dartford)||Neal, Harold (Bolsover)||Sparks, J. A.|
|Isaacs, Rt. Hon. G. A.||Noel-Baker, Francis (Swindon)||Steele, T.|
|Jay, Rt. Hon. D. P. T.||Oliver, G. H.||Stewart, Michael (Fulham)|
|Jeger, Mrs. Lena (Holbn & St. Pncs, S.)||Oram, A. E.||Stones, W. (Consett)|
|Jones, Jack (Rotherham)||Orbach, M.||Strauss, Rt. Hon. George (Vauxhall)|
|Jones, J. Idwal (Wrexham)||Oswald, T.||Stross, Dr. Barnett (Stoke-on-Trent, C.)|
|Jones, T. W. (Merioneth)||Owen, W. J.||Summerskill, Rt. Hon. E.|
|Kenyon, C.||Paget, R. T.||Sylvester, G. O.|
|Key, Rt. Hon. C. W.||Paling, Rt. Hon. W. (Dearne Valley)||Taylor, Bernard (Mansfield)|
|King, Dr. H. M.||Palmer, A. M. F.||Thomas, George (Cardiff)|
|Lee, Frederick (Newton)||Parker, J.||Thomson, George (Dundee, E.)|
|Lee, Miss Jennie (Cannock)||Parkin, B. T.||Turner-Samuels, M.|
|Lever, Harold (Cheetham)||Paton, J.||Ungoed-Thomas, Sir Lynn|
|Lever, Leslie (Ardwick)||Peart, T. F.||Warbey, W. N.|
|Lindgren, G. S.||Price, J. T. (Westhoughton)||Weitzman, D.|
|Logan, D. G.||Price, Philips (Gloucestershire, W.)||Wells, Percy (Faversham)|
|Mabon, Dr. J. Dickson||Proctor, W. T.||Wells, William (Walsall, N.)|
|McGhee, H. G.||Pryde, D. J.||West, D. G.|
|McInnes, J.||Randall, H. E.||Wheeldon, W. E.|
|McKay, John (Wallsend)||Rankin, John||White, Mrs. Eirene (E. Flint)|
|McLeavy, Frank||Redhead, E. C.||White, Henry (Derbyshire, N. E.)|
|MacMillan, M. K. (Western Isles)||Reeves, J.||Wigg, George|
|MacPherson, Malcolm (Stirling)||Robens, Rt. Hon. A.||Wilkins, W. A.|
|Mahon, Simon||Roberts, Albert (Normanton)||Williams, David (Heath)|
|Mann, Mrs. Jean||Roberts, Goronwy (Caernarvon)||Williams, Rev. Llywelyn (Ab'tillery)|
|Mason, Roy||Ross, William||Williams, W. R. (Openshaw)|
|Mayhew, C. P.||Royle, C.||Willis, Eustace (Edinburgh, E.)|
|Mellish, R. J.||Shinwell, Rt. Hon. E.||Woof, R. E.|
|Messer, Sir F.||Short, E. W.||Yates, V. (Ladywood)|
|Mitchison, G. R.||Silverman, Julius (Aston)||Younger, Rt. Hon. K.|
|Moody, A. S.||Simmons, C. J. (Brierley Hill)|
|Mort, D. L.||Skeffington, A. M.||TELLERS FOR THE NOES:|
|Mulley, F. W.||Slater, J. (Sedgefield)||Mr. Holt and Mr. Wade.|
§ The Parliamentary Secretary to the Board of Trade (Mr. Derek Walker-Smith)
I beg to move, in page 4, line 22, to leave out "wholesale or retail".
This Amendment covers a drafting point. The intention of the Clause is to cover all classes of supply in the course of the distributive trades. The words "wholesale or retail" were included in the hope of showing that all forms of wholesale supply were to be included. Unfortunately, it appears, on further consideration, that "wholesale" may have a restricted meaning, and it might be argued that the intention was to exclude supply by a merchant, importer, factor or broker. Our intention will be better fulfilled by omitting the words.
§ Amendment agreed to.
§ Mr. Jay
I beg to move, in page 4. line 34, after "be", to insert "or not to be".
The Amendment introduces a literary note into our otherwise rather forensic discussion. The Parliamentary Secretary will have noticed that these words are taken from a speech which includes "the law's delay" among the worst of human ills as well as "The pangs of despriz'd love …" and "The insolence of office." It also speaks of:… enterprises of great pith and moment …2046 losing the name of action. That is appropriate to this discussion.
The purpose of the Amendment is to make sure that the Government are not inadvertently leaving out of the scope of registration under the Clause agreements not to produce any goods in addition to agreements to produce certain quantities. I do not think there is any doubt that such agreements exist. The Commission's Reports have described some of them. I believe there was one in the case of rainwater goods. One of my hon. Friends from Birmingham, with great skill and ingenuity, managed to describe a number on the last Amendment, which I thought dealt with quite separate points. The Amendment seems to us to be no more than common sense, and I trust that it will help the President to carry out the purpose of his Bill.
§ Mr. Walker-Smith
The right hon. Gentleman has referred to the literary nature of the Amendment. I have not looked up the speech in "Hamlet," but I think it is the same speech which refers to "the law's delay"—
§ Mr. Walker-Smith
That also seems apposite to our proceedings. I am grateful to the right hon. Gentleman for clarifying the Amendment, and I am happy to accept it.
§ Mr. William Hannan (Glasgow, Maryhill)
There is an Amendment in my name, in page 4, line 42, after "acquired," to insert:or not to be supplied or acquired.I shall be grateful if the Parliamentary Secretary can say whether he is accepting it. Its purpose is the same as the Amendment moved by my right hon. Friend the Member for Battersea, North (Mr. Jay). The Clause refers to:the persons or classes of persons to, for or from whom or the areas or places in or from which, goods are to be supplied or acquired. …I have a concrete example of how a firm, by restricting the class of people with whom it will deal, is creating great hardship and a great deal of resentment in the west of Scotland. I had better describe the circumstances so that the Committee may be in possession of the facts.
§ Sir L. Joynson-Hicks
On a point of order, Sir Charles. Have we passed the Amendment moved by the right hon. Member for Battersea, North (Mr. Jay)?
§ The Chairman
No, we have not. I should have mentioned that the Committee may discuss at the same time the Amendment in the name of the right hon. Gentleman the Member for Battersea, North (Mr. Jay), in page 4, line 36, and the two Amendments in the name of the hon. Member for Maryhill (Mr. Hannan), in line 42.
§ Mr. Hannan
I am sorry if the Committee was unaware of that. I presumed that it knew the position.
In the West of Scotland the British Carpet Federation, which has 90 per cent. of Britain's carpet makers within its organisation, brought pressure to bear on a Glasgow wholesaler to break his contract to supply rugs to the Western Regional Hospital Board. Earlier in the year the firm signed a contract to supply the Board with 1,000 rugs. Later it wrote to the Board saying:We must relinquish the contract. We did not know that it contravened our agreement with the British Carpet Federation.The managing director of the wholesaler was reported in the Press as saying:This is a delicate situation. Under our agreement with the Carpet Federation the Hospital Board is classed as a non-trader and cannot be supplied. The contract was accepted by an employee in error.2048 This Federation decides to whom the carpets can be sold, and the wholesalers who purchase from members must sign up. The Secretary of the Federation, speaking about this case, is reported in the same Press report as saying:I know about this case, which is very simple. The hospital board are regarded as non-traders.7.30 p.m.
The aim of my Amendments therefore is to make it quite clear that supplies are not only to be given to those who are indicated in the Clause, but that the freedom of others will not be restricted, so that they will not supply certain individuals or organisations simply because they are public bodies. In the public interest, it is really fundamental that we should make it quite clear that a public authority, such as a regional hospital board or any local authority, is entitled to the same conditions of wholesale buying as are private concerns.
I think that strong exception should be taken to the British Carpet Federation arrogating to itself the right to decide with whom it will trade and will not trade, to decide what in fact a trading department is or on its own to decide that a regional hospital board is not a trading organisation, thereby forcing it to go to retailers to purchase such a quantity of carpets. In other fields, the same conditions apply—in food, blankets and bedding—and a hospital board is entitled to go to wholesalers, get the best conditions possible and buy goods at the cheapest rates possible, in order to satisfy the taxpayers that it is looking after the finances allocated to the Health Service.
The Western Regional Hospital Board in Scotland controls a large number of hospitals there, and spends millions of pounds each year on wholesale purchases. I think it is difficult to conceive of anything more against the public interest than this action of the British Carpet Federation, and it is for these reasons that I am asking the Committee to accept these Amendments. They will prevent such action being taken against public boards, and will prevent discrimination against such bodies as against private buyers.
§ Mr. Walker-Smith
The Committee will not expect me to go into the details of individual cases. It is the intention of this Clause to include restrictive agreements not to supply as well as agreements 2049 to supply, and, therefore, here again, I accept the principle of the hon. Gentleman's Amendments. I think perhaps it would be more appropriate, both on these Amendments and the Amendments in the name of the right hon. Member for Battersea, North (Mr. Jay), if I confined my acceptance to acceptance of the principle which is enshrined in their Amendments, so that we may have a look at the wording and work out the best possible words between now and the Report stage.
§ Mr. Jay
Secondly, may I ask the hon. and learned Gentleman, in pursuance of the point made by my hon. Friend the Member for Maryhill (Mr. Hannan) whether the phrase—the persons or classes of persons to, for or from whom, or the areas or places in or from which, goods are to be supplied or acquired,includes public authorities, such as local authorities, hospital boards, and so forth?
§ Mr. Walker-Smith
Yes, I understand that the phrase would so include them. Though all questions of construction, of course, are for the courts, it is the intention that they should be covered.
§ Amendment, by leave, withdrawn.
§ Mr. Walker-Smith
I beg to move, in page 4, line 35, to leave out from "acquired" to the end of line 36.
Perhaps I may, at the same time, deal with the point covered in the Amendment to line 38, to insert "quantities or descriptions of".
These are drafting Amendments really designed to clarify paragraphs (c) and (d) of subsection (1) of Clause 5. In the present drafting, paragraph (c) refers to goods to be produced and also to processes to be applied. It will perhaps be clearer in the drafting of this Clause to 2050 confine paragraph (c) to quantities or descriptions of goods to be produced, supplied or acquired, and to leave any questions of processing to be dealt with in paragraph (d), where in any event it already occurs in the present drafting. The second Amendment fills a consequential gap which is created by the first Amendment.
§ Amendment agreed to.
§ Further Amendment made: In line 38, after "the", insert "quantities or descriptions of".—[Mr. Walker-Smith.]
§ Mr. E. Fletcher
I beg to move, in page 4, line 42, after "supplied", to insert "imported".
I am sure that my hon. and right hon. Friends are very pleased to find the Parliamentary Secretary to the Board of Trade in such an accommodating mood and willing to accept some of the Amendments which we have drafted with a view to improving the Bill and closing some of the loopholes in it. This Amendment is designed to further the same good cause. We are anxious to insert the word "imported" so as to make it quite plain that, among the agreements which call for registration, are any agreements among importers whereby they either impose or accept mutual restrictions in the matter of dividing up among themselves, either in areas or quantities, the goods imported for distribution in this country.
The object of the Amendment, as the Parliamentary Secretary will see, is to make sure that imported goods are covered, because we do not think they are sufficiently covered at present by the words in the Bill "supplied or acquired". We think that the addition of the word "imported" is particularly required, in view of the discussion which we had earlier on the point that, as the Bill now stands, it is limited to agreements between persons carrying on business in the United Kingdom. The President of the Board of Trade declined to accept an Amendment which would have brought in for registration agreements between a company carrying on business in the United Kingdom and a company carrying on business outside.
In view of the fact that that Amendment was resisted, it seems to me to be more necessary than ever to make it abundantly clear that registrable agreements under this Bill are not merely those 2051 limited to goods manufactured here and distributed here, but, also, that the Clause is wide enough to bring in agreements about imported goods, and, therefore, agreements between importers among themselves which contain objectionable restrictive Clauses. For these reasons, I hope that this Amendment also will be accepted.
§ Mr. Walker-Smith
I do not think that the fact that there may be an agreement between a single company carrying on business in the United Kingdom and a single company carrying on business outside the United Kingdom really affects the narrow point which is raised by this Amendment. I am advised that the word "imported"—the importation of goods—is, in fact, beyond a doubt included in the word "acquired"—as, indeed, one would think in the ordinary connotation of language. If that is so, the addition of this word could not serve any useful purpose, because the point which the hon. Gentleman has in mind is already fully met by the wording of the Clause.
I hope that, with that assurance, the hon. Member will not wish to press this Amendment, which in any event, as I apprehend, was intended only to seek clarification of what is already the effect of the Clause.
