HC Deb 13 June 1956 vol 554 cc647-59
Mr. P. Thorneycroft

I beg to move, in page 4, line 25, to leave out from "which" to third "of" in line 27 and to insert: restrictions are accepted by two or more parties in respect". It might be for the convenience of the House if this Amendment were discussed with some other Amendments which are closely inter-related. There is an Amendment in page 4, line 42, to insert subsection (2). Then in page 5, line 29, there is au Amendment which deals with the association point. I think it would be convenient if at the same time we discussed the Amendment to Clause 6, in page 6, line 16, to leave out subsection (3) and insert the words on the Notice Paper. That would enable us to discuss at the same time what we are putting into the Clause and what we are taking out. I think it simpler to do that together. There is also an Opposition Amendment to that proposed Amendment.

Mr. Mulley

The Government Amendment to Clause 6, in page 6, line 16, deals with a different point, and there is also an Amendment to it. It would appear inconvenient to discuss that Amendment with the others.

Mr. Thorneycroft

I am prepared to carry the argument up to Clause 6 and deal with the matter in that way.

Sir L. Ungoed-Thomas

Perhaps it would be better to take the Amendment to Clause 6 separately.

Mr. Thorneycroft

I shall be happy to do that.

The object of the Amendments we are now considering is to clarify and tighten Clause 5. The object of that Clause, as hon. Members will recall, is to say which are the types of agreements to which Part I of the Bill applies. None of these Amendments will in any way alter the central purpose which I have expressed on a number of occasions, but they clarify the drafting.

The first thing we do under them is to drop the word "mutual". That word was under considerable fire, I think I can say, during the Committee stage discussions. I would not abandon it altogether in argument, but I must admit that we did hang a great deal upon it. Perhaps it is possible to have different interpretations of that term. At any rate, we drop it and simply say restrictions which are accepted by two or more parties…. Whether that means precisely the same thing does not matter; it is what we intend to say in the Bill. I do not think there can be any doubt about what that means.

Mr. Jay

That is not what the right hon. Gentleman said that "mutual" meant.

Mr. Thorneycroft

At any rate, it is what I intend the Bill to mean. Restrictions are accepted by two or more parties. That is what I intend the Bill to mean and, if I have varied it slightly, I hope that it is for the better.

The second thing we drop are the words in line 26, carrying on business as aforesaid. That is, carrying on business in the United Kingdom as appears in the first part of Clause 5. In the Amendment those words drop out. The effect is to ensure that agreements are registrable if two or more of the parties are in the United Kingdom. It is possible that the restrictions may be entered into, not by the parties who are in the United Kingdom, but by parties who are outside the United Kingdom.

If I may give an example—I do not think it a particularly likely one—suppose the British parties to the agreement made a money payment to the other parties. The money payment is not registrable. The foreign parties, in exchange for the money payment, entered into restrictive arrangements not to sell in this country. It has always been our purpose to see that restrictions upon imports into this country were registered. I hope the House will agree with that. They are very important in their effect upon the public as consumers and users in the United Kingdom, and there would be a large loophole in the Bill were arrangements of that kind not registrable and open to registration.

6.45 p.m.

By this redrafting, we ensure that no matter whether the arrangements by the United Kingdom persons were in fact restricted or registrable, if in the agreement as a whole, to which two or more United Kingdom people are parties, there are restrictive arrangements, the agreement should be registrable. The Amendment in page 5, line 29, deals simply with the case of an association, and it ensures that where there is an association in the United Kingdom it is treated the same as two parties in the United Kingdom. That is a problem which has arisen in other connections in the drafting, and I am sure that one would not wish to make an agreement unregistrable simply because two parties joined an association in the United Kingdom.

Mr. E. Fletcher

One point troubles me about this. I appreciate that it is complicated. But can the President say why he rejects the suggestion that if an agreement is made between two parties, one of whom is carrying on business in the United Kingdom and the other outside, that should not be equally registrable?

