§ Order for Second Reading read.
§ 3.31 p.m.
§ The President of the Board of Trade (Mr. Peter Thorneycroft)
I beg to move, That the Bill be now read a Second time.
Though it may be controversial in parts, this is not, in fact, a particularly complicated Bill. Its provisions are, I think, very plainly stated. I propose to refer to them and, a little later on, to the attitude expressed towards the Bill by the Opposition in speeches in the country.
First, I would say that the background to any Bill on this subject is a free enterprise society. The purpose of any Bill on this topic must be to secure that the virtues of free enterprise—initiative, adaptability and risk-taking—are not throttled by restrictions imposed by industry upon itself. Agreements between traders about the prices that they will charge, or the markets or consumers to whom they will sell, or the quantities that they will produce, are all tempting ways of avoiding competition. Such arrangements thrived in the 1930s, and it was powerfully argued in those days that such devices mitigated unemployment and staved off bankruptcy by avoiding what was called "cut-throat competition."
Today, in the second half of the twentieth century, the problems have undoubtedly changed, but many of the practices still go on. They are, indeed, widespread, and although unemployment and stagnation have given way to the problems of rising prices and inflation, new arguments have been found for the practices. It is now claimed that they ensure supplies at stable prices while the manufacturers compete in quality and service. All I would say is that if people are free to select where competition operates, then it will tend to operate at places where it has the least marked effect.
All those who have studied this problem agree that some at least of these practices may be beneficial. I think, however, that one might obtain agreement in the House on two propositions. The first is that, whatever benefits may flow from restrictive arrangements, what- 1928 ever stability may be secured by them, a price has to be paid for them, and it is a price which, in an age of rapid technical change, we can ill afford to pay. The second proposition is this: that the parties to an agreement of this character—the parties to the agreement—are not the right people to judge whether the practice is or is not against the public interest.
Whatever may be the course of this debate, there has been in the past a wide measure of agreement between all parties as to the aims that we should have in mind. There was the often-quoted White Paper on Full Employment which was issued by the Coalition Government. There was the Monopolies Bill, introduced by the party opposite in 1948. There was the Bill, introduced by the Conservative Government in 1953, which extended the monopolies arrangements in scope and strengthened the Monopolies Commission.
The Monopolies Commission is often criticised; but may I say, Mr. Speaker, that I do not believe there is anything to be done in this field worth doing which will be free from all criticism? I would pay a tribute to the members and staff of the Monopolies Commission for the indispensable contribution they have made to a proper understanding of problems in this difficult field.
Last year the Commission produced its Report on Collective Discrimination—it produced, in fact, two Reports, a Majority and a Minority Report. The Majority Report recommended that a range of practices should be made criminal offences. It did not recommend outright condemnation, but recommended instead an inevitably elaborate procedure for licence and exception. The Minority Report recommended registration followed by a continuation of existing methods of examination by the Monopolies and Restrictive Practices Commission.
The House will recall the discussions and debate which took place on that Report. The pros and cons of these various suggestions were very widely canvassed and, looking back into HANSARD, I do not think that anyone would claim that there was complete unanimity about those Reports in any party. In the event, the Government proposed their own policy upon these 1929 matters, and this Bill implements to the full the proposals that we then made. So much for the background to this Bill. Now a word about the new approach.
May I say that, in my judgment, this is not the kind of problem in which by some sudden and brilliant device one can achieve finality. In principle, nothing could be simpler than outright prohibition of all restrictive practices, but even if we take the Sherman Act in the United States of America—which went a long way in that direction—in practice we find that they are still arguing about its application 65 years after it was introduced. The measures here proposed go wider than the Majority Report of the Monopolies Commission. They extend to a field beyond collective discrimination. They cover substantially all the restrictive practices commonly to be found in British industry today. They propose a change of some constitutional importance in our method of judging these issues and dividing the responsibility between executive and judiciary, and they advance, for the first time in legislation, into the difficult field of resale price maintenance. I propose shortly to describe and to defend the various steps we propose to take, and I will deal with the Opposition's case later.
The first stage is registration. Whatever else is to be done, I hope the House will agree that registration has a part, and an important part, to play.
§ Mr. Harold Lever (Manchester, Cheetham)
On a point of order. May I ask for your guidance, Mr. Speaker, on the fact that the right hon. Gentleman the President of the Board of Trade, although he is dealing with a complex subject—I feel that I must nevertheless take up the point—is manifestly reading his speech? [HON. MEMBERS: "Oh."] In view of the fact that only yesterday, on a point taken up by my right hon. Friend the Member for Ipswich (Mr. Stokes), you ruled—what is the common and clear rule of the House—that neither right hon. Gentlemen nor hon. Members must read their speeches, will you now direct the attention of the right hon. Gentleman to that Ruling?
§ Mr. Speaker
I can tell the hon. Member that the House generally extends its indulgence to a Minister who is introducing a Bill and to Members of the 1930 Front Opposition Bench in making considered statements of party policy.
§ Mr. Thorneycroft
As I was saying, the first stage is registration, and I hope that the House will agree that registration has a part, and an important part, to play. The first thing to do about restrictive arrangements is surely to know precisely what they are, and Clauses 5 to 14 provide for this to be done. Registration clearly is not of itself enough. The Minority Report of the Monopolies Commission in my judgment fell far short of what was required, but do not let any of us ignore the effect of registration. I have no doubt whatever about what is happening at the moment. Industries at this very moment are looking at their arrangements very closely. They are deciding what they are going to keep, and in consequence publicly register, and every industrialist is asking himself whether his particular arrangements are in his judgment essential. Industry has a little time, while this Bill is being discussed, to ponder on these matters, and it is my hope and belief that quite a number of devices which may have been appropriate 25 or 30 years ago may now be quietly dropped.
Now as to the scope of the Bill. Broadly speaking, it covers all agreements and arrangements between persons under which mutual restrictions are accepted as to prices, terms and conditions of trading, what is to be sold, to whom it is to be sold and where it is to be sold. The power to register is wide. It covers virtually all the known restrictive practices and devices by rings on the supply of goods in this country, and I suggest to the House that it is much better to make a comprehensive approach of this character to this problem.
Three important classes are excluded, and I want to tell the House about these exclusions. The first type of exclusion is services. Neither the Act of 1948 nor that of 1953 covered services, which include such matters as transport or hairdressing, or a variety of occupations of that character. The principal argument for sticking to goods and excluding services is that we really have a vast field to cover already, and I suggest that it is better to concentrate on getting an advance here. Secondly, I warn the House that services are coming very close to labour, and that 1931 brings me to the second point of exclusion.
This Bill does not cover restrictive practices by workers, and I would only say that such practices seem to me to be inappropriate to it. I do not say that nothing could or should be done about them. I do say that the passing of an effective Measure in the field which we are here considering is an essential prerequisite to any advance upon the other front.
Thirdly, exports. Agreements exclusively about exports are not dealt with in the arrangements which I am here describing, but are dealt with separately under Clause 25. The essential point is that pure export agreements raise issues somewhat different from those which are made justiciable under this Bill. They raise great issues of commercial and sometimes even of foreign policy. Nor should we undertake more than necessary an obligation to publish and publicly scrutinise arrangements affecting our customers and our competitors abroad. Some agreements are mixed export and home trade agreements and are indivisible, and a provision is made in Clause 9 for keeping a special section of the register, not open to the public, recording matters affecting secret processes of manufacture and other matters affecting the public interest.
It will be for the Board of Trade to determine in which order registration shall take place, and I can say now that our intention is that price rings will be amongst the first batch to be recorded.
I now turn to the rather controversial figure of the Registrar. If we are to have a register, we must have a Registrar, and Clause 1 of the Bill deals with the appointment of this important officer by Her Majesty. The task of the Registrar is twofold. First of all, it is to keep the register, which I may add is quite a large and difficult administrative task, and, second, to initiate proceedings before the court, about which I shall speak presently. The Registrar will be advised by the Treasury Solicitor, and will be represented before the court by counsel nominated by the Attorney-General. It will be the duty of the Registrar to ensure that all relevant facts are placed before the court, and he will consult the Attorney-General, through the Treasury 1932 Solicitor, on any matters of doubt or difficulty.
May I say what our object here is? It is to ensure in this Bill that the fullest knowledge of these practices is made available to the public, to ensure that the cases are thoroughly and adequately prepared, and that machinery exists for their proper presentation to the court by all parties. We are anxious to ensure by every means that the procedures are thorough and effective, and that the Registrar has adequate powers to get all and any information needed for the proper conduct of the case.
There is one other matter to which I attach importance. Whatever method is adopted, I do not believe that the national interest would be served by having the Board of Trade, or any other Government Department, and an industry as some kind of rival contestants in an issue. It is our firm intention to remove these issues from the political to the judicial sphere, and all I need say at the moment is that, on the question of the Registrar, we shall listen with close attention to any comments which the House should make, and express our determination that the proceedings and procedures should be both effective and just, and be manifestly seen to be just.
Now I pass from registration and the Registrar to other matters. It is clearly not enough to record these various arrangements. It is necessary to provide for their examination and to determine whether they should be allowed to go on or whether they should be stopped. There is no solution to my knowledge in any country which precludes the need for some such decision to be made in any individual case.
The first question which has to be asked and answered is this: who should determine this matter? There are only two choices—either an administrative tribunal answerable to a Minister or a court forming part of the judicial system of this country. There is no solution in between. It is not possible to imagine or for the House to tolerate some administrative body deciding issues of this kind which has neither the status of the High Court determining an issue placed before it nor is responsible to a Minister answerable to Parliament. The choice is either the executive or the judiciary, and there are forceful arguments for and against them both.
1933 In part, these decisions are decisions not only of fact and law but of economic and social judgment, and it may be said that we should not or ought not to separate such judgments from the executive, or that we dare not hand them to the courts with the criticism which might flow from that. Those are powerful considerations, but can we, on the other hand, contemplate the interminable delays and endless debate which is inevitably associated with the administrative solution?
Let no one be under any illusion as to what an administrative solution entails. Each case can be and will be appealed to the Minister. The Minister himself will have first of all to study a voluminous report and then to defend it in the House of Commons; and the House of Commons will have to be prepared to discuss and determine, not principles to be followed, but the detailed merits and the demerits of such issues as whether there should be a percentage quantum scheme in the calico printing industry or whether there should be exclusive dealing between manufacturers and traders in dental goods.
I have always been unashamedly and wholeheartedly in favour of the judicial solution, and that is the solution which we have adopted in the Bill. The provisions for the court are set out in Clause 2, and I will not elaborate them here except to say that the court will consist of judges of the High Court and laymen with knowledge of or experience in industry, commerce and public affairs.
Mixed courts of this type have existed before when judgments of a rather broad character have had to be made. The Railway and Canal Commission is an example of that type, in a smaller and different field, and we believe that type of court to be best suited to the purposes which we have in mind.
If we are to have a judicial solution, certain consequences follow. It must be for Parliament to lay down the principles to be followed and the presumptions to be made. It will be for the court to interpret them. These points were put powerfully in an able and helpful leading article in The Times today. I believe that this division of responsibility is the right one—principles laid down by legislation, interpretation and applications in individual cases by the courts.
1934 I accept that these proposals represent a new, perhaps even an adventurous, constitutional advance, but the law of this country and the rôle of the judiciary is not something which is static or immutable or unchanging. It is indeed one of the glories of the English legal system and of the judiciary that its history has been one of constant change and adaptation to the changing needs of the world about it. A system which has seen and catered for vast changes in land tenure, the growth and development of the principles of equity, the industrial revolution, the introduction of the joint stock company and the commercial court will not prove itself unable to meet these new needs of a modern age, and we have therefore decided in favour of the court solution.
§ Mr. M. Turner-Samuels (Gloucester)
The Minister is emphasising that Parliament will lay down the principles. Yet this matter is to be submitted to the court on the test that it is the public interest which matters and the court will decide that. Will the Minister tell us how he proposes that in that situation Parliament shall lay down the principles when, according to the Bill, it will be for the court to make the decisions?
§ Mr. Thorneycroft
That is the part of my speech to which I am about to turn. The next task, as the hon. and learned Member properly points out, is to frame the issue to be placed before the court. In framing that issue, we have one overriding duty. We must say what presumptions should be made. We have to show what has to be proved and who has to prove it. Clause 16 tackles this not altogether uncontroversial task.
May I recall what I said about these agreements in the debate which we had last July:The answer seems to me…to place the onus of showing that they are in the public interest fairly and squarely on the shoulders of the men who wish to use them."—[OFFICIAL REPORT, 13th July. 1955; Vol. 543, c. 1944.]That is the essential principle which is followed in the Clause.
I want to emphasise that there is no question here of guilt or innocence; we are not here considering criminal offences at all. We are doing something much more practical. We are saying that in the Government's view the presumption is that these practices are against the 1935 public interest, and we lay down what has to be established to show an exception.
Two things have to be shown. The first is that the arrangement is necessary to secure one of the benefits or to avoid one of the ills contained in paragraphs (a) to (g) of Clause 16. The second is that the restriction has not operated to an unreasonable extent to the detriment of the public.
As this is an important Clause, the House will perhaps forgive me if I say a few words about it. Let me take these tests (a) to (g) in order. The first, (a) is what I might call the safety clause. It was recommended by the Majority Report of the Monopolies Commission and it deals with the case where the public can be shown to need protection owing to the nature of the goods, for instance dangerous drugs, or the type of installation. Next, (b) is the case where it can be shown that the removal of the arrangement would deny a specific and substantial benefit to consumers. Surely if that can be shown, it would not be unreasonable to admit it as an argument at any rate for continuing the practice.
Next, (c) covers the case when it can be shown to be necessary for protection against a competing ring. That, too, was recommended by the Majority Report of the Monopolies Commission. Paragraph (d) is similar and covers the case where the arrangement can be shown to be necessary for dealing with a monopoly buyer or a monopoly seller. Paragraph (e) covers the case where the industry is being deliberately contracted with the approval and wholehearted support of the Government of the day.
Paragraph (f) permits the argument that serious and persistent unemployment in an area would follow. I emphasise "in an area." It is not enough to say that some workers would leave the industry, because it might be quite right that they should leave the industry and go to another industry. It also permits the argument of damage to our export trade. Paragraph (g), which I think is a sensible arrangement, covers the case where some arangement of minor importance is ancillary to or accessory to an arrangement already approved by the court.
Having established the case under one of those heads, the industry must further 1936 show that the restriction has not operated to an unreasonable extent to the detriment of other persons, whether purchasers, users or consumers, or persons engaged in or to be engaged in the trade, or other- wise to the detriment of the public.