§ Sir L. Ungoed-Thomas
We do not really feel at all happy about this. I appreciate that the hon. and learned Gentleman has been advised to the effect which he has just mentioned, but, apart from the difficulty which my hon. Friend has mentioned, we have had on the discussion which arose before the last Division—and all through this Bill—references to supply and to acquisition; there are provisions about exporting and importing, and so on. There is, for instance, the Amendment in the name of the President of the Board of Trade in page 6, line 6, at the end to insert:(4) This Part of this Act does not apply to an agreement in the case of which all such restrictions as are described in subsection (1) of section five of this Act relate exclusively—It seems to me that all kinds of questions might arise on construction as to the precise meaning, the precise intention, in construing the words "supplied", "acquired", "imported", etc. Questions might arise as to whether or tot the words "supplied", and "acquired" covered the word "imported" or not. I should have been content with what the hon. and learned Gentleman said, but it is immaterial whether the supply or acquisition comes from abroad or at home—it is still acquired or supplied. When one comes to consider the terms of the Bill, I must say that it seems to me arguable that the two words could be construed in such a way as to exclude the word "import". It is for that reason that my hon. Friend put down the Amendment, and I hope that it will be accepted because, as I understand, there is nothing between us here as to the intention.
- (a) to the supply of goods by export from the United Kingdom;
- (b) to the production of goods, or the application of any process of manufacture to goods, outside the United Kingdom;
- (c) to the acquisition of goods to be delivered outside the United Kingdom and not imported into the United Kingdom for entry for home use; or
- (d) to the supply of goods to be delivered outside the United Kingdom otherwise than by export from the United Kingdom.
All that concerns us is to have the meaning completely clear, and I cannot see what the difficulty is in accepting the Amendment. One could say "supplied or acquired" and put in the words "or imported" in brackets—or do it in some such way. We have had difficulty and considerable doubt about this; so much so that we did not know whether we were coming here on a point of policy or a point of construction. We are relieved to hear that it is a point of construction and not of policy, but I do ask the Minister to give further consideration to this matter with a view to avoiding ambiguity.
§ 7.45 p.m.
§ Mr. Walker-Smith
As the hon. and learned Gentleman has said, we are dealing here only with a point of construction, and he agrees with me that, prima facie, the construction which I suggest is right. I do not think that we want to take up time on a point of construction. I will go this far with the hon. and learned Gentleman. I will certainly consider this point again between now and Report if the hon. Member for Islington, East (Mr. E. Fletcher) will withdraw his Amendment. If the 2053 point can be clarified without prejudicing the rest of the Bill it may be possible to include it. The hon. and learned Gentleman appreciates, of course, that the incorporation of unnecessary words in an Act of Parliament is sometimes fraught with danger.
§ Mr. E. Fletcher
I appreciate what the Parliamentary Secretary says, from which I gather that there is nothing here of policy; but when I heard the first part of his answer it seemed to me that there could not be any objection to this Amendment, even though the hon. and learned Gentleman might think it unnecessary. It seemed to us that the Amendment would clarify the position. I gather that he has undertaken to consider it and will accept it unless he finds an insuperable objection on drafting. I therefore beg to ask leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Captain L. P. S. Orr (Down, South)
I beg to move, in page 5, line 13, after "payments," to insert:(other than payments by way of subscription to any fund to be used exclusively for purposes of scientific or industrial research or towards the administrative expenses of a trade association)".
§ The Temporary Chairman (Major W. J. Anstruther-Gray)
I understand that it would be for the convenience of the Committee if, with this Amendment, we take the next one, which is in line 16.
§ Captain Orr
Yes, that is my understanding.
There is nothing in the least sinister behind the purpose of the two Amendments. Even my hon. and learned Friend the Parliamentary Secretary, with his zeal for seeking out Amendments designed to make holes in the Bill could find anything sinister here. The Amendment is not designed to defeat the purpose of the Clause or, indeed, the purpose of this particular paragraph.
As I understand, the purpose of paragraph (b) is designed to exclude from the operation of Part I of the Bill those devices which, under the guise or in the form of subscriptions are in essence part of restrictive quota agreements. I think the Committee will agree that the paragraph is exceedingly wide, and I notice that in the debate on an earlier Amendment my right hon. Friend the 2054 President of the Board of Trade said that it was important not to throw Clause 5 too wide open.
At the moment it would appear as if a whole variety of associations—and the rules of a whole variety of perfectly innocent, harmless and non-restrictive associations—would come under this paragraph. There are a great many associations whose funds for administrative expenses are normally based upon something other than a flat payment per individual member. In many trade associations it is the practice to say that the big fellow will pay more than the little fellow as his normal annual subscription. It would appear that where an association uses as the criterion for its scheme of annual subscription the output or turnover of goods that each member may have, that arrangement would constitute an agreement or arrangement under which the members accepted an obligation within the terms of the subsection to make payments calculated by reference to the quantity of goods produced or supplied. I cannot believe that it is really the intention of the Government, or indeed of the Committee, that rules of such an association should be caught up in this way.
It applies, also, in a case where a perfectly innocent association, not designed to attract resale price maintenance or anything of that sort, sets aside funds for certain purposes. It is a very important thing, and an admirable development in British industry, that more and more groups of individuals or companies should get together and put money aside to provide machinery for common industrial and scientific research and for the dissemination of that knowledge among their members.
It appears now that if an association whose rules were constituted in the way I have described set aside a portion of its funds for that purpose, those rules would be caught up and incur the penalties of Part I of the Bill. If an association—as many do—had a special levy on members for research funds and that levy were based on the quantity of goods produced or supplied, it would appear that such an arrangement under the rules of the association would constitutean agreement to make payments calculated by reference to the quantity of goods produced or supplied by him, or to which any process of manufacture is applied by him, shall be 2055 treated as a restriction in respect of the quantities of those goods to be produced or supplied.I cannot believe that it is the intention of the Government, or the desire of the Committee, that such rules should be treated and such associations caught up in that way. I hope, therefore, that my hon. and learned Friend will agree, first, that such bona fide associations should be excluded from the operation of this paragraph, and secondly, that this Amendment is drawn in such a way that it would exclude only those which we have in mind. If the Committee looks at the wording of the Amendment it will agree that it is very tightly drawn. I draw attention to the word "exclusively" in the wording. That is to exempt from the provisions of the paragraph only such associations as I have described, and not open the door to the exclusion from the operations of Part I of the sort of practice with which I think it is the intention of the paragraph to deal. I hope that my hon. and learned Friend may see his way to accept the Amendment.
§ Mr. Walker-Smith
The purpose of paragraph (b) of subsection (2) of Clause 5 is to provide for the case where a manufacturer is not restricted as to the quantity of goods he may manufacture, but is allocated a quota which he may only exceed on payment of a calculated sum into a pool which is divisible periodically among the parties to the agreement who fall short of their quota of production. It is right that that, which in essence is a restrictive practice, should be caught by the Bill, but, as my hon. and gallant Friend the Member for Down, South (Captain Orr) pointed out in his persuasive speech, the phraseology of this paragraph as drafted would catch in its net a great many arrangements which, in effect, are not restrictive practices. Of course, it is not our intention in this paragraph to catch the sort of provisions which are related to research and suchlike purposes which my hon. and gallant Friend specified.
As my hon. and gallant Friend indicated, the Amendment contains the word "exclusively." I am satisfied that the words used in the Amendment—the first of the two we are discussing—are apt for the purpose he has in mind and we are happy to accept that Amendment. I hope that on that basis the second 2056 Amendment will, therefore, be withdrawn.
§ Mr. Remnant
May I suggest to my hon. and learned Friend the Parliamentary Secretary, on the second Amendment, that one of our objectives is not to clutter up the Registrar or the Restrictive Practices Court with any arrangements which are not producing a restriction within the meaning of this Measure. It is quite a common custom among trade associations to base their subscriptions on output, whether they are based on bulk, or—as in the case of the brewers—per barrel, or by some similar form. That does not in any way create a restriction within the meaning of the Bill. Will my hon. and learned Friend be good enough to explain why he cannot accept the second Amendment as well as the first Amendment, as it would seem to be a means of saving quite unnecessary work to be done by the Court?
§ Mr. Walker-Smith
In reply to the query of my hon. Friend the Member for Wokingham (Mr. Remnant) the sort of subscription he has in mind is a subscription towards the administrative expenses of a trade association. That comes within the wording of the Amendment which has been moved by my hon. and gallant Friend the Member for Down, South (Captain Orr). What is not so clear is that the other matters spelt out in the Amendment in the name of my hon. and gallant Friend would necessarily come within the second Amendment in the name of my hon. Friend the Member for Scotstoun (Sir J. Hutchison), and also in the name of my hon. Friend the Member for Wokingham.
I think that my hon. Friend the Member for Wokingham can be assured that the purpose and principle underlying those Amendments is the same, but it is, in fact, better and more comprehensively albeit more definitively—provided for by the Amendment moved by my hon. and gallant Friend. I hope that in those circumstances the second Amendment will be withdrawn.
§ Mr. Jay
In spite of what the Parliamentary Secretary has said, we on this side of the Committee are not happy about either of these Amendments. It seems to us that the Bill contains quite enough loopholes and excuses for delay already. It is our business at this stage 2057 of the Bill, among other tasks, to protect the President of the Board of Trade from the blandishments of some of his hon. Friends who are seeking to weaken the effect of the Bill.
I agree with the hon. and gallant Member for Down, South (Captain Orr) that no doubt there are many innocent arrangements made for research and other practices which, as the Bill stands, would be caught by this provision. On the other hand, there may be other arrangements which, in that sense, are not innocent and which might have restrictive effects. I agree with the hon. and gallant Member, of course, that some of the innocent arrangements would be caught and have to be terminated or altered if the Bill goes through as it is; but I should have thought that, rather than leave a possible loophole for restrictive agreements to get through, we should be prepared to cause a little inconvenience to existing arrangements which, originally, had no restrictive purpose.
I should have thought it would be possible for an arrangement originally designed for the purpose of research based on the production of a firm to be altered and in future calculated on some other basis. If the difficulty were that it was desired to make a distinction between big and small firms I should think it would be possible for it to be based on profits or nominal capital rather than on production, which might have another consequence.
The hon. and gallant Gentleman said that all this would be safeguarded by the use of the word "exclusively", which I realise he put in for that purpose. I do not feel wholly convinced about that. The words are:… to be used exclusively for purposes of …It may be that some arrangement which has one purpose might have other effects. Therefore, I do not think that that wholly meets the point. In addition, he asks us to let through not merely arrangements for purposes of scientific or industrial research, but also for subscriptions towards the administrative expenses of trade associations.
If the Parliamentary Secretary accepts the Amendment he might inadvertently open a loophole, whereas if we retain the paragraph as drafted, though it might 2058 cause some temporary inconvenience to some people, it would be a stronger and more effective Measure.
§ 8.0 p.m.
§ Sir Harold Webbe (Cities of London and Westminster)
I hope that the Committee will accept the Amendment. I cannot understand what the right hon. Member for Battersea, North (Mr. Jay) has in mind. Clearly, he knows very little about trade associations. His suggestions of alternative methods of assessing subscriptions to the associations seem to indicate that he is not very clear about company structure either. To suggest that the issued capital of a company is necessarily an indication of its size and importance shows a lamentable ignorance which leads to so much nonsense being talked about bonus shares and things of that kind.
If the right hon. Gentleman knows of any conceivable case in which the operation of the Amendment could introduce any kind of objectionable restriction of trade, he should give the Committee the benefit of his experience. Personally, though I have had a fairly long and varied experience of trade associations in many respects, I cannot conceive it possible.
§ Mr. E. Fletcher
I doubt whether the hon. and gallant Member for Down, South (Captain Orr) is really alive to the possible consequences of the Amendment if it is carried, and I hope that it will not be. It is a little alarming to find that the President of the Board of Trade seems a little readier to accept Amendments designed to liberate people from obligations under the Bill than to close the net more tightly and to bring them in. I do not want to throw any doubt upon the intentions of the hon. and gallant Member, but I must say that I am becoming a little nervous about the way in which the Government are encouraging industry to adopt responsibility for matters of scientific research which ought to be the responsibility of the Government.
§ Mr. E. Fletcher
The hon. Member is tempting me. The hon. Member, who has had a long experience on the London County Council, is perfectly familiar with the intentions of the Government about technological education. He knows that 2059 there is to be a great debate between both sides of the House about whether the universities should be in charge or whether it should be left to a great many private firms and local government organisations to sponsor development in technological education.
This raises an important question of principle. We do not want to find that, under cover of promoting scientific research, trade associations are entering into agreements which otherwise would be registrable. We feel that the whole principle of the Bill is that if there is any doubt at all whether or not an agreement should be registered, it is better that it should be registered so that the public may see what it contains, so that it may be brought into the daylight. If it is then found that the agreement is completely innocuous, there are plenty of provisions which ensure that no further steps will be taken.
One of the primary objects of the Bill—and the President of the Board of Trade has acknowledged this—is to secure for the public the widest possible conditions of publicity about any agreements—whether they are desirable, undesirable or doubtful. We feel that if there is any doubt at all it is much better to let the agreement be registered and not to give a sort of blanket exemption to agreements merely because somebody puts down an Amendment which, however laudable in intention, may exclude from registration something which the public ought to see. Therefore, I support my right hon. Friend, and I hope that the Amendment will not be accepted.