Mr. Thorneycroft

We have never contemplated that type of agreement as being registrable. I do not wish to use the term "ring" in any technical sense, but here we arc concerned with collective arrangements in restraint of trade. Those are the circumstances with which we have been concerned in this Measure.

There is hardly any arrangement which an individual makes in the conduct of his business which is not in restraint of trade in some way or another—

Mr. Turner-Samuels

rose

Mr. Thorneycroft

Perhaps the hon. and learned Gentleman would allow me to complete my sentence. Every contract, or nearly every contract, into which he enters is in restraint of trade. It inhibits him from doing something. I believe, and it is the view of the Government, that if we started to extend these registrations to arrangements made by any individual businessman in the United Kingdom to start with, we should scoop into the net of the Registrar a wholly unmanageable number of arrangements, and, secondly, we do not particularly want to deal with that kind of thing. If, as may sometimes happen, a single-man business is so preponderant in size as in fact to be a monoply, we think that ought to be dealt with by the Monopolies Commission. But if it is not, we do not particularly wish to deal with such a man. We wish to deal with those cases where two or more persons get together and make an arrangement. That is the essence of the proposals under this Bill.

Mr. Turner-Samuels

There is, of course, a case which ought to be visualised in this respect. Suppose someone abroad used his position abroad as a jumping-off ground for an agreement to be operated by someone, by a single person, in this country. Would not that be a proper case to be caught by this legislation?

Mr. Thorneycroft

Do not let us overestimate what we can do about people who are abroad. Let us remember that we are dealing with the High Court in this country and, therefore, it is axiomatic to these arrangements that, in order to be registrable. there must be at least two persons who are in fact in the United Kingdom. It is necessary that we have them there. But the restrictions here need not be entered into by the person carrying on business in the United Kingdom. It may be that the restrictions in this sense are entered into by the foreign parties to the agreement, and that is the difference—

Mr. Turner-Samuels

rose

Mr. Thorneycroft

The hon. and learned Gentleman may intervene later. It is easy to get drawn aside in this argument, and I do not wish to give way again.

The restrictions are entered into, or can be entered into, by the foreign parties, and provided there are the two United Kingdom parties to the agreement, then the agreement is a registrable one.

Sir L. Ungoed-Thomas

The case of a foreigner entering into two separate agreements in precisely the same terms with two parties in this country would not come within the Bill. There is an obvious loophole, because the foreigner simply makes separate agreements with each party.

Mr. Turner-Samuels

rose

Mr. Thonneycroft

The hon. and learned Gentleman must forgive me. I cannot answer two hon. Members at once. We do not cover an arrangement between one British party and one foreign party. No doubt a great number of such arrangements are made. It would be remarkable if it were otherwise in this country, which is much dependent for its livelihood upon international trade. The only cases we seek to cover are those in which there are two United Kingdom participants.

There is only one other point to which I need refer here, concerning the manner in which we seek to clarify Clause 5. Some doubt was expressed in Committee about the type of restrictions: Did they all have to be of the same type, or could they be of different types? Could some participants be retailers and others be suppliers, and the rest of it. Some fairly complex wording was used in order to demonstrate that they should be of different types.

In the Amendment to page 4, line 42, we make it plain by saying: For the purposes of the foregoing subsection it is immaterial whether any restrictions accepted by parties to an agreement relate to the same or different matters specified in that subsection, or have the same or different effect in relation to any matter so specified, and whether the parties accepting any restrictions carry on the same class or different classes of business. It is better to spell it out in the clearest terms rather than to rely upon the subtle drafting upon which we were relying at the Committee stage. The purpose of the Amendment is to tauten and strengthen the Clause. I am much indebted to hon. Members on both sides for suggestions, many of which are incorporated in the present draft.

Mr. Turner-Samuels

I posed the case to the right hon. Gentleman where abroad was being used as a jumping-off ground by one person in order to exploit an agreement here. It might very well be that that case could be caught by the Monopolies Commission on the other section of their activities. That is why I wanted to qualify what I said.