I am firmly of the opinion that it is right to place the onus in these matters fairly and squarely on the shoulders of the industry. The parties to these agreements believe firmly, sincerely—sometimes even passionately—that so far from causing harm they do positive good to everybody concerned. It is not unreasonable that they should be placed in a position to put forward their arguments in favour of that contention.
May I draw attention to the right of review? I think the right of review is rather important. That right is provided for, and that, I hope, will encourage the court sometimes to make decisions in favour of freedom with the knowledge that if the situation materially changes the right to review exists and the industry can go back again.
In my submission, Clause 16 is drawn tightly enough to direct the attention of the court to the issues which we regard as relevant and wide enough to permit the industry to advance all proper arguments in support of its arrangement. No doubt we shall be pressed to alter it in both directions, but I hope that the House will not disturb the balance of what I judge to be a fair justiciable issue.
If I may, I will leave aside for the moment Part II of the Bill, which deals with resale price maintenance, and invite the attention of the House to Part III, which deals with the future of the Monopolies and Restrictive Practices Commission. I want to speak shortly of the work it has to do and the transitional provisions as the new system comes into operation. I have already paid tribute to the work of the Commission, and I should like to say what a special debt I owe to Sir David Cairns for the great assistance he has been to me over a considerable period.
A large block of work previously within the field of the Monopolies Commission will be covered by the arrangements I have been describing. The process of transition from the Commission to the court obviously requires some detailed thought. What we wish, first, is to avoid any overlap between the Commission and the court. That obviously would be 1937 undesirable. Secondly, we wish to ensure that the Government do not have to make new executive or administrative decisions upon matters which under this Bill they seek to allot to the judiciary.
The essence of the arrangement in Clause 23 can be described in non-technical language as follows. First, the current inquiries which are nearing completion will be finished and the reports will be published. They cover rubber footwear, industrial and medical gases, heavy electrical plant, tea, and standard metal windows and doors. Chemical fertilisers will also be left with the Commission for the Commission to report on the monopoly aspects.
Secondly, where references are not near completion, Clause 23 permits me to vary or withdraw them. Under existing legislation I have no power to withdraw references from the Commission, but the Commission is prepared to adjust its work in the light of the intentions I am now expressing. What I propose is to withdraw the references where they are not near completion—electric batteries, street lighting equipment, steel frames for buildings, common prices and agreed tendering. As I have said, price rings are earmarked for comprehensive and early registration. Electronic valves I contemplate converting into a factual reference.
As far as the Government are concerned, I do not propose to make governmental decisions on matters which are now made justiciable. To do so would bring about an intolerable conflict between the courts and Parliament. Orders and agreements made under the old Act are preserved under Clause 24 with provisions enabling the industry affected to apply to reinstate an arrangement after a period of three years. The future task of the Commission will cover all arrangements it at present deals with other than those allocated by this Bill to the court.
There are two particular matters with which the Commission may be concerned in future. First, single-firm monopolies and, secondly, agreements relating exclusively to export markets. It is obviously necessary to have some machinery for investigating those two matters and both of them, I think the House will agree, are inappropriate for judicial solution. For this purpose, Clause 22 gives power to re- 1938 constitute the Commission on a smaller and more compact basis.
There remains only one large problem with which I have not so far dealt, a problem which any Bill dealing with this subject must really face—the problem of resale price maintenance. For 35 years reports have been made upon this issue. Speeches have been made in this House and White Papers expressing very brave intentions have been published, but never followed up. The proposals represent the first, although perhaps not the last, legislative proposal on this matter. I believe they represent what it is right and proper to do at this stage.
Those who favour resale price maintenance are not devoid of arguments in their support. They can produce the evidence of views expressed from time to time by many manufacturers, retailers, consumers and trade unionists. In the other scale has to be put the views of other people and two major Reports which deplore the rigidities of the system, and particularly the fact that consumers are denied the benefits which would flow from economies in retail distribution, such as the introduction or development of self-service stores and the like.
While there are respectable arguments in favour of resale price maintenance, maintaining prices is surely not an end to which all other factors should be sacrificed—indeed, rather the reverse. In the mass of evidence available, there does appear to be a wide measure of agreement on one point. Collective enforcement by trade associations of resale prices greatly exacerbates any evils which may flow from it. I will quote from the Lloyd Jacob Report on the topic contained in paragraphs 145 and 147. That Report stated:In this connection associations of manufacturers and distributors, whose main business is to enforce prescribed retail prices, have, in our opinion, contributed in no small measure to the rigidity which at present exists in the distributive structure and which we believe it to be desirable to prevent.Later the Report stated:There is a natural tendency for the members and officials of enforcement associations to try to make the protected list or membership more and more inclusive and to extend the scope of the rules to cover less and less direct forms of price-competition, until the business of some specialist traders may be almost entirely controlled and regulated.1939 The Majority Report of the Monopolies Commission returned to the same theme. They said in paragraph 175:we consider that these agreements sustain a more rigid and more widespread system of price maintenance than would exist if individual suppliers were responsible for their own enforcement even if enforcement in the Courts were made much easier than it is at present. Such a rigid maintenance of prices and enforcement of elaborate trading rules goes well beyond anything that can be justified as necessary for preserving a reasonably stable market for branded goods or for protecting particular retailers.Those are the extracts—though hon. Members will no doubt refer to other parts—of the two principal Reports upon this subject. I believe those views expressed by the Lloyd Jacob Report and the Majority Report of the Monopolies Commission to be right.
There has been a steady expansion of this system under the influence of trade associations, generally of manufacturers and retailers together, and it has led to ever more inflexible and far-reaching devices and arrangements in which everybody is expected to participate, and it is in this that the main danger lies. A system which could be simply a device to protect the manufacturer of branded goods against the use of his goods in loss leading has degenerated into a system where great areas of trade are frozen into a fixed pattern of price and profit margins. What we propose to do is to make collective enforcement by trade associations unlawful, but to permit the individual manufacturer who wishes to price maintain his goods to do so openly and publicly through the ordinary courts.
I am well aware that these proposals will be attacked from both flanks. Supporters of resale price maintenance will say that the removal of collective enforcement will lead to the erosion of the whole system, and that few individuals will avail themselves of the new rights which are recorded here. Opponents of resale price maintenance will claim that the substitution of the public for the private court system represents approval of the very system which they condemn. But there is one course which I hope will not be urged, and that is that some body should be established to examine each price maintenance agreement, to test the wisdom of each individual manufacturer in maintaining his particular price, or 1940 worse still, to examine the overhead costs of each distributor to say whether he should or should not be made an exception to this particular arrangement. Such a proposal would be open to solid objections. First, that it would be unworkable, and secondly, that if anybody tried to work it it would certainly last for an eternity.
The effect of our proposals will probably, perhaps certainly, be a reduction in the area of resale price maintenance. They will remove certainly the worst features of the system, including in particular its inflexibility; they will provide what I judge to be adequate means of dealing with the problem of the loss leader, and as an important by-product they will get rid, in this large field, of both the stop list and the private court. I think the public will judge that we are well rid of them. I claim that these are important and substantial advantages in a field in which no other Government has yet dared to advance at all.
§ Mr. George Darling (Sheffield, Hillsborough)
Before the right hon. Gentleman leaves that point, I suppose he realises that the measures he is proposing take away any protection that retailers might have who give deferred rebates to their customers, the co-operative societies in particular.
§ Mr. Thorneycroft
What they do will depend entirely upon the individual arrangement made in any particular case. I am not prejudging that issue; nor, indeed, is it referred to in this Bill.
Now a word about the alternatives to the proposals which I have been describing. I gather from speeches made in the country that it was at any rate the intention of the Opposition—though I hope my remarks may have dissuaded them from it—to vote against this Bill. Such an action places a very heavy responsibility upon them. It will not, for example, be enough to attack the Bill, for if they simply do that they will lay themselves open to the grave suspicion that their real interest is not to attack restrictive practices at all. In order to support such a case it will be necessary for them to propound constructive alternatives, and to set those alternatives forth in considerable detail. We for our part shall judge the sincerity of the Opposition by the 1941 extent to which they indulge in constructive as well as destructive criticism of the measures which I have been describing.
If it should happen that the right hon. Gentleman relies upon the Majority Report of the Monopolies Commission, I think we are entitled to ask: Do they intend to restrict themselves to the fields covered by that Report? If so, their approach is, of course, much narrower than the approach which I have been describing in this Bill. It would exclude, for example, price rings. If not, what crimes do they intend to institute in the wider field not covered by the Monopolies Commission Report? If new crimes are suggested, they demand, I think, detailed and analytical treatment, and we await an analysis of those new crimes in the speech which is to follow this one.
If the right hon. Gentleman is going to enter this criminal field, will he remember that he would do well to exercise a little caution and to look towards the future. This Bill deals with employers, and I think rightly deals with employers, but the dividing line between a ring among traders limiting entry to a field of manufacture and supply and a closed shop limiting entry to a trade, whilst it is there may not be so glaringly obvious to the public as it is to every Member of this House. At any rate, it would be hard to say that those who stand on one side of the line are criminals whilst those who are on the other are not. I would simply warn hon. Members opposite that the principles which they seek to enunciate here may in time carry them over a much wider field than they yet imagine.
§ Mr. Thorneycroft
What is their exceptions procedure to be? The necessity, if a criminal procedure is adopted—perhaps additionally if a criminal procedure is adopted—of an exceptions arrangement is admitted in the Majority Report. What would be the exceptions procedure advocated by the party opposite? Is this exceptions procedure to be operated by an administrative or a judicial tribunal?
These are far-reaching and fundamental questions which demand an answer. We gather that the Opposition favour an administrative tribunal, but do they really propose that exceptions to 1942 criminal charges should be decided by an administrative tribunal reporting to a Minister? If a Minister is to be brought in, that Minister is responsible to Parliament, and each decision, particularly if criminal taint is involved, must be open to debate and challenge. To make a restriction a criminal offence may add to the acrimony, but it will certainly not lessen the length of any debate which takes place upon the issue. If that is their line, we are entitled to ask how they can justify the interminable delays of such a system. It seems to us—if I may quote the right hon. Member for Leeds, South (Mr. Gaitskell), who always finds some very happy little phrase to describe these things—a road which leads only to delay and evasion and away from really effective action. There are many more questions which have to be asked—
§ Mr. R. T. Paget (Northampton)
Does the right hon. Gentleman really imagine that there will be no delay when a number of lawyers get to work on Clause 16 to discuss the whole activities of a large industry with these eight exceptions?
§ Mr. Thorneycroft
No solution, not even a Sherman Act solution, would deal with every restrictive practice. If the suggestion is to have an administrative tribunal deciding exceptions to a criminal procedure, each debatable in the House of Commons, the delay would be interminable. Many more questions could be asked but I mention these because they go to the root of any alternative solution. I suggest to the right hon. Gentleman that they need to be dealt with early in any speeches from the party opposite.
I summarise our own proposals. First, public registration of a wide range of restrictive practices. Secondly, a judicial solution by setting up a court with the status of the High Court. Thirdly, the laying down of the criteria upon which the judgment is to be based. Fourthly, the placing of the onus fairly and squarely on the industry concerned. Fifthly, a ban on the collective enforcement of resale price maintenance and a new method, through the public and the ordinary courts, of enforcing individual price maintenance. Sixthly, the reconstitution of the Monopolies Commission upon a smaller and more compact basis to deal particularly with single firm monopolies 1943 and agreements dealing purely with the export trade.
These measures are a substantial advance on anything hitherto attempted in this direction by any Government in this country. I commend them to the House in the knowledge that if they are carried into effect, they will constitute a powerful reinforcement to the system of free and flexible competitive enterprise which we on this side seek to foster and sustain.
§ 4.22 p.m.
§ Mr. Douglas Jay (Battersea, North)
I beg to move to leave out from "That" to the end of the Question and to add instead thereof:this House, believing that consumers should be set free from exploitation by monopolies and restrictive practices operated for private gain, declines to give a Second Reading to a Bill which disregards the main recommendations of the Monopolies Commission Report of June, 1955, Command Paper No. 9504, and fails to provide speedy and effective action to protect the public.If the Bill were as brave as the President's concluding words, we should give it our warm support. We examined it in the hope that it might mark a real step forward. But when one penetrates behind these flights of eloquence and sees what the Bill does in cold fact, one is forced to the conclusion that it lives up neither to the President's oratory, to the Election promises of hon. Members opposite, to the Monopoly Commission's Report of last summer, nor even, in some ways, to its own Explanatory Memorandum.
We in the Labour Party want to secure real and speedy protection for the consumer and the housewife, and we do not believe that the Bill will do it. I very much doubt whether any of us in the House today will live to see the price of many things reduced by the Bill. It is just possible that some of our grandchildren might. If the Government are relying upon the Bill to reverse the vote of censure passed upon them recently by the electorate of Walthamstow and other constituencies, they will have to wait a very long time.
Let us make perfectly clear at the outset the general philosophy with which we on this side approach the subject of monopolistic practices. We believe that monopolies and other devices to limit competition for the sake of private gain 1944 are normally bad, for three main reasons. First, and most important, they tend in a modern community to make incomes and wealth more unequal rather than less unequal. They do that because normally, by maintaining prices above the competitive level, the profit earner is benefited at the expense of the consumer, the wage earner and the salary earner. All economic history, not to mention the Annual Reports of the Inland Revenue, shows that profit earners, with certain exceptions, such as small retailers and small farmers, who may need special protection, are usually better off than wage earners. That is our fundamental view.
Two conclusions follow. First—in this we agree with the President of the Board of Trade—the Government have been perfectly right to exclude from the Bill collective action affecting services, and particularly labour, as opposed to goods. I agree with the hon. Member for Somerset, North (Mr. Leather) who, in a letter to The Times last November, quoted the declaration by President Theodore Roosevelt in 1911, when speaking on the Clayton Act of that year, that human labour is not a commodity.
The fundamental truth behind that dictum is that collective action benefiting human labour normally has a desirable effect on the distribution of incomes and wealth, while action to raise prices and profits normally has a bad effect. Let us also remember that collective bargaining on salaries and wages is conducted publicly and openly between two organised sides—[HON. MEMBERS: "Oh."]—of course it is—while price-raising restrictive practices are normally operated in secret, and the consumer—the other party—is generally not represented.
The second conclusion is that if extra profits due to monopoly benefit the community as a whole, if the monopoly is publicly-owned, the main objection to monopoly vanishes. The managers of a public monopoly are under no incentive of private gain to exploit the consumer. Therefore, hon. Members opposite, who regard a monopoly as equally bad, whoever owns it, completely fail to understand the argument. We in the Labour Party stand on the basic principle: that where there is monopoly, there should be public ownership; and that where there is private ownership, there should be competition.