§ Mr. Cronin
In company with my hon. Friends, I feel very disturbed about the nature of the two Amendments which we are discussing, and particularly about the first one. I have the greatest sympathy with the desire of the hon. and gallant Member for Down, South (Captain Orr) to do his utmost to encourage scientific and industrial research. Obviously that is a most laudable intention which must have first priority, but it is more important that the Bill should be devoid of all the loopholes through which an escape can be made. All of us know that firms concerned can, by paying suitable fees, get legal advice of the most superior and minute nature to enable them to 2060 take advantage of even the smallest loophole; but the loophole here is a very large one. It is wide open.
§ Mr. Cronin
The Amendment refers to "scientific or industrial research". What is scientific research? There are multitudinous activities which could be included under that heading, and the same applies to industrial research and the administrative expenses of a trade association. The latter is a wide and all-embracing phrase. The Amendment would make a very wide breach in the Bill which an army of restrictionists could pass through with the greatest ease.
The hon. and gallant Gentleman said that the Amendment was drawn very tightly, but the word "scientific" covers almost every form of exact knowledge.
§ Mr. Cronin
And inexact knowledge, also.
By the very nature of those words, the Amendment must leave a very large breach in the Bill. Another unfortunate aspect of the Amendment is that there is no restriction of amount on the payments. All of us who belong to associations of any kind know that we do not welcome paying subscriptions. Nobody likes paying money if he can avoid it, but if there is no restriction on the amount paid this can be a completely penal restriction—
§ Mr. Cronin
It might be impossible to do so. To resign might prejudice a firm's activities. It might be essential to the continuance of the work which the firm was doing. This is a very dubious proposition, and I hope that the Parliamentary Secretary will reconsider his intention to accept the Amendment.
§ Mr. Philip Bell
I can hardly believe that hon. Members opposite are being serious. Are they really so mean, so jealous, so envious and so bitter as to think that if anything is put in a Statute to enable a business firm to make a subscription it must be cheating? Are they saying, "We are the only honourable people"? Are they saying that trade 2061 unions always pay subscriptions honestly, but that if an unhappy manufacturer pays his subscription to an industrial and scientific organisation which can have nothing whatever to do with restrictive practices, they not merely want to discourage him but, in fact, do not believe him? Let us have no more of this childishness.
§ Mr. Cronin
There is no objection to paying a subscription, but the objection is to paying subscriptions based on quantities produced and supplied. It is a very simple matter to vary the basis on which the subscriptions are paid.
§ Sir J. Barlow
We have wandered quite a long way from the purpose of the Bill, which is to deal with restrictive trade practices. It seems that we are straying into restricting scientific and industrial research, which is the last thing the country wants to happen at present. Some hon. Members seem to read into subscriptions for industrial research something which can be very bad for industry. Surely they are trying to look for something which does not exist at all.
We wish to encourage scientific and industrial research in every way, and in many cases it can be done far better by associations of private enterprise than by other authorities. I hope that the Minister will accept the Amendment, because it is a very genuine request on the part of industry and it is most important that this valuable work should continue.
§ Mr. Arthur Holt (Bolton, West)
Would the hon. Member tell me the names of some of these associations whose subscriptions are based on quantities? I have been trying to think of some. Subscriptions to organisations like the Shirley Institute are based not on quantity production, but on the number of spindles and the like. If there are organisations which base subscription on production the hon. Member might let us know of them.
§ Mr. R. Gresham Cooke (Twickenham)
I might answer that question. When the Labour Government came to power they approached a great many industries and encouraged them to set up research and trade associations, because they wanted to negotiate with industry and knew that they could not do so if there was no trade association. Many such trade associations and research associations were set 2062 up, in food manufacture and other industries. I was intimately connected with the formation or extension of a research association in the motor industry at that time.
One is faced with the problem that one has small firms with a turnover of perhaps £10,000 or £20,000 a year and enormous firms with a turnover of £20 million or £30 million a year. They cannot be asked to pay the same subscription of £5 each, because, obviously, the bigger firm will make greater calls on a research or trade association than the smaller one. The normal practice, therefore, has been adopted in a great many industries that the subscription is based on output, with perhaps a minimum subscription of £5 which might run into many hundreds or even many thousands of pounds for the bigger firms. The Amendment, therefore, seems very innocuous and fully in accord with normal practice.
§ Mr. Gresham Cooke
They are not jealous of revealing it at all. It is quite normal practice in the motor industry and many other industries. Where there may be some jealousy, the difficulty is overcome by supplying the figures of turnover in confidence to a firm of chartered accountants, which sends a note to the trade association to say, "We assess Messrs. X.Y.Z. at a certain subscription." In fact, however, in these modern days there is no difficulty about assessing the turnover of a firm, because in most balance sheets and annual accounts and reports the figures are fully disclosed.
§ 8.15 p.m.
§ Mr. Walker-Smith
I have listened with attention to the criticism put forward by hon. Members and right hon. Members opposite, but I say with respect that they are indulging in some wild imaginings and are seeing a possible sinister import in the Amendment which, in the terms in which it is couched, it is incapable of bearing. Surely no hon. Member would take exception to this as a method of making payment for subscriptions so long as it is not united to a restrictive practice.
2063 It is certainly not an unusual method of making a subscription and it is similar in another sphere to what is done in professional bodies. In the Bar Council there is a rate of subscription for Queen's Counsel, another rate for junior counsel of over ten years and yet another for junior counsel of under ten years. That is the professional equivalent of what is done in this case and, for all I know, it may be the same with the British Medical Association, to which the hon. Member for Loughborough (Mr. Cronin) presumably pays subscriptions. There is no possibility of there being a restrictive practice united with these payments of subscriptions.
The right hon. Member for Battersea, North (Mr. Jay) will appreciate that in reading the Amendment I was careful to scrutinise the words to see whether or not that danger existed. I am satisfied that the Amendment, in the terms proposed, is sufficiently clearly defined in character to exclude the sinister possibilities which the right hon. Gentleman, without giving any particular instance, put forward to the Committee.
I suggest to the hon. and right hon. Members opposite that it would be wrong merely on the very broadest grounds of suspicion to include on the register many agreements which have nothing to do with restrictive practices and to expose these perfectly respectable bodies and arrangements to these difficulties and inhibitions unnecessarily in that way.
If the Registrar has any reason at all to suppose that there is anything cloaked behind these arrangements so as to make them, in effect, restrictive arrangements, Clause 11 (1) gives the procedure in that case. Afterwards, if the question is in doubt, under Clause 10 (2) it can be adjudicated on by the High Court. I ask the Committee, therefore, to believe that there is no substance in these gloomy prognostications. I hope that the Committee will accept the Amendment, which I am satisfied is in proper terms and makes a useful, constructive contribution to the Bill.
§ Mr. Roy Jenkins (Birmingham, Stechford)
I think that to some extent there has been a misunderstanding of the exact point of view which occasions our doubts on this issue. If we were seriously saying that all trade association funds, 2064 particularly those for scientific and industrial research, were undesirable, there might be some basis for the very severe strictures which some hon. Members opposite have found it necessary to address to this side of the Committee. But we are not saying anything of the kind.
§ Mr. Jenkins
What we are saying is not necessarily that we believe that to be so in all cases, but that we may be suspicious that in some cases such a device could be used as a possible means of enforcing a restrictive practice by the back door. This is a Bill which, by its very nature, is suspect. The President must recognise that. We all have to recognise it.
§ Mr. Jenkins
It is no use the hon. Gentleman saying "Shame". This is a Bill which starts from the assumption that there are many things wrong in British industry which we want to put right. It is no use trying to take the view that everything is right in British industry, because if that were the case we would not have this long and complicated Bill, which is taking up so much of the time of the House. Therefore we are suspicious of the approach of this Bill.
I do not think that anyone is arguing that it is unreasonable that there should be different subscriptions to a trade association for a firm with a small production of say £10,000 and £20,000 a year and for a giant firm in the industry. I thought, therefore, that the point of the Parliamentary Secretary about the method of subscription which was the practice of the Bar was beside the point. What I am worried about, in so far as I have a corner of suspicion in my mind about the position, is not about a system by which, as the result of agreement, firm A, which is a small firm, shall pay five guineas a year and firm B, which is a large one, shall pay 100 guineas. What I am worried about is a system by which there is a sliding scale of subscriptions for different firms, so that firm A, if it puts up its production, automatically goes up in the scale and firm B automatically 2065 goes down—in other words, where there is a sliding scale directly related to the amount of production in a given period.
We are suspicious of this not because we are against scientific or industrial research or a trade subscription, but because it could come near to a system of fines for excess production if certain people desired so to operate it. That, after all, is a well-known restrictive practice with which we have all been familiar.
Visualise, for instance, a set-up which had a high ratio of subscription to increase in output. It might be called a fund for industrial or scientific research. It might be called a fund for administrative expenses—certainly all sorts of things could be done under the head of administrative expenses. It could be made very unpleasant for a firm which, in a certain period, exceeded its quota of output. That seems to me to be the danger—I admit of a contingent nature, not a certain one—against which we have to be on our guard in accepting this Amendment.
I do not know whether the right hon. Gentleman, if he wishes to accept the Amendment, would agree to look at the wording to see if we are guarded against this danger of an automatic system of fines by which subscriptions float up or down on a quota basis according to production—
§ suggested by the hon. Gentleman would have no members, and would cease to exist.
§ Mr. Jenkins
I do not think that the hon. Member for the Cities of London and Westminster (Sir H. Webbe) is correct. There are many restrictive associations which apply effectively a very severe system. The hon. Member for Islington, East (Mr. E. Fletcher) told us earlier about the position in the match industry.
Clearly it is not impossible, in the light of the history of restrictive practices in this and other countries, to hold people together in an association of some kind or another under a system of extremely heavy fines. To take the view that if we set up a system by which somebody by exceeding his quota output rendered himself liable to paying sums of money—whether in the form of fines or in some other form—it would be such a serious inconvenience to that association that it would automatically fall apart, is merely to ignore a great part of the history of restrictive practices in this and other countries.
There might therefore be a point of danger here. What we do not like about it is the automatic sliding scale. I do not think that anyone is trying to object to a system by which there are funds of this kind, subscribed to in differing amounts, but the automatic sliding scale gets very near to the position in which there is a system of fines for output.