Mr. Jay

I only want to ask a question as one who raised doubts in the Committee about the value of the word "mutual". Do I understand there is no suggestion in the present form of words that it is relevant to the Bill whether or not the restrictions are accepted by one party in return for or in consideration of a restriction being accepted by the other party? As I understood it, the right hon. Gentleman used "mutual" as referring to the motives in the minds of the people who made the agreement when they made it. Do we understand that the whole matter is now made objective and that the question whether the agreement is registrable has no relevance?

Mr. Thorneycroft

No doubt all agreements are "mutual", but the test here is what is written in the Bill, which has nothing to do with reciprocity. The test is purely objective, whether, in fact, the parties have both entered into restrictions.

Mr. Mulley

I am very pleased that the word "mutual" has been removed. While we must pay close attention to what the right hon. Gentleman says he intends the Bill to mean, I would point out that the judges are not so impressed as we are with the right hon. Gentleman's interpretation of his own words. I recognise that the removal of "mutual" is an improvement, but I am not sure that the words now being inserted may not give rise to more litigation even than "mutual".

I know it is not easy to give off-the-cuff answers, and certainly not legal answers, but I wonder whether one could not get round this particular form of words by having a separate agreement with different retailers, like the oil companies. They have arrangements whereby a garage is tied to sell a particular petrol and oil, and the agreement applies to each particular garage. There is no restriction on the activity of the oil company, yet because they have separate agreements it seems that even under the new words they will be excluded from the Bill. Does the right hon. Gentleman want that particular vicious practice to continue? I hoped that the new form of words might have been made wide enough to catch that kind of practice. I shall be glad if the right hon. Gentleman would enlighten us on the matter.

Mr. R. Edwards

I cannot see the point of restricting the Clause to two parties in alliance with some party abroad. In the past, damage to our economy by restriction of goods coming into this country has invariably arisen out of agreement, not between two parties here, but with one party. I will give the right hon. Gentleman an example.

There was an agreement on the priming of ammunition and on supplies to the British Armed Forces. It was signed by one firm in this country, one firm in Germany and one firm in America. The Court cannot deal with the problem of one firm. During the war, the British Purchasing Commission were unable to buy the best method of priming, namely Tetracine, because of the agreement made between American Remington Arms, British Imperial Chemical Industries and the German I. G. Farben Industrie. British Armed Forces in this country and in the Commonwealth could not use that method of priming because of that agreement between the single British firm, the single American firm and the single German firm.

I can give many other examples relating to drugs; for example atabrine, a substitute for quinine. Those were agreements signed, not between two companies in this country, but by one. In each case the company concerned was not a total monopoly and, therefore, would not be subject to the Monopolies Commission.

7.0 p.m.

Mr. P. Thorneycroft

It is not necessary for the company to be a total monopoly. It has to control more than a third of the goods. I think the I.C.I. would fall into that category if it were required for the examination. I am not quarrelling with the perfectly fair argument of the hon. Member, but I am pointing out that it is not necessary for the organisation to be a total monopoly in order to be examined.

Mr. Edwards

I agree, but there could be an agreement similar to the two examples I have given with a relatively small firm. Because it was one firm which had an agreement with a company in another country, that agreement could govern the supply of strategic goods. It might be a medium-sized firm which might not have a monopoly and, therefore, would not be subject to the Court or to the Monopolies Commission. I cannot see why it is necessary in this Clause to insist that the agreement must be between two companies in this country. Why should not the case of one company being concerned be covered as well? If we want to get at a damaging agreement which prevents important products entering this country, we should make the provision all-embracing to include a single firm as well.

Mr. Basil Nield (City of Chester)

I wish to ask my right hon. Friend a question arising from the Amendment to page 5, line 29. When this Clause was under consideration in Committee, I put to the President the situation in which a trade association consisting of a large number of manufacturers might have an agreement as to common prices, for example, which was binding only on those members who were signatories to the agreement. It seemed to me under the old wording that it was to be deemed that all the members were parties to that agreement, although in truth and in fact it might be that half of them—because they were not signatories—were not bound by the agreement.

