§ Mr. MulleyI beg to move, in page 6, line 9, to leave out from "corporate" to end of line 10.
The President will perhaps recall that, during the Committee stage, I moved an Amendment to exclude inter-connected bodies corporate and persons carrying on business in partnership from this Clause, which contains the agreements which are excepted from registration. We were able accept the explanation which the Government gave for the inclusion—
§ Mr. P. ThorneycroftI hope the hon. Gentleman will forgive me, but, as I shall want to refer to it in my reply, it would perhaps be convenient to take along with this Amendment the Amendment to line 9 to leave out "persons" and insert "individuals", because the two Amendments are really interrelated.
§ Mr. MulleyThat would be convenient.
§ Mr. SpeakerVery well.
§ Mr. MulleyWe are satisfied that there is a case for excepting agreements between inter-connected bodies corporate because I believe that in order to satisfy that definition only one controlling force in a number of companies may be concerned. After all, they are separate individuals and are trading as separate persons. In the case of individuals carrying on a business in partnership with each other, I cannot envisage what kind of agreements they might have with each other which would fall to be registered 660 under Clause 5. It seems to me that in the ordinary course of partnership business the individuals concerned would be trading not as individuals but as partners; they would be trading jointly. No question of a restrictive practice of the kind we want to catch under the Bill could arise from their ordinary partnership relations.
For the ordinary purpose of partnership trade, I suggest, to use a phrase popular with the Parliamentary Secretary, that these words are otiose. Since there is no point in putting things in an Act of Parliament which are unnecessary, I suggest that they should be omitted.
The argument has more force even than that, however, because there will be many gentlemen looking for loopholes in the Bill, and it might well be possible that some form of partnership arrangement, under the very loose wording of the Partnership Act, could be arrived at which would permit a certain type of agreement to escape the registration which we desire to see under Clause 5. I think the point has already been taken by the Government to some extent by the Amendment which they have put down to substitute "individuals" for "persons." This is one of the reasons I moved my Amendment in Committee, As the House knows, persons include companies, and the Government were perhaps afraid that there could have been a partnership between a number of companies unless the point had been covered. as it is covered, by their Amendment.
I feel that there is no practical use in this exception and, since it gives rise to the possibility of a loophole, as the Government themselves have found, why not go a stage further, prefer my Amendment and omit the reference to partnership altogether, rather than try to meet the point half-way by the Government's Amendment? I ask the President to think very carefully about this. There will be pressure on the best brains of the Temple and Lincoln's Inn to find a way round the Bill. I suggest that there may be a possibility of a way round in this Clause.
§ Mr. A. J. IrvineI beg to second the Amendment.
If I may respectfully say so, there is a good deal of force particularly in the latter point of the argument advanced by my hon. Friend the Member for 661 Sheffield, Park (Mr. Mulley). It seems to me that we might have two individuals contemplating the exploitation of some project or another and proposing to enter into an agreement which would be registrable. It might well prove to be contrary to the public interest. It might be thought that their entry into an ad hoc partnership for the purpose provided an all-too-easy getaway. I merely express a suspicion here that my hon. Friend may have pointed to a loophole which I know the President would not for one moment, as a matter of policy, desire to remain in the Bill if, as we suspect, it exists.
§ Mr. P. ThorneycroftThe effect of the Amendment would be to make registrable restrictive arrangements entered into by partners if there were two or more of them. It may be said that there are not a lot of these restrictive practices, but undoubtedly there are some. It is quite a common arrangement in a partnership agreement to lay down restrictive arrangements as to the areas in which the partners will carry on business at the end of the partnership.
I am quite certain that it is not the wish of the House to bring all that mass of trivia into the net of the Restrictive Practices Court, to register it and to find ourselves under an obligation solemnly to call it forward in front of the Court. That is not our purpose at all.
I am, however, grateful to the hon. Member for Sheffield, Park (Mr. Mulley) for pointing out a fear which he had. The fact that he pointed it out made us look closely and anxiously at the matter to see that we had not left a loophole. I do not think we have. There is a limit to which anything can be achieved by entering into partnership arrangements. Indeed. I believe that the numbers in a partnership are now limited to 20. I also think that it is important to limit this exception to individuals, because the vast majority of the arrangements with which we are dealing are not the restrictions entered into by individuals but those entered into by companies and firms.
It is a valuable consequence of the hon. Member's Amendment that we seek to delete the word "persons," which would include companies, and to make it clear that we are selling simply to exclude the ordinary partnership agreement between individuals. That does 662 not go the whole way to meet his point, but I think it should meet a good deal of it and a good many of the fears which he had in this connection.
§ Mr. MulleyThe President ought to give us an example of the kind of partnership agreement which he thinks would be caught by the Clause. His reference was to areas, but the essence of a partnership is that it should be trading jointly, with the profits being shared. I do not see how an ordinary partnership, which I agree should not come within Clause 5, can fall under Clause 5. It seems to me that there is a possibility of a loophole existing here with no practical advantage.
§ Mr. ThorneycroftIf there are no examples, at any rate we can say that we are doing no harm. My feeling is that there are examples of restrictive partnerships. I gave a very common example where partners agreed that when the partnership came to an end one would look after the North of England and one would look after the South of England. I do not want that kind of agreement, of which there may be hundreds, registered and argued out in the Court.
To safeguard that, I sought to exclude the partnership, and in order to meet the hon. Member's perfectly proper and cautious fears that we might be opening the door too wide, I have limited the exception to individuals. I think that is the best we can do.
Amendment negatived.
Amendment made: In page 6, line 9, leave out "persons" and insert "individuals".—[Mr. P. Thorneycroft.]
§ Mr. P. ThorneycroftI beg to move, in page 6, line 16, to leave out subsection (3) and insert:
(3) No account shall he taken for the purposes of this Part of this Act of any term of an agreement for the supply of goods, or for the application of any process of manufacture to goods, which relates exclusively to the goods supplied, or to which the process is applied. in pursuance of the agreement:Provided that where any such restrictions as are described in subsection (1) of section five of this Act are accepted as between two or more persons by whom, or two or more person,. to or for whom, goods are to be supplied, or the process applied, in pursuance of the agreement, this subsection shall not apply to those restrictions unless accepted in pursuance of a previous agreement in respect of which particulars have been registered under this Part of this Act.663(4) Without prejudice to the last foregoing subsection, no account shall be taken for the purposes of this Part of this Act of restrictions accepted under an agreement for the supply of goods for the purpose of resale, being restrictions accepted—This Amendment links up with the Amendments which we were discussing previously. We were discussing a range of Amendments and a Clause which laid down what should be registrable for the purposes of Part I of the Act. In a series of provisions, not all of which we need discuss now, this Clause lays down the exceptions. The exceptions which we are considering here, spell out, in slightly different terms from those originally used. three types of exception, about one of which some hon. Members opposite think there is some doubt. Indeed, they are moving an Amendment to leave it out.
- (a) by the party supplying the goods. in respect of the supply of goods of the same description to other persons for the purpose of resale; or
- (b) by the party acquiring the goods, in respect of the sale, or acquisition for sale, of other goods of the same description.
7.30 p.m.
I will take three forms of exception with which we are here concerned. The first one—and I am putting this in my own language, I know, but that is more intelligible, sometimes, than the Bill—is the ordinary supply agreement between two persons. It may be a contract of sale or, equally, it may be a long-term supply agreement between two persons. That is excluded, and I may say that I hope the House will agree that it should be excluded. If it is not, then no register we can ever have will hold the agreements that would come forward for registration.
I should like to spend just a few moments on the second type of exception, because it is a little complicated and rather important. It refers to the ring. I was anxious to ensure, and I referred to this in Committee, that where there was a ring we should, if possible, examine that ring and not every contract that it entered into. What we really want to have decided is whether that restrictive arrangement between those persons is a good thing or a bad thing. If it is a good thing and in the public interest we have no concern about the arrangement which the ring enters into. At least, we do not 664 want to examine each and every contract which flows from the restrictions, which will have been argued about during consideration of the merits of the ring itself.
If it is a bad thing, an order ought to be made so that those arrangements cannot be entered into in one contract after another, and we do not take up the time of the Court in dealing with the detailed consequences instead of with the casual arrangement. Therefore, what we here provide for is that the contracts or arrangements which are entered into by a ring shall not be registrable so long as the ring itself is registrable. If the parties do not register the ring then each one of these other arrangements must come forward for registration. There is. therefore, a very strong inducement for those concerned to register their basic agreement.
I hope that the House will agree that that is a sensible course which gets rid of the danger of perhaps missing some of these arrangements, and that it does ensure that what is really the root agreement will be registered, and in due time called forward.
§ Mr. Turner-SamuelsComprehensive.
§ Mr. ThorneycroftComprehensive, yes. Those are the first two exceptions the ordinary supply arrangement, and the ring arrangement where the root agreement has been registered.
The last exclusion is dealt with in subsection (4), and there is an Amendment to leave that out. That is the sole agency arrangement. It is quite clearly spelled out in the Bill, and there can be no illusions as to what we are seeking to leave out.
We are seeking to leave out from registration the ordinary arrangement, very prevalent in our industrial life, whereby a manufacturer says to a retailer in a town, "I will sell only to you, and you, on your part, will undertake not to stock other suppliers' goods. You will be the sole agent for the Austin motor cars but you will not stock Standard cars "—or whatever the arrangement may be. It is an arrangement which is very deeply interwoven into the commercial life of the United Kingdom. Certainly, if we tried to register those arrangements we should have a vast number and, to tell the truth, we should have to make up our minds in broad principle as to 665 whether it was right or wrong to have sole agency arrangements.
I am satisfied that such arrangements serve a very useful purpose. They provide a steady outlet for the manufacturer and the specialist who knows and understands the goods of the particular firm etc. At all events, they are widely used over a vast range of manufactures, and I am quite sure that we should exclude them, as we do the sole agency and the other arrangements, from the compass of the Bill.