§ Question put, That those words be there inserted:—
§ The Committee divided: Ayes 218, Noes 167.2069
|Division No. 153.]||AYES||[8.26 p.m.|
|Agnew, Cmdr. P. C.||Bossom, Sir A. C.||Deedes, W. F.|
|Aitken, W. T.||Bowen, E. R. (Cardigan)||Doughty, C. J. A.|
|Alport, C. J. M.||Braine, B. R.||du Cann, E. D. L.|
|Amory, Rt. Hn. Heathcoat (Tiverton)||Brooke, Rt. Hon. Henry||Duthie, W. S.|
|Arbuthnot, John||Browne, J. Nixon (Craigton)||Errington, Sir Eric|
|Armstrong, C. W.||Bryan, P.||Farey-Jones, F. W.|
|Ashton, H.||Buchan-Hepburn, Rt. Hon. P. G. T.||Fell, A.|
|Astor, Hon. J. J.||Butler, Rt. Hn. R. A. (Saffron Walden)||Finlay, Graeme|
|Atkins, H. E.||Campbell, Sir David||Fisher, Nigel|
|Baldook, Lt.-Cmdr. J. M.||Channon, H.||Fleetwood-Hesketh, R. F.|
|Baldwin, A. E.||Clarke, Brig. Terence (Portsmth, W.)||Fletcher-Cooke, C.|
|Balniel, Lord||Cooper-Key, E. M.||Fort, R.|
|Barber, Anthony||Cordeaux, Lt.-Col. J. K.||Foster, John|
|Barlow, Sir John||Corfield, Capt. F. V.||Fraser, Hon. Hugh (Stone)|
|Barter, John||Crosthwaite-Eyre, Col. O. E.||Freeth, D. K.|
|Baxter, Sir Beverley||Crouch, R. F.||Galbraith, Hon. T. G. D.|
|Bell, Philip (Bolton, E.)||Crowder, Sir John (Finchley)||Garner-Evans, E. H.|
|Bell, Ronald (Bucks, S.)||Cunningham, Knox||George, J. C. (Pollok)|
|Bennett, F. M. (Torquay)||Currie, G. B. H.||Glover, D.|
|Bennett, Dr. Reginald||Dance, J. C. G.||Godber, J. B.|
|Bidgood, J. C.||Davies, Rt. Hon. Clement (Montgomery)||Gomme-Duncan, Col. Sir Alan|
|Bishop, F. P.||D'Avigdor-Goldsmid, Sir Henry||Gower, H. R.|
|Graham, Sir Fergus||Legh, Hon. Peter (Petersfield)||Rodgers, John (Sevenoaks)|
|Grant, W. (Woodside)||Lennox-Boyd, Rt. Hon. A. T.||Roper, Sir Harold|
|Grant-Ferris, Wg Cdr. R. (Nantwich)||Lindsay, Martin (Solihull)||Ropner, Col. Sir Leonard|
|Green, A.||Linstead, Sir H. N.||Russell, R. S.|
|Gresham Cooke, R.||Lloyd, Maj. Sir Guy (Renfrew, E.)||Schofield, Lt.-Col. W.|
|Grimston, Sir Robert (Westbury)||Longden, Gilbert||Sharples, R. C.|
|Grosvenor, Lt.-Col. R. G.||Lucas, Sir Jocelyn (Portsmouth, S.)||Shepherd, William|
|Gurden, Harold||Macdonald, Sir Peter||Simon, J. E. S. (Middlesbrough, W.)|
|Hall, John (Wycombe)||Mackeson, Brig. Sir Harry||Smithers, Peter (Winchester)|
|Harris, Reader (Heston)||McKibbin, A. J.||Smyth, Brig. Sir John (Norwood)|
|Harvey, Air Cdre. A. V. (Macclesfd)||Mackie, J. H. (Galloway)||Spearman, A. C. M.|
|Harvey, Ian (Harrow, E.)||McLaughlin, Mrs. P.||Speir, R. M.|
|Harvie-Watt, Sir George||McLean, Neil (Inverness)||Stanley, Capt. Hon. Richard|
|Heald, Rt. Hon. Sir Lionel||Macpherson, Niall (Dumfries)||Stevens, Geoffrey|
|Heath, Rt. Hon. E. R. G.||Maddan, Martin||Steward, Harold (Stockport, S.)|
|Hill, Mrs. E. (Wythenshawe)||Maitland, Cdr. J. F. W. (Horncastle)||Steward, Sir William (Woolwich, W.)|
|Hill, John (S. Norfolk)||Maitland, Hon. Patrick (Lanark)||Stoddart-Scott, Col. M.|
|Hirst, Geoffrey||Markham, Major Sir Frank||Studholme, H. G.|
|Holland-Martin, C. J.||Marlowe, A. A. H.||Taylor, William (Bradford, N.)|
|Holt, A. F.||Marples, A. E.||Teeling, W.|
|Hornsby-Smith, Miss M. P.||Marshall, Douglas||Thomas, Leslie (Canterbury)|
|Horobin, Sir Ian||Mathew, R.||Thomas, P. J. M. (Conway)|
|Howard, Hon. Greville (St. Ives)||Maude, Angus||Thompson, Kenneth (Walton)|
|Howard, John (Test)||Mawby, R. L.||Thompson, Lt.-Cdr. R. (Croydon, S.)|
|Hudson, Sir Austin (Lewisham, N.)||Monckton, Rt. Hon. Sir Walter||Thorneycroft, Rt. Hon. P.|
|Hudson, W. R. A. (Hull, N.)||Nabarro, G. D. N.||Thornton-Kemsley, C. N.|
|Hughes Hallett, Vice-Admiral J.||Nairn, D. L. S.||Tilney, John (Wavertree)|
|Hutchison, Sir Ian Clark (E'b'gh, W.)||Neave, Airey||Touche, Sir Gordon|
|Hyde, Montgomery||Nicholls, Harmar||Vane, W. M. F.|
|Hylton-Foster, Sir H. B. H.||Nield, Basil (Chester)||Vaughan-Morgan, J. K.|
|Iremonger, T. L.||Noble, Comdr. A. H. P.||Vickers, Miss J. H.|
|Irvine, Bryant Godman (Rye)||Nugent, G. R. H.||Vosper, D. F.|
|Jenkins, Robert (Dulwich)||O'Neill, Hn. Phelim (Co. Antrim, N.)||Wade, D. W.|
|Jennings, J. C. (Burton)||Ormsby-Gore, Hon. W. D.||Wakefield, Edward (Derbyshire, W.)|
|Johnson, Dr. Donald (Carlisle)||Orr, Capt. L. P. S.||Wakefield, Sir Wavell (St. M'lebone)|
|Johnson, Eric (Blackley)||Osborne, C.||Walker-Smith, D. C.|
|Johnson, Howard (Kernptown)||Page, R. G.||Wall, Major Patrick|
|Jones, Rt. Hon. Aubrey (Hall Green)||Pannell, N. A. (Kirkdale)||Ward, Dame Irene (Tynemouth)|
|Joseph, Sir Keith||Partridge, E.||Waterhouse, Capt. Rt. Hon. C.|
|Johnson-Hicks, Hon. Sir Lancelot||Pickthorn, K. W. M.||Watkinson, Rt. Hon. Harold|
|Kaberry, D.||Pilkington, Capt. R. A.||Webbe, Sir H.|
|Keegan, D.||Pitt, Miss E. M.||Whitelaw, W. S. I. (Penrith & Border)|
|Kerby, Capt. H. B.||Pott, H. P.||Williams, R. Dudley (Exeter)|
|Kerr, H. W.||Raikes, Sir Victor||Wills, G. (Bridgwater)|
|Kershaw, J. A.||Redmayne, M.||Wilson, Geoffrey (Truro)|
|Kimball, M.||Remnant, Hon. P.||Wood, Hon. R.|
|Kirk, P. M.||Ridsdale, J. E.||Woollam, John Victor|
|Lagden, G. W.||Rippon, A. G. F.||Yates, William (The Wrekin)|
|Lambert, Hon. G.||Roberts, Sir Peter (Heeley)|
|Lancaster, Col. C. G.||Robertson, Sir David||TELLERS FOR THE AYES:|
|Leavey, J. A.||Robinson, Sir Roland (Blackpool, S.)||Colonel J. H. Harrison and|
|Leburn, W. G.||Robson-Brown, W.||Mr. Hughes-Young.|
|Ainsley, J. W.||Collins, V. J. (Shoreditch & Finsbury)||Hall, Rt. Hn. Glenvil (Colne Valley)|
|Albu, A. H.||Corbet, Mrs. Freda||Hamilton, W. W.|
|Allaun, Frank (Salford, E.)||Craddock, George (Bradford, S.)||Hannan, W.|
|Allen, Arthur (Bosworth)||Cronin, J. D.||Harrison, J. (Nottingham, N.)|
|Anderson, Frank||Cullen, Mrs. A.||Hastings, S.|
|Awbery, S. S.||Darling, George (Hillsborough)||Hayman, F. H.|
|Bacon, Miss Alice||Davies, Harold (Leek)||Healey, Denis|
|Benson, G.||Davies, Stephen (Merthyr)||Henderson, Rt. Hn. A. (Rwly Regis)|
|Bevan, Rt. Hon. A. (Ebbw Vale)||Deer, G.||Houghton, Douglas|
|Blackburn, F.||Delargy, H. J.||Howell, Charles (Perry Barr)|
|Blyton, W. R.||Dodds, N. N.||Hubbard, T. F.|
|Boardman, H.||Donnelly, D. L.||Hughes, Emrys (S. Ayrshire)|
|Bowden, H. W. (Leicester, S. W.)||Dugdale, Rt. Hn. John (W. Brmwch)||Hughes, Hector (Aberdeen, N.)|
|Boyd, T. C.||Dye, S.||Hunter A. E.|
|Braddock, Mrs. Elizabeth||Edwards, Robert (Bilston)||Irvine, A. J. (Edge Hill)|
|Brockway, A. F.||Evans, Albert (Islington, S. W.)||Irving, S. (Dartford)|
|Brown, Rt. Hon. George (Belper)||Evans, Edward (Lowestoft)||Isaacs, Rt. Hon. G. A.|
|Burke, W. A.||Fernyhough, E.||Jay, Rt. Hon. D. P. T.|
|Burton, Miss F. E.||Fienburgh, W.||Jager, Mrs. Lena (Holbn & St. Pncs, S.)|
|Butler, Herbert (Hackney, C.)||Finch, H. J.||Jenkins, Roy (Stechford)|
|Butler, Mrs. Joyce (Wood Green)||Fletcher, Eric||Johnson, James (Rugby)|
|Callaghan, L. J.||Gaitskell, Rt. Hon. H. T. N.||Jones, Rt. Hon. A. Creech (Wakefield)|
|Carmichael, J.||Gibson, C. W.||Jones, Jack (Rotherham)|
|Champion, A. J.||Grenfell, Rt. Hon. D. R.||Jones, J. Idwal (Wrexham)|
|Chapman, W. D.||Grey, C. F.||Jones, T. W. (Merioneth)|
|Chetwynd, G. R.||Griffiths, David (Rother Valley)||Kenyon, C.|
|Clunie, J.||Griffiths, Rt. Hon. James (Llanelly)||Key, Rt. Hon. C. W.|
|Coldrick, W.||Griffiths, William (Exchange)||King, Dr. H. M.|
|Collick, P. H. (Birkenhead)||Hale, Leslie||Lee, Frederick (Newton)|
|Lee, Miss Jennie (Cannock)||Paling, Rt. Hon. W. (Dearne Valley)||Stones, W. (Consett)|
|Lever, Leslie (Ardwick)||Palmer, A. M. F.||Strauss, Rt. Hon. George (Vauxhall)|
|Lindgren, G. S.||Parker, J.||Sylvester, G. O.|
|Logan, D. G.||Parkin, B. T.||Taylor, Bernard (Mansfield)|
|Mahon, Dr. J. Dickson||Paton, J.||Thomas, George (Cardiff)|
|McGhee, H. G.||Peart, T. F.||Thomson, George (Dundee, E.)|
|McInnes, J.||Price, J. T. (Westhoughton)||Turner-Samuels, M.|
|McKay, John (Wallsend)||Price, Philips (Gloucestershire, W.)||Ungoed-Thomas, Sir Lynn|
|McLeavy, Frank||Proctor, W. T.||Warbey, W. N.|
|MacMillan, M. K. (Western Isles)||Pryde, D. J.||Weitzman, D.|
|MacPherson, Malcolm (Stirling)||Randall, H. E.||Wells, Percy (Faversham)|
|Mahon, Simon||Rankin, John||Wells, William (Walsall, N.)|
|Mason, Roy||Redhead, E. C.||West, D. G.|
|Mayhew, C. P.||Reeves, J.||Wheeldon, W. E.|
|Mellish, R. J.||Roberts, Albert (Normanton)||White, Mrs. Eirene (E. Flint)|
|Messer, Sir F.||Roberts, Goronwy (Caernarvon)||White, Henry (Derbyshire, N. E.)|
|Mitchison, G. R.||Ross, William||Wigg, George|
|Moody, A. S.||Royle, C.||Williams, David (heath)|
|Mort, D. L.||Shinwell, Rt. Hon. E.||Williams, Rev. Llywelyn (Ab'lillery)|
|Mulley, F. W.||Short, E. W.||Williams, W. R. (Openshaw)|
|Neal, Harold (Bolsover)||Silverman, Julius (Aston)||Willis, Eustace (Edinburgh, E.)|
|Noel-Baker, Francis (Swindon)||Simmons, C. J. (Brierley Hill)||Woof, R. E.|
|Oliver, G. H.||Skeffington, A. M.||Yates, V. (Ladywood)|
|Oram, A. E.||Slater, J. (Sedgefield)||Younger, Rt. Hon. K.|
|Orbach, M.||Sorensen, R. W.|
|Oswald, T.||Sparks, J. A.||TELLERS FOR THE NOES:|
|Owen, W. J.||Steele, T.||Mr. Wilkins and Mr. Holmes.|
|Paget, R. T.||Stewart, Michael (Fulham)|
§ Mr. P. Thorneycroft
I beg to move, in page 5, line 20, to leave out from "made" to "as" in line 22 and to insert:by a trade association the members of which consist of or include persons carrying on business as mentioned in subsection (1) of this section or representatives of such persons".It might be convenient if, with this Amendment, we took those in page 5, line 26, line 28, and line 33, as they really go together.
§ The Deputy-Chairman
The Amendment in line 36, at the end to add:(5) In this section "trade association" means a body of persons (whether incorporated or not) which is formed for the purpose of furthering the trade interests of its members, or of persons represented by its members.might be taken with them as well.
§ Sir L. Ungoed-Thomas
I think we should deal with the Amendment in page 5, line 36, at the same time, because what is proposed in the Amendment in page 5, line 28, is to insert "a trade association" and we can only see what the right hon. Gentleman is up to—and I am using that expression in no offensive sense—if we know what the definition of "trade association" is. That involves an alteration of meaning and is not purely a drafting Amendment and it might, therefore, be convenient to take the Amendment in page 5, line 36, at the same time.
§ Mr. Thorneycroft
The object of the Amendment which I have moved can be shortly and simply stated. It is to ensure that persons who are carrying on business and entering into restrictive arrangements cannot evade the provisions of Clause 5 by operating through a trade association. That is the simple object of the whole operation.
However, as drafted, the Clause does not do that wholly effectively and it is defective in two ways which the Amendment will cure. The first thing which it would not do is to include an agreement by a trade association in the United Kingdom with traders or associations not carrying on business in the United Kingdom. That was the point I mentioned in an earlier discussion. We are now agreed that a single trader entering into such an arrangement would not be caught, but where a trade association is doing it that is the common form of a cartel and we must catch it.
§ Mr. Turner-Samuels
The single trader would come within the Monopolies and Restrictive Practices (Inquiry and Control) Act, 1948?
§ Mr. Thorneycroft
If it is not a trade association, it would come within that Act.
The second defect is that agreements entered into by associations the members of which were not in the firms carrying on business in the production, supply or 2071 processing of goods, but were merely representatives nominated by such persons, would escape. That is an obvious loophole which should be closed and the first four Amendments would close that loophole.