1945 Secondly, monopolistic and restrictive practices are bad because they limit experiment, innovation, progress and change. Five years of experience during the war at the Ministry of Supply and the Board of Trade, dealing with literally dozens of industries, convinced me that there is nobody whom the trade associations hate so much as the new entrant. I imagine that most of us in the House, although not all, agree that private enterprise cannot be justified without competition. I say "not all" because, although the President of the Board of Trade appears on or off as a great crusader for competition, the Chancellor of the Exchequer once in the 30's wrote, or at least put his name to, a book called "Reconstruction," which argued that competition was an outmoded relic and that the whole of British industry should be regimented into private monopolies.
In that book, the Chancellor of the Exchequer said:Intense competition will lower prices to an unprofitable level and thus spread ruin and dislocation in ever-widening circles.The Chancellor of the Exchequer was very sweeping. He said:The period of positive or effective expansion is over.
§ Mr. Jay
In the 1930s. He urged—again I quote—thatregulative powers amounting to monopoly must be granted to efficiently organised and integrated…industries.In view of that remarkable book, I was fascinated to find that the Chancellor has also put his name—or at least somebody else has put it there for him—to the Bill we are discussing today.
The third reason why, in my view, these practices are bad is that in many cases they involve an element of conspiracy and abuse of power. I think that the public when it reads of these collective boycotts, secret courts, snoopers in fancy dress, and all the rest of it, feels that, quite apart from economics, it is wrong that this sort of thing should go on in a free country. I will give one concrete example, because in these matters of Conservative freedom one ounce of practice is worth a ton of propaganda.
1946 I have a letter from an American clock firm which, with the help of the Board of Trade, very rightly, has recently built up production in a new factory in the Scottish Development Area. The letter, which is dated 23rd February, 1956, says that the firm objects in principle to joining trade associations which operate in restraint of trade. It goes on:We have just started in this country to manufacture electric clocks, and our first model has been announced to the trade. The 'Synchronous Clock Conference'"—that is the name of a body which I have not heard of before—has reacted almost immediately by sending a circular to all the principal electrical wholesalers reminding them that, if they dare to handle the products of a non-member, such as ourselves, all their manufacturers who are members of the Conference will be obliged to deny them their products.That is a striking example of the way in which Conservative freedom works.
The crime of which this firm is accused is not even the terrible one of selling too cheap; it is the crime of being in business at all without permission of the trade association. I think that in that case the action of this private bureaucracy is at once injurious to consumers and workers, an anti-social conspiracy, and an abuse of economic power. But the remarkable fact—and I doubt if all hon. Members opposite have grasped this—is that there is no certainty whatever that this particular conspiracy would be prevented by this Bill for a large number of years, if, indeed, ever.
Therefore, let us look at what the Bill does. Our first charge against the Bill is that it fails to carry out the main majority recommendation of the Monopoly Commission in its general Report on Collective Discrimination last summer. In our view, the Monopoly Commission—and the President praised it with some rather empty words—has proved of the greatest value to the House and to the country. I think that it deserves far better treatment than the President is now giving it.
It is a body of experienced, practical people who have worked extremely hard, and thoroughly. Last summer it reported at the President's request on a limited group of practices involving collective discrimination—collective boycott, exclusive dealing, collective resale price maintenance and so on. The majority recommended, after two-and-a-half years' 1947 investigation, that this limited group of practices should be banned outright by law, with provision for only rare exceptions. It did this on the ground that, in its view, the general effective of these practices was against the public interest. The Commission used these words in summing up:…we are satisfied that all the types of agreements which we have examined do adversely affect the public interest, some to a considerably greater degree than others.It concludes:For all these reasons we believe that all the practices falling within our reference should be prohibited by law, provision being made for exceptions on grounds which would be set out in the legislation.If the President had acted on those general lines, he would have made a real advance in the fight against restrictive practices, though even so he would have gone less far than the United States and quite a number of other countries.
But what, in fact, does he do? He gives himself the power to call for the registration of a wider group of practices some time—we do not know when—after the Bill becomes law. But he does not say that even all these practices will have to be registered at once. We do not know whether any of them will have to be registered by any particular date, or, if so, when.
Under this scheme the President can call for the registration of a class of practices from time to time if he pleases but in the meantime all the practices go on. The second stage of the Bill does not even say—the President can contradict me if I am wrong—who should register. It merely says that certain agreements should be registered; nor is there any penalty applicable to anybody until someone has defaulted in registration. It is not at all clear to me how the Registrar can know at this stage of the proceedings who has defaulted. Assuming that all this is sorted out, in stage three it is still possible for the High Court to have an argument before it as to just what is to be registered, and how long that may take I do not know. Then we have the fourth stage in which even when agreements in one class are duly registered, the President has carefully given himself the power to cancel the whole thing and remove that group from registration. He advances to the brink; and 1948 then, like Mr. Dulles, he hurriedly retreats, no doubt congratulating himself on his cunning in so doing.
But supposing that he does not retreat, We then reach stage five in this process. Even then nothing more happens unless and until the Registrar intervenes. Meanwhile, even in this limited class of practices, all are still going on. When a specific firm or trade is called upon to justify itself—this is stage six—then, of course, the real legal proceedings begin, and even at the end of them there can be further appeals—and this is the final stage seven—to higher courts on points of law. Meanwhile, all these practices are still going on. All these effluxions of time, as the President calls it very aptly in the Bill, apply to each one agreement, falling into each one class, even if these have been both included in the first group which is registered, and even if the Registrar pounces rapidly on that particular registration. How long is it going to be by this procedure before any real impact is made on the present jungle of restrictive practices in this country?
§ Mr. Jay
I was not going to have been so pessimistic as all that. I think that anyone familiar with British industry who has read the Commission's Report knows that industry here is riddled with these practices. The Annual Report of the Commission for 1955 alone mentions over 70 trades either under investigation or referred to it, ranging from sand and gravel in central Scotland to animal intestines in Northern Ireland. When one thinks of this long and laborious procedure of the President being applied to this dark and dense labyrinth, I think that an appalling vista of confusion and delay is opened up before us; and all this time these practices will go on.
§ Mr. Turner-Samuels
It is really much worse than that, bad as that is. Although one is entitled to take a class of agreement, one may discover in that class numerous agreements which depend entirely upon different facts, and there again specifically there would be more and more delay.
§ Mr. Jay
I am trying to be moderate and fair. Supposing that the Bill was passed by mid-1956 and the President—and this would be rapid on his past form—designated the first class of practices for registration, covering perhaps one-twentieth of the whole field. Registration in that group might be called for perhaps early in 1957. The Registrar might act some time in 1957, and the court might begin to hear its first cases by the end of that year. It is hard to believe, therefore, that any single case would be settled by the court in less than two years from now, or that the whole of the first group would be covered in fewer than five years.
§ Mr. David Ormsby-Gore (Oswestry)
The right hon. Gentleman might refer to some of those cases where criminal sanctions are relied upon, such as in the United States and Canada, and delays occur just as there might be delays in these cases.
§ Mr. Jay
If even where there are criminal sanctions there are delays, then where there are no such sanctions—we are arguing—the delays are likely to be far greater. If in that way it took five years to get through the first group of practices, the whole field would not be dealt with even in one hundred years from now.
How would this arrangement work in the case of the clock manufacturing firm which I quoted a moment ago? How can we answer the question of that firm? How soon is it likely to get redress? We can say nothing other than, "this year, next year, sometime, never." Supposing that the particular brand of conspiracy from which that firm is suffering were included in the fourth or fifth group which the President registered. The firm might, with luck, secure justice within 20 years, if it managed to survive, even though throughout that time it was prevented by its competitors from selling any of its goods.
What an extraordinary proposal it is, and how contrary to the promises of hon. and right hon. Members opposite at Election time. The Lord Privy Seal gave a most important pledge on this matter, as on so many others, including the food subsidies. He said., in his immortal prose, in the "Conservative Industrial Charter" that: 1950We condemn out of hand any price agreements designed to keep prices above the cost of the most efficient producers or levies on more efficient to keep less efficient in business.The right hon. Gentleman says, "we condemn out of hand…" No registration, no courts, no arguments, no wigs and gowns, no delays and all the rest of it. That was the promise, and this Bill is the performance. It would be astonishing in any Government but the present one that the Lord Privy Seal, who condemns all restrictive practices "out of hand," and the Chancellor of the Exchequer, who objects to all competition, should have both put their names to the Bill.
It is not as though this "never-never" procedure of the Bill was a new idea on the part of the President which the Commission has been too stupid to think of for itself. Not at all. I think that the President will agree that the Commission considered something very like this precise plan in its Report and condemned it. This is what the Commission said:This procedure would be cumbersome, slow and unfair. To complete the task would take the reviewing authority many years.I think that the phrase "many years" was one of those careful understatements which we would expect from a dispassionate organisation like the Commission. But, of course, it was quite right in saying that this type of procedure was unfair. It may be inevitable to some extent, but there is this great difficulty: one firm or trade is prohibited from engaging in a practice, while at the same time others are perfectly at liberty to go on doing something just as bad for years and years afterwards.
The President now says that if the Commission's much fairer and quicker system had been adopted, and a definite date set after which the banned practices would have been illegal, as much time would have been needed first to hear the exceptions as we say would be needed to examine the cases coming forward under the President's proposed procedure. We do not accept that, for these reasons. First, it is significant that the Commission, which knows more about this matter than anyone in the House, including the President, states that there would have been much less delay under the procedure which it recommended.
Secondly, we on this side of the House are proposing that this procedure of the Commission's should be applied to the 1951 limited group of practices which the Commission specifically defined and condemned in its Report last summer. Thirdly, if these specific practices had been declared illegal outright, with only rare grounds for exceptions, many restrictionists would have abandoned their practices and not thought it worthwhile to come forward and argue the case at all.
Fourthly, we on this side of the House believe that if the Commission itself, no doubt suitably enlarged, and not a law court, decided these cases, there is little doubt that the time needed on each case would be much less and that some procedure for prima facie exceptions, as the Commission itself recommends, could be devised.
It would be both quicker and fairer to apply the Commission's procedure to the practices already examined and condemned, and the President's registration procedure to the wider groups of practices in which there is admittedly ground for further investigation. In that way, we should have the benefit of both arguments. In addition, we feel that the Registrar should be clearly responsible to some Minister, and that the registration of all these practices under the Bill should take place by some definite and fairly early date and not be spun out in infinite regress to the last syllable of recorded time.
The President has made another first-class blunder in taking the greater part of the job out of the hands of the Commission and handing it over to a legal court. The truth is that the vital decisions to be taken are questions of public interest and not questions of law or fact. I speak as a layman; but certainly a court of law is better fitted than is a Minister or Parliament to decide issues of fact or of law. But this issue is quite different. The issue is the balancing of the interests and needs of one group of the community against those of another group. That is surely precisely the sort of matter of policy for which Ministers and Parliament exist. That is surely what they are for in a democracy. The Government are here abnegating an essential responsibility and shuffling off their own job to the courts.
On examination, the President's own Bill shows that the course he is taking is unsound. He adds lay assessors to the courts—
§ Mr. Jay
Yes, lay members to the court, thus admitting that it will take a wider decision than a normal legal one. But if the decisions to be taken are not wide ones about the public interest, these additional lay members are not necessary. And, if the decisions are so wide, they should not be taken by a court of law.
The President flounders all the more deeply into the mire by admitting in Clause 16 that he has to describe "public interest" in the Bill, and so he produces this remarkable Clause 16 with paragraphs (a) to (g), with so many loopholes that one wonders whether the arguments will ever come to an end. He ends that Clause by stating that the agreement must not be:calculated to operate to an unreasonable extent to the detriment of persons not parties to the agreement…Finally, it must not operate "otherwise to the detriment of the public." I should have thought this means that the lawyers can argue, and the court can decide in the end almost anything it likes. We might as well hand the Budget over to a court and lay it down that it has to take all steps necessary for the prosperity of the country, or some other such phrase.
Our third serious objection to the Bill is that on top of all this, the President is drastically curtailing the scope of the Monopolies Commission. The increase in membership which he brought before us with much pride in 1953 is reversed. The right hon. Gentleman told us today that the inquiries not completed by the time this Bill becomes law are to lapse, and that the Commission is to be confined to examining the outright single firm monopolies. Why should not the Commission be allowed to continue its present inquiries and to finish them? There is, for instance, the extremely important inquiry into common prices which I should have thought it desirable to finish. Also, perhaps the Parliamentary Secretary can tell us tonight why the President should not take a decision on the report on tyres, which we have had already but on which still no action has been taken.
Why is it that the President has developed such anxious haste to clip the wings of the Commission? It will be noticed that in this part of the Bill there is none of the "this year, next year, sometime, never" type of approach. The Commission is muzzled from the very day that the Bill is passed. Yet I should have 1953 thought that this Commission, which has worked not merely patriotically but effectively, and especially so since 1953, has penetrated the iron curtain built up by these private trade bureaucracies more successfully than the courts or anybody else has done before. One is bound to ask oneself, is that the real reason why the President is now curtailing its activities? I must point out to anybody who thinks that registration is a great advance on the procedure of the Commission that it might well be in itself, but that what the President is doing is to substitute registration for the previous activity of the Commission, which is itself being cut down.
Is the real reason behind this type of approach that the restrictionists themselves had begun to feel that the Commission, unlike the courts, really meant business? After all, there are many people interested in these schemes. Some of them are not too badly off; and we know that they are sympathetic to the party opposite most of the time. At any rate it is significant to me that the organised monopolists, who greeted the Report of the Royal Commission last summer with a howl of rage and fear, have treated this Bill with that rather formal murmur of protest which so often in human affairs, in fact, gives consent. It rather sounds as if they did not really mind.
Lastly we have serious doubts, which my right hon. and learned Friend the Member for Leicester, North-East (Sir L. Ungoed-Thomas) will develop further this evening, whether Clause 19 really bans collective resale price maintenance, as the President claims, and as both the Lloyd Jacob Committee and the Monopolies Commission argue that we should do, and as, incidentally, the United States, Canada, and Sweden have done already.
The Explanatory Memorandum, which I think has misled a few people, states that Clause 19 prohibits:agreements by dealers and recommendations by their associations to discriminate against suppliers…who fail to observe resale price conditions. But it does not, in fact, do that. All Clause 19 prohibits are agreements or arrangements to withhold supplies, or conversely orders, from dealers who resell in breach of an understanding about price. I do not think that the right hon. 1954 Gentleman will dispute this. There has to be an agreement; it has to be to withhold supplies; and it has to refer to price maintenance. If any one of those three conditions is absent, then the practice can go on. That Clause will not prevent a collective boycott, such as that I mentioned earlier in the case of the clock industry, because that is aimed at debarring a competitor from selling clocks. There is no resale price maintenance there. The only crime which that firm was accused of was selling clocks in this free country.