§ Sir L. Ungoed-ThomasIf there is a sole agency arrangement and the agreement is between two people—and not, therefore, apparently within the contemplation of the collective restriction in Clause 5—what is the necessity for having subsection (4) at all in order to take the arrangement outside the Bill? The very fact that we have subsection (4) indicates that it is an exception to some collective agreement under Clause 5 which would otherwise be registrable. It seems to us that an agency agreement of itself, being merely between two parties, would not be within the collective arrangement mentioned in Clause 5 and, therefore, not registrable. In that case, if subsection (4) is merely a matter of agency arrangement, what is the point in having that subsection at all as an exception?
§ Mr. ThorneycroftThe answer is that the ordinary form of sole agency agreement is an agreement by two, persons, both of them entering into restrictions with regard to supply. That is, the manufacturer says, "I will not sell my particular goods to anybody else in Wolverhampton." The agency, the shop, the retailer, in Wolverhampton says, "I will not stock anything except your goods". I do not want to go back to the word "mutual", but those are two persons, both of whom are entering in the same agreement into restrictions of supply or whatever it is under Clause 5. Therefore, unless something is done about it, it would appear that in the ordinary course they would be registrable under Clause 5, and we have to pull them out by means of subsection (4).
§ Mr. George Darling (Sheffield, Hillsborough)I should like to pay a tribute to the clarity of the right hon. Gentleman's explanation of what, when I read the new subsections, seemed to be no 666 more than an incomprehensible slab of legal jargon. I would suggest to the President in all seriousness that where we are dealing with a Bill which will be fought over in the courts—and the application of which when it becomes an Act will depend on legal interpretations in the courts—the clarity of expression used by the right hon. Gentleman ought to appear in the Bill. I am confident that, as they now stand, the words are completely meaningless to an ordinary layman.
As I certainly have no legal training, I can claim to be a layman in these matters and the words used were certainly meaningless to me. I read the proposed new subsections about twenty times and at the end I could not understand at all clearly what the words meant. I am suggesting this quite seriously. We shall be having traders who, especially when seeking exemption for the sole agency arrangements, will want to know what their position is. The Bill should make their position clear without there being any need to get a lot of expensive legal advice. As the Bill stands, no person will be clear as to the meaning of these exemptions.
There is another important point. When the lawyers get to work to try to steer their clients through this exemption procedure the Court will find that there will be a flourishing crop of conflicting interpretations because the Bill is not clear on these matters. We all realise that this has not been a very easy Bill to draft. The Minister has not only had to draft it in the legal language necessary for the Bill to carry out his intentions but has also had to bear in mind that every word, particularly of Part I, will be fought over, perhaps by legal actions in the courts. He has had to keep that consideration in mind.
The proposed subsections (3) and (4) seem to me to be a positive invitation to lawyers to exercise their forensic skill in order to find possible loopholes in this exemption procedure, and, so far as I can see from the very complicated and complex wording of the two subsections, the lawyers will have a mighty fine time. I should like the President of the Board of Trade to say whether this wording can be made simpler so that it can be understood by laymen as well as by lawyers. I should like to know whether it is necessary to have subsection (4) in these terms 667 in order to carry out what he wishes to do.
I may be wrong, but as I see the matter, it would be possible under the proposed subsection (4) for the petrol company arrangements not only to get through the Court but to be entirely exempt from registration, even if they were borderline cases. It seems to me that what the right hon. Gentleman is doing is to make absolutely certain that these exclusive arrangements for tied garages and so on would not even be considered by the Registrar to make sure whether they were outside the terms of the Bill.
The original subsection (3) is quite clear. I can understand it. It says, in effect, that if a firm imposes conditions of sale or reaches such an agreement with its customers, provision may be made so that it does not enter into any collusive arrangements with other manufacturers. The right hon. Gentleman intends to scrap that simple provision and to have in its place something which will lead to legal difficulties.
As I read subsection (4), it says that without prejudice to something which no ordinary person can understand, the Registrar must take no account of an agreement between a manufacturer and a wholesaler or a retailer if the manufacturer's conditions of sale are imposed on a number of his customers, provided that the customers accept the conditions laid down by the manufacturer. That may be all right if we are dealing with a case, such as the right hon. Gentleman mentioned, of the exclusive agency arrangements which motor car manufacturers make with local garages. But, to mention petrol companies again as an example, so long as there is no written collusive agreement, there could be a collusive arrangement between two petrol companies to set up tied garages throughout the country. Both the petrol companies would have identical agreements which they would seek by one means or another to impose on the garages, and the agreement would work out in such a way that the two petrol companies would together be working exclusive arrangements with garages throughout the country.
For instance Shell, B.P. and National Benzole, in their exclusive arrangements, 668 have identical agreements. I am told that the wording is identical. The tied garages which enter into the arrangement with one company also enter into arrangements with the others. The petrol companies work together in the sense that they have identical agreements, and the brands of petrol of the companies—
§ 7.45 p.m.
§ Mr. SpeakerI have been trying to follow the hon. Member's argument, but it appears to me that he is anticipating matters a little. The Question is, "That the words proposed to be left out stand part of the Bill". It is not until that Question has been disposed of that I can put the Question, "That the proposed words be there inserted in the Bill" and then the hon. Member's speech would be in order. The Amendment to the proposed Amendment in the name of the hon. Member for Islington, East (Mr. E. Fletcher) could then be called. But we must first get rid of the old words. If the House is agreed that the present subsection (3) should be left out, we can get on.
Question, That the words proposed to be left out stand part of the Bill, put and negatived.
Question proposed, That the proposed words be there inserted in the Bill.
§ Mr. DarlingI am sorry if I offended, Mr. Speaker. There is very little more that I want to say. I wanted to make this point about the petrol agreements because it seems to me that, so long as there is no proof of collusive action, it will be possible under the exemption granted here for the petrol companies to make identical arrangements with the garages which would, therefore, have the effect of collusive agreements although, as I say, there may not be proof of that.
We must remember that these exclusive arrangements are not confined to the motor trade. There are exclusive arrangements in the brewing trade, with tied houses for the sale of certain brands of beer. There are arrangements of a somewhat similar kind in the tobacco trade between manufacturers and retailers. There are exclusive arrangements of this kind in the drugs trade, the photographic materials trade, the newspaper distribution business, etc.
It seems to me that if subsection (4) is as widely drawn as I think it is, those arrangements will escape registration. I 669 am sure that that is not the intention of the right hon. Gentleman or of the House. If such agreements are to escape registration because the new subsection is so widely drawn, I hope that the right hon. Gentleman will look at it again.
Reverting to the first point that I mentioned, I would urge that when dealing with matters of this kind, perhaps involving small retailers who may not be able to obtain a great deal of expensive legal help, it is essential that the provisions of the Bill should be clearly drawn so that laymen can understand them. I cannot believe that it is impossible to reword these provisions so that they can he understood by ordinary people.
For those reasons—first, because of the lack of clarity, and second, because this subsection is so widely drawn that all exclusive trading arrangements will escape registration—I hope that the right hon. Gentleman will reconsider this matter.
§ Mr. Deputy-Speaker (Sir Rhys Hopkin Morris)Does the hon. Member for Islington, East (Mr. E. Fletcher) intend to move his Amendment to the proposed Amendment?
§ Mr. E. FletcherWhat I should like to do would he to make some observations on the right hon. Gentleman's Amendment proposing to insert new subsections (3) and (4), and then to move my Amendment at the end.
§ Mr. Deputy-SpeakerThe Question now is, That those words be there inserted. The hon. Member has got an Amendment to that. It would be more convenient if he would move his Amendment at this stage.
§ Mr. FletcherI have no objection to doing so, provided that I shall not thereby be precluded from speaking on the proposed insertion of the new subsections. In other words, I want to make some comments on the proposed addition of the new subsections and then to make some observations on my Amendment.
§ Mr. Deputy-SpeakerThe hon. Member would be quite in order in doing that. If he moves his Amendment, he will not exhaust his right to speak on the right hon. Gentleman's proposed Amendment.
§ Mr. FletcherI am obliged, Mr. Deputy-Speaker.
670 I beg to move, as an Amendment to the proposed Amendment, to leave out subsection (4).
We are in this position. We have now eliminated from the Bill subsection (3). which during the Committee stage, despite the improvements the President of the Board of Trade tried to make to it, was found objectionable, obnoxious and, I think, unintelligible. The President is now, on reflection, proposing to insert two new subsections. I entirely agree with what my hon. Friend the Member for Hillsborough (Mr. G. Darling) just now said. I think the President's remarks were an absolute model of lucidity. For the first time. I understood what he was getting at. His speech was clear and comprehensible. and we understood his object. and, of course, it was, as my hon. Friend said in marked contrast to the verbiage with which his intentions are concealed in the proposed new subsections (3) and (4).
I do not want to debate with my hon. Friend whether the legal jargon could or could not be simplified. I have some sympathy with the draftsmen in trying to put in watertight language the quite simple objectives which the President explained so lucidly, but I fully agree with my hon. Friend that if anybody, lawyer or layman, is to understand this Bill, sooner or later we shall have to have a child's guide explaining what really is intended. I have no doubt that the Parliamentary Secretary would prove an admirable author of such an explanatory guide to the Bill, if he were free to undertake that work of authorship.
Coming to the Amendments, we agree with the intentions of the new subsection (3), subject to one reservation which I will make in a moment. We agree that the ordinary straightforward contract for the sale of goods or for the supply of goods over a period should be excluded from registration. I also think, if I understand what is in the President's mind, that when there is a ring and a great many agreements consequential on the existence of a ring, the sensible thing to do is to make the agreements constituting the ring registrable but not to bother with the antennae and the related agreements brought into operation to carry it out.
I listened very attentively to what the President said about subsection (4), which is intended to exclude the sole agency 671 agreement or the sole agency system. I want to say something about its merits, because the real truth of the matter is this. Some sole agency agreements may be desirable in the public interest, but others may be thoroughly undesirable. The President gave as an illustration the motor car dealer. It may be perfectly legitimate in the public interest for, say, the Morris manufacturer to choose a dealer and say to him, "If you devote your skill and expertise to understanding the mysteries of this particular motor car, you will do a service to all users of my particular brand of motor car" Some other manufacturer of a rival motor car may choose another dealer in the same town and say the same thing to him. This, no doubt, serves very well the interest of the manufacturer, the interest of the dealer and the interest of the public, but, as the President says, we cannot apply that illustration to other commodities.