There is then the question of definition which, as the hon. and learned Member for Leicester, North-East (Sir L. Ungoed-Thomas) quite properly said, is caught up with this topic. The definition in the Amendment is:In this section 'trade association' means a body of persons (whether incorporated or not) which is formed for the purpose of furthering the trade interests of its members, or of persons represented by its members.The reason for this is that if we are not careful we shall have "trade association" interpreted in a manner so wide as to cover almost everything.
Suppose there were a shareholder of a public company who was a person carrying on business within the meaning of Clause 5, and the public company of which he was a shareholder was carrying on that business. There is then, so to speak, an association between them, and it is felt that unless we make a limit to the idea of association, we shall catch every sort of company holding shares in another company, or even private individuals doing so.
We believe that this definition should be inserted in the Clause. It conveys to everybody's mind what these associations really are, namely, bodies of persons—whether incorporated or not—formed for the purposes of furthering the trade interests of their members; and those are the ones with which we are really concerned in a Clause of this nature. I believe that these Amendments will, therefore, have a useful effect in tightening these arrangements and ensuring that we really do catch the type of trade association envisaged in the operation of the Clause.
§ Sir L. Ungoed-Thomas
The only point which really concerns me here is the definition. I am a little troubled about that, and I should be glad if the President could help me. It is not easy to follow. We have here in subsection (4) of Clause 5, at line 28, a reference torecommendations (whether expressed or implied) made by or on behalf of any such association as aforesaid".2072 Those recommendations are to be caught under the provisions of subsection (4). "Any such association as aforesaid" is what we are really concerned about, and "any such association as aforesaid" is the association referred to in line 20 in the same page:This Part of this Act shall apply in relation to any agreement made between an association"—these are the words which matter—composed of such persons as are mentioned in the said subsection (1)".When we go back to consider the persons mentioned in subsection (1), we find, at the beginning of Clause 5, thatSubject to the provisions of the next following section this Part of this Act applies to any agreement"—here are the relevant words—between persons carrying on business within the United Kingdom in the production or wholesale or retail supply of goods. …This is my difficulty. I can quite understand the recommendations of an association composed of those persons falling within the objection which Clause 5 has to those persons acting independently of an association, so that in Clause 5, as drawn, we have a completely logical scheme on this aspect of it. We will say that an association composed of the persons included in subsection (1) shall be treated as an agreement, in effect, between the persons in subsection (1), so that the association is composed of the persons within the objection in subsection (1).
Then we come to this definition that is changed, which I find rather puzzling. When we come to the last of the Amendments which the right hon. Gentleman mentioned, we see that "trade association" does not mean that necessarily. It states:… 'trade association' means a body of persons (whether incorporated or not) …Of course, whether it is incorporated or not will be immaterial, as subsection (4) now stands. Whether the association be incorporated or not, it will still be an association and, therefore, that makes no difference to subsection (4). Then it goes on:which is formed for the purpose of furthering the trade interests of its members, or of persons represented by its members.I agree that the words,or of persons represented by its members2073 is an obvious improvement. But why include the requirement in the definitionwhich is formed for the purpose of furthering the trade interests of its members"?All that is done by including that requirement in the definition is, in effect, to say that it is not enough that the trade association should consist of the persons in Clause 5 and that the trade association should make a recommendation to those persons which has the effect of an agreement between those persons for the purposes of bringing it within the iniquity of Clause 5. The further requirement is imposed that the trade association must be formed for the purpose of furthering the trade interests of its members. So that additional test is imported.
That seems to me illogical. I cannot see why it is brought in for the purposes of Clause 5. The objection to the trade association making the recommendation when it is composed of these men applies whatever the purpose may be for which the association was formed, because the "iniquity", if I may use the word, in subsection (1), the restriction mentioned in subsection (1), applies whatever the purpose of the formation of the association may be. It seems to me, therefore, first, to be illogical and, secondly, to take the trade association outside the object which the right hon. Gentleman has in mind.
§ Mr. Turner-Samuels
As I read these Amendments, I consider that what the President is attempting to do would seem to be a very laudable thing. In the ordinary way an individual who got himself associated with some other people might not be caught because in the operation of that agreement it would be said that he was an individual, was acting on it and getting the benefit of it and did not come within the terms of the Bill. He might come within the terms of the 1948 Act, but that is beside the question.
The President is saying that that will not do, that it may be a screen behind which the man might hide with other people and do exactly the same thing as other firms and undertakings were being caught for doing. With regard to the restrictive agreement, that, I understand, is taking the matter further, ex abundanti cautela as we say, so that he cannot possibly frustrate the objective of this Bill. Therefore, the President says where the association 2074is formed for the purpose of furthering the trade interests of its members or of persons represented by its members.I understand that to be the very gravamen of this protective measure which is being taken.
It is perfectly clear that if the associated arrangement is for the benefit of the public and is not restrictive, it does not matter, and in any case, even were it registered, the Court would laud the agreement and not condemn it. I understand the President to be saying that where an agreement clearly shows that it is for the furtherance not only of the association but of each individual member, the individual member shall not get away with it, but take the same consequences individually as the association takes collectively.
§ Mr. P. Thorneycroft
The Amendment starts to tighten up the Clause in the two ways which both hon. and learned Gentlemen have mentioned. It covers the case of the trade association agreeing with firms abroad and it covers the trade association which is formed for the interest not only of its own members, but of persons represented by those members. It is necessary, however, also to deal with what is really a technical difficulty. It is not a great policy issue.
It could be said that a trading corporation the shares of which were held either by a person or by a company of the sort mentioned in Clause 5 (1) was itself a trade association. We do not want to say that because, otherwise, every trade association whose shares are held by somebody carrying on the business of processing, or whatever it is, as mentioned in subsection (1), will be included and have to be registered. We really must exclude that.
What I am trying to do is to tighten up and close the two loopholes, which are really rather bad ones, in the Bill as drafted, but, at the same time, to do so in a way which restricts us to the type of trade association which we had in mind and does not bring in a trading corporation which is admittedly in the technical sense a trade association the shares of which are held either by a private person or by a company carrying on some sort of business mentioned in subsection (1).
§ Amendment agreed to.2075
§ Mr. Basil Nield (City of Chester)
I beg to move, in page 5, line 25, after "shall", to insert:unless the contrary is shown".My purpose in moving the Amendment is to seek information. My right hon. Friend has given me some. I should be very grateful for a little more. The effect of this part of the Clause as at present drafted, as I see it, is that a restrictive practice accepted by a trade association is to be deemed to be accepted by all the members of that trade association whether, in fact, they are parties to it or not. This is not an academic point; it is a practical point which is familiar to those of us who have presented cases before the Monopolies Commission.
Let me take an example of the structure of an industry. There is, maybe, a federation which has affiliated to it some ten trade associations covering various aspects of the industry. Each trade association has a great number, maybe, of members who are manufacturers. Assume that the federation proposes two restrictive practices—for example, common prices, on the one hand, and exclusive buying on the other. Assume that all the manufacturing members of the trade association accept, agree to and sign their names to the agreement about common prices, but that half of them decline to sign or agree to the agreement dealing with exclusive buying. Indeed, they may well say, "We are in no sense in agreement with this. We do not propose to sign it or to be bound by it."
It seems to me that under the Clause as it stands at present those who declined to be parties to the agreement about exclusive buying would be deemed so to have agreed when, in truth and in fact, they had not. If my proposal were thought to be right it would mean that those who had declined to be parties could show that they had so declined and would therefore not be deemed to be parties to the agreement.
§ Mr. P. Thorneycroft
The answer to this point is that whatever the position of the persons who were not parties to the arrangement, the fact is that this is a registrable agreement. That is important. The subsection says:This Part of this Act shall apply in relation to any agreement made between an association composed of such persons … and any other 2076 such person … as it applies to an agreement between such persons; and for the purposes of this Part of this Act any restrictions accepted by any such association under such an agreement shall be treated as accepted mutually by the members for the time being of the Association.It may often happen that an arrangement is made between persons only some of whom accept restrictions made under that arrangement, and if the people concerned are members of an association and some do not accept restrictions laid down under that agreement, it remains registrable.
Later in the Bill we shall come to the Clause which provides what shall happen then, and the defences which can be put forward. It would then be appropriate to argue that those who were not parties would certainly not be open to any opprobrium or, if they were, they would have a complete defence to it. We are here dealing with the simple question whether such an arrangement is registrable. The fact that some members of the association have not participated in the arrangement—or have even expressed dissent from it—should not, under any circumstances, enable the arrangement to contract out of the Bill.
§ Mr. Turner-Samuels
There is an even stronger point than that. I quite agree that this matter resolves itself into the question of registration. I should like to ask the President who will try the issue implicit in the words "unless the contrary is shown". Is it suggested that the Registrar should do so? First, there will be the question whether a certain agreement is the subject of registration. When the matter is taken before the Registrar it will not be for him to hold a judicial inquiry as to whether the contrary is shown. What should properly happen is that the question should be considered when the matter comes before the Court of judicial and lay members.
If what the hon. and learned Member for the City of Chester (Mr. Nield) says is correct—if certain parties to the agreement who ought not to be prejudiced may be prejudiced—
§ Mr. Turner-Samuels
I quite agree.
We have decided that if those parties are members of a trade association they become parties to the agreement for the purposes of the Bill. It is in that sense that I want to deal with the matter. The Court will examine the point and make such qualifications as it thinks proper. It can make any order which it thinks proper in the circumstances. If it is right that anyone should be excluded because "the contrary is shown", the Court will exclude him. I agree with what the President has said, but I would add that this could not be a matter for the Registrar to resolve in any case, and to that extent the Amendment is otiose.
§ 9.0 p.m.
§ Mr. Nield
There is nothing between my right hon. Friend and myself in substance or in principle. I entirely agree with him that an agreement coming under this Clause must be registered, but I was objecting to these words thatan agreement shall be treated as accepted mutually by the members for the time being of the Association.when we know of cases where some of the members of the Association are definitely excluded from the agreement. If they can make their position clear at a later stage, I am satisfied. In these circumstances, I beg to ask leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
Amendment made: In page 5, line 26, at end insert:
and any persons represented thereon by such members."—[Mr. P. Thorneycroft.]
§ The Chairman
I think it would be for the convenience of the Committee if we considered, at the same time, the Amendments in line 27 and line 30.
§ Mr. Bell
They all deal specifically with the same point, Sir Charles.
It may help the Committee if we remember that subsection (3), with which we have just been dealing, for the first time brings trade associations into the general review of the Clause, which deals with agreements on prices and conditions 2078 between bodies and manufacturers. Subsection (3) goes further and states that, in effect, "We do not stop there; we bring in agreements between one association and another or an association and a member."
Subsection (4) takes the matter a little further. No one complains of that. It says, in effect, "You may not have an agreement, but you have a powerful trade association and it is not really necessary to have an agreement." If it just recommends an act by parties, it may be that that is as effective as an agreement. I make no complaint that that is what subsection (4) is directed to.
Before I mention these specific words, my complaint generally about subsection (4)—which may not be met by my suggested Amendment—is that, like several others, it goes too wide. It appears to me that it would prevent an association recommending to its members that it should adopt the standards of the British Standards Institution. That would be the recommendation about the description of goods to be supplied, and that would be for a recommendation by a trade association.
Again, supposing that the trade association recommended, say, restraint in prices, that would come under Clause 5 (1 a)—prices to be charged. I should hope that it is inconceivable that subsection (4) was really meant to catch this up. The subsection should make clear the specific recommendation to which there is objection so that the persons who have to take the responsibility of deciding whether they register or not will have something upon which to make up their minds.
Bearing that in mind, let us look for a moment at subsection (4). It states:Where recommendations (whether expressed or implied) or made by or on behalf of any such association as aforesaid to its members or to any class of its members, as to the action to be taken or not taken by them in respect of any such matters as are described in paragraphs (a) to (e) of the said subsection (1)that is, are familiar (a) to (e)—this Part of this Act shall apply in relation to the agreement for the constitution of the association as if each such members were thereby required to comply with the recommendations, notwithstanding that the agreement does not so provide or expressly provides to the contrary.2079 The first point to which I want to draw attention is rather amusing. The Clause reads:Where recommendations (whether express or implied)are made by an association. There is a good deal of difficulty in deciding what people mean when they write or talk, but to suggest that advisers should find out what they imply when they put something in writing makes it very hard for the advisers in deciding whether the agreement should be registered or not and whether it comes within Clause 5. It would also be very difficult for the court to decide what was implied.
But the position is even worse than that, because when the implied recommendations are made, they still have to be registerednotwithstanding that the agreement does not so provide or expressly provides to the contrary".For anyone to imagine that an implied recommendation can be found from an agreement which expressly provides to the contrary seems to me to be stretching draftsmanship very far.
I do not want to cut the claws of this subsection, for I appreciate that strong recommendations might be as effective as an agreement, but I think that business interests are entitled to have it made plain to them what recommendations are the cause of objection. My first Amendment, therefore, asks that the subsection should deal with specific recommendations about these matters; for instance, when an association says, "We want you to do something about prices or about these conditions of supply or about quantities or about the process of manufacture". A happy counsel will be asked to advise, "Are we an association within this subsection, because we have been sending out circulars about what they should charge?" Under the subsection as drafted, the adviser would say, "There is nothing about prices in your circular, but at the end there is a paragraph saying 'I hope that you have a good Christmas'. That might be implied to mean that they should charge more for their turkeys, or less."