Collective resale price maintenance itself can go on if it is enforced by any method other than withholding supplies, as I understand the Bill. For instance, would it be so difficult, now that the right hon. Gentleman, in Clause 20, is making individual resale price maintenance enforceable by the law, for a trade association to lay it down as a condition of membership that firms should enforce individual resale price maintenance by law under this Bill? In that case there would, of course, be no agreement to withhold supplies. The sanction against the wicked retailer who sold too cheaply would be the enforcement of the law, and the sanction against the manufacturer who refused to invoke the law would be expulsion from the trade association, membership of which might carry advantages, or else perhaps a fine.
Just as this Clause does not ban any agreement which does not aim at withholding supplies, so it does not ban any private courts or star chambers, or any other private methods of torture, which are not designed to enforce the withholding of supplies for the sake of resale price maintenance. For all other purposes, all these private Gestapos, with the full blessing of the President, can continue to enjoy life, liberty and the pursuit of Conservative freedom.
Next, in return for this very partial and dubious ban, the President, in Clause 20, makes individual resale price maintenance enforceable by the courts on third parties, which has never been done before in this country. Again there are no delays or "ifs" or "buts" about this part of the Bill. Note again how the President, normally moving at such a snail-like speed, jerks into action when he is tightening and not loosening some monopoly practice. These powers come 1955 into force on the day this Bill becomes law.
The House should note carefully what the President is doing. Already, of course, the trader can enforce in the courts a direct contract with a second trader about resale prices. He can also do his best to persuade a still further party to observe the price which he wants. What he cannot do now, but what he will be able to do under Clause 20, is to enforce his prices in the courts on other parties who have made no contract with him. They have notice of the conditions, but have not made the contract.
Last year there was a grocer in Birmingham who, at his own expense, sold tea cheaply to old-age pensioners. The manufacturers in that case tried to drive him out of business. Under Clause 20 the manufacturers would be able to invoke the law to stop that trader reducing the price of tea. On this side of the House, because we are not doctrinaire like hon. Members opposite, we do not say that in no circumstances whatever should prices be maintained by law in that fashion. But we do say that to grant this legal power unconditionally, without any public supervision at all, to back prices fixed by a private manufacturer at his own will, is altogether another matter.
We believe that the President ought to have made this radical change conditional upon a number of safeguards. Firstly, we ought to be certain that collective resale price maintenance really is banned before we add this unconditional power for individual maintenance. Secondly, there should be a clear condition that deferred discounts, like the co-operative dividend, are not treated arbitrarily as a price reduction. It is intolerable, whatever view one may take about that complicated issue, that private manufacturers should be able to lay down their own interpretation of what the co-operative dividend is, and then enforce discrimination against the co-ops in the courts.
Thirdly, if this law is to be used to enforce prices, the fixing of these prices should not be left simply to the individual private manufacturer. There should be some statutory opportunity for a public authority to protect the public, either by price control, or in some other way. Another danger of this unconditional grant of these powers is that they will 1956 tighten not merely individual but collective resale price maintenance. Last year there was the case where Mr. Mendelsohn of Stockport was bullied by this private police because he was selling tyres too cheaply. In that case the majority of the Commission took the view that because one firm dominated the trade individual resale price maintenance amounted to collective price maintenance. As it stands—and I do not think the President will deny this—applied to a trade like tyres the Bill would mean the enforcement of collective resale price maintenance through the courts; and yet the President wants to give these powers in this entirely unconditional form.
This is not the only way in which the Bill in its present form might actually tighten the grip of monopolies on British industry. The President has provided another escape hole for what he politely calls inter-connected bodies corporate. In plain English, that means that a combine or single firm monopoly can do what it likes so far as this Bill is concerned. If the President creates all this bother and legal expense for these restrictionist groups of firms, but altogether lets off the combines, that will encourage the pressure in British industry towards full monopoly. In trades where three or four big firms are linked together by trade associations, like ball bearings, will not this influence become more powerful? Will it really require very great ingenuity by those who earn their daily bread by this sort of thing to say to one another, "Let us become an inter-connected body corporate and get over all these troubles"?
It is because, for all these reasons, that there seems to us to be little or no protection for the British public in the Bill and it may make things worse in many respects, that we feel bound tonight, in spite of what the President has said, to vote for the reasoned Amendment setting out these defects. On this side of the House we really believe in a mixed economy, and if the private sector is made genuinely competitive, there is a strong case for a measure of private enterprise. However, the President has dealt a double blow at a system of private enterprise by this Bill. Firstly, he has missed a really big opportunity which the Royal Commission's Report offered him, and secondly, he has so framed his 1957 Bill as to encourage the growth of the movement towards actual combines or full monopolies.
It is not necessary for the President to say that the Commission itself is to deal with the single firm monopolies. How can it deal with them in fact?
§ Mr. Thorneycroft
I did not intend to say that. The thought flashing through my mind was that if the right hon. Gentleman intends to make all these arrangements criminal offences, will he not be open to the same objection?
§ Mr. Thorneycroft
It is rather important for us to know exactly where the right hon. Gentleman stands on this issue. He has made his case upon the views of the Majority Report of the Monopolies Commission. He said that very plainly, and that is contained in the Amendment. The essence of that Report was that these arrangements should constitute a new range of criminal offences. Does he stand by that or depart from it?
§ Mr. Jay
We stand by the main Report of the majority of the Commission, that these practices should be banned by law by that date. The right hon. Gentleman misunderstands me. I am not denying that the Commission wanted to make these arrangements criminal offences. That does not necessarily mean that we also say that they should be made criminal offences in the same way. That does not follow at all. It is perfectly possible to make the prohibition apply at that date, but, of course, to follow the normal injunction procedure. My hon. and learned Friend the Member for Leicester, North-East will explain tonight how he suggests that would work. We do not have to accept every detail of the Commission's Report because we want to accept the main recommendations.
§ Mr. Thorneycroft
I want to get this clear, because we are getting closer together. It ought to be placed on record that it is not part of the case of the right hon. Gentleman that any of these offences, whether inside or outside the 1958 Report of the Monopolies Commission, should be made criminal offences.
§ Mr. Jay
We say that prohibition should occur at a definite date laid down in the Bill. We do not necessarily say that these arrangements should therefore be made criminal offences. The right hon. Gentleman must be able to understand that and must surely see that there are arguments against making these offences actually criminal offences which are much stronger than arguments for having the procedure he lays down.
§ Mr. Thorneycroft
I can well understand that there are very powerful arguments in many directions. What we want to know is what the right hon. Gentleman's conclusion is.
§ Mr. Jay
I have told the right hon. Gentleman several times. We think that prohibition should occur at a definite date laid down in the Bill, but we do not say that these practices should therefore be made criminal offences. It is perfectly possible that the injunction procedure could be used, and my hon. and learned Friend will develop that argument later this evening. That is not the point which at that moment I was discussing. I was saying to the President that it is no answer to the argument that this procedure may make for the growth of monopolies to say that the Commission itself will deal with monopolies in single firms.
I ask the President, what is the Commission to do? I think that the case of the Report on the match industry showed that really there are only two things that this Commission can do when it is confronted with a virtual monopoly or complete monopoly. One is to advocate price control and the other to advocate public ownership; and I am afraid that the party opposite—as its inaction over the match industry Report showed—is doctrinally inhibited from adopting either of those remedies.
Therefore, I draw this final conclusion: that if this Bill is the best which the champions of competitive enterprise can do to make it competitive, and give the consumer a fair deal, then a lot of people will be convinced, on the Government's own showing, that there is a very strong case for further advances in this country towards public ownership.
§ 5.12 p.m.
§ Mr. J. A. Leavey (Heywood and Royton)
At the beginning of this Parliament, last June, Mr. Speaker was kind enough to point out to new Members that when we rose to address this House the faces we should see before us would be those of hon. Gentlemen who would not necessarily be unduly prejudiced in favour of the sentiments we might express. I hope I show no disrespect if I use a colloquialism and say how right he was. The right hon. Member for Battersea, North (Mr. Jay) will, I hope, understand if I do not seek to debate with him, because I am—I hope understandably—most anxious not to abuse the courtesy which I know is extended to those who, like myself, find themselves addressing this House for the first time.
I will confine myself to some general observations, and the first I wish to make is that while I am sure it is generally agreed that this is to be an important Measure, it has not outlined or embarked on an entirely new intention. From some very elementary researches, I find that as long ago as 1600 this House was invited by a private Member, a Mr. Hyde, to consider this problem. In the words of the historian, which I will quote:It appeared that the habit of granting to Ministers the sole right to manufacture and sell one or other articles of commerce had resulted in the fact that the monopolist had it in his power to raise the price of the monopolised articles to the detriment of the consumer…And the record goes on:Great frankness characterised the debate.It occurs to me that in making a start in this matter some 350 years ago, our predecessors, at any rate in regard to their approach on this subject, followed a very similar procedure to that which we are following this afternoon. Nevertheless, although it is perhaps not entirely a novel intention, there are, I believe, certain distinctive features about this Measure. In the first place, of course, it does what much of our legislation aims to do, to protect one section of the community from exploitation by another section. But in this case it does it by aiming to restrict restriction.
Secondly, as I see it, it is novel in that it invades an area of human activity which until now has been substantially free from legislation. Thirdly, and perhaps most important, it aims not only to 1960 reverse a natural instinct, but to reverse what I believe is a notable trend in social behaviour over the last 20 or 30 years. It aims to stop a habit which is increasingly practiced by us all and increasingly condemned by us all. It seems to me that more and more as a community and as individuals we have come to rely upon collective activities; upon the decisions and leadership of our associations and our clubs, unions and so on—and if I may say so, perhaps on the activities of our Whips.
Because of this, I believe we may find that a very large proportion of those people who are to be involved—I believe that means the whole nation—will find themselves at least trying to run with the hare and hunt with the hounds; at least trying to get the best of both worlds. I think we may find that the indignant plaintiff at one moment is the self-righteous defendant the next. I dare say, Mr. Deputy-Speaker, that you will know of the works of James Bridie, and he is on record as saying on one occasion:Hypocrisy is the nearest approach the average man gets to goodness.I say, with the greatest respect to the House, that that comment upon human behaviour is significant and relevant at this time, and I think that something is to be learned and something is to be gained from it. I believe that the British people will gain some satisfaction from the fact that, on the one hand, right hon. and hon. Gentlemen opposite find the Bill too soft and, on the other hand, some leaders of British industry find it too harsh. I think that perhaps the judgment of the British people will be that because of these two condemnations, what my right hon. Friend is proposing is just about right.
I have the honour to represent the Lancashire constituency of Heywood and Royton, and there we make no apology for having a deep vested interest in the cotton industry. Hon. Members will know, although perhaps some may have forgotten, that the Lancashire cotton industry got away to a flying start in the early days, 70 or 80 years ago, not just by chance, but because of vigour, drive, enterprise and determination to get on with the job in hand. Over the years our great traditional industry of Lancashire—and it is still a great traditional industry—has made an enormous contribution to the real wealth of this nation, and 1961 that is something of which we in Lancashire are very proud.
It may be that we are going to pass through difficult times, indeed, we have been passing through difficult times in that industry, and some of us feel that we are somewhat out on a limb. But I hope that one thing will be quite readily accepted by my right hon. Friend and indeed by the House, namely, that in our traditional industry we really shall not need this Bill to produce for us the invigorating effect of competition. We have had from Japan, India and Hong Kong, as well as from some of the manufacturing countries of Europe, quite enough competition to last us a lifetime. Nevertheless, I am very ready to support the Bill, as one who has the strongest convictions about the need for vigorous competitive enterprise.
In our industry we have already seen the cloth printing side pass through the sieve of the Monopolies Commission, and, as my right hon. Friend knows, what was asked of that section of the industry was done. On the weaving side, I am sure that the most savage critic of restrictive practices will find little with which he can find fault. On the spinning side, admittedly, there are pricing arrangements, but I have no doubt that if it is necessary to look at these they will stand scrutiny.
I think I am putting the point of view of a great number of people whom I have the honour to represent, but in the wider field I am very glad to have this opportunity which I sincerely hope I do not abuse, of supporting the Measure for what I believe to be sound reasons. I support the principle by which the practices laid down in the Bill are to be registered. As my right hon. Friend pointed out that must be right. I support the principle whereby the onus is on parties concerned to establish that a particular practice shall be justified.
I believe that to apply blanket legislation in this case would do more harm than good. This is not an occasion, as I have tried to explain, when it would be proper for me to debate with right hon. Gentlemen opposite the relative merits of the two fundamentally different approaches to the problem, although I appreciate that hon. Members, and particularly hon. and learned Members, will find many fea- 1962 tures embodied in the Bill with which they may reasonably quarrel. On the subject of delay, I do not know whether it is a precedent or a straw in the wind that such delay as has occurred so far has come from learned Gentlemen.
Psychologically this will be a vital and useful Measure, and I believe that it will achieve practical success in what it sets out to do and that in present economic conditions it will make a very useful contribution. Whatever the observations and criticisms of the economic difficulties of our times, I hope it is generally accepted that if we are to survive in this highly competitive world, then from each hour of work, from each ingot of steel, each acre of land, and each bale of cotton more real wealth has to be obtained. If the Bill makes some contribution in that direction, then it should command the support of the House for that reason alone. I believe it will command the support of the country as a whole.
May I express my humble thanks to the House for the patience with which hon. Members have listened to my observations on the subject.
§ 5.26 p.m
§ Mr. W. E. Padley (Ogmore)
It is my pleasant duty on behalf of the House to congratulate the hon. Member for Heywood and Royton (Mr. Leavey) on his maiden speech. Whatever differences of view there may be among hon. Members, there is unanimity in the view that the ordeal of one's first speech in the House is usually faced with trepidation. We can congratulate the hon. Member on his eloquence and on the sincerity with which he made his first contribution, and we shall look forward to hearing him on an occasion when he can exercise the undoubted talents for controversy which he was restraining today.
The Bill deals with a complex and tangled subject, and in my view it is as well that we should begin by getting our sights right. The Bill is widely referred to by a title other than that which appears on it; it is referred to as the Monopolies Bill. We should be quite frank and realise that the citadels of private monopoly power in Britain will scarcely be touched by its provisions. The great monopoly of the iron and steel industry, which right hon. Gentlemen opposite have brought cut of public ownership and which is now under a shadowy form of public control, 1963 will scarcely be touched by the Bill. Unilevers, with their vast productive interests and their holdings in the distributive trades, will scarcely be touched by the Bill. A similar situation arises with Imperial Chemical Industries.