It would be undesirable for a manufacturer of one brand of chocolate to choose two or three grocers in Wolverhampton and say, "I am only going to sell you my chocolate; you must not stock anyone else's chocolate," and for a rival manufacturer to choose another two or three grocers and say to them the same thing. That would be an intolerable nuisance to the public for this reason. It cannot be said that a dealer in chocolate, as in the case of a dealer in motor cars, requires any particular skill in selling it to the public. Therefore, if we get that kind of sole agency agreement for chocolate and biscuits or tobacco it becomes a public nuisance.
Reference has been made to the case of petrol. We have a system which is growing up of one or two distributors of petrol choosing garages and saying to them, "You can only sell my brands of petrol", whether Esso or Regent or something else. The President has rejected this argument in the case of petrol. I do not understand why. I cannot understand what skill is required in selling one brand of petrol rather than another. When I go to buy petrol all that the supplier has to do is to turn a handle or operate a pump and petrol comes out. I cannot see that that requires any particular skill or that it is any great convenience to the public that at one garage one can get one type of petrol and at 672 another another type, as compared with the system where one can get whatever petrol one likes at one garage.
That is why we say to the President that there must be a large range of commodities in which sole agency agreements are, to say the least, an intolerable public nuisance. One of the reasons which the President has given for excluding from the obligation to register these sole agency agreements—this is a point he has made in Committee two or three times, and I agree with him to a certain extent—is that he says that we must not clutter up the register with all kinds of agreements, or the whole thing will become unworkable. He has given that excuse for rejecting agreements between two companies, one of whom is inside the United Kingdom and another outside—import and export. He has also given that reason for rejecting the partnership argument and, up to a point, there is validity in it.
At a later stage of the Bill—I do not want to anticipate, but a great many parts of this Bill hang together—we shall be resisting very strongly the President's proposal to dismantle the machinery of the Monopolies Commission. I would not be so alarmed about the exclusion of the sole agency agreement if we could be quite sure that the Monopolies Commission was to be continued in full strength and full virility, so that it could expose evils which we are quite sure will arise from the sole agency agreement. It might well be that that would be a better way of dealing with them and we shall press that argument when we come to Part III of the Bill.
For these reasons, we feel that the entire balance of argument would be in favour of having the sole agency agreement registered and then it would not be very difficult to see in which of the articles the public interest is served, and in which of the articles the sole agency agreement works to the detriment of the public interest. It is for these reasons that we are moving the deletion of subsection (4).
§ Sir Leslie Plummer (Deptford)I beg formally to second the Amendment.
§ 8.0 p.m.
§ Sir L. Joynson-HicksThe hon. Member for Islington, East (Mr. E. Fletcher), in moving the Amendment, seemed to me to broaden very considerably the issues 673 to which the Amendment itself relates. I hope that my right hon. Friend will not accept it.
If all these agreements to which subsection (4) relates require to be registrable, I cannot conceive that there will not be so many of them that it will be exceedingly difficult to deal with them. The vast majority of them are, in addition, entirely innocuous agreements, and it is very hard to envisage any agreement which would be caught by subsection (4) which would be of a restrictive character detrimental to the public. The reason for that gives me my second reason for objecting to the deletion of this subsection.
We are here approaching very near indeed to a statutory imposition on the mutual rights of contract between individuals. It is very seldom that two individuals can contract together to the detriment of the public as a whole, and to take the risk of their doing so is a very much better thing in the public interest than to bring under review all contracts of that character. After all, to do so would be a first step towards interfering by statute with the right of parties to contract over a house, in an ordinary common or garden lease, because there is no requirement upon any party to an agency agreement to deal with any particular supplier. There are plenty of suppliers, and there are plenty of potential agents. It is entirely a matter of individual judgment and option whether a particular supplier ties himself to another supplier or not.
I really cannot agree that there is any justification for us to seek to intervene in that type of individual personal contract, which cannot be restrictive in the sense in which we are seeking to protect the public from its effects. I therefore hope that my right hon. Friend will not accept this Amendment.
§ Mr. GrimondEven if I had not been up all night, I know quite well that I could never understand this new Clause; but, like other hon. Members, I hang on to the words of the President, which shine like a small glow-worm on a very dark night. I hope he will arrange to lend his services to the Parliamentary draftsmen and ask them to let him see what he can do.
May I try to see whether I understand either his purpose or the effect of the 674 Amendment if it were accepted. As I understand it, subsection (4) excludes from the Bill an exclusive agreement so long as it affects only one class of goods. First, if there is a company or group of companies which supplies a great variety of goods, that company or group can presumably make an exclusive agreement covering all its goods with a retailer, and it will come under subsection (4). Again, if a petrol company, in agreement with a retailer, says that the retailer must sell only the company's brand of petrol, the company can presumably also make a parallel agreement that the retailer will sell only its brand of oil, but, if the company seeks to exclude other types of goods, then that would be an exclusive agreement, outside this sub-clause and probably would be objectionable to the Court. Is that the right interpretation of subsection (4)?
Secondly, if we pass the Amendment moved by the hon. Member for Islington, East (Mr. E. Fletcher) and we strike out subsection (4), we are then left with subsection (3), and even a straightforward exclusive agreement between a garage and a petrol company to sell a particular brand of petrol and no other will be registrable. I agree with the hon. Member for Chichester (Sir L. Joynson-Hicks) that that would put an intolerable burden on the Registrar. I take it that that would be the effect of leaving out subsection (4), although even then it would be perfectly possible, under subsection (3) alone, for the Court to find that such an agreement was not objectionable though it would be a practice which would be registrable.
I would like the President to give us a little further light upon the exact effect of subsection (4), and also upon the effect of leaving it out.
§ Sir L. Ungoed-ThomasMay I put the difficulty with regard to subsection (4) as I see it? There are two points: first, the President's intention that it should be a sole agency agreement, and second, the question whether subsection (4), as it stands, is in fact limited to sole agency cases.
I will take the second point, the limitation to sole agency cases, first. The subsection provides
Without prejudice to the last foregoing subsection, no account shall be taken for the purposes of this part of this Act of restrictions accepted under an agreement for the supply of goods …675 There is nothing there which, expressly at any rate, states that the agreement is to be limited as between two individuals, two companies, or two parties. So far, the agreement might include any number of parties.Let us imagine a case where there is an agreement with a large number of suppliers on the one hand a large number of retailers on the other. The subsection goes on
… for the purpose of re-sale, being restrictions accepted— (a) by the party supplying the goods…That is presumably one party.Let us imagine an agreement, in which there is a large number of suppliers on the one hand and a large number of retailers on the other, setting out the terms in which the parties agreed that party A, party B, and party C severally should sell goods to party X, party Y and party Z. That is an agreement between a large number of suppliers and a large number of retailers, all dealing with the supply of goods by one party, namely the party referred to in paragraph (a) as the "party supplying the goods" The same reasoning applies precisely the other way round to the party acquiring the goods.
Therefore, one would have, within a collective arrangement, a restriction which is obviously within the purpose of the Bill. All one would then have to do to come within subsection (4) and escape the Bill would be to arrange for the agreements for supply to be within the same document as the restrictions which are agreed to be imposed and accepted collectively. It therefore seems to me that this subsection, as it stands, is not limited to sole agency agreements.
It is a matter of construction, and that, obviously, is not the President's intention. What we should ask him to do, in that case, is to look at the provision with a view to making quite certain that it is limited to sole agency cases.
I now pass to the second point, as to the virtues or demerits of having the exception of sole agency cases. Let me take the petrol case first. As I understand it, the petrol agreement is a case in which the restrictions are virtually, at any rate for all practical purposes, on one side. I dare say there may be restriction which work mutually in certain 676 cases, but, generally speaking, they are agreements in which the petrol company imposes restrictions and the garage proprietor accepts them, without any corresponding restrictions accepted by the petrol company from the garage proprietor. If that is so, it would seem to me that that would be outside Clause 5 altogether.
Secondly, there are cases in which there are mutual—if I might use that atrocious word—restrictions accepted by one party and the other party. There may be sole agency cases of that kind which are very desirable and to which there is no objection. Equally, there might be cases which are very pernicious. My hon. Friend referred to the chocolate case as contrasted with the sale of motor cars.
What makes them pernicious is when a stage is reached where there is a big demand in several places for small scale goods. It is then an atrocious trespass upon the convenience of the public not to have the goods available. To take the case of the petrol companies again, it is most inconvenient and, as far as one can judge, most uneconomic to have sole agency arrangements.
Clearly, there are instances where something ought to be done about sole agency cases. It should not be beyond the capacity of the Government to provide an indication of a line which would exclude those which are not pernicious and include those which are. There should not be much difficulty in providing a test based on the desirability of the general availability, or skill in the sale, or big articles which are comparatively rarely sold although there is no perniciousness in the arrangements as in the case of small articles which are generally sold and generally required.
Something ought to be done about the petrol company cases, and the stranglehold on newspaper sales. There is no such provision in the Bill. I am not pressing that all sole agency cases should be brought within the Bill and be registered, but on that point of principle our case is that there are considerable numbers of sole agencies which are within the vice of the Bill, and they certainly should be registered. We hope the Government will consider that course.
§ Mr. Reader Harris (Heston and Isle-worth)I should also like to put a point 677 to the President of the Board of Trade. Subsection (4) is designed to cut out the sole agency agreement. Petrol companies have been quoted. It may or may not be desirable, but it is arguable that it is desirable that a petrol company which gives certain things to and does certain things for a garage might be entitled to say "You shall sell only my petrol" Such an agreement is excluded by the Clause.
What I am worried about is what happens if a petrol company says not only "You may sell only my petrol", but, "You may sell only a certain make of tyre, battery or other accessory". As I understand the subsection, that sort of agreement would not be excluded. The subsection says:
… no account shall be taken … of restrictions accepted under an agreement for the supply of goods for the purpose of resale, being restrictions accepted by the party supplying the goods …A petrol company supplies only petrol and not tyres, batteries and other accessories. It seems to me that such an agreement would have to be registered. I am all for it. I should like to see such agreements registered because I believe they are contracts in restraint of trade to a very much greater extent than many restraint agreements. I support the hon. Member for Islington, East (Mr. E. Fletcher) on that point.