To expect anybody to understand whether an obligation to register is placed upon them, on the basis not of what they have written specifically but of what 2080 might be implied from what they have written, and might be implied even if it is contrary to what they have written, is imposing too big a burden upon them.
I propose that the subsection should read:Where specific recommendations are made by or on behalf of any such association.This leaves out "express or implied." We should then say that where specific recommendations are madethis Part of this Act shall apply … notwithstanding that the agreement does not so provide or expressly provides to the contrary.For instance, if the association says, "You are not bound to carry this out, but we advise you to do it," that would be treated as a recommendation.
Dealing with the other Amendment, I suggest to my right hon. Friend that for the sake of clarity it might be advisable for us to make clear that the recommendations arein relation to any particular class of goods or process of manufacture.If those words were included, then a recommendation dealing generally and not specifically with paragraphs (a) to (e) of Clause 5 need not be registered. I entirely agree that recommendations ought to be caught, but I respectfully suggest that we ought not to use the words "express or implied" and that the specific recommendations which are objectionable ought to be the test whether the association ought to register on the ground that it gives specific recommendations on matters dealt with in Clause 5. We would understand that, but I think it would be very difficult for anybody to know whether it was an association that should be registered, because, after all, it is anybody's guess—and it really is a guess—as to what people imply when they say something. It is hard enough to know what they really mean by what they say, but it is extremely difficult to know what they imply.
§ Mr. P. Thorneycroft
There are really two quite separate points involved in this discussion. The first is whether we should exclude recommendations of a rather general character, like, for instance, the Federation of British Industries saying that it would be a very good thing if everybody kept their prices stable. I think the Committee would agree that that sort of recommendation ought to be 2081 excluded. I think that two of these Amendments do that, and they are, therefore, acceptable.
Those to which I refer are, first, that to page 5, line 27, after "Where," to insert "specific," and I do not think that a vague general recommendation is really meant to be caught and, secondly, the Amendment to line 30, after "them," to insert:in relation to any particular class of goods or process of manufacture.That is to say, a general recommendation that it is a good thing to have stability of prices or to increase output is something that we do not want to have cluttering up the register.
But I take an entirely different view about the suggestion in the Amendment to line 27, to leave out "(whether express or implied)." I have had some experience in this field in recent years, and I know very well the methods which are used to imply recommendations of this sort, and so do most of us in the Committee. One sends round a price list, but does not say anything about it, but everybody sticks to the prices. In my submission, a specific recommendation is implied there, and very clearly implied, and it is followed.
We might have, say, a statement made in a trade journal, or lists of people circulated without very much comment, and statements at annual meetings to the effect that people should deal only with their friends. I am not saying that these things are common in industry, because I think that, in the vast majority of cases, people either have a price ring or they do not, and that in all the bigger and more reputable industries, which comprise 98 per cent. of them all, no problem of this sort arises whatsoever.
I would hope that the Committee will not leave a loophole for the small number who could quite easily get round the provisions of this Bill by simply circulating a price list or telling a third party rather than a member of the association. There are many such ways in which he could get round them, not in a general recommendation, but in a very specific one, as to what ought to be done.
Therefore, my advice to the Committee is that it should accept the insertion of the word "specific" and should accept the words 2082in relation to any particular class of goods or process of manufacture.I think that these are very proper things to do. They exclude what would be a very wide field of general exhortation which we do not want to be involved, and we should stick to the words "(whether express or implied)."
§ 9.15 p.m.
§ Sir L. Ungoed-Thomas
The President will appreciate that with his attitude towards the words "express or implied" we are in agreement. I was a little surprised at some of the observations of the hon. and learned Member for Bolton, East (Mr. Philip Bell). He knows as well as I do that one can have an implied contract, and a recommendation may be implied as strongly as a contract may be implied, and to say that we cannot have a recommendation implied was just not quite worthy of the hon. and learned Gentleman.
There is rather more difficulty about these two other Amendments. I agree at once with the purpose of the President in his approach to these Amendments, and that a general recommendation dealing with price stability or something of that sort and in those sort of terms would of course be unobjectionable and not within the purpose of the Bill. On that, I think the hon. and learned Gentleman the Member for Bolton, East was persuasive.
However, we are envisaging a trade association which by definition is an association for furthering the trade interests of its members. We are not here dealing with the British Standards Institution or anything of that sort, to which the hon. and learned Gentleman referred. There are Amendments later to deal with that matter, which have nothing at all to do with the one which we are discussing. We are asked to consider a specific recommendation instead of a general recommendation, and I am doubtful about the advisability of the use of this word "specific," doubtful not of the intention of the President but of the drafting.
I cannot see what a specific recommendation means precisely. Suppose there is a recommendation given in general terms, a recommendation, for instance, from a trade association which says quite bluntly that trade shall be 2083 confined to particular classes of business, That would come within the subsection, but would that be specific?
§ Sir L. Ungoed-Thomas
How specific would it have to be? What is general? If anything is specific, what is general? I am not arguing against the intention of the President. I accept that the example given about price stability, a recommendation in such terms as those, which one may call general terms, could be excluded from the Bill. It is obviously outside the purpose of the Bill altogether. When, however, does a specific recommendation become general?
Suppose there is a recommendation dealing with all the categories of goods in which members of a trade association deal. It is a recommendation which is entirely directed to restrictions, and in terms which apply to every single member and to all the categories of goods with which the members of the association deal. It is our intention that that recommendation shall be brought within the scope of Clause 1, and I am sure that it is the President's intention, too. The hon. and learned Gentleman the Member for Bolton, East may argue that that is specific. I beg to question whether that is specific, if it is in wide enough terms to cover the whole object of the trade association in furthering the interests of its members and dealing with all the goods concerned.
What I would ask the President to do is not to say now that he will accept the Amendment as it stands, but to say that he will look at it rather more closely with a view, I hope, to finding words, instead of the word "specific", to carry out the intention which the President has in mind, and with which I am in agreement, and for which purpose the hon. and learned Gentleman moved the Amendment. It is a drafting point, and I would ask the President to deal with it as a drafting point, and to say he will consider it to carry out the intention of all of us who so far have spoken upon the Amendment.
§ Mr. Philip Bell
I chose the word "specific," and we must distinguish between "specific" and "detailed". It is not suggested that to come within the terms of this Amendment one must give a 2084 detailed recommendation. There could, for instance, be a recommendation that everyone must lower prices 10 per cent. or put them up 10 per cent., or that nobody must sell any goods to a certain firm, or that everybody is advised not to deal with persons on a certain list. Specific is a thing which one can—[HON. MEMBERS: "Specify."] By "specific" I do not mean "detailed" but some course of action that one can clearly define.
§ Sir L. Ungoed-Thomas
This illustrates the awful difficulty of using the word "specific". The recommendation to put up the price by 10 per cent. is a specific recommendation, according to the hon. and learned Member for Bolton, East. We are also asked to deal with this matter on the assumption that a recommendation not to put prices up at all—which is in favour of stability of prices—is a general recommendation, but the two things are, of course, logically identical in the sense that they both deal with prices as they are and that they are both addressed to the question whether or not there should be any alteration and, if any, what alteration in prices.
It is rather absurd to say that a recommendation to put up prices by 10 per cent. is specific but a recommendation not to put up prices at all is general. I should have thought that that was an argument which underlined the difficulty which I am pointing out. I am not saying that the one recommendation is general and the other is specific or vice versa. I am merely addressing myself to a point of drafting, and it is perfectly clear, from the very intervention of the hon. and learned Member for Bolton, East, that there is a difficulty. I am merely asking the President of the Board of Trade to have a look at the matter purely from the drafting point of view.
As to the other Amendment, I must ask why it is limited to,in relation to any particular class …Suppose that there is a recommendation for a 10 per cent. increase in prices in all the goods dealt with by members of a particular association, dealing, for example in motor cars. Is that in relation to a particular class of goods or is it not? [HON. MEMBERS: "It is."] I am not so sure, because it is not expressed in relation to a particular class of goods. There is a difficulty there. It 2085 is quite wrong to say that this provision should be limited in relation to any particular class of goods. It would be within the objectionable feature which the Bill hits at even if the recommendation were made not in relation to a particular class of goods.
If it were a recommendation by a trade association to raise the prices of whatever goods were included in it by 10 per cent., that obviously would be within the objective aimed at by the Bill. Whilst agreeing with the President of the Board of Trade on the purpose which I assume he had in mind in saying that he would accept these two Amendments, I ask him to reconsider the first Amendment from the point of view of drafting, but the second Amendment really seems objectionable, not just from the point of view of drafting, but in substance.
§ Mr. P. Thorneycroft
There is no difference between us in our objectives. What everyone wants to exclude is such a case as when the Federation of British Industries says that, on the whole, it would be a good thing for British industry to hold its prices stable. It would be quite intolerable to include such a case within the provisions of the Clause. We are agreed on the objective, but the question is how to achieve it. I have thought this over and taken a great deal of advice and I am satisfied that these words probably achieve that object as well as anything that we could devise.
We must have the words "particular classes of goods" in order to exclude the F.B.I. recommendation. It is the general exhortation to hold prices steady that we do not want to be registered and examined by the court. What we want to catch is—whether "express or implied"—a recommendation that the price of, say, motor cars, or whatever it may be, should be moved by 10 per cent. It is awkward to give an example and it may be better if I do not choose any.
I propose that we should accept these words, because I believe they carry out the objective. At the same time, I will give further consideration to what the hon. and learned Gentleman has said. If I find, on further examination, that these words do not carry out what is the agreed objective of the Committee, then we will certainly do something about it on the Report stage but, in the meantime.
2086 I urge the Committee to accept the two Amendments.
§ Mr. Turner-Samuels
Before the Minister finally decides this point, what I want to know, both in grammar and practice, is how we can have, in the words of subsection (4), if amended—"specific recommendations (whether express or implied) …"How can we have an implied specific recommendations?
§ Mr. Thorneycroft
Quite simply, if I may say so. If, for instance, a price list is circulated showing at exactly what price everything ought to be sold by a trade, without any further recommendation, that is an implied specific recommendation that everybody should sell at that price.
§ Mr. Hector Hughes
I hope that these words will not be inserted, because they go far to spoiling this Clause. They would put too great a burden upon those who have to administer it. These words are either redundant or else they limit the scope of the Clause undesirably. If we look at the Clause—can my hon. and learned Friend the Member for Gloucester (Mr. Turner-Samuels) bear with me for a moment?
§ Mr. Hughes
I am trying to get a little order in this corner, Sir Charles, so that the rest of the Committee can hear the few observations that I shall venture to offer.
I was saying that the words sought to be reserved are either redundant, or, alternatively, that they unduly, improperly and unfairly limit the scope of the Clause. In the Clause itself we find these words:Where recommendations (whether express or implied), are made. …The recommendations express or implied must be specific. If they are not specific, what are they?
To be more specific would involve that which appears from the third of these Amendments, namely, a schedule of particular recommendations. That would put too great a burden upon those who have to administer the Bill. The words in the Clause are simple and straightforward, namely, "recommendations (whether express or implied)". As my hon. and learned Friend asked a moment ago, how 2087 can there be an express recommendation unless it is a specific recommendation? I oppose all three Amendments.
§ Sir L. Ungoed-Thomas
On the first point, I accept what the right hon. Gentleman has said. I should like to accept what he said on the second point, but here there is a difference of substance and intention between us. I am not really satisfied on the second point, and we ought clearly to show our view upon it. Consequently, I would advise my hon. Friends to divide against the relevant Amendment.
§ 9.30 p.m.
§ Mr. P. Thorneycroft
I do not want to debate the matter. I do not think there is really a difference between us. We do not want to include the F.B.I. recommendation. Therefore, we must have some such words as:… in relation to any particular class of goods.…in order to exclude the general recommendation. If the hon. and learned Gentleman prefers to divide against the Amendment rather than accept my assurance—
§ Sir L. Ungoed-Thomas
No; I certainly accept the right hon. Gentleman's assurance. The point of difference is in relation to the F.B.I. being covered by "specific" or "general". With words such as… in relation to any particular class of goods.…the President is imposing a limitation to a particular class of goods. The point
§ about which I am concerned is a recommendation being given to goods generally. What the right hon. Gentleman says is not quite enough. Thus, on that point there is a difference of substance between us.
§ Mr. Turner-Samuels
I appeal to the right hon. Gentleman not to accept any of the Amendments, but to consider the position and on Report tell the House what decision he has arrived at. It makes nonsense grammatically to talk about a "specific" recommendation "express or implied." In the interests of grammar alone, I beg the right hon. Gentleman to reconsider the matter.
§ The Chairman
I called the Amendment. I do not think it makes nonsense, or I should not have called it.
§ Mr. Turner-Samuels
In deference to you, Sir Charles, perhaps I ought not to have said that. I am trying to tell the President that this will not work in practice. I merely ask him, for the sake of greater caution, to reconsider the matter and deal with it on Report.