The House should realise that the Bill does little to deal with the problem of trusts and combines. It is restricted to what has become known as the cartel form of organisation in Britain, although, strictly, the agreements with which the Bill deals are not cartel agreements in the old German sense.
I want to take as my text today a statement in the T.U.C. report on Trusts and Cartels published in 1945, at the time the T.U.C. was discussing post-war reconstruction, and I take it as a text because I believe that it is the effective answer to the approach of the President of the Board of Trade to the whole problem of monopolies and restrictive practices. After discussing Trusts and Cartels, the T.U.C. said:Whilst specific trade practices of an obvious anti-social character, such as boycotts, deferred rebates or stop lists, might be prohibited by law, it is not possible by legislation to outlaw private monopoly.… Even legislation which allowed considerable latitude for judicial discretion and only declared illegal combinations or agreements which were contrary to the public interest would be equally unsatisfactory in that it would leave matters of economic policy to the interpretation of the courts. What is most urgently needed in relation to privately-owned industry is the establishment of proper machinery for the public supervision of combinations, associations and agreements which permit price management by private interests.The Report went on to suggest the formation of what we call the Monopolies Commission, to advocate industrial boards with statutory powers, price controls and partial or total public ownership in industries where there was a high degree of monopoly.
Recently the Monopolies Commission reported on the tyre industry. It is worthwhile considering how far the Bill could deal with the problems of that industry. Even popular newspaper accounts of that Report led one to think that the Commission had a tough job because they divided into a majority of five and a minority of four. So long as one approaches this as a choice between monopoly capitalism or private competitive capitalism, the dilemma facing the Commission will continue to exist.
1964 The Commission's Report on the tyre industry has a significance for Clauses 19 and 20 of the present Bill, in that for the first time the majority came down against individual as well as collective price maintenance. The Commission recognises that the circumstances of the tyre industry are quite different—its own words—from most of the cases that the Commission has examined. We discover from the Report that there are 11 producing firms, that the Dunlop group controls nearly 50 per cent. of the production, and has about a 20 per cent. interest in the distribution trades. The Dunlop group, plus four other firms, account for 90 per cent. of the production. On the buying side there is a high degree of what economists call "monopsony"—the monopoly buying power of the "Big Five" motor companies.
No matter what practices are prohibited, it is extremly doubtful whether free, healthy price-competition will be restored in the tyre industry. It is important to recognise that when an industry reaches that stage the time has come for private price management to give way to public price management. The T.U.C. recommended in its Report that rubber processing should be subject to control by a statutory body. All that now remains to be done in the light of the Commission's Report is to decide whether public ownership of the "price-leader," Dunlops, or of some more substantial part of the industry, is the real method of obtaining public control.
§ Mr. Ormsby-Gore
The hon. Member is presenting a most interesting argument. Would he agree with his right hon. Friends that his party wants a mixed economy?
§ Mr. Padley
If the hon. Member will restrain his curiosity, he will find that that is exactly the point I was coming to. I am trying to establish that the prohibition of practices is but one part of a Socialist approach to the problem of monopoly. Historical evidence suggests that as we prohibit cartel practices we encourage mergers, trusts and combines.
The main indictment of the Bill is that Part III seriously weakens the Monopolies Commission, which has had more than eight years' experience. The strengthening of the Commission in 1953 is just yielding results in a steady flow of reports. Now, the President of the 1965 Board of Trade is going, if not to cut its throat, at least to cut its members from a maximum of twenty-five to a maximum of ten. What about the staff? Experience in this field is of enormous importance. The right hon. Gentleman has said on many occasions that monopoly practice is a complicated subject. If the public interest is to be protected, it is of tremendous importance that the Commission should have a large and experienced staff. If the maximum number of the Commission is to be cut to ten would the right hon. Gentleman tell the House the present strength of the staff of the Commission and to what figure it is proposed to reduce it? Has the process of reduction already begun? If we are to have a real monopoly policy, the Commission must have an adequate and experienced staff.
I readily accept the point just put by the hon. Member for Oswestry (Mr. Ormsby-Gore) about a mixed economy, in which there is a place for healthy competition and a good case for the prohibition of restrictive practices of the type condemned by the Monopolies Commission. In his Report on full employment, Lord Beveridge has a very illuminating passage on competition and monopoly. He makes the valid point that, to be effective, competition between firms in industry must be free and not forced. He goes on to say that when competition ceases to be free there are only three remedies open. The first is public supervision, the second public control and the third outright public ownership.
This Bill is largely bogus. It drastically weakens the Monopolies Commission's power to deal with trusts and combines, and its judicial approach will inevitably mean endless delay. I have often listened to lawyers in this House. I am certain that the more one listens to lawyers, the more one realises that the procedure in the Bill will take years and years. The Committee stage of this Bill is likely to prove my point. The President of the Board of Trade made a point about the establishment of case law. That applies when the task of the court is to interpret the law. When it is asked to decide the public interest in relation to firms that produce goods which range from aspirin to motor cars, the amount of case law will be negligible. There will be lay members, but if the British tradition counts for anything, some of 1966 them are likely to look after one set of interests and others will look after another set, and in the end the decision will be taken by the judge.
I cannot see valid objections to the Majority Report of the Commission. [An HON. MEMBER: "Criminal practices?"] I will leave the question of criminal practices to be dealt with by hon. Members experienced in the law. When I have listened to them I would like to give an empirical judgment, as a layman. The majority of the Commission were quite right; the practices with which they deal—though not all the practices which the right hon. Gentleman intends to call up—are against the public interest. Since the end of the war we have had the Lloyd Jacob Committee's Report and Monopolies Commission Reports covering many industries. It is a remarkable fact that the group of practices which may be summarised as collective boycotts and exclusive dealing arrangements have been condemned by the Lloyd Jacob Committee and the Monopolies Commission in virtually every case. They are essentially arrangements which seek a private veto on entrance into a trade or industry.
I believe that it would be quite practicable to ban both collective boycotts and exclusive dealing practices from a specified date, to examine claims for exemption before the appointed day, and to deal with any which remained unresolved at that date by interim exceptions. The Commission itself, with its wealth of experience, says that it has not come across a clear case. It lays down in precise terms the grounds for exemption. It is noteworthy that in almost every case the Commission goes on to say that public action rather than private action is desirable, even when it thinks that an exception could be made. For example, of the need to have some exclusive dealing arrangements in order to protect a home industry against cheap foreign dumping, the Commission says that public action is the right remedy.
I do not propose at this stage to say much about Part II of the Bill. My views on the evils and abuses of collective resale price maintenance are well known. I am glad that in his speech, if not in his Bill—that is another question for the lawyers to argue about—the right hon. Gentleman is now a convert to the renunciation of the evils and abuses of collective resale 1967 price maintenance agreements. It is also well known that, in common with the Trades Union Congress, I have always held that there are marked advantages in a flexible system of standard prices for branded products, enforced by individual producers—not by rings and trade associations—subject to safeguards.
I want to address two points to the right hon. Gentleman. First, I regard it as highly important that the right of cooperative societies to pay dividends and of other firms to pay deferred discounts should be written into this Bill. Mention has been made of the grocery trade, in which a self-service revolution is taking place. At the moment, price-fixing arrangements do not interfere with that revolution, for the simple reason that only about one-eighth of the goods sold in co-operative or multiple grocery shops are price maintained, though in some other cases the manufacturer suggests a retail price.
The point I want to make is that all the arguments in favour of a responsible and flexible system of price maintenance by individual producers are consistent with the payment of a deferred discount on the total trade of a business. Let us look at the grocery trade. It is not only the co-operative movement; there are large multiple firms, Williams Bros. is the best known in the London area, but there are others—which have practised a method of deferred discounts in some respects, though not in all, similar to the co-operative dividend. Have the manufacturers ever complained that that brought about unstable conditions in their markets, or have there been complaints that it led to bad conditions of labour and wages for either distributive or manufacturing workers? No such argument has ever been advanced.
If the right hon. Gentleman will refer to every public inquiry on this issue—the Committee on Trusts in 1920, the Greene Committee in 1930, the Lloyd Jacob Committee in 1948, and every Report of the Monopolies Commission itself—he will find that discrimination against co-operative dividends and other genuine deferred discounts has been condemned. It is up to the Government, therefore, to act on the findings of every public inquiry—including the Monopolies Commission itself—over the last 35 or 36 years.
1968 The second point that I have to address to the right hon. Gentleman is this. The procedure outlined in Clause 20 needs some measure of supervision. I know that some of my hon. Friends fear that the power put into the hands of individual producers by Clause 20 is tremendous. In fact, of course, the tyre manufacturers and those in industries where there is considerable monopoly, such as the radio and electrical industries, already have much of the power contained in Clause 20. They have it under patent licences. Therefore, if it is not desired that the individual producer of price-maintained goods should have this power, Clause 20 must be knocked out of the Bill, and we must also amend the 1949 Patents Act, which was piloted through the House by a Labour Government. It is as well that that should be realised.
There is a measure of public supervision over patents. Is it unreasonable, therefore, to say that when the same process is to be applied to other branded goods there should likewise be a measure of public supervision? In support of that proposition I again turn to the Committee on Trusts which sat in 1920. When that Committee considered the question of standard prices for branded products it came down in favour of the view that, on the whole, they were a good thing, but went on to recommend that there should be public supervision, and where necessary public control of the prices.
Unlike some people who discuss this subject, the Committee on Trusts had the understanding to recognise that as a rule it was the manufacturer's price to the retailer rather than the retailer's margin that was likely to be wrong. The reason is the obvious one—that in most cases though not in all, the manufacturer has an interest in a low retail margin because he will sell more of his goods if there is a lower retail price. There are certain circumstances where that is not so, but in the main it is so. For effective proof one can look at what has been happening since the ending of controls in the food trade. Hon. Members may remember that with the ending of controls Unilever fixed the retail margin of margarine at a fraction above what it was under Ministry of Food control and that that produced a howl from the whole of the retail trade.
1969 My point is that the Committee on Trusts advocated a measure of public control of prices, and so, in regard to matches has the Monopolies Commission. There is also the very interesting case of electric lamps. I regard the Monopolies Commission's Report on the electric lamp industry as being in some ways the most interesting laboratory experiment that has taken place. There, the Commission came to the conclusion that, on balance, the E.L.M.A. ring served the public interest. It recommended the abolition of most of the practices dealt with in the Majority Report, but recommended the continuance, subject to public control, of the common price system. The Commission argued that the advantages of the pooling of patents, the exchange of technical information and so on, were more important than the disadvantages attached to the practice.
Of course, one member of the Commission, Mrs. Joan Robinson, Keynes' chief lieutenant in the revolution in economic theory, went further, and recommended a measure of public ownership in some of the firms in the industry. From what I have said, it will be seen that from the time of the Committee on Trusts in 1920 to the Monopolies Commission in 1950 we have had recommendations that there should be some public supervision of prices where standard prices for branded products apply.
The right hon. Gentleman will no doubt reply that this means an enormous machine, etc., etc. Really, it means nothing of the kind. He knows as well as I know that at the Board of Trade now machinery exists to do the job. When goods are bought on the public purse, that division of the Board of Trade does the job—the price check. It would not be necessary to check the price of every article for which a standard price was fixed, but what is essential is that public machinery should be available to deal with any cases where there is widespread criticism or the public interest is otherwise involved.
To sum up, I regard this as largely a bogus Bill, designed to cause as much delay as possible and to destroy the Monopolies Commission as an effective weapon against the citadel of monopoly capitalism in the trusts and combines. If suitably amended, Part II might conceiv- 1970 ably produce a solution to a very complex question, but, in view of the totally unsatisfactory nature of Parts I and III of the Bill, I am glad that my hon. and right hon. Friends will divide the House tonight.
§ 5.51 p.m.
§ Mr. Bryant Godman Irvine (Rye)
This is the first occasion on which I have had the privilege of addressing this House. I am most grateful for the indulgence which I know is extended on such occasions. I have the honour of representing a division in East Sussex which not only includes a very great deal of excellent farm land but also the attractive towns of Rye and Bexhill. I have done my best to see how I could link those towns with the matter which we are discussing today, and I very much regret to say that there are probably few divisions in the country with less direct interest in the matter that is now before us.
One thing which I know I must do on the first occasion on which I am addressing the House is to avoid controversy. I should indeed have liked to have made a few observations on the remarks that have just been made by the hon. Member for Ogmore (Mr. Padley), but I must confine myself to saying that, although I know the declaration that one happens to be a lawyer means one gets a very cool reception in this House, little did I know that I should be received with such a speech of welcome as the one which we have just heard.
I welcome the Bill, and particularly do I welcome the decision which the President of the Board of Trade has taken to see that the decisions that are to be made will be made by the courts. I have had a little experience of some administrative tribunals, and I know that some of them do a great deal of good work; but I believe that, as regards this problem, there is nothing which could deal with it as effectively as a Division of the High Court, as the President has suggested. I know that some hon. Members have complained that one of the difficulties about the High Court is the precedents which it provides. I believe it will be part of the strength of this particular organisation. We shall have precedents laid down which will be clearly and fully appreciated by the people who have to administer the law.
1971 Although I believe that it is a great advantage to have the High Court dealing with this problem, that fact lays upon us a very great responsibility to see that we define very clearly the principles which the court has to administer, and that is why I wish to examine the provisions of Clause 16. To my mind, those provisions are the kernel of the Bill. No matter what the other organisation may be, if it should so happen that Clause 16 is not properly defined or causes difficulty when it comes before the Court, all the administration and organisation will be very little use. Therefore, that is the reason why I would ask for a little clarification about some of the provisions of Clause 16.
The heading in the margin claims this Clause deals with the public interest. This may be a lawyer's question, but it is surely necessary to have a definition of "the public." In paragraph (a) of the Clause, we find that the public is defined in one way, while it is defined in another way in paragraph (b). I am wondering if it may not be helpful to have an indication of what exactly "the public" is intended to be. I believe I have detected in the speech of the President some suggestion that people outside this country will not be covered by this Bill, and I wonder whether somebody who happens to enter into an agreement, which is quite beneficial to some export trade, would be included as part of the public or not. I am very interested in trade in Canada. I am wondering whether an organisation in this country which happened to produce agreements of benefit to trade with Canada which would in other ways be covered by either of these definitions would be regarded as "the public" or would not be so regarded. I should be very grateful for some assistance from the Parliamentary Secretary on that point.