§ 8.15 p.m.
§ Mr. P. ThorneycroftI welcome the unanimity in the House on this point. My hon. Friend the Member for Heston and Isleworth (Mr. R. Harris) is right. The reference is specifically to goods of the same description. There is no question of any of the arrangements whereby one tries to link up petrol with tyres, sparking plugs and so on being able to escape from the Clause.
I hesitate to blur what I understand was the accidental clarity with which I expressed myself a few moments ago, by attempting to repeat what I gather I must re-read afterwards to enable even me to understand with absolute clearness what the Clause does. Let us be clear about one thing first of all. There is absolutely nothing to prevent an individual manufacturer from doing what he wants about his supply. It is worth recalling that. If one is a chocolate manufacturer and wishes to 678 deal with one shop only in the United Kingdom, there is nothing in the Bill or that could be put in the Bill, so far as one can see, which would prevent one from doing so. A man can do what he wants with his own in the ordinary course of events. The Bill is concerned only with people joined together on what we are now agreed are—I use the word for shorthand purposes only — mutual arrangements to restrict supply in one form or another.
I agree that if we attempted to bring into the net of the Restrictive Practices Court sole agency arrangements we should be placing upon it an altogether impossible burden. It is all very well to say that it should be possible to draw a line between the good and the bad. We must be clear what the arrangements are. They are only commercial arrangements in which manufacturers and retailers agree together that their commercial interests would be served by having exclusive supplies from one another. Such arrangements are adopted over an enormous range of industry. If I were asked to do so, I do not know how I should distinguish between those which were good and those which were bad, but I believe that if one gets supply tied up thus over a very large area in a quasi-monopolistic way there is a case for inquiry.
Perhaps I might take an example which recalls some past days of mine when I was a barrister. Mitchell and Butler provides excellent beer in large quantities in the Birmingham area. The firm may even supply a third of the total amount of beer supplied in that area. In these circumstances, I dare say that, technically at any rate, one could, if one wished to do so, refer its tied houses to the Monopolies Commission and inquire about their effect on the public.
However, I do not want to call up all agreements between a brewery and a tied house, between a motor car firm and its agencies in a certain town, or between manufacturers and retailers which are simply carrying out the very ordinary form of sole agency arrangements. I should not want to say to the Registrar "Put it on the register", or "Undertake the obligation which you have to call the agreement before the Court", and to the Court "Please sort out all this for us".
§ Mr. JayWas the President saying that it would be possible to refer to the Monopolies Commission under the latter part of the Bill the agreements which the few great petrol companies have with garages?
§ Mr. ThorneycroftThat would be so if their control extended to more than one-third of the goods for sale. Let me assume for the purpose of my answer—if the assumption is wrong, the answer does not stand—that a great petrol company controls, at any rate in an area of the United Kingdom, and probably over the whole of it, more than one-third of the articles or goods in question. In that case, it is plain from the Monopolies and Restrictive Practices (Inquiry and Control) Act, 1948, that it would be referable to the Monopolies Commission.
When it got there, the petrol company would argue, its case that a limitation on the sources of distribution from the point of view of refilling the pumps and so forth was thoroughly advantageous com-
§ pared with distributing petrol in penny packets at hundreds of filling stations. It would make out its case, the argument no doubt being on those lines, in front of the Monopolies Commission. But it would be done in front of the Monopolies Commission. What I do not want to do is to alter a sound provision in the Bill, namely, not to bring into the net of these arrangements the whole of the sole agency system, just because, at the moment, there happens to be a certain amount written about petrol companies. I hope that the House will not press me to do so. I think that it is right to exclude them. Where they are in a monopolistic or quasi-monopolistic situation adequate arrangements exist for dealing with them, and I hope that the House will be content to let the matter proceed upon that basis.
§ Question put, that the words proposed to be left out stand part of the proposed Amendment:—
§ The House divided: Ayes 247, Noes 190.
683| Division No.217.] | AYES | [8.21 p.m. |
| Agnew, Cmdr.P.G | ||
| Aitken, W. T. | Chichester-Clark, R. | Harris, Reader (Heston) |
| Allan, R. A. (Paddington, S.) | Conant, Maj. Sir Roger | Harrison, A. B. C. (Maldon) |
| Alport, C. J. M. | Cooper-Key, E. M. | Harrison, Col. J. H. (Eye) |
| Amory, Rt. Hn. Heathcoat (Tiverton) | Craddock., Beresford (Spelthorne) | Harvey, Air Cdre. A. V. (Macclesfd) |
| Arbuthnot, John | Crouch, R. F. | Harvey, Ian (Harrow, E.) |
| Armstrong, C. W. | Crowder, Sir John (Finchley) | Harvey, John (Walthamstow, E.) |
| Ashton, H. | Cunningham, Knox | Hay, John |
| Atkins, H. E. | Currie, G. B. H. | Head, Rt. Hon. A. H. |
| Baldock, Lt.-Cmdr. J. M. | Dance, J. C. G. | Heald, Rt. Hon. Sir Lionel |
| Baldwin, A. E. | Davidson, Viscountess | Heath, Rt. Hon. E. R. G. |
| Balniel, Lord | Deedes, W. F. | Hicks-Beach, Maj.W. W. |
| Barber, Anthony | Digby, Simon Wingfield | Hill, Mrs. E. (Wythenshawe) |
| Barlow, Sir John | Dodds-Parker, A. D. | Hill, John (S. Norfolk) |
| Barter, John | Donaldson, Cmdr. C. E. McA. | Hinchingbrooke, Viscount |
| Baxter, Sir Beverley | du Cann, E. D. L. | Hirst, Geoffrey |
| Bell, Philip (Bolton, E.) | Duncan, Capt. J. A. L. | Holland-Martin, C. J. |
| Bell, Ronald (Bucks, S.) | Duthie, W. S. | Holt, A. F. |
| Bennett, F. M. (Torquay) | Eden,Rt.Hn.SirA (Warwick & L'm'tn) | Hornby, R. P. |
| Bennett, Dr. Reginald | Eden, J. B. (Bournemouth, West) | Horobin, Sir Ian |
| Bevins, J. R. (Toxteth) | Errington, Sir Eric | Howard, John (Test) |
| Bidgood, J. C. | Erroll, E. J. | Hudson, Sir Austin (Lewisham, N.) |
| Biggs-Davison, J. A. | Farey-Jones, F. W. | Hughes Hallett, Vice-Admiral J. |
| Birch, Rt. Hon. Nigel | Fell, A. | Hulbert, Sir Norman |
| Bishop, F. P. | Finlay, Graeme | Hutchison, Sir Ian Clark (E'b'gh,W.) |
| Black, C. W. | Fisher, Nigel | Hyde, Montgomery |
| Body, R. F. | Fletcher-Cooke, C. | Hylton-Foster, Sir H. B. H. |
| Bossom, Sir Alfred | Fort, R. | Iremonger, T. L. |
| Bowen, E. R. (Cardigan) | Fraser, Sir Ian (M'cmbe & Lonsdale) | Irvine, Bryant Godman (Rye) |
| Boyd-Caarpenter, Rt. Hon. J. A. | Galbraith, Hon. T. G. D. | Jenkins, Robert (Dulwich) |
| Boyle, Sir Edward | Garner-Evans, E. H. | Jennings, J. C. (Burton) |
| Braine, B. R. | George, J. C. (Pollok) | Johnson, Dr. Donald (Carlisle) |
| Bromley-Davenport, Lt.-Col. W. H. | Gibson-Watt, D. | Johnson, Eric (Blackley) |
| Brooke, Rt. Hon. Henry | Glover, D. | Jones, Rt. Hon. Aubrey (Hall Green) |
| Brooman-White, R. C. | Godber, J. B. | Joseph, Sir Keith |
| Buchan-Hepburn, Rt. Hon. P. G. T. | Gomme-Duncan, Col. Sir Alan | Joynson-Hicks, Hon. Sir Lancelot |
| Bullus, Wing Commander E. E. | Gower, H. R. | Keegan,D. |
| Burden, F. F. A. | Graham, Sir Fergus | Kerby, Capt. H. B. |
| Butcher, Sir Herbert | Green, A | Kerr, H. W. |
| Butler,Rt. Hn. R. A.(Saffron Walden) | Grimond, J. | Kershaw, J. A. |