§ Amendment agreed to.
§ Further Amendment made: In page 5, line 28, leave out "any such association as aforesaid" and insert "a trade association".—[Mr. P. Thorneycroft.]
Amendment proposed: In page 5, line 30, after "them", insert:
in relation to any particular class of goods or process of manufacture"—[Mr. Philip Bell.]
§ Question put, That those words be there inserted:—
§ The Committee divided: Ayes 206, Noes 158.2091
|Division No. 154.]||AYES||[9.34 p.m.|
|Agnew, Cmdr. P. G.||Boyle, Sir Edward||Duthie, W. S.|
|Aitken, W. T.||Braine, B. R.||Errington, Sir Eric|
|Alport, C. J. M.||Brooke, Rt. Hon. Henry||Farey-Jones, F. W.|
|Amory, Rt. Hn. Heathcoat (Tiverton)||Browne, J. Nixon (Craigton)||Fell, A.|
|Arbuthnot, John||Buchan-Hepburn, Rt. Hon. P. G. T.||Finlay, Graeme|
|Armstrong, C. W.||Butler, Rt. Hn. R. A. (Saffron Walden)||Fisher, Nigel|
|Ashton, H.||Campbell, Sir David||Fleetwood-Hesketh, R. F.|
|Atkins, H. E.||Channon, H.||Fletcher-Cooke, C.|
|Baldock, Lt.-Cmdr. J. M.||Clarke, Brig. Terence (Portsmth, W.)||Fort, R.|
|Baldwin, A. E.||Cooper, Sqn. Ldr. Albert||Foster, John|
|Balniel, Lord||Cordeaux, Lt.-Col. J. K.||Fraser, Hon. Hugh (Stone)|
|Barber, Anthony||Corfield, Capt. F. V.||Galbraith, Hon. T. G. D.|
|Barlow, Sir John||Crosthwaite-Eyre, Col. O. E.||Garner-Evans, E. H.|
|Barter, John||Crouch, R. F.||George, J. C. (Pollok)|
|Baxter, Sir Beverley||Crowder, Sir John (Finchley)||Glover, D.|
|Bell, Philip (Bolton, E.)||Cunningham, Knox||Gomme-Duncan, Col. Sir Alan|
|Bell, Ronald (Bucks, S.)||Currie, G. B. H.||Gower, H. R.|
|Bennett, F. M. (Torquay)||Dance, J. C. G.||Graham, Sir Fergus|
|Bennett, Dr. Reginald||D'Avigdor-Goldsmid, Sir Henry||Grant, W. (Woodside)|
|Bidgood, J. C.||Deedes, W. F.||Grant-Ferris, Wg. Cdr. R. (Nantwich)|
|Bishop, F. P.||Doughty, C. J. A.||Green, A.|
|Bossom, Sir A. C.||du Cann, E. D. L.||Gresham Cooke, R.|
|Grimston, Sir Robert (Westbury)||Lennox-Boyd, Rt. Hon. A. T.||Robinson, Sir Roland (Blackpool, S.)|
|Grosvenor, Lt.-Col. R. G.||Lindsay, Martin (Solihull)||Robson-Brown, W.|
|Gurden, Harold||Linstead, Sir H. N.||Rodgers, John (Sevenoaks)|
|Hall, John (Wycombe)||Lloyd, Maj. Sir Guy (Renfrew, E.)||Roper, Sir Harold|
|Harris, Reader (Heston)||Longden, Gilbert||Ropner, Col. Sir Leonard|
|Harrison, Col. J. H. (Eye)||Lucas, Sir Jocelyn (Portsmouth, S.)||Russell, R. S.|
|Harvey, Air Cdre. A. V. (Macclesfd)||Macdonald, Sir Peter||Schofield, Lt.-Col. W.|
|Harvey, Ian (Harrow, E.)||Mackeson, Brig. Sir Harry||Shepherd, William|
|Heald, Rt. Hon. Sir Lionel||Mackie, J. H. (Galloway)||Simon, J. E. S. (Middlesbrough, W.)|
|Heath, Rt. Hon. E. R. G.||McLaughlin, Mrs. P.||Smithers, Peter (Winchester)|
|Hill, Mrs. E. (Wythenshawe)||McLean, Neil (Inverness)||Spearman, A. C. M.|
|Hill, John (S. Norfolk)||Macpherson, Niall (Dumfries)||Speir, R. M.|
|Hirst, Geoffrey||Maddan, Martin||Stanley, Capt. Hon. Richard|
|Holland-Martin, C. J.||Maitland, Cdr. J. F. W. (Horncastle)||Steward, Harold (Stockport, S.)|
|Hornsby-Smith, Miss M. P.||Maitland, Hon. Patrick (Lanark)||Steward, Sir William (Woolwich, W.)|
|Horobin, Sir Ian||Markham, Major Sir Frank||Stoddart-Scott, Col. M.|
|Howard, Hon. Greville (St. Ives)||Marpies, A. E.||Studholme, H. G.|
|Howard, John (Test)||Marshall, Douglas||Taylor, William (Bradford, N.)|
|Hudson, Sir Austin (Lewisham, N.)||Mathew, R.||Teeling, W.|
|Hudson, W. R. A. (Hull, N.)||Maude, Angus|
|Hughes Hallett, Vice-Admiral J.||Mawby, R. L.||Thomas, Leslie (Canterbury)|
|Hughes-Young, M. H. C.||Monokton, Rt. Hon. Sir Walter||Thomas, P. J. M. (Conway)|
|Hutchison, Sir Ian Clark (E'b'gh, W.)||Nabarro, G. D. N.||Thompson, Kenneth (Walton)|
|Hyde, Montgomery||Nairn, D. L. S.||Thompson, Lt.-Cdr. R. (Croydor, S.)|
|Hylton-Foster, Sir H. B. H.||Neave, Airey||Thorneycroft, Rt. Hon. P.|
|Iremonger, T. L.||Nicholls, Harmar||Thornton-Kemsley, C. N.|
|Irvine, Bryant Godman (Rye)||Nield, Basil (Chester)||Tilney, John (Wavertree)|
|Jenkins, Robert (Dulwich)||Noble, Comdr. A. H. P.||Touche, Sir Gordon|
|Jennings, J. C. (Burton)||Nugent, G. R. H.||Vane, W. M. F.|
|Johnson, Dr. Donald (Carlisle)||Vaughan-Morgan, J. K.|
|Johnson, Erie (Blackley)||O'Neill, Hn. Phelim (Co. Anrim, N.)||Vickers, Miss J. H.|
|Johnson, Howard (Kemptown)||Ormsby-Gore, Hon. W. D.||Vosper, D. F.|
|Jones Rt. Hon. Aubrey (Hall Green)||Orr, Capt. L. P. S.||Wakefield, Edward (Derbyshire, W.)|
|Joseph, Sir Keith||Osborne, C.||Wakefield, Sir Wavell (St. M'lebone)|
|Joynson-Hicks, Hon. Sir Lancelot||Page, R. G.||Walker-Smith, D. C.|
|Kaberry, D.||Pannell, N. A. (Kirkdale)||Wall, Major Patrick|
|Keegan, D.||Partridge, E.||Ward, Dame Irene (Tynemouth)|
|Kerby, Capt. H. B.||Pickthorn, K. W. M.||Waterhouse, Cap. Rt. Hon. C.|
|Kerr, H. W.||Pilkington, Capt. R. A.||Watkinson, Rt. Hon. Harold|
|Kershaw, J. A.||Pitt, Miss E. M.||Webbe, Sir H.|
|Kimball, M.||Pott, H. P.||Whitelaw, W. S. I. (Penrith and Border)|
|Kirk, P. M.||Raikes, Sir Victor||Wills, G. (Bridgwater)|
|Lagden, G. W.||Redmayne, M.||Wilson, Geoffrey (Truro)|
|Lambert, Hon. G.||Remnant, Hon. P.||Wood, Hon. R.|
|Lancaster, Col. C. G.||Ridsdale, J. E.||Woollam, John Victor|
|Leavey, J. A.||Rippon, A. G. F.||Yates, William (The Wrekin)|
|Leburn, W. G.||Roberts, Sir Peter (Heeley)|
|Legit, Hon. Peter (Petersfield)||Robertson, Sir David||TELLERS FOR THE AYES:|
|Mr. Godber and Mr. Bryan.|
|Ainsley, J. W.||Deer, G.||Hughes, Hector (Aberdeen, N.)|
|Allaun, Frank (Salford, E.)||Delargy, H. J.||Hunter, A. E.|
|Allen, Arthur (Bosworth)||Dodds, N. N.||Irvine, A. J. (Edge Hill)|
|Awbery, S. S.||Donnelly, D. L.||Irving, S. (Dartford)|
|Bacon, Miss Alice||Dugdale, Rt. Hn. John (W. Brmwch)||Isaacs, Rt. Hon. G. A.|
|Benson, G.||Dye, S.||Jay, Rt. Hon. D. P. T.|
|Blackburn, F.||Edwards, Robert (Bilston)||Jeger, Mrs. Lena (Holbn & St. Pncs. S.)|
|Blyton, W. R.||Evans, Albert (Islington, S. W.)||Johnson, James (Rugby)|
|Boardman, H.||Evans, Edward (Lowestoft)||Jones, Rt. Hon. A. Creech (Wakefield)|
|Bowden, H. W. (Leicester, S. W.)||Fernyhough, E.||Jones, Jack (Rotherham)|
|Bowen, E. R. (Cardigan)||Fienburgh, W.||Jones, J. Idwal (Wrexham)|
|Boyd, T. C.||Finch, H. J.||Jones, T. W. (Merioneth)|
|Braddock, Mrs. Elizabeth||Fletcher, Eric||Kenyon, C.|
|Brockway, A. F.||Forman, J. C.||Key, Rt. Hon. C. W.|
|Burke, W. A.||Gaitskell, Rt. Hon. H. T. N.||King, Dr. H. M.|
|Burton, Miss F. E.||Gibson, C. W.||Lee, Frederick (Newton)|
|Butler, Herbert (Hackney, C.)||Grey, C. F.||Lever, Leslie (Ardwick)|
|Butler, Mrs. Joyce (Wood Green)||Griffiths, David (Rother Valley)||Lindgren, G. S.|
|Carmichael, J.||Griffiths, Rt. Hon. James (Llanelly)||Logan, D. G.|
|Champion, A. J.||Griffiths, William (Exchange)||Mabon, Dr. J. Dickson|
|Chapman, W. D.||Hale, Leslie||McInnes, J.|
|Clunie, J.||Hamilton, W. W.||McKay, John (Wallsend)|
|Coldrick, W.||Hannan, W.||McLeavy, Frank|
|Collick, P. H. (Birkenhead)||Harrison, J. (Nottingham, N.)||MacMillan, M. K. (Western Isles)|
|Collins, V. J. (Shoreditch & Finsbury)||Hastings, S.||MacPherson, Malcolm (Stirling)|
|Corbet, Mrs. Freda||Hayman, F. H.||Mahon, Simon|
|Craddock, George (Bradford, S.)||Healey, Denis||Mason, Roy|
|Cronin, J. D.||Holmes, Horace||Mayhew, C. P.|
|Cullen, Mrs. A.||Holt, A. F.||Mellish, R. J.|
|Darling, Sir William (Edinburgh, S.)||Houghton, Douglas||Messer, Sir F.|
|Davies, Rt. Hon. Clement (Montgomery)||Howell, Charles (Perry Barr)||Mitchison, C. R.|
|Davies, Harold (Leek)||Hubbard, T. F.||Moody, A, S.|
|Davies, Stephen (Merthyr)||Hughes, Emrys (S. Ayrshire)||Mort, D. L.|
|Mulley, F. W.||Reeves, J.||Ungoed-Thomas, Sir Lynn|
|Neal, Harold (Bolsover)||Roberts, Albert (Normanton)||Wade, D. W.|
|Noel-Baker, Francis (Swindon)||Roberts, Goronwy (Caernarven)||Warbey, W. N.|
|Oliver, G. H.||Ross, William||Weitzman, D.|
|Oram, A. E.||Royle, C.||Wells, William (Walsall, N.)|
|Orbach, M.||Shinwell, Rt. Hon. E.||West, D. G.|
|Oswald, T.||Short, E. W.||Wheeldon, W. E.|
|Owen, W. J.||Silverman, Julius (Aston)||White, Mrs. Irene (E. Flint)|
|Paget, R. T.||Skeffington, A. M.||White, Henry (Derbyshire, N. E.)|
|Paling, Rt. Hon. W. (Dearne Valley)||Slater, J. (Sedgefield)||Wilkins, W. A.|
|Palmer, A. M. F.||Sorensen, R. W.||Williams, David (Neath)|
|Parker, J.||Sparks, J. A.||Williams, Rev. Llywelyn (Ab'tillery)|
|Parkin, B. T.||Steele, T.||Williams, W. R. (Openshaw)|
|Paton, J.||Stewart, Michael (Fulham)||Willis, Eustace (Edinburgh, E.)|
|Peart, T. F.||Stones, W. (Consett)||Woof, R. E.|
|Price, Philips (Gloucestershire, W.)||Strauss, Rt. Hon. George (Vauxhall)||Yates, V. (Ladywood)|
|Proctor, W. T.||Sylvester, G. O.||Younger, Rt. Hon. K.|
|Pryde, D. J.||Taylor, Bernard (Mansfield)|
|Randall, H. E.||Thomas, George (Cardiff)||TELLERS FOR THE NOES:|
|Rankin, John||Thomson, George (Dundee, E.)||Mr. Simmons and Mr. J. T. Price.|
|Redhead, E. C.||Turner-Samuels, M.|
Question put and agreed to.