The second question on which I should like to have a little help is the exact meaning of the so-called safety clause. The President has defined paragraph (a) as the safety clause, but I would ask my right hon. Friend and his Parliamentary Secretary to have a look at that paragraph, and, for example, say whether the words—the public in connection with the purchase, consumption, installation or use of goods requiring special knowledge or skill in that connection;1972 mean, in fact, what the President said when he was telling us that the safety clause was designed to protect the public. I am not at all sure that these words would stand up to a test in the courts, and I should be very grateful for any assistance which I might obtain as to the exact principle which it is desired should be applied there.
There also seems to me to be some difficulty about paragraph (f), on which I should like to have some help. There are two conditions contained there as a basis for exemption which have to be proved. The first is—… a serious and persistent adverse effect on the general level of unemployment"—I wonder if that does not mean "employment," because an adverse effect on employment would have exactly the result which is intended here—in an area, or in areas taken together,I have in mind a small association which has a certain number of associated works which are distributed fairly widely throughout the country. I do not believe that any one of these would fit inside "an area" in the sense which, perhaps, the President has in mind here. It would be helpful if my right hon. Friend would indicate whether the area of which he is thinking is that of a county or an area in which a particular industry is normally grouped, and whether the association which I have in mind would in fact be regarded as being in an area.
Further, the association of which I am speaking is only a small one, and I am wondering whether it could ever qualify and show that there would be… a serious and persistent adverse effect on the general level of unemploymentI wonder whether the Clause as drafted in fact means that only a very large concern would in fact be covered by these provisions. Looking at the second basis of exemption in paragraph (f)… or to cause a substantial reduction in the volume or earnings of the export trade of the United Kingdom;I would say that the particular association which I have in mind, although engaged in the export trade, will find it very difficult indeed in the circumstances to prove that whatever happens to it would result in a substantial reduction in the trade of the United Kingdom. Therefore, I think it would be helpful if the Parliamentary Secretary could give us a little 1973 information on these two points connected with paragraph (f).
I should also like some help concerning paragraph (g). It is suggested that it is of small importance, but I was not able to follow exactly what is intended to be covered. In order to bring oneself within its provisions it seems that one has to do soupon grounds other than those specified in this paragraph.…What grounds are they? There may be a very simple answer, but the only grounds of which I am aware are those which are specified in the paragraph.
My hon. Friend the Member for Heywood and Royton (Mr. Leavey) mentioned the difficulties which we were experiencing as a result of competition from Germany and Japan. I am wondering whether a further provision should not be included in Clause 16 to cover exactly that difficulty. On a subsequent occasion we may find that an industry will be able to work out its own arrangements to deal with competition from such goods coming into the country, but nothing in the Bill seems to suggest that such an arrangement would be approved. It may be that the Government take the view that this is a matter with which they should deal, but I would much prefer to see an industry being given the chance of dealing with that sort of problem before it comes to the Government.
I should be most obliged if the Parliamentary Secretary could say exactly why the last part of Clause 16 is expressed in the negative. I wonder what would happen if somebody asked the Parliamentary Secretary for advice as to what evidence should be brought before a court to prove that something had "not operated" and was "not calculated to operate" to the detriment of persons not parties to the agreement," and possibly persons of whom he knew nothing at all. I suggest that that is an impossible condition for any person to fulfil. The intention of the Government is quite obvious, but the provision is expressed in such a way that it puts the individual in grave difficulties in preparing a case to come before a court.
I have raised these matters in connection with Clause 16 because that Clause seems to me to be the kernel of the Bill, and I should be very grateful for any assistance which the Parliamentary Secretary can give me in connection with it.
§ 6.7 p.m.
§ Mr. Roy Jenkins (Birmingham, Stechford)
It is always a pleasure to congratulate a Member who has addressed the House for the first time, and in the case of the hon. Member for Rye (Mr. Godman Irvine) it is a particular pleasure and an easy task. He addressed us with remarkable confidence and fluency; indeed, I thought that he gave an almost classical exposition of how to make a maiden speech sound not like a maiden speech.
In view of his very detailed and searching criticisms of Clause 16 it is perhaps lucky for the President that the hon. Member interpreted the rule of being non-controversial as applying not only between the two sides of the House but also between the Government and their own back benches, otherwise he could have made some very damaging holes in the Bill in addition to those which have already been made in it. It is a very great pleasure to congratulate the hon. Gentleman and I am sure that the whole House looks forward very much to hearing him upon future occasions.
It was brave to make a maiden speech upon this subject. I agree with my hon. Friend the Member for Ogmore (Mr. Padley) upon that point, and also upon some other points he made—although with not quite so much emphasis—especially in regard to the Part II of the Bill. I agree that this is a confused and complex subject. We import a good deal more jargon into this subject than occurs in our ordinary debates upon economic affairs. Upon this subject we go further and get into even greater difficulties at present, because so much recent discussion upon restrictive practices has been concentrated upon the machinery of enforcement, rather than upon the simpler question of what ought or ought not to be enforced.
In a sense that stems from the very valuable Report which the Monopolies Commission issued last July. The Commission was set up to investigate a whole range of practices, almost all of which stemmed either from common price maintenance or resale price maintenance, in one form or another. Understandably, those two subjects were outside the Commission's terms of reference and, therefore, it was dealing with something which was not absolutely essential to the main 1975 issue. There was a little of "Hamlet without the Prince of Denmark" about its proceedings.
The same thing applies to the Bill and to our discussion upon it. What is the central issue with which we are bound to be concerned in any discussion of this subject? It is surely the question of how much price competition we want in British industry and trade, especially in its retail aspects. It is inevitable that we should make up our minds as to what we think about this issue. I agree that some difference of opinion exists among Members on this side of the House about the matter; I make no secret of that. But the President is also rather confused in his approach to this central issue. What is he doing? He says that the Bill is a great improvement because it bans the collective enforcement of resale price maintenance. We are not sure how effectively it does so. I agree with what my right hon. Friend the Member for Battersea, North (Mr. Jay) said about this matter. On the other hand, there is no doubt that it makes individual resale price maintenance easier to apply.
What is the attitude of the President and the Government to resale price maintenance in the absence of price competition—which the Bill implies—over a substantial field of the retail trade? The President says that he is abolishing collective price maintenance. Is he happy about the situation because he thinks that individual resale price maintenance, which will then be left, cannot be enforced very effectively? If so, it is very difficult to see why he is going back upon that opinion by inserting Clause 20. Or is the truth that he is solely concerned with means of enforcement and, provided he gets rid of that means of enforcement, which has gained a rather bad reputation in the public mind, he does not mind whether or not his Bill leads to any more effective price competition?
That seems to be the effect of Clauses 19 and 20 as they stand at present and as they are interpreted by the President. They do nothing to clear up the question in our minds as to what is in the mind of the President upon this issue. Does he want more price competition at the retail stage? My right hon. Friend the Member for Battersea, North referred to the two cases which have probably 1976 attracted most public notice during the past year or so in this matter of restrictive practices. He referred to the Birmingham grocer who got into truoble for selling tea, sugar and one or two other commodities, including margarine, to old-age pensioners at a few pence below the fixed price. He also referred to the tyre dealer, Mr. Mendelsohn.
In those two cases, what was it to which we objected? Was it the trouble which these and people like them have got into, or might have got into? Did we object solely to the methods which were used, or did we object, as I did, to the fact that, over a wide range of commodities, there was no opportunity for a retailer who thought he could offer equally efficient service at a cheaper price to do so? It is quite clear that the Bill will not improve the position of those people; indeed, in some cases it may well make their position worse.
We have had the Report of the Monopolies Commission upon the tyre industry. I agree with my hon. Friend the Member for Ogmore that that industry is not absolutely typical of the whole range of British industry. It is difficult to think of any industry which is. Indeed, the industry represents only one aspect of the problem. It is quite clear, according to the very valuable Report of the Commission upon the tyre industry, that the foundation of restrictive practices in that industry is the individual resale price maintenance scheme of the Dunlop company. A very large company dominates the industry, and under the Bill as it stands it will be absolutely reinforced by being able to go to the court; and the retention of resale price maintenance will be perfectly practicable.
The only difference, so far as I can see, will be that whereas in the past a trader might have been taken before a private court and put out of business, he might in future be taken before a Division of the High Court and, if he persisted in his practices, could be put in gaol. That does not seem to be a very substantial improvement in merit, and certainly is no improvement at all so far as the result is concerned.
In addition to the methods and the fact that it obviously does not make the position better, Clause 20 may lead to certain positive evils over and above the fact that it cancels out a large part of the 1977 good which Clause 19 might do. I start with the smallest of three possible evils. It seems to put retailers in a very unreasonable position. Under the provisions of Clause 20, a retailer could buy goods from a wholesaler with no question of price maintenance in the contract, but, if there were a contract between that wholesaler and the manufacturer which laid down price maintenance, and if the wholesaler mentioned the existence of that in the most casual way to the retailer, the retailer could have an action taken against him for breach of a contract into which he had never entered. He merely has to have it brought to his notice very vaguely and indefinitely that another contract is in existence in order to make him liable. That seems to be a most unsatisfactory state of affairs.
There is another danger also connected with the existence of wholesalers' contracts which might arise out of Clause 20. There is no doubt that while manufacturers over a very wide field like resale price maintenance and might like to enforce it, what they do not like and never have any interest in, is resale price maintenance which does not work—resale price maintenance with very widespread breaking of the arrangements. That gets them into constant trouble and argument with retailers buying from them.
Therefore, I think it is broadly the case that in trades where manufacturers have been selling to a large extent to wholesalers they have refrained—whatever they would have liked to have done—from going in for R.P.M. Under the new system there may be an extension of R.P.M. because it would be possible for a manufacturer, without doing a very large wholesale trade, to go in for R.P.M. in a way which previously was not possible.
The third point has to some extent been already referred to. It is that there is no doubt that in so far as this Bill is effective against what we call cartels it might encourage the building up of trusts. It might encourage amalgamation and the trustification of manufacturing industry. We might be asked to recognise the fact—to some extent we were asked to do so by my hon. Friend the Member for Ogmore; I am sorry he is not now present—that the tyre industry is in a very exceptional position because one firm controls half the market and small firms 1978 control almost the whole of the other half. In a position like that they would be able perfectly happily under this Bill to go in for R.P.M.
If R.P.M. is regarded as important by manufacturers, we shall be giving them an incentive, by amalgamation, to get into a position not very different from that of the tyre industry. It seems very unfortunate to bring forward a Bill under the guise of anti-monopoly legislation which may or may not offer a block against cartels but which gives incentive to industry to trustify itself. From all those points of view there are very grave dangers indeed in Clause 20.
In any case, why do we need to have the view taken—even assuming that the President does not go nearly so far as I do in opposition to individual R.P.M. as a whole—that it should be treated differently from all other categories of restrictive practice and that we should say there is to be no question of anyone having to justify anything? Individual R.P.M. is given a blanket blessing and taken outside the work of the inquiry of any court or tribunal and there is no question of any individual industry having to justify its position.
Certainly at the very least the Registrar ought to retain the right to bring individual cases of R.P.M. before the court if he thinks that in those particular cases public welfare is being adversely affected. I should like to go further and make a presumption that R.P.M., whether individual or collective, is likely to be harmful. I would not go so far as to say that it was always harmful. One could certainly think of individual isolated cases when it may have some particular advantage, but I believe that they are sufficiently few and far between as to make it perfectly reasonable to put the onus of proof on those who wish to show that those particular practices are desirable.
I take that view because I approach this whole subject on the basis of three propositions. The first is that the level of our costs in Britain today is certainly not sufficiently low that one can afford to turn one's back on any method of effectively reducing them. The second is—I think that I should carry my hon. Friend the Member for Ogmore with me in this—that privately-owned industry, by its very nature, ought to be compete- 1979 tive. There is no possible reason why the retail trade as a whole should claim to be insulated from price competition.
The third proposition with which I would start is that there are undoubtedly in British trade and industry at present a great many restrictive practices, giving our economy a far greater rigidity than it ought to have. If one is to make a really effective attack on this problem one is bound to take some risks. One can always find in every individual case that there are certain advantages, certain claims which can be put for the practices, but unless one is to start with the firm conviction that in sum those practices are doing grave harm to the economy, whatever may be said in their defence in individual cases, we shall not get anywhere.
What are the risks in going in for price competition at the retail sale stage? I know that one risk which weighs particularly heavily with some of my hon. Friends is the fear that if we have price competition at the retail stage it will do harm to the conditions of labour working in that industry. I am bound to say that, whilst I recognise the importance of that point of view, I think it is a falsely diagnosed danger. After all, what is the case based on? It is based on the view that there will be little back-street shops, with no trade union agreements, employing sweated labour which will undercut other people. I do not believe that if we have real price competition that would happen.
I do not believe it is the little backstreet shop which would be doing price cutting. It would be much more likely to be the big, large-scale retailers going in for efficient new methods of distribution; and they are, broadly speaking, the organisations in the retail trade for which R.P.M. is the most satisfactory arrangement. I therefore find it very difficult to believe that there is a real danger here.
It is suggested, for instance, that resale price maintenance will not in any way hold up the self-service revolution. I am very glad it has not held it up very much and that conversions are going on at a pretty rapid rate at present, but I believe that certainly a stage will come when resale price maintenance will prevent the consumer from having the cash benefits from that revolution which he could otherwise get. They are not benefits 1980 which become immediately available as soon as the store is converted to self-service; it takes some time for the benefits to become available, for the central organisation to be built up and so on.
Certainly the conversions which have taken place will in future make such benefits available, whether in cash reductions in the price of the product or merely in holding margins while margins elsewhere in the trade are going up, which is what has been happening recently. I am sure that on one or other ground there is a possibility of substantial benefit to the consumer, but that will not be obtained if we stick to resale price maintenance, whether individually or collectively enforced, on its present scale.
The other risk which is sometimes urged is one which, to a large extent, contradicts of the first. It is that if there is not resale price maintenance the small shopkeeper will be treated unfairly. That is to a large extent in contradiction to the first stated risk, which is that the small shopkeeper will do the price cutting. This view is based on the belief that the small shopkeeper is more inefficient than the big shopkeeper. I am not sure that he is; I think he may sometimes be able to provide extra service. Unless that belief is held, there is no inherent unfairness in anybody being able to fix their margin according to their costs.