| Campbell, Sir David | Grimston, Hon. John (St. Albans) | Kimball, M. |
| Carr, Robert | Grimston, Sir Robert (Westbury) | Kirk, P. M. |
| Cary, Sir Robert | Grosvenor, Lt.-Col. R. G. | Lagden, G. W. |
| Channon, H. | Hall, John (Wycombe) | Lambert, Hon. G. |
| Harris, Frederic (Croydon, N.W.) | Lancaster, Col. C. G. | |
| Leather, E. H. C. | Oakshott, H. D. | Steward, Sir William (Woolwich, W.) |
| Leburn, W. G. | O'Neill, Hn. Phelim (Co. Antrim, N.) | Stewart, Henderson (Fife, E.) |
| Legge-Bourke, Maj. E. A. H. | Ormsby-Gore, Hon. W. D. | Stoddart-Scott, Col. M. |
| Legh, Hon. Peter (Petersfield) | Orr-Ewing, Charles Ian (Hendon, N.) | Studholme, Sir Henry |
| Lindsay, Hon. James (Devon, N.) | Osborne, C. | Summers, Sir Spencer |
| Lindsay, Martin (Solihull) | Page, R. G. | Taylor, Sir Charles (Eastbourne) |
| Linstead, Sir H. N. | Pannell, N. A. (Kirkdale) | Taylor, William (Bradford, N.) |
| Lloyd, Maj. Sir Guy (Renfrew, E.) | Partridge, E. | Teeling, W. |
| Longden, Gilbert | Peyton, J. W. W. | Thomas, Leslie (Canterbury) |
| Lucas, Sir Jocelyn (Portsmouth, S.) | Pilkington, Capt. R. A. | Thomas, P. J. M. (Conway) |
| Lucas, P. B. (Brentford & Chiswick) | Pitman, I. J. | Thompson, Kenneth (Walton) |
| Lucas-Tooth, Sir Hugh | Pitt, Miss E. M. | Thorneycroft, Rt. Hon. P. |
| Macdonald, Sir Peter | Pott, H. P. | Thornton-Kemsley, C. N. |
| McKibbin, A. J. | Powell, J. Enoch | Tiley, A. (Bradford, W.) |
| Mackie, J. H. (Galloway) | Price, Henry (Lewisham, W.) | Tilney, John (Wavertree) |
| Maclay, Rt. Hon. John | Prior-Palmer, Brig. 0. L. | Touche, Sir Gordon |
| Maclean, Fitzroy (Lancaster) | Profumo, J. D. | Turton, Rt. Hon. R. H. |
| McLean, Neil (Inverness) | Raikes, Sir Victor | Tweedsmuir, Lady |
| MacLeod, John (Ross & Cromarty) | Ramsden, J. E. | Vane, W. M. F. |
| Maddan, Martin | Rawlinson, Peter | Vaughan-Morgan, J. K. |
| Maitland, Hon. Patrick (Lanark) | Redmayne, M. | Vickers, Miss J. H. |
| Manningham-Buller, Rt. Hn. Sir R. | Renton, D. L. M. | Vosper, D. F. |
| Markham, Major Sir Frank | Ridsdale, J. E. | Wakefield, Edward (Derbyshire, W.) |
| Marlowe, A. A. H. | Roberts, Sir Peter (Heeley) | Wakefield, Sir Wavell (St. M'lebone) |
| Marples, A. E. | Robertson, Sir David | Walker-Smith, D. C. |
| Mathew, R. | Robinson, Sir Roland (Blackpool, S.) | Wall, Major Patrick |
| Maude, Angus | Robson-Brown, W. | Ward, Hon. George (Worcester) |
| Mawby, R. L. | Rodgers, John (Sevenoaks) | Ward, Dame Irene (Tynemouth) |
| Maydon, Lt.-Comdr. S. L. C. | Roper, Sir Harold | Waterhouse, Capt. Rt. Hon. C. |
| Milligan, Rt. Hon. W. R. | Schofield, Lt.-Col. W. | Watkinson, Rt. Hon. Harold |
| Molson, Rt. Hon. Hugh | Scott-Miller, Cmdr. R. | Webbe, Sir H. |
| Morrison, John (Salisbury) | Sharples, R. C. | Whitelaw, W.S.I. (Penrith & Border) |
| Nabarro, G. D. N. | Shepherd, William | Williams, Paul (Sunderland, S.) |
| Nairn, D. L. S. | Simon, J. E. S. (Middlesbrough, W.) | Williams, R. Dudley (Exeter) |
| Neave, Airey | Smithers, Peter (Winchester) | Wills, G. (Bridgwater) |
| Nicholls, Harmer | Soames, Capt. C. | Wood, Hon. R. |
| Nicolson, N. (B'n'm'th, E. & Chr'ch) | Spearman, Sir Alexander | Woollam, John Victor |
| Nield, Basil (Chester) | Spens, Rt. Hn. Sir P. (Kens'gt'n, S.) | |
| Noble, Comdr. A. H. P. | Stanley, Capt. Hon. Richard | TELLERS FOR THE AYES: |
| Mr. Bryan and Mr. Hughes-Young | ||
| NOES | ||
| Ainsley, J. W. | Delargy, H. J. | Jones, Jack (Rotherham) |
| Allaun, Frank (Salford, E.) | Dodds, N. N. | Jones, Idwal (Wrexham) |
| Allen, Arthur (Bosworth) | Edwards, Robert (Bilston) | Jones, T. W. (Merioneth) |
| Allen, Scholefield (Crewe) | Edwards, W. J. (Stepney) | Kenyon, C. |
| Awbery, S. S. | Evans, Albert (Islington, S.W.) | Key, Rt. Hon. C. W. |
| Bacon, Miss Alice | Evans, Stanley (Wednesbury) | King, Dr. H. M. |
| Balfour, A. | Fernyhough, E. | Lawson, G. M. |
| Bence, C. R. (Dunbartonstiire, E.) | Fienburgh, W. | Ledger, F. J. |
| Benn, Hn. Wedgwood (Bristol, S.E.) | Finch, H. J. | Lee, Frederick (Newton) |
| Benson, G. | Fletcher, Eric | Lee, Miss Jennie (Cannock) |
| Bevan, Rt. Hon. A. (Ebbw Vale) | Forman, J. C. | Logan, D. G. |
| Blackburn, F. | Fraser, Thomas (Hamilton) | Mabon, Dr. J. Dickson |
| Blenkinsop, A. | Gibson, C. W. | MacColl, J. E. |
| Blyton, W. R. | Grenfell, Rt. Hon. D. R. | McGhee, H. G. |
| Boardman, H. | Grey, C. F. | McGovern, J. |
| Bottomley, Rt. Hon. A. G. | Griffiths, David (Rother Valley) | McKay, John (Wallsend) |
| Bowden, H. W. (Leicester, S.W.) | Griffiths, William (Exchange) | Macpherson, Malcolm (Stirling) |
| Bowles, F. G. | Hale, Leslie | Mahon, Simon |
| Boyd, T. C. | Hamilton, W. W. | Mallalieu, E. L. (Brigg) |
| Braddock. Mrs. Elizabeth | Hastings, S. | Mallalieu, J. P. W. (Huddersfd, E.) |
| Brockway, A. F. | Hayman, F. H. | Mann, Mrs. Jean |
| Broughton, Dr. A. D. D. | Healey, Denis | Marquand, Rt. Hon. H. A. |
| Brown, Thomas (Ince) | Henderson, Rt. Hn. A. (Rwly Regis) | Mason, Roy |
| Burton, Miss F. E. | Hobson, C. R. | Mayhew, C. P. |
| Butler, Herbert (Hackney, C.) | Holman, P. | Messer, Sir F. |
| Butler, Mrs. Joyce (Wood Green) | Howell, Charles (Perry Barr) | Mikardo, Ian |
| Callaghan, L. J. | Howell, Denis (All Saints) | Mitchison, G. R. |
| Chetwynd, G. R | Hubbard, T. F. | Monslow, W. |
| Clunie, J. | Hughes, Cledwyn (Anglesey) | Moody, A. S. |
| Coldrick, W. | Hughes, Emrys (S. Ayrshire) | Morris, Percy (Swansea, W.) |
| Collick, P. H. (Birkenhead) | Hughes, Hector (Aberdeen, N.) | Morrison,Rt.Hn.Herbert(Lewis'm,S.) |
| Collins, V. J.(Shoreditch & Finsbury) | Hunter, A. E. | Mort, D. L. |
| Cove, W. G. | Hynd, H. (Accrington) | Moss, R. |
| Craddock, George (Bradford, S.) | Irvine, A. J. (Edge Hill) | Moyle, A. |
| Crossman, R. H. S. | Irving, S. (Dartford) | Mulley, F. W. |
| Cullen, Mrs. A. | Isaacs, Rt. Hon. G. A. | Neal, Harold (Bolsover) |
| Darling, George (Hillsborough) | Jay, Rt. Hon. D. P. T. | Noel-Baker, Francis (Swindon) |
| Davies, Harold (Leek) | Johnson, James (Rugby) | Oliver, G. H. |
| Davies, Stephen (Merthyr) | Jones, Rt. Hon. A. Creech(Wakefield) | Oram, A. E. |
| Deer, G. | Jones, David (The Hartlepools) | Orbach, M. |
| de Freitas, Geoffrey | Jones, Elwyn (W. Ham, S.) | Oswald, T. |
| Padley, W. E. | Roberts, Goronwy (Caernarvon) | Timmons, J. |
| Paget, R. T. | Robinson, Kenneth (St. Pancras, N) | Turner-Samuels, M. |
| Paling, Rt. Hon. W. (Dearne Valley) | Rogers, George (Kensington, N.) | Ungoed-Thomas, Sir Lynn |
| Paling, Will T. (Dewsbury) | Ross, William | Usborne, H. C. |
| Palmer, A. M. F. | Shinwell, Rt. Hon. E. | Viant, S. P. |
| Pargiter, G. A. | Short, E. W. | Warbey, W. N. |
| Parker, J. | Silverman, Julius (Aston) | Wells, Percy (Faversham) |
| Parkin, B. T. | Silverman, Sydney (Nelson) | Wells, William (Walsall, N.) |
| Paton, John | Skeffington, A. M. | West, D. G. |
| Pearson, A. | Slater, Mrs. H. (Stoke, N.) | Wheeldon, W. E. |
| Plummer, Sir Leslie | Slater, J. (Sedgefield) | White, Henry (Derbyshire, N.E.) |
| Price, J. T. (Westhoughton) | Smith, Ellis (Stoke, S.) | Williams, Rt. Hon. T. (Don Valley) |
| Price, Philips (Gloucestershire, W.) | Snow, J. W. | Williams, W. R. (Openshaw) |
| Probert, A. R. | Sorensen, R. W. | Williams, W. T. (Barons Court) |
| Proctor, W. T. | Stewart, Michael (Fulham) | Willis, Eustace (Edinburgh, E.) |
| Pryde, D. J. | Stones, W. (Consett) | Winterbottom, Richard |
| Randall, H. E | Summerskill, Rt, Hon. E. | Woodburn, Rt. Hon. A. |
| Rankin, John | Sylvester, G. 0. | Woof, R. E. |
| Redhead, E. C. | Taylor, Bernard (Mansfield) | Yates, V. (Ladywood) |
| Reeves, J. | Taylor, John (West Lothian) | Younger, Rt. Hon. K. |
| Reid, William | Thomas, George (Cardiff) | Zilliacus, K. |
| Robens, Rt. Hon. A. | Thomson, George (Dundee, E.) | |
| Roberts, Albert (Normanton) | Thornton, E. | TELLERS FOR THE NOES: |
| Mr. Holmes and Mr. Wilkins. |
Question put and agreed to.