I should like to know from my right hon. Friend whether that point was in mind when the Amendment was put down and whether that situation has been dealt with. I ask the question for the reason that it does not seem right that those who in fact are outside such an agreement should by this enactment be deemed to be inside the agreement.

Sir L. Ungoed-Thomas

We welcome the Amendments with which the right hon. Gentleman is concerned here. They are substantial improvements on what existed before. I regret very much, as all on this side of the House do, that the type of agreements to which my hon. Friends have referred—which are very common and well known as a type of petrol company garage agreement—is not within the ambit of the Bill. That does not affect the Amendments we are discussing. Those Amendments are definitely improvements, and I thank the President for heeding the considerations put before him in Committee. We welcome them, although we could have wished that the ambit of the Bill were wider.

Amendment agreed to.

Mr. E. Fletcher

I beg to move, in page 4, line 42, after "supplied", to insert "imported".

We had some discussion on this matter in Committee, when the Parliamentary Secretary said that he would consider it. Our argument was that the word "imported" ought to be inserted after the word "supplied" in line 42 to make it abundantly clear beyond any shadow of doubt that imports were covered.

The right hon. Gentleman has said that he is determined to see within the ambit of the Bill any agreement which purports to carve up the area in which imports into this country of goods of a particular class as between various importers should come. There are various references in the Bill to exports and imports and to companies trading within the United Kingdom, etc. The President has declined to extend Clause 5 to cover agreements made between two parties, one of whom is carrying on business in the United Kingdom and the other of whom is not. Therefore, we feel that there is room for ambiguity. We urged the matter during the Committee stage, and it was left open for review. This Amendment has accordingly been put down again, and I hope that the President will tell us that he is prepared to accept it.

Mr. Mulley

I beg to second the Amendment.

I do not think there is need for me to add very much to what my hon. Friend the Member for Islington, East (Mr. E. Fletcher) has said, except that the President has at previous stages shown willingness to write words into the Bill when he wanted to make matters abundantly clear. It may well be that the purpose we seek to achieve is already somewhere in the verbiage of the Bill, but we suggest that if this word were inserted here it would be much clearer to the lay public, who will have some need to refer to the Bill and to see which agreements should be registered. Even though it might possibly be superfluous, it would add to clarity if the President could accept the Amendment so cogently moved by my hon. Friend.

Mr. P. Thorneycroft

Of course I am in entire agreement with the purpose which the hon. Member for Islington, East (Mr. E. Fletcher) has, of making sure that any form of restriction on supply would be dealt with. The trouble about adding words is that sometimes, instead of clarifying the matter, doubt is cast upon it. We feel that that would be the effect here. What we are concerned with here is restriction on supply. I can imagine all sorts of ways in which restrictions on supply, inside or outside this country, could be effective.

To put in the word "imported" brings into one's mind the question of someone deciding to stock goods at a particular moment. A decision not to import might be interpreted as a decision to stock at Calais. If we bring in the question of stocking at Calais, why not bring in stocking at Dover as well? If we have the word "imported" and the additional idea of making registrable a restriction on stocking abroad, by implication that would not include a restriction in this country. It would cast considerable doubt on the registrability—if I may use such a horrid word of some methods of controlling supply within the United Kingdom by which there might be quotas related to where goods were held at a particular time, all of which I think should be registrable because they are all part and parcel of complicated arrangements whereby it is intended that supply should be restricted.

In the circumstances, I hope that the hon. Member for Islington, East will realise that I have looked closely and sympathetically at this proposal with my advisers to see whether in fact it would strengthen the Bill and secure the object which the hon. Member has in mind. I am satisfied that it would not, for reasons which we quite agree are not apparent at first sight, but which were very real when we looked further into this particular drafting point. I am satisfied that it would do damage to the Bill, and in view of this explanation, I hope that the hon. Gentleman will not press the Amendment.

Mr. Jay

Does the President mean that "supplied" covers "imported" already?