In any case, under resale price maintenance the small shopkeeper is, normally, already treated a good deal more unfairly than the big shopkeeper, because whether there is a system of straightforward rebates according to the size of purchases or of aggregated rebates which take place a stage further on, almost invariably the manufacturer of resale price-maintained goods will give a bigger margin to the big buyer, to the big shopkeeper, than he will give to the small shopkeeper. We have, in a sense, the ludicrous position of the big shopkeeper being given a higher margin and the small shopkeeper often being treated rather unfairly, while at the time it is ensured that none of the difference in treatment given to the big shopkeeper will be passed on to the consuming public. That seems to me to be a striking example of ensuring that one gets the worst of both worlds.
There is also the important question of branded goods. It is widely suggested that branded goods are a great benefit to the 1981 public; that the guarantees of quality which they afford are a very important argument for the existence of resale price maintenance. While I entirely agree that branded goods and resale price maintenance are very frequently associated together, there is absolutely no necessary causal relationship between the two. It is quite possible—and indeed the case in a number of instances—to have branded goods and guarantees of quality which go with them without any question of R.P.M., individual or collective.
In the second place, it would be a mistake, despite the great popularity which I believe branding does enjoy in this and many other countries, to believe that the consumer does too well out of branding. Branded goods and the creation of a wide national market for them to some extent result in economies in production, but I would say that in a great number of cases the cash advantages of those economies in large-scale production are more than countered by the enormously heavy advertising and salesmanship costs associated with branded goods.
It is frequently argued that branded goods, even if resale price be maintained, have a smaller retailer's margin than non-branded goods. That may be so, but almost invariably the end price, the price to the consumer, of branded goods is higher in relation to the basic costs of manufacture than that of non-branded goods, and to that extent they are generally a bad bargain compared with the non-branded article.
I do not want to continue developing this argument for too long, but it seems to me that many of the fears expressed about what would happen if resale price maintenance were abolished are, to say the least, grossly exaggerated. It is a mistake to argue too much on loss leaders in the very difficult economic situation of the 'twenties and 'thirties in this country.
As hon. Members will no doubt be aware, Canada abolished resale price maintenance, individually and collectively, four years ago. There have been some complaints about what has happened, but from the reports that I have seen I should not have thought that the complaints had been particularly frightening or widespread, in view of the very important change that has taken place. Certainly the complaints have not 1982 been from consumers' organisations in Canada. So far as I can make out, consumers have been wholeheartedly in favour of the change; they want it to continue, and would like to see it even more effective than it has been. The complaints, such as they have been, have come mainly from manufacturers.
It is easy to see that manufacturers have an interest in resale price maintenance. I believe that by means of it they avoid complaints and grumbles from retailers to whom they sell. No retailer likes to believe, and can scarcely believe, that he is less efficient than any other retailer, and therefore tends to think that if somebody else is selling at a lower price than his own it must be because the manufacturer is giving his competitor more favourable terms. There is a lot of trouble of that sort. I believe that a great deal of the pressure to maintain resale price maintenance comes from manufacturers, but I do not think it is clear that it is even in any way decisively in their best interests.
I do not like the Bill at all. I do not think that it faces the main issue with which we are here involved. The part of the issue which it does face it faces in an extremely weak and dilatory manner. In certain respects I believe it will make the position worse than it is today, and I am absolutely sure that we have missed a very great opportunity to make real progress in the fight against restrictions.
§ 6.29 p.m.
§ Sir Lancelot Joynson-Hicks (Chichester)
This is by no means the first occasion on which I have had the privilege of following the hon. Member for Stechford (Mr. Roy Jenkins), and I must say that he never fails to put me in an exceedingly difficult position. He always starts his speech with an admirable partisan diatribe, and we think we know where we are; but by the time he has continued for ten minutes or so, reason seems to assert itself against his political education. By the time he has finished we are in the position which we are in tonight. We enjoyed listening to his speech; about half might have come from the other side of the House and about half from this side of the House, and we have not gone very far as a result of listening to him.
1983 Having listened to the debate, it strikes me as very singular that whereas before it started I thought hon. Gentlemen opposite were opposed to restrictive practices, having listened to their speeches I am no longer convinced of that. Certainly no one has taken up my right hon. Friend's challenge to put forward any constructive criticisms or alternatives. The nearest we got to that was the conclusion of the speech of the right hon. Member for Battersea, North (Mr. Jay), who said that he founded his opposition to the Bill and based his reasoned Amendment to the Motion upon the Majority Report of the Royal Commission. When he was pressed on the question of the introduction of the criminal offences which are the key to that Report, he hedged in all directions and declined to say whether or not it was a part of the Opposition's policy to make the matters about restrictive practices to which they object criminal offences.
§ Sir Lynn Ungoed-Thomas (Leicester, North-East)
We should clear up this point at this stage. Surely the hon. Gentleman appreciates that if an injunction is granted—it being obtained by civil proceedings—and then there is a breach of the injunction, there is contempt of court and imprisonment. Whether we take two bites at the cherry and proceed by injunction and contempt of court or whether we take one bite at the cherry and make these practices a criminal offence, the result is eventually the same, if there is a persistent breach. We are not concerned with that. Our concern is whether a practice should be forbidden and stopped, not whether that should be done by one form of procedure or another.
§ Sir L. Joynson-Hicks
I do not think that the hon. and learned Gentleman has assisted his hon. Friend the Member for Battersea, North very much. May we take it from what he has told the House that if he had an opportunity of recommending it to the House, the procedure which his party would like to adopt is tantamount to making the practice a criminal offence? Certainly what he said indicates clearly that he is not prepared to face up to making the matters to which he objects criminal offences. He proposes to achieve the same result by a very circuitous route by way of the back door.
§ Sir L. Joynson-Hicks
The Bill contains nothing whatever about criminal offences.
The alternative which the Opposition would put forward would be a very great departure for this country. They would seek to make an enormous number of their fellow-countrymen, who are involved directly or indirectly in these restrictive practices, depend for their livelihood upon people whom the Opposition make criminals or put into a position tantamount to being criminals. I do not believe that to be a situation which hon. Members, and certainly not the country, would want to see.
Furthermore, the difficulties of definition to which the right hon. Member for Battersea, North referred would be just as great under the system which he proposes as under the system which the Government propose. I believe that the system proposed in the Bill is one upon which the Government are to be congratulated from all points of view. I agree that there will inevitably be some delay in sorting out what is an exceedingly complex and widespread problem, but the delay under the Bill, such as it is, will be a delay leading to a positive result, whereas the delays under the proposals which we have heard so far from the Opposition would be introduced through people who had been branded either as criminals or quasi-criminals trying to clear their names. That would be completely disruptive to the whole of British industry and exceedingly adverse to the whole of the country's interests.
One point which hon. Members opposite seem to have overlooked is that in the vast majority of the cases in this country in which men have initiated these practices which have come to be regarded as restrictive practices, they have done so with good intentions. It is probably true that at present the majority of restrictive practices are still operated with good intentions. It is just a minority, and a small minority at that, which are not in that category, which cause offence and which attract public attention and bring the whole subject into disrepute.
I believe that the way in which the Bill tackles the problem is both bold and 1985 imaginative. Both the public and industrialists have a feeling of security when they get into the hands of the judiciary. I say frankly that they do not have anything like the same feeling of security if their affairs are to be judged by politicians. That is no reflection upon us; we are not qualified to act as judges in these matters. We should be in the position of having to judge whether certain practices came within what we ourselves had defined as being contrary to the public interest; and that is a position in which no politician should be placed, and certainly is not one which would inspire any confidence among those subject to the judgment.
My complaint about the Bill—and it is on a matter about which complaint is justified—is that the emphasis in Part I is wrongly placed. I should like to see the Registrar made much more supplementary to the court than the Bill suggests. At present the court is to be made supplementary to the Registrar, but we must bear in mind that the Registrar is new and that we do not know with what success he will operate. He has not built up a tradition commanding the trust of industry, whereas the courts are old and are trusted. People know where they are when they have to deal with the courts.
I should therefore like the courts to be the paramount provision in Part I, with the Registrar supplementary to them. We do not yet know where the Registrar will stand. At the moment he is in the nature of a floating kidney. I suggest that he should be attached to the Lord Chancellor. The Lord Chancellor has played a substantial part in connection with the Bill and might play a greater part by having the Ministerial responsibility for advice to the Crown on the appointment of the Registrar.
In my submission, the Registrar's regulations need not and should not be Statutory Instruments. Either they are instruments which are to be laid and debated in the House—and I do not think we can add much benefit to Statutory Instruments on such a subject—or they are simply to be laid and accepted without debate. I cannot see any point, therefore, in their being Statutory Instruments. Let these regulations be by rule, either approved by the court itself or approved by the Lord Chancellor.
1986 Again, I think that most of us are probably anxious about Clause 11, which particularly gives powers to the Registrar. I am very doubtful whether there is any need for that Clause. After the Board of Trade has appointed the class of agreements which has to be registered, which it is to do by order, that requires the registration of the agreements and if the agreements are not registered, why do we need the Registrar to have power to take steps to get them registered? Surely the right procedure would be for the Registrar to go to the court and to make an ex parte application, if necessary, for the Minister's order to be complied with.
The same applies to discovery and entry. I should have thought that there the proper procedure, if the emphasis is on the right basis, would be for the Registrar to make his application to the court, and for the court to make an order, whether it be for discovery, the production of documents, or anything of that sort.
What we want to see, and what we want to have seen, is that the action of the Registrar throughout is absolutely impartial and that he is not—as may be desired by some hon. Members opposite, but I do not think they would desire it on reflection—in the position of being a director of public prosecutions or a public prosecutor, though he should be Registrar, as his name implies, and it is his duty to ensure that there is laid before the court full information from every angle, so as to enable the court to arrive at a fair, proper and impartial decision.
Why should not other parties have the right to apply to the court themselves? They have it in a limited capacity in Clause 17 (3). Why should not the parties to an agreement have a right themselves to initiate proceedings by applicaton to the court for a declaraton that the agreement to which they are parties is a fair and proper agreement and is not contrary to the public interest? I should particularly like to see that included in the Bill, so that people shall know that the court is there for their protection as well as to censure them, if need be, for acting contrary to the public interest.
There is one other small point in which perhaps I should declare some interest. Why should not the court be allowed to 1987 award costs? I think that I see the reason. On the other hand, it might prove to be a helpful and perhaps salutary sanction in order to discourage frivolous or delaying applications, because there may be many parties to these proceedings. I think that, on balance, the court should have a discretion to enable it to award costs should it so think fit.
I had intended to make some remarks about Clause 16, but my hon. Friend the Member for Rye (Mr. Godman Irvine), in his maiden speech, covered the problem of Clause 16 so fully, so impartially and so objectively that I do not propose to say anything about it, other than to repeat what he said about the last sentence of it—the difficulty which is laid upon the parties in proving a negative. It is quite right that the onus of establishing that a practice is not contrary to the public interest should be upon those who practise it, but it is exceedingly difficult for those who are seeking to prove to the court that what they are doing is in the public interest to establish that what they are doing is not otherwise to the detriment of the public. I feel that we should be able to find a way of enabling the court to assess the matter upon whether what is being done is calculated to be in the public interest or not.
Finally, I would say that I believe that the Bill has ingeniously and successfully overcome the difficulties which were foreshadowed by the Commission; and, furthermore, it avoids the disruption of industry which the Commission's alternative would introduce, and which the Opposition's alternative, in so far as we can discover it, from the speech of the right hon. Member for Battersea, North, would also introduce. It establishes unequivocally the guidance which is required by all as to the Government's attitude and policy towards restrictive trade practices. I wish the Bill every success.
§ 6.46 p.m.
§ Mr. George Darling (Sheffield, Hillsborough)
I do not intend to follow the hon. Member for Chichester (Sir L. Joynson-Hicks) in the detailed discussion of how he thinks that the Court and the Registrar should work. I dislike the whole idea of the court procedure suggested in the Bill, and I will give my 1988 reasons for that in a few moments. Therefore such a discussion would be from my point of view quite unprofitable.
I was interested to hear the hon. Member say that in his view most of the restrictive practices with which, we hope, this Bill will deal were started with good intentions. That is a piece of special pleading about which we can have discussion when we know how many agreements there are, what they are and why they were set up. At the moment we have not that evidence, and no one will have it until there has been a complete registration of all trade agreements. He went on to say that only relatively few of the whole number of trade agreements in existence were really bad in their application. Most of them, he said, started off with good intentions and some of them have become bad. That is something which cannot be proved either way until we have had complete registration.
I agree with my hon. Friend the Member for Ogmore (Mr. Padley) that this is very largely a bogus Bill. Certainly we had from the President a speech which did not measure up to the weaknesses and inadequacies of the Bill, weaknesses which I should have thought would have been apparent to anyone reading it. We were given a statement by him about the Bill's intention, which I am sure cannot possibly be carried out under the Bill in its present form.
The general intention of the Bill, so we are told, is to put a stop to certain harmful practices in trade and industry. The real objection to these restrictive practices with which we are dealing is that they operate against the most efficient use of our economic resources. Everything that is done by private controls to stop new firms opening up, or to fix prices or conditions of sale to suit the least efficient firm in a trade or industry, or to prevent new inventions and new machines being adequately developed, is an obstacle to enterprise. It is true that this view can apply to some trade union practices as well, but all that we need say in this debate about trade union practices is that they are not covered by this Bill. [Laughter.] If some trade union practices are to go because, in the opinion of hon. Members opposite, they are restrictive in character, it must be realised that their going must be a matter of negotiation in industry and that trade 1989 unions are not alone but they are a part of the general set-up in industry. The President of the Board of Trade came pretty near to making a threat this afternoon about action on those lines.
§ Mr. Darling
I hope the right hon. Gentleman and hon. and right hon. Members opposite will remember that many of the practices about which they may be complaining now exist because it is impossible to negotiate with employers to get rid of them. The Confederation of Engineering Unions, for example, some time ago went to the employers and said, "Let us set up a joint council to discuss productivity and all questions dealing with workshop practices and so on." The employers would not agree. Therefore, we should not put the blame on the trade unions until this matter has been fully examined and discussed.
If it is to be suggested that legislative action should be taken to prevent trade unions continuing these practices without these preliminary discussions, there will be trouble and chaos in industry and the whole thing will be unfair and unworkable. Therefore, I hope that we shall have this question of trade union practices properly considered. In any case, we are not dealing with trade union practices by means of this Bill. I assure hon. Members opposite, however, that we on this side of the House are not running away from the problem.
The practices with which we are supposed to be dealing by means of the Bill are practices of a restrictive character. Most trade agreements are bad. Some may be good, but we shall not know until they are registered. I am very worried, therefore, as must be other hon. Members, about the procedure of registration proposed in the Bill. The President of the Board of Trade said that he was going to deal with the worst practices first. He was going to decide first which groups of practices should be picked out for immediate registration. At some subsequent date we should pass to another group, and at a still later date to a further group, but we have no idea at this stage what the priorities will be and how long all this will take.