§ Proposed words there inserted in the Bill.
§ 8.30 p.m.
§ Mr. Walker-SmithI beg to move, in page 6, line 22, at the end to insert:
or by a person who has applied for a patent or for the registration of a design, to.It might be for the convenience of the House if together with this Amendment we discussed the two following Amendments, in page 6, lines 23 and 25.Subsection (4) exempts certain restrictions in regard to patents. During the Committee stage of the Bill I sought to explain the principle on which that was done, which is, broadly, to avoid the duality of control where there already exists a statutory control under the Patents Act. All that these Amendments are really concerned to do is to remove small defects in the existing draft of the Bill and to make provision for cases which fall within the same general principle.
This Amendment and the Amendment in page 6, line 23, deal with a different point, though within the same principle, from that of the Amendment to line 25. The first two Amendments are concerned with the time at which the exemption should arise. As drafted, restrictive agreements arising from the grant of patent licences or the use of registered designs are exempted from the Bill, but, as the House will know, there is, of course, a certain and inevitable time lag between the application for the grant of a patent or registered design and the actual grant thereof.
Many of the agreements which this Clause is intended to exempt are entered 684 into after the application, but before the grant takes place. All that the first two Amendments propose is to extend the exemption to this class of agreements entered into at that time which are quite clearly covered by the principle which was accepted on the Committee stage.
The third Amendment relates to a rather different point. The Bill as it stands exempts from its scope agreements relating to articles made by a patented process. In the case of patented machines, the agreements commonly relate to the articles made by the machines and to the price and quantity, and so on. of those articles and not to the machines themselves.
Here, again, the agreements relating to the articles made by the machine and imposing these restrictions in respect thereof come within the same general principle because they are subject to the statutory safeguards under Sections 37 and 38 of the Patents Act in the same way as are the patented machines which the Clause already exempts. That being so, these extensions are not extensions of the principle of the exemption; they are merely extensions of the application within that general principle. I hope that with that explanation I may confidently commend the Amendment to the House.
§ Sir L. PlummerIf the Parliamentary Secretary is correct, and the effect of these Amendments is only to rectify some defects, then I think that the Amendments do not go far enough. But I am not absolutely sure about this, and for that reason I want to put some questions to the hon. Gentleman, because I think that these Amendments, and the Clause itself, need some further elucidation.
685 We accept that it is quite understandable that ordinary patent agreements between the patentee and the licensee should be excluded from the working of the Bill. But how does this Clause affect patent pools? I am sure the hon. and learned Gentleman will have in mind the description of patent pools contained in the Monopolies and Restrictive Practices Commission's Report on the Supply of Electric Lamps which appeared in 1951. That document is worth the study of the hon. and learned Gentleman, for it contains a good deal of information which certainly ought not to he forgotten now. I recommend him particularly to that part of the Report which describes what was called the Phoebus agreement, which I think it would be fair also to describe as the "grandaddy" of all restrictive practices agreements and monopolistic tendencies.
Out of the Phoebus agreement, which was designed to provide for an interchange of patents between the manufacturers who were producing electric lamps, and which resulted in such an interchange of those agreements with ordinary agreements that they became almost indistinguisable, came the ordinary pool of patents. Are such patent pools to be excluded from registration under the Clause which we are now discussing? I ask that question. because in paragraph 270 on page 94 of the Commission's Report it is stated:
We have described in Chapter 5 the patent policies formerly followed by members of E.L.M.A. and the new policy they propose to follow in the light of the passing of the Monopolies and Restrictive Practices … Act, 1948. …There are, however, two features of the new patent policy on which we must make some further comment. The first is that a patent licence will still fix the price at which the lamps under the patent are to be sold. It is, as we have said, common for patentees to fix prices in this way. and it is no doubt natural to do so when those settling the terms of the licence have agreed common prices among themselves.This pool of patents was organised solely for the purpose of exchanging patents between those companies who had formed themselves into an association inter alia for the purpose of fixing prices, restricting output and sharing markets, and for the purpose of excluding from access to the patents firms who were not members of that association. I am perfectly certain that the Parliamentary Secretary does not want to perpetuate the 686 combination which was very properly attacked and scored by the Monopolies Commission. I am sure that the Minister would agree that these firms should not be provided under the Bill with an opportunity to revive patent pools.I would ask him to see whether the Clause does not give an opportunity for the re-creation of patent pools. If it does, will he take the necessary steps to see that that possibility is denied to people who want to use patent pools for the purposes that I have described?
§ Sir L. HealdI understand that these Amendments are the result of consultations between my right hon. and learned Friend, my right hon. Friend the President of the Board of Trade and the Parliamentary Secretary with the professional body which is interested in this matter, and which agrees, I understand, with the Amendments. I would therefore like to thank Ministers very much for having had those discussions at the suggestion of one or two of us. It is a very pleasant feature of the Bill that, whatever interests may be involved and whatever differences of opinion we have, the President of the Board of Trade and the Parliamentary Secretary have shown themselves very accessible to the people concerned in these matters. That has greatly helped everyone.
I believe there are other Amendments which have not received the same 100 per cent. degree of agreement, but that only shows that any suggestion that my right hon. Friend is giving way to anybody is a complete mistake. I know, from what I have had to do with the matter, that he has taken a great deal of trouble over these matters, and that we ought to be grateful to him and to the Parliamentary Secretary, who has helped him.
As regards what has been said by the hon. Member for Deptford (Sir L. Plummer), I do not want to enter into a long discussion on the matter. I have not heard the word "Phoebus" for some time, although I was personally engaged in that connection. The Phoebus agreement to which the hon. Member referred was international and, of course, had special characteristics. Secondly, it was shown quite clearly to the Commission, which made it quite clear in the Report, that the result of that agreement had been to build up a great British industry.
§ Mr. JayThis is a subject where angels fear to tread, but I would nevertheless like to add one question to those asked by my hon. Friend the Member for Deptford (Sir L. Plummer), in order to be quite sure that we understand something of what the Parliamentary Secretary is trying to do.
One of the criticisms put forward in Committee on Clause 6 (4) was that, while attempting to exclude patent agreements proper from the scope of the Bill, the President of the Board of Trade had, quite inadvertently, made it possible to exclude other types of restrictive agreement affecting the goods in respect of which there was a patent arrangement. It was argued that that might be so because the words of the subsection read:
This Part of this Act does not apply to any licence … or agreement which imposes no such restrictions aforesaid except in respect of the patented article …The argument was that that might exclude an agreement for some other type of restriction which related to the patented article.I have looked at the Amendment being dealt with by the Parliamentary Secretary, and which gets rid of the latter words. The subsection is now to read, after leaving out words:
under which no such restrictions as are described in subsection (1) of section five of this Act are accepted except in respect of.Then paragraph (a) deals with the invention, and paragraph (b) reads:articles in respect of which the design is or is proposed to be registered and to which it is applied, as the case may be.8.45 p.m.That, on the face of it, would appear —on this point at any rate—to mean substantially the same as the original Clause. It would still be possible to make a restrictive agreement affecting articles in respect of which the design, etc., would nevertheless be types of restriction which in principle were quite distinct from the actual patent arrangement. Can the Parliamentary Secretary tell us if that would be true under the form of words that he has suggested? Has he really met the difficulty which, in Committee, some of us felt to be quite substantial?
§ Mr. MulleyThe only doubt that I have stems from my lack of knowledge of the patent laws, but before we part 688 with these Amendments, I should like to know that there is no possibility of someone applying for a patent or registered design and then unduly prolonging the period whilst that is being considered if it is likely that that patent or design is not likely to be given. I want to be sure that there is not a device here to which someone could turn and use as a loophole instead of registering a particular agreement.
Secondly, and again this perhaps stems from my inability to understand the wording, it is not clear what happens if someone applies and is not granted a patent or registered design. It does not seem clear that automatically that agreement or series of agreements would fall to be registered. Perhaps the hon. and learned Gentleman could set our fears at rest on that question.
§ Mr. Walker-SmithWith the leave of the House, I will deal shortly as best I may with the points which have been raised. I hasten to say that I share the disability to which the hon. Member for Sheffield, Park (Mr. Mulley) gave modest expression in that I am far from expert in patent law, but I take confidence in the presence of my right hon. and learned Friend the Member for Chertsey (Sir L. Heald) who, I believe, is the leading expert on patent law in the country today.
First, what would happen if the application were made and not granted? The hon. Member asked if the agreement would then fall to be registered, but if the agreement and restrictions are linked to the grant of the licence under the patent and if there is no patent granted on the application, the agreement would fall altogether. In fact there would be nothing to register.
On the point raised by the hon. Member as to the possibility of a delaying device, I think he is probably not very familiar with the position about applications for patents and how they are dealt with at present. For various reasons which I need not go into, the time that is taken to deal with those matters is rather longer than one would like, and there is no question of any applicant prolonging the period—indeed the reverse is true.
To reply to the right hon. Member for Battersea, North (Mr. Jay), what we were 689 concerned with when the House was in Committee on this Bill was that the Clause should not give exemption to restrictions which went beyond the actual patented processes—in other words which went beyond the things which come under the statutory control and safeguards of the Patents Act. I can reassure the right hon. Member, I think, quite confidently on that.
I could put the point this way. This Amendment does nothing, as it were, to widen the scope and take the Clause beyond what is covered by patent protection. All it does is, as it were, to expand the Clause in the sense that where articles are made by a patented machine they now, as a result of that machine, come within the exemption because they are covered by the same statutory safeguards under Sections 37 and 38 of the Patents Act. We do not in any way depart from the principle enunciated during the Committee stage that the exemption from the protection of this Bill is given only where there is already a protection under the Patents Act, and that it is to avoid that duality of control.
The hon. Member for Deptford (Sir L. Plummer) referred to the electric lamp case before the Monopolies Commission, and the question of pooled patents and various esoteric mysteries of that sort. My right hon. and learned Friend the Member for Chertsey who was professionally engaged in those proceedings, has already made some observations to put the matter in perspective. The hon. Member will appreciate that I cannot deal very fully with that, because, whatever the position about pooled patents, they are in no wise affected by the Amendment before the House at present. That certainly does not affect their position.