Further Amendments made: In page 5, line 33, after "member", insert:
and any person represented on the association by any such member".
In line 36, at end add:
(5) In this section "trade association" means a body of persons (whether incorporated or not) which is formed for the purpose of furthering the trade interests of its members, or of persons represented by its members.—[Mr. P. Thorneycroft.]
§ Motion made, and Question proposed, That the Clause, as amended, stand part of the Bill.
§ Mr. Jay
May I ask the President a question which relates to the scope of Clause 5? The right hon. Gentleman may remember that in the Second Reading debate we expressed doubts as to whether collective resale price maintenance really was, as I think he intends, banned by the provisions of the Bill. The Parliamentary Secretary assured us that it was. We want to be quite sure, before we part with Clause 5, that he is correct on one particular point.
There is no disagreement, I think, about Clause 19 banning collective resale price maintenance if it is enforced by the method of a collective boycott. It is perfectly clear that if the resale price maintenance is enforced by withholding supplies collectively, then it is prohibited by Clause 19.
The point which we put in the Second Reading debate, necessarily rather briefly, was this. Suppose there were an attempt to enforce collective resale price maintenance, not by a collective boycott and not by any arrangement or agreement to withhold supplies, but simply by making it one of the rules of a trade association that the individual members of the association should all enforce individual resale 2092 price maintenance under the provisions of Clause 20. Would such rules of the trade association be an agreement which would be registrable under Clause 5?
I understood the Parliamentary Secretary, in his necessarily brief reference to the matter on Second Reading, to say that that would be so. We wish to ask just how, under which words and which part of this Clause, would rules of the trade association making it obligatory to employ this Bill for individual resale price maintenance, be found? I take it that it is in virtue of subsection (1, a), that is to say that such rules would be agreements under which mutual restrictions are accepted in respect ofthe prices to be charged, quoted or paid for goods …But it did not seem to us to be at all clear that a general rule to the effect that individual resale price maintenance was to be used would be, in fact, an agreement as tothe prices to be charged, quoted or paid …It would not of course refer in any way to any particular prices. It would merely be an agreement about the way in which some prices unspecified were to be enforced. Are the President and the Parliamentary Secretary clear that an agreement of that kind would be covered by those words?
§ Mr. Charles Fletcher-Cooke (Darwen)
I wish to raise a short but important point regarding subsection (2) and the meaning of the word "arrangement". Bearing in mind that the persons who are parties to the "arrangement" have to register, have to take the initiative, it is important that they should know what is the meaning of the word. It is 2093 not the same, evidently, or it need not be, as either a legally enforceable agreement or an agreement which is not legally enforceable because that is already covered by the definition. It is, or may be, something more than that. But since, as I say, traders and other people have to take the initiative in registering such an arrangement, I think that they ought to know what is meant by this vague word.
I know that it is a word which comes from the Monopolies and Restrictive Practices (Inquiry and Control) Act, 1948, because there, in Section 10 (2) the competent authority, when making an order after the report of the Monopolies Commission, may declare a practiceto be unlawful, except to such extent and in such circumstances as may be provided by or under the order to make or to carry out any such agreements or arrangements as may be specified or described in the order.Of course, it is one thing to be told what one has not to do because that instruction may be obeyed. The arrangements which one is not to make will have been specified by the competent authority. But I suggest that it is a very different thing when one has to take the initiative oneself and has had no guidance from the competent authority or anyone else as to what is the "arrangement".
I suspect that what is meant is a common course of behaviour without any agreement being approved or even alleged. If, in fact, traders move their prices up and down with suspicious harmony, that has in itself to be registered—although quite what one registers, I do not know. If that be right—that is the doctrine which the American courts have developed under the name of "conscious parallelism"—I think that the traders of the country ought to know whether this provision seeks to import into our law the doctrine of "conscious parallelism" as elaborated in the American courts.
§ Mr. A. J. Irvine
The right hon. Gentleman has given unmistakably the impression throughout our considerations of this Clause of desiring to stop any of the loopholes that there might be and to make the Clause entirely effective. Before the Committee passes the Clause, I feel bound to point out how, in the aggregate, there is still a considerable number of potential ways of escape about 2094 which I have throughout had the impression that it is the President's desire to stop, but which the Clause, by the wording adopted, leaves available.
There is, first, the all-important point that it is doubtful, on the construction of the Clause, whether an agreement made between the person and a retailer is caught by the wording of the Clause. There is the ambiguity about the members of an association still to be removed. I listened very carefully to what both the President and my hon. and learned Friend said about that, but I still think that, on the construction of the Clause, the matter is in doubt. The fact remains, and it is a very important point to recognise, that explicit provision is made in the Clause for mutuality as affecting members of an association, but only in the context of an agreement made with the association and some other person. In my view, it really leaves the important question of construction open as to whether members of an association agreeing among themselves are caught by the Bill at all.
After all, it is not ordinary practice, I should have thought, to take the view that members agree with each other by virtue of belonging to the same club or the same association. There may be an agreement between each member and the governing body of the club, but it does not follow that there is necessarily agreement between the members. As I see it, that matter is left in doubt.
During the latter part of the discussion on the Clause, the matter of recommendations was considered and there was discussion about the meaning of "implied" and of "specific" in relation to recommendations. But there appears to be a rather important point in the Clause as it stands that whereas recommendations are dealt with in this fashion, the rules of the association are not. It may often be that restrictive provisions under paragraphs (a) to (e) in subsection (1) of the Clause will be conveyed to members of an association not by recommendations, but by rules. Rules, at least, are specific, and it is very doubtful, I should have thought, whether as the Clause is at present drafted, explicit rules in respect of these matters, as distinct from recommendations, are caught by the Clause. Therefore, I ask the Government to bear that consideration in mind.
2095 Finally—and this arises purely out of the observations made by the hon. Member for Darwen (Mr. Fletcher-Cooke), when he raised the question of what was meant by an arrangement—the question is left open whether an agreement not in writing is caught by this Clause. There are other parts of the Bill which suggest that it is envisaged that an agreement not in writing shall be caught by the Clause, but one would like it to be specifically provided for in the Clause, and it is not. This matter has really practical importance.
The Monopolies Commission, particularly in its Report on tyres, shows how practicable it is for parties who want to enter into a price and maintenance agreement to do so without resorting to a written agreement. It was found that there is an identity of prices for similar articles, but there is no agreement in writing under which that is effective. It is argued that it results from the free trade of the market and the operations of the parties. We would welcome a plain provision in the Bill by which such an agreement under subsection (1), although not in writing, would be caught by the Bill.
§ Sir J. Barlow
A number of points have been put to my right hon. Friend this evening as to whether different items would or would not be caught in the net under Clause 5. If he will clarify this matter, I shall be greatly obliged.
It will be remembered that last year, on 25th July, the then Chancellor of Exchequer urged that the banks should have what is colloquially known as a squeeze and reduce credit—reduce the facilities for the people who normally borrow money from the banks. Indeed, the Chancellor, under the Bank of England Act, 1946, could give instructions to the Bank of England that joint stock companies should do this among many other things. Section 4 (3) of the Bank of England Act says quite clearly that the Treasury, presumably meaning the Chancellor of Exchequer, could give such instructions, but the Committee will remember that in this particular case the Chancellor apparently did not give official instructions but gave advice, which he confirmed in a letter, to the Governor of the Bank of England.
2096 In that letter he wrote:I have no doubt that the Banks will agree that it is their duty to reduce the amount of Bank credit.That, in the words of the hon. Member for Darwen (Mr. Fletcher-Cooke), seems to indicate a common course of behaviour among the banks. Whether it is an instruction by the Government through the Act, which would eliminate it from the net, or whether it is not and is only advice, and whether it would come into the net, I should be greatly obliged if the President would explain.
§ Dr. Horace King (Southampton, Itchen)
I want to welcome this Clause and put a question to the Minister. I welcome the Clause because, as hon. Members know, it demands that agreements shall be registered which, among other kinds of agreements, confer profits or benefits upon certain parties. I want to be assured that the loophole does not exist whereby practices which those who examine the agreement which comes for registration would condemn are not allowed to be carried on merely because an agreement has not been registered.
I do so because I have been asked by a Hampshire farmer to take the opportunity of raising an example of the kind of agreement which, if presented for registration, would certainly be condemned, I believe, by both sides of the Committee. This farmer was supplied by the Southern Counties Agricultural Trading Association with fertilisers year by year and suddenly his supply of fertiliser was stopped. He received a letter from the Association which said:With reference to your inquiry of yesterday concerning the non-delivery of I.C.I. fertiliser this year, I have gone into the matter, and I find that the allocation has been diverted to other customers of the Society who are giving us the benefit of their fertiliser, seed and feeding-stuffs trade. I have some sympathy with the department over this matter but I think you should have been notified beforehand so that you could have made alternative arrangements if necessary.Then they offered him a substitute, saying:I am sorry for any inconvenience caused over the I.C.I. fertiliser, but in any case I think you ought to take it that we shall not be able to make an allocation of this fertiliser, which is in very short supply, in the future, unless, of course, we have the benefit of some of your other seed and fertiliser trade.This farmer has been rich and resourceful enough to go elsewhere, but this could 2097 have been a very serious blow to him, merely because the society was seeking to impose the sort of conditions with which the Clause seeks to deal.
§ 10.0 p.m.
§ Mr. R. Harris
The hon. Member for Edge Hill (Mr. A. J. Irvine) referred to the report on tyres, which, he said, had disclosed agreements which were not reduced to writing. It would be more true to say that the report showed that price leadership existed in the tyre trade. If the hon. Member hopes that price leadership will be covered by the Clause, he is asking for the moon. I leave it to the President to deal with that.
Subsection (1, b) refers tothe terms or conditions (other than terms as to prices) …Was it intended that within the bracket there should be the wordsother than terms and conditions as to prices"?It seems a little odd that it should merely beother than terms as to prices.I do not know whether that was deliberate or was a drafting mistake, but it has a very important effect. If a number of manufacturers get together and agree among themselves that they will enforce their individual prices—as they are permitted to do under Clause 20—unless the words "and conditions" are inserted, any such agreement will be registrable. It may be the Minister's intention that it should be so registrable, but I should have thought it unnecessary to register it because the enforcement of individual prices is permissible under Clause 20.
§ Mr. P. Thorneycroft
The discussion began and ended on the same question, namely, the registration of agreements for resale price maintenance. They are and should be registrable. It is true that later provisions provide that a manufacturer can individually enforce his prices, but an agreement between all manufacturers that all should individually enforce their prices, is clearly something which should be registrable, and which we believe is registrable under the Clause.
There is a clear distinction between an agreement and an arrangement. An agreement imports the idea of some form of enforceability, whereas many of the matters which we are considering are not 2098 legally enforceable; they are arrangements. I am not particularly attracted by the term "conscious parallelism," but if people really arrange together to move all their prices they should say so, and under the Bill they are required to say so.
The hon. Member for Edge Hill (Mr. A. J. Irvine) asked again whether the Clause included agreements between different classes—between some who were retailers and some who were producers. The answer is "Yes". The agreement can straddle the whole range of wholesaling, retailing and the rest.
If members of an association come to an agreement themselves they are certainly caught a fortiori. They are even more clearly caught than if we had to rely on the provision of their being a member of an association which makes a recommendation. If the rules of an association bind the members, there is an agreement anyway; and if the rules do not bind the members, there is a recommendation, and the association is again caught under the Clause.
As the hon. Member for Edge Hill knows better than I do, an agreement need not necessarily be in writing. Clause 8 (3, b) makes it demonstrably clear that an unwritten agreement is caught within the Clause.
My hon. Friend the Member for Middleton and Prestwich (Sir J. Barlow) referred to a letter of advice sent by the Chancellor of the Exchequer to the banks. The answer to his question is that the letter did not deal with goods and therefore is outside the Bill altogether.
The hon. Member for Southampton, Itchen (Dr. King) raised a point concerning some Hampshire farmers. I hesitate to advise on these matters "off the cuff", but on the account given to me it does not appear that there was any mutual restriction within the sense of the Clause, and it seems to me that whatever remedy that the farmers whom the hon. Member mentioned had, it would not be under the Bill. My hon. Friend the Member for Heston and Isleworth (Mr. R. Harris) repeated his question about resale price maintenance. As I have said, an agreement that everybody should maintain their prices is registrable under the Bill.
§ Mr. Thorneycroft
One reduces it to writing under Clause 8 (3, b), and sends it to the Registrar, and it is recorded in the register.
§ Clause, as amended, ordered to stand part of the Bill.