Mr. Fletcher

I am satisfied that the President has looked into this matter very carefully, and in view of what he has said, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Amendment made: In line 42, at end insert: (2) For the purposes of the foregoing subsection it is immaterial whether any restrictions accepted by parties to an agreement relate to the same or different matters specified in that subsection, or have the same or different effect in relation to any matter so specified, and whether the parties accepting any restrictions carry on the same class or different classes of business.—[Mr. P. Thorneycroft.]

Mr. P. Thorneycroft

I beg to move, in page 5, line 4, after "and", to insert: ' restriction ' includes any negative obligation, whether absolute or not.(3)". This is the "To be or not to be" point. There can be no difference between us about the purpose of this Amendment. Plainly, we want to include not only a restriction that is doing something; we want to catch negative restrictions also. I think that almost certainly that type of restriction is included, but we have looked at this matter and have had a certain amount of discussion on how we ought to achieve that purpose. We believe that the tidiest way is to say that "restriction" includes any negative obligation, whether absolute or not, and I think that mops up the whole of the "To be or not to be" point. It is a genuine and honest attempt to meet the Amendments put down by hon. Members, and to have one instead of a large number. I hope that the House will accept it in that spirit.

Mr. Jay

When I first read this Amendment, I thought that the President was using some very excellent metaphysical language. It was only when I looked further down the Notice Paper that I discovered that he was substituting the language of Kant and Hegel for that of Shakespeare, which I put forward. In my approach, I rather preferred the language of Shakespeare, and I am beginning to wonder how the right hon. Gentleman would re-write the whole of the speech that begins with the words "To be or not to be" in the type of language which he has now placed before us.

However, I think we have to try to be sure that the Bill means what we intend it to mean, and I take it that the President has no doubt that these rather curious words would cover any agreements not to produce or acquire or process, or do anything of that sort. I do not think that that would immediately jump to one's mind on reading this Amendment, but I take it that the President is satisfied that that is the effect.

Amendment agreed to.

7.15 p.m.

Mr. P. Thorneycroft

I beg to move, in page 5, line 12, to leave out from "matters" to the first "an" in line 14 and insert: (4) Without prejudice to the last foregoing subsection. I think it would be convenient to consider this Amendment in conjunction with the Amendments in my name to lines 15 and 22. This is not much more than a tidying-up operation, but I think it will obviate a mass of other Amendments which could be put down. It deals with levy arrangements. The effect of the Bill as drafted, as evidenced by the number of Amendments on the Order Paper, is that it would catch far too many levy arrangements for beneficial and charitable purposes, which one does not want to have recorded and debated under the provisions of Clause 16. Indeed levies are raised for common funds of various kinds. What we want to catch is what I would call the punitive levy, under which a producer is told that, if he produces more than a certain amount, at that stage the levy will operate as a penalty on the production, or that the rate of the levy will thereupon be increased. That was the Calico Printers' case.

I am not condemning this process; it is not for me to condemn it. All I am saying is that these are matters which certainly deserve examination in a free society. I am anxious that they should be within the ambit of Clause 5, and I am equally anxious that we should not import on to the register a mass of other arrangements which exist in industry for levies for quite innocent purposes.

Sir Lancelot Joynson-Hicks (Chichester)

May I express my appreciation to the President for having overcome, with considerable ingenuity, a point which appeared to some of us to cause considerable difficulty? We appreciate what he has done, and hope it will meet with success.

Amendment agreed to.

Further Amendments made: In page 5, line 15, leave out from first "payments" to "to" in line 19 and insert: calculated by reference—(a)". In line 22, leave out "shall be treated" and insert: Or (b) to the quantity of materials acquired or used by him for the purpose of or in the production of any goods or the application of any such process to goods, being payments calculated, or calculated at an increased rate, in respect of quantities of goods or materials exceeding any quantity specified in or ascertained in accordance with the agreement, shall be treated for the purposes of this Part of this Act". In line 29, leave out from beginning to end of line 34 and insert: if the agreement were made between those persons and, where any restriction is accepted thereunder on the part of the association, as if the like restriction were accepted by each of those persons".—[Mr. P. Thornevcroft.]