I would say in rapid parenthesis, in the hope that I am in order, to the extent of bringing this measure of reassurance to the mind of the hon. Gentleman, that, as I understand it, an agreement to pool patents simpliciter would not itself be registrable, because it is not a restriction relating to goods. Therefore, it is outside Clause 5 of the Bill, but an agreement between holders of patents as to the terms on which each will license people to use his patent is registrable under the Bill.
Further than that, and particularly in respect of hypothetical or specific cases, 690 I do not think it would be either proper or in order to go, but I hope that that brings some measure of reassurance to the hon. Gentleman. It certainly is not a matter affected by the Amendment with which we are dealing now, to which I hope the House will agree.
§ Mr. JayIf I may, by leave of the House, I should like to ask the hon. and learned Gentleman a question. He does not greatly reassure me by saying that he is not widening the Clause, because I understood that what he sought to do was to narrow it. Let us suppose that there was a normal patent agreement between certain parties relating to certain goods. Supposing the same parties made another agreement of a restrictive kind wholly unconnected with the patent relating to these same goods, is it quite clear that that agreement would be registrable as the Bill will now stand?
§ Mr. Walker-SmithYes.
Amendment agreed to.
Further Amendments made: In page 6. line 23, after second "or" insert:
of the right to apply for a patent or for the registration of a design, or toIn line 25, leave out from "agreement" to end of line 28 and insert:under which no such restrictions as are described in subsection (1) of section five of this Act are accepted except in respect of—
- (a) the invention to which the patent or application for a patent relates, or articles made by the use of that invention or
- (b) articles in respect of which the design is or is proposed to be registered and to which it is applied,
as the case may be".—[Mr. P. Thorneycroft.]
§ Mr. Walker-SmithI beg to move, in page 6, line 28, at the end to insert:
(5) This part of this Act does not apply to any agreement between two persons, neither of whom is a trade association within the meaning of section five of this Act, for the exchange of information relating to the operation of processes of manufacture (whether patented or not), being an agreement to which no other person is party and under which no such restrictions as are described in subsection (1) of section five of this Act are accepted except in respect of the descriptions of goods to be produced by those processes or to which those processes are to be applied; and for the purposes of this subsection, two or more persons being inter-connected bodies corporate or individuals carrying on business in partnership with each other shall he treated as a single person.
Mr.Deputy-Speaker (Sir Rhys Hopkin Morris)It may be convenient also to discuss the Amendment in the name of the hon. Baronet the Member for Middleton and Prestwich (Sir J. Barlow), in line 28, to insert a new subsection (5).
§ Mr. Walker-SmithThe last Amendment with which we were dealing was concerned with patents. This Amendment deals with what is called unpatented information, or, popularly and perhaps more generally, "know-how." The Amendment results from an undertaking given by my right hon. Friend in Committee on an Amendment moved in an exploratory and interrogative sense by my right hon. and learned Friend the Member for Chertsey (Sir L. Heald).
In the course of those proceedings, my right hon. Friend said he appreciated that there was a problem here. We have addressed ourselves to this problem within certain limitations-the limitations which were defined by him in Committee. We have sought to see that the operation of the Bill does not discourage technical processes based on the exchange of know-how, but at the same time we have adhered to our self-imposed limitation of not providing exemptions for agreements which use the cloak of know-how to escape the obligations of the Bill in respect of restrictive practices.
Perhaps I may recall my right hon. Friend's words, as reported in column 240 of HANSARD of 1st May:
Whatever else we do, we cannot adopt a principle which would say that any price ring or exclusive dealing arrangement would be exempted from the Bill if it contained within it some know-how provisions. That would plainly be so wide as to give an obvious loop hole to anyone who wanted to bring his agreemetn outside the purview of the Restrictive Trade Practices Court."—[OFFICIAL REPORT, 1st May, 1956; Vol. 552, c. 240.]We read in the same column that the hon. and learned Member for Leicester, North-East (Sir L. Ungoed-Thomas) broadly acquiesced in the approach which my right hon. Friend suggested to this problem of know-how.
§ Mr. E. FletcherKnow-how?
§ Mr. Walker-SmithI think before the hon. Member came into the House I said that it was a word used in Committee and is a popular term for unpatented information. It has the advantage of 692 being a good deal shorter and also avoids the duality of pronunciation about patents which exhibits itself when we use that term.
Agreements relating simply to the exchange of know-how, if I may continue so to describe it, do not come under the Bill at all if they are confined to know-how because they are not restrictions in relation to goods. What we are doing by the Amendment is that where we have agreements containing provision for the imparting of know-how, and in addition restrictions as to the description of the goods which may be produced with that know-how, those restrictions will be exempted from registration under Part I of the Bill, subject to certain provisos which arise because of the general limitation to which I referred earlier.
The first of those provisos is that there should be only two parties to the agreement, neither of which is a trade association. The object of that is to make sure that the exemption cannot cover agreements throughout the industry as to the kind of goods which would be produced, because that would clearly be restrictive in the wider sense. Secondly, the exemption simply covers cases where the parties exchange know-how, agreeing as to the kind of goods to which each will apply it. If the restrictions go beyond restrictions merely as to the kind of goods and specify the quantity of goods to be produced with the know-how or the price of goods or the areas to which they should be limited, any such extension of the restrictions beyond the mere matter of kind of goods would take the agreement outside the exemption which the Amendment provides.
The third proviso or limitation is that there should be no other restrictions in the agreement relating to other goods than those to which the know-how is specifically related.
I am afraid that all these matters relating to these restrictions and exemptions are necessarily a little complicated, but I think the House will agree from my description of the effect of the Amendment and the limitation upon the exemption which I have sought to describe that we have adhered to the principle enunciated by my right hon. Friend in Committee and in which hon. 693 Members opposite acquiesced. I therefore hope that the House will accept the Amendment as a proper provision in the Bill to meet this objective.
§ 9.0 p.m.
§ Sir L. HealdAgain I should like to express my personal obligation to my hon. and learned Friend and his right hon. Friend for having gone into this matter carefully and for giving us what is very nearly what we regard as adequate.
I asked that there should be consultation between my right hon. Friend and those who were closely concerned in these matters. I am glad to know that the discussions have taken place and that those concerned have had the opportunity of putting before my right hon. Friend some important points, which he fully appreciates and to which he has given effect. In the end, I understand, the points under discussion came down to two, upon the first of which my right hon. Friend accepted the view put before him that the "persons concerned" should include "interconnected body corporate". My right hon. Friend has accepted that and it is now in the Clause.
The other point was a different one and is of considerable importance in relation to the export trade. As the Amendment is drafted, limitation in overseas territories is not permitted. The Amendment which I and my hon. Friend the Member for Middleton and Prestwich (Sir J. Barlow) have put down includes paragraph (b) relating to
areas or places or persons or classes of persons outside the United Kingdom….I wonder whether my hon. and learned Friend would be good enough to give this matter a little more thought? Those who have important know-how information at their disposal enter into agreements with people in foreign countries. Clearly, in many cases, the foreign manufacturer would be interested in such an arrangement only if he were assured that, so far as his country was concerned, he would be the owner of the exclusive rights.We must bear in mind that this know-how sharing arrangement is the opposite of a restrictive practice because normally the know-how, unless something is done about it, would be secret; it would be kept for the manufacturer himself. Therefore, an arrangement under which it is able to be shared with someone else 694 means in effect that a sharing takes place which would probably not otherwise be possible. Therefore, it seems to follow that in any agreement between the two parties in this country, it should be possible as a matter of course to make provision regarding the position abroad. It is only on that basis that it may be possible to enter into important agreements for that very purpose with foreign manufacturers. In return, of course, we may get valuable information from abroad.
I should like my hon. and learned Friend to look into the matter again. I understand that further information could be supplied on this subject giving examples of cases where this aspect is of materiality. If my hon. and learned Friend would look into it with a view to the possibility of introducing a further Amendment in another place, I would be happy then to accept his Amendment, for which I am grateful in any event, and I should not proceed with the Amendment which stands in my name and the names of some of my hon. Friends.
§ Mr. E. FletcherThe right hon. and learned Member for Chertsey (Sir L. Heald) speaks with very great knowledge and authority on this subject, and I have no doubt that it is as a result of his knowledge and persuasiveness that the Government have put down this Amendment. We see no objection to it at all.
We have not throughout the conduct of this Bill taken any frivolous objection to any wise or sensible provision that is necessary in the public interest. Speaking for myself and, I think, for most of my hon. Friends, we fully understand and appreciate the reasons which make it necessary that there should be some provision of this kind in the Bill. As the right hon. and learned Gentleman said, it is very desirable in the interests of our own manufacturers who have specialised secret or semi-secret knowledge to impart to people overseas, and correspondingly it is in the interests of manufacturers and dealers here who wish to profit by the researches and experiments which in many industrial fields are pursued at greater lengths abroad than they are here, that our manufacturers should have the benefit of that knowledge. As the Parliamentary Secretary has said, all that in itself is desirable.
695 Speaking for myself, I am satisfied that in this Amendment there are adequate safeguards which make it quite clear, as is the Government's intention, that the exemption being granted to an agreement of this kind, designed for the exchange of confidential information, is limited to agreements that do not contain any of the offending provisions to be found in Clause 5. It is on that basis that we support the Amendment.
Amendment agreed to.
§ Mr. Walker-SmithI beg to move, in page 6, line 28, at the end to insert:
(5) This Part of this Act does not apply to any agreement made in accordance with regulations approved by the Board of Trade under section thirty-seven of the Trade Marks Act, 1938 (which makes provision as to certification trade marks) authorising the use of such a trade mark, being an agreement under which no such restrictions as arc described in subsection (1) of section five of this Act are accepted, other than restrictions permitted by the said regulations.(6) This Part of this Act does not apply to any agreement between the registered proprietor of a trade mark (other than a certification trade mark) and a person authorised by the agreement to use the mark subject to registration as a registered user under section twenty-eight of the said Act of 1938 (which makes provision as to registered users), being an agreement under which no such restrictions as aforesaid are accepted except in respect of the descriptions of goods bearing the mark which are to be produced or supplied or the processes of manufacture to he applied to such goods or to goods to which the mark is to he applied.As the House will see, there are two subsections which it is proposed to incorporate into this Clause as a result of this Amendment, and the Amendment in fact raises two distinct points, one in each subsection both referring to the matter of trade marks.There was no exemption contained in the Bill as originally drafted and presented to the House, in respect of restrictions in relation to trade marks, becasue we then felt that restrictions imposed under such agreements were subject to exemption in any event under the provisions of Clause 6 (1) which exempts agreements expressly authorised by statute. On reflection and with the benefit of further consideration on this point, we feel that this is not so, because the restrictions in question are not expressly authorised under the Trade Marks Act, 1938, so as to bring them 696 within the general exemption of subsection (1). Therefore, it is necessary to give appropriate exemption by the specific provision of the two subsections in this Amendment.
The effect of the proposed subsection (5) is to exempt from Part I of the Bill an authorisation to apply a certification trade mark which imposes no relevant restrictions except such as are permitted by the regulations approved by the Board of Trade for governing the use of that mark. Certification trade marks. as the House will be aware, are, so to speak, general marks which distinguish certified goods
… in respect of origin, material. mode of manufacture, quality, accuracy or other such characteristics.from goods which are not so certified. The regulations governing the use of such marks have to be approved by the Board of Trade and deposited with the Registrar of Trade Marks. Certification marks may not in law be registered by any person carrying on trade or business in goods of the kind in question, that is to say goods to which the marks apply, but they may be, and frequently are, registered by trade associations.That is really the importance of the first of these subsections because membership of the association may confer the right to use the marks but that right is restricted, as indeed it must be, to the use of goods which comply with the requirements as to quality and so on. So the position is, under the Bill as drafted, that as there is no general exemption under subsection (1), the association rules would in fact be registrable if they are not specifically exempted.
That is obviously an inappropriate provision for two reasons, first, that the restrictions in regard to the use and quality and so on of the goods are necessary in the interest of the public and, secondly, safeguards against abuse and protection of the public are already contained in the Trade Marks Act, so in that sense this is rather analogous to what we were discussing in the Amendment before the last, where the same principle applies in respect of patents where there is statutory protection under the Patent Act. So the effect of subsection (5) is as I have said, and that is the reason for it. I should point out that the exemption proposed is limited to the restrictions permitted by the approved regulations.
697 The other subsection raises a rather different point. It deals with the ordinary trade marks as distinct from the special certification trade marks which are dealt with in the proposed subsection (5). The new subsection (6) exempts from registration an agreement between the proprietor of a trade mark and a person authorised to use the registered mark as a registered user under Section 28 of the Trade Marks Act, 1938. if it imposes no relevant restriction except in respect of the description of goods to be produced or supplied or the processes of manufacture to be applied to such goods or to goods to which the mark is to be applied.
Here again, the public interest is already safeguarded by statutory provision. It is safeguarded by the provision prescribed in Section 28 (5) of the Trade Marks Act, 1938. which says:
When the requirements of the last foregoing subsection have been complied with, it the Registrar, after considering the information furnished to him under that subsection, is satisfied that in all the circumstances the use of the trade mark in relation to the proposed goods or any of them by the proposed registered user subject to any conditions or restrictions which the Registrar thinks proper would not he contrary to the public interest, the Registrar may register the proposed registered user as a registered user in respect of the goods as to which he is so satisfied subject as aforesaid.9.15 p.m.The public interest thus has statutory protection with the Registrar of Trade Marks, and the restrictions to which the Registrar has regard relate primarily to two matters, first, to the characteristics of the material, that is to say quality and so on, and, secondly. to the mode or place of permitted use. These things are set out in subsection (4) of Section 28 of the Trade Marks Act. That, of course. refers to the mode of applying the mark or the place at which the article is marked.
So far as those second matters are concerned, they are not registrable in any event, because they are not within the provisions of Clause 5. But the first matters, restrictions relating to the characteristics of the article, quality and so on, would be registrable if this subsection is not written into the Bill to give them exemption. Here again, these matters ought clearly to be exempted, on the same principle as guided us in relation to patents, that is, the avoidance of duality of control.
698 I would like finally to emphasis that here again, as with "know-how", we have proceeded within very clear and definite limits, and this subsection would not exempt restrictions relating to quantity or price because those are not characteristics within the meaning of subsection (5) of Section 28 of the Trade Marks Act. It is. therefore, a relatively narrow matter, and one in which there are already statutory safeguards.
Again, I apologise for the inevitably somewhat technical nature of this Amendment, and I commend it to the House.
§ Mr. E. FletcherI have an Amendment to this Amendment upon the Notice Paper, which, with your permission. Mr. Speaker, I should like to move. Before doing so, may I say that I do not think the Parliamentary Secretary need apologise for having given a very careful and comprehensive explanation of a subject which is by no means easy to explain. It is useful to have it on record. I do not think it calls for any prolonged debate. I agree with him that the Amendment is similar in its nature to others we have been discussing, particularly the one relating to what he calls "know-how", by which I believe he means some specialised knowledge of some special process.
We do not object to it, because, as the Parliamentary Secretary said, it is carefully hedged round with safeguards designed to ensure that it is only that limited class of agreement, between registered owner of a trade mark and licensee, which it is reasonable to protect; if such an agreement transgresses beyond the bounds of what is strictly necessary for the protection of that particular subject-matter. and if it incorporates any of the objectionable features referred to in Clause 5, then its exclusion is no longer sanctified and it is caught in the net of Clause 5.
The Amendment we put down is, we think necessary in the interests of clarity. I hope it will be accepted because the word "description" is apt to be ambiguous and misleading.
§ Mr. SpeakerThe Amendment to which the hon. Member is now speaking, which seeks to leave out "descriptions" and to insert "definition". was not selected.
§ Mr. E. FletcherI am sorry, Mr. Speaker. In that case, I cannot move it. All I can say is that I hope that, having 699 seen the suggestion on the Order Paper, the right hon. Gentleman will appreciate the reasons which prompted some of us to make it. Those reasons are that we thought that it would be an improvement in the language of the Amendment, because the word "descriptions" is apt to be rather ambiguous and unnecessarily wide whereas what is wanted is to protect the definition of goods which are the subject of a particular trade mark.
The essence of trade mark protection is that we identify particular goods with the trade mark to which they are attached. Perhaps that is a small matter of detail which might engage the attention of the President of the Board of Trade between now and the next stage of the Bill.
§ Sir L. HealdIn thanking my right hon. Friend for the Amendment, I should like to say that I understand that these two points arose as a result of the interest taken in this matter by the Chartered Institute of Patent Agents, a professional body which does a lot of work in connection with these matters, and I think that we should be grateful to them. They raised the matter, and I understand that they would have liked my right hon. Friend to go a little further than this, but I feel that they will be satisfied with what he has done and I certainly do not want to take the matter any further now.
This is an important matter. These registered user provisions are of considerable importance in mercery, although the layman may not know much about them, and I think that a valuable addition has been made. Also, certification marks have proved to be a great success and, there again, I think that these provisions are desirable. Again I thank my right hon. Friend for the Amendment.
Amendment agreed to.
§ Mr. P. ThorneycroftI beg to move, in page 6, line 42, at the end to insert:
(6) No account shall be taken for the purposes of this Part of this Act of any agreement to comply with or apply, in respect of the production of any goods or the application to goods of any process of manufacture, standards of dimensions, design or quality for the time being approved by the British Standards Institution.The Amendment meets an undertaking which I gave during the Committee stage to deal with the registration of agree- 700 ments affecting British Standards Institution standards. We do not want to register those, and the effect of the Amendment is that they will not be registered provided the agreement does not limit production of goods of a higher standard of quality than that laid down by the British Standards Institution.
§ Miss Elaine Burton (Coventry, South)My remarks will be brief, but it is not often that I have the pleasure of agreeing with the President of the Board of Trade and I should like to say, as one who has been somewhat critical of the British Standards Institution in this House, how very pleased I am that the right hon. Gentleman has felt able to suggest the Amendment, as indeed he told us he would.
It seems to me that as at present constituted the whole work of the Institution is based on this voluntary agreement between producers, and also that if those producers who supported the work of the Institution had to register these arrangements and stand the risk of justifying them in the courts then little work would be done by the Institution.
The point I want to make is that if the work done by the British Standards Institution were reduced, it would have a drastic effect on both consumers in this country and efficiency in home production. Also, it seems to me that it would affect the ability of the British Standards Institution to come to agreements on which it is possible for it to argue with people overseas about international standards.
I have frequently argued in the House that I feel that, on the matter of standards, the agreement or majority agreement which is demanded of producers takes in far too many and that the standard is thereby at times too low. On the other hand, so far as the Amendment is concerned, there is little doubt that the fact that the producer, distributor and consumer have a say in this means that there is an endeavour to obtain a majority opinion.
Before we leave the Amendment, I should like to emphasise that I believe agreements reached by the British Standards Institution are quite different from agreements arrived at separately by trade associations. I believe I am right in saying that this was recognised in various Reports by the Monopolies Commission. 701 I think it was specifically recognised in the Report dealing with lamps and cables, which advocated that matters of specification affecting user interest should be reached between manufacturers and users through the machinery of the British Standards Institution.
One of the best examples of the work done in the consumer cause in the past few years relates to the bedding industry. I am sure the President will be one of the first to agree that, following the ending of the Utility scheme, this industry, as was not the case in some other industries, worked out standards for bedding and for certification marking of bedding according to those British Standards.
From discussions which I have had with various industries, I feel that if the President had not brought forward this Amendment, there would have been a considerable falling off in work done on the production of British Standards.
In the Amendment we are arguing only in relation to the standards produced by the Institution. I should have thought that if there were any other trade associations which wanted to argue similar exceptions for their standards, the real answer would be that they should put the matter to the test—to consumer debate, as I should describe it—through the machinery of the British Standards Institution to ascertain whether they would qualify as British Standards.
I am very pleased to be able to support the Amendment.
Amendment agreed to.