We have not the faintest idea when the whole business of registration, without 1990 which we cannot do anything at all, will be completed. We are working in the dark. We have no idea what restrictive practices the Bill will deal with, and we do not know how many agreements there are and how much of the national economy they cover. It seems to me, therefore, that we shall be in great difficulty in deciding which is the best procedure for dealing with them—whether a court should take action to ban them or a tribunal should advise the President on what action should be taken to deal with them. This long delay in the process of registration will be one of the weakest points in the Bill if it becomes an Act. I cannot understand why the Federation of British Industries is getting excited, because the restrictive practices which apparently the F.B.I. wishes to defend will continue for a long time under the Bill.
The court procedure is open to objection for many reasons, not the least of which is that the Bill has been very badly drafted in respect of court procedure, as has been pointed out by the hon. Member for Rye (Mr. Godman Irvine) in his excellent maiden speech. If the draftsmen who are responsible for the Bill, and the Government and the House, cannot lay down what in effect will be the rules for the Restrictive Practices Court to follow in defining the public interest, I cannot see how the court can get on with the job which the Bill will hand to it.
The definition of what is and is not public interest will be left to the court, whatever else may be said about it, and the guiding rules given to the court will be the rules which we shall put in the Bill. It is a considerable job to frame the rules and the exceptions to them in a very good legal manner so that the court can do in the public interest the job which we want it to do if the court procedure is followed. If the rules are not properly framed, it will be quite impossible for the court to do that job.
I should prefer the tribunal procedure and that the Monopolies Commission should remain in existence to look at the agreements which come along and examine them, perhaps in some order of priority laid down by the House, and then suggest to the President and to the House, through him, what procedure should be adopted to deal with the exceptions.
§ Mr. Charles Fletcher-Cooke (Darwen)
Why does the hon. Member think that there will be less delay if the exceptions are examined by a tribunal than if they are examined by a court?
§ Mr. Darling
It is because I do not think the court can act in the public interest. I was not discussing delay. I do not think that the court can act in the public interest, because the job of deciding the public interest is one for Parliament and I do not think that we can find the proper form of words to hand the job over to a legal court. The decision on what is and is not in the public interest in connection with a trade agreement is something which should be decided in this House. I do not want to leave the decision to a court and to the kind of lawyers who, we think, will operate there.
§ Mr. E. H. C. Leather (Somerset, North)
Would the hon. Member say what we on this side of the House have tried without success to get from his right hon. Friend the Member for Battersea, North (Mr. Jay)? Does not his proposal mean that every case would have to come before the House and be debated? Would not that involve an even worse delay?
§ Mr. Darling
Not at all. I think that certain agreements would have a clean bill of health from the Monopolies Corn-mission. They would be agreements which might have a difficult time if they went through the court procedure, but we here have to decide what is in the public interest and I am not happy about handing that job over to a court of law.
Another great weakness in the Bill concerns price fixing. Although the Minister thinks that the Bill will stop collective enforcement of fixed prices, I agree with my hon. Friend the Member for Stechford (Mr. Roy Jenkins) that, because the individual price-fixing procedure is retained, it will be awfully difficult to get rid of collective price-fixing. Groups of manufacturers now working collectively to enforce prices could meet informally some evening in a private room at the Dorchester and decide over port and cigars that each would fix the same price. We shall not find any formal agreement, we shall not be able to prove in any court of law that they have done anything wrong under this Bill, but 1992 there will be individual price maintenance and those individual prices will be enforced by law.
Now I come to another aspect of this matter. I am surprised, and I am sure that the 11 million members of the cooperative societies of this country are surprised, to see no reference in the Bill to the protection of retailers giving deferred rebates. As my hon. Friend the Member for Ogmore has said, the Lloyd Jacob Committee, the Monopolies Commission and other committees have said that suppliers of goods should not be allowed to withhold supplies from retailers merely on the ground that those retailers are giving a deferred rebate to their regular customers.
The right hon. Gentleman did more than ignore this question. I tried to put the point to him when he was speaking so that he could tell us clearly the view of the Government. The Bill gives legal protection to those suppliers who withhold supplies of goods from retailers on the ground that the retailers give rebates. Under the Bill the manufacturer or supplier can insist that no deferred rebates shall be given on his goods but, if they are given, not only can he withhold supplies, but he can go to the courts and get legal sanction for his right to lay down how his retailer customers shall distribute their profits, because that is what it amounts to.
The manufacturer or supplier can go to the courts and say, "I will not supply this retailer with goods if he distributes his profits on their sale in a way I do not like." He can get legal enforcement for that kind of discriminatory action and that is a real step backward. After all, this co-operative system of distributing profits, whether hon. Members like it or not, has had legal protection for nearly 100 years, and I am sure no one ever thought that a Government in the second half of the twentieth century would go back on that and make the position of the co-operative societies in regard to the distribution of their profits worse than it has been since the first co-operative society was set up.
This hits not only co-operative societies but also any retailer who takes the view that he can distribute his profits, or part of them, in the form of deferred rebates to his regular customers; not to any customer who comes along, but to his 1993 regular customers who are known to him and with whom he has firm trading relations.
When we say that the position of the deferred rebate giver should be protected, we are not making an attack upon measures to prevent price-cutting. In the case of branded and nationally advertised goods, all those traders, including co-operative societies, who give rebates in this way at the moment sell at agreed prices, as far as I know, and would go on selling at agreed prices, at what are generally considered to be the market prices or at the prices written by the manufacturers on their products. What they do is to distribute part of their profit to their customers in the form of rebates.
We must ask the Government for their views on this method of distributing profits, because that is what it amounts to, and nothing else here is involved. Do they find anything objectionable in it? Do they find anything morally or economically or socially wrong in retailers distributing part of their profits to their customers in the form of deferred rebates? We want the Government to answer that question. If there is nothing wrong in it, then that method of distributing profits should not be discriminated against by suppliers. Or, if the Government think that suppliers can please themselves whether they supply such traders who give deferred rebates, surely the Government would agree that they ought not in this Bill to give legal protection to firms which withhold supplies, because that is what the Bill will do.
I hope that the Parliamentary Secretary can clear up the point, but, if he cannot, obviously we cannot vote for a Bill which deals with the co-operative societies in this way. Of course, if it gets its Second Reading tonight, we shall see to it that the opinion of the Government on co-operative trading will be tested by putting down Amendments to clear up this matter.
I want to make it clear that the co-operative movement is not in favour of price cutting, but we take the view that new methods, new materials, new forms of organisation that make economies in trade, should be passed on to the consumer. We are not proposing that those benefits, such as the benefits of self-service stores, should be passed on by deliberately reducing prices; all we are 1994 saying is that as we make more profit out of these new developments which reduce costs, the extra profits shall be passed to the consumers in the form of deferred rebates.
I could criticise the Bill further, Sir, but I gave you an undertaking not to take too much time. This is the main issue from my point of view, and I hope that when the Parliamentary Secretary replies to the debate tonight he will not run away from this question, but will give the view of the Government on the question of distributing profits in the form of deferred rebates.
§ 7.8 p.m.
§ Mr. Charles Fletcher-Cooke (Darwen)
The hon. Member for Hillsborough (Mr. G. Darling) has addressed a technical question to my hon. and learned Friend, who will deal with it far more ably than I can. Yet I cannot but feel that this Bill, which substitutes a method of individual resale price maintenance enforcement by the public courts for a collective system by secret courts, if any courts at all, is more likely to regard the rebates in the way that the tax authorities do, namely, as profit sharing rather than as price cutting. That is the way in which the public courts have regarded these rebates for Income Tax purposes.
Therefore, if any individual manufacturer seeks to enforce these new facilities against a co-operative society in a public court, it seems to me more than probable that the public court would say, as it has said on other matters, that this is not price cutting but merely profit sharing and a deferred method of rewarding members of the society, and therefore the individual manufacturer would be thrown out. However, I speak only for myself and the Parliamentary Secretary will be able to satisfy the hon. Gentleman much better than I can.
On the main issue, I do not think that much divides the two parts of the House. In this matter there are two approaches. One is the approach of saying that trade restrictions are always bad. That, to a great extent, is the attitude in America. They are prohibited per se, and no amount of adducing the national interest in any case will avail. They do that particularly as regards price-fixing agreements, the allocation of territories and the limitation of production. That is the received opinion on the interpretation of the Sherman Acts of those three 1995 matters. On almost all other matters in America they have the rule of reason which, in itself, means that one can plead exception provided he can bring himself within much vaguer conditions and requirements than are laid down in this Bill. That is the division, that is the dichotomy which the House has to face. It is not by what method the exception is tested; it is whether there is any exception at all that matters, because if we are to have any exception, we will be found to fall into this difficulty of long delays. I am convinced that there is no way other than that.
I cannot understand why the Opposition thinks that an administrative tribunal will be any quicker than a court of law. I have sat through all the debates we have had on the activities of the Monopolies Commission since I entered the House more than four years ago, and every time from benches opposite there have been long complaints about the slowness of the Monopolies Commission, an administrative tribunal set up by hon. Gentlemen opposite and considerably enlarged by the present Government. Nevertheless, there has always been this bitter complaint from the other side, with great justice in many cases, about how slow it is. When I have suggested that by appointing more full-time members and less part-time members it might have been speeded up, I have not had support from hon. Members opposite.
§ Mr. Fletcher-Cooke
The general sense of the House was that there was some virtue in having large numbers of part-time members and that is the general practice with administrative tribunals throughout the country. Our experience of administrative tribunals is very much against the belief that an administrative tribunal will be any quicker than a full-time court of law.
There is bound to be delay with whatever method is used, because each agreement has to be taken individually. No doubt the first will set the standard for others, but until there has been a decision on an agreement, there has to be some sort of licence for everyone to continue practising the same sort of agreement, or otherwise there will be the 1996 unfairness which the Majority Report instanced in the report on collective discrimination, namely, that those who come up first will get some sort of green light, whereas those who have not been brought up will at some date, either before or after that decision, be vetoed and prohibited, without the possibility of interim arrangements and without the possibility of getting the same treatment as those first selected.
There is therefore bound to be enormous delay, unless we are prepared to take the step which the Americans have taken, at least in these three cases, namely, to say that all the practices are illegal, whether or not in a particular case it works in favour or against the public interest. I cannot believe that even in the case of price fixing anybody would agree to that step being taken. It would be almost impossible to get the House to agree that all price fixing should be prohibited, without any exception, even if, for example, they were prices fixed because somebody else, perhaps a Government agency, was in a stronger bargaining position.
That comes under paragraphs (c) and (d) of the famous Clause 16, which was obviously designed, quite rightly, to give a group of people who are up against a monopoly, whether public or private, some countervailing power. The right hon. Member for Battersea, North (Mr. Jay) will no doubt have read the words of Professor Galbraith on this topic. It is manifestly unfair that a group of people at the mercy of a Government Department, for example—although not necessarily a Government Department—should not be able to gather together to get some form of fairness in the competition between what may be their only buyer, or their only seller. There are other examples of that sort which all hon. Members would agree should be made exceptions. Once one starts on exceptions, one is bound to have a long and laborious procedure and that seems a relatively simple point.
§ Mr. Fletcher-Cooke
A very nice example of timing. I should have thought that that was rather a Committee point. Unless one of these trade associations has been given a clean and unequivocal bill of health, the other cannot plead that it requires exceptional treatment in order to have proper countervailing power.
§ Mr. Fletcher-Cooke
No, because the first would not yet have its bill of health, because it could not say that the one up against which it was had already been given a clean bill. No doubt that is a matter for clarification at Committee stage, and I shall leave it to my hon. and learned Friend the Parliamentary Secretary for what will be his admirable winding-up speech.
I am certain that it is right to put the onus in Clause 16 on industry. I have no doubt that, although it may be thought at the end of the hearing that it does not much matter where the onus lies in many cases, nevertheless it is quite right to have it said clearly and distinctly that prima facie these arrangements are wrong and against the interest of the consumer. I am sure it will have the effect that many industries. as my right hon. Friend said earlier, which made these arrangements at an earlier age in our history will now immediately review them and see whether they cannot do without them and without the need for having to register them in a public register. It is very important that we should make the proclamation that the onus is on the industry to justify, rather than the other way round. We shall find as a result that the best part of industry and commerce will have an immediate review, a sort of self-analysis, of its own practices to see whether it cannot do without them, knowing that it has to justify them soon.
§ Mr. Reader Harris (Heston and Isleworth)
As my hon. Friend has just issued a proclamation, on whose behalf has he issued it? Some of us do not entirely agree with the statement he has made.
§ Mr. Fletcher-Cooke
The Government I support have issued it, and I hope that they will have a further support in that proclamation.
§ Mr. Paget
Before the hon. Member leaves that topic; he says that the industry has to justify the agreement. Under the Bill it is every individual party to an agreement which must justify it. That means that hundreds of people will be represented by hundreds of lawyers before the tribunal. How long will that take?
§ Mr. Fletcher-Cooke
As I understand the procedure, it is the agreement that is for consideration, and though no doubt in any agreement, as in any civilised country, all parties to the agreement can be heard, the actual decision will be upon the validity of that agreement in practice and not on any particular party. I am not denying that there will be a very great deal of delay. I have said that there will be delay in any system which permits of exceptions. I do not think that I need repeat that, because it was frankly said at the beginning of my speech.
On the question of sanctions, a great deal has been made of the equivocal nature of the Opposition's standing on this matter of criminal or civil sanctions. I do not want to rub that in further, because my impression is that the Opposition has not quite thought that one out. Hon. Members opposite should fully realise how important it is that we should not, if we can avoid it—I am not sure that we can—get some of the most respected people in this country into the position of having to stand trial in the criminal dock, as often happens in America. That only makes the war between those who wish to enforce and see this policy go through and those who wish to resist it longer and much more bitter.
There is another sanction that this Bill does not provide but which may be thought about. I should like to see this much more self-regulatory. I do not see why we should not have something like an action for triple damages, a civil suit, which they have in America, by which any person, any individual, private citizen, trader or consumer who is injured can have a civil action against somebody who is wrongfully operating a price ring, or some practice like a price ring, such as the example given by the right hon. Member for Battersea, North of the clock manufacturers. It seems to me that it would be a good thing not to 1999 rely entirely on the public authority or Registrar who, no doubt, would be very good, but like so many public authorities often would have too much to do.
Why cannot we devise some mechanism by which the individual trader, consumer or retailer can himself take civil action for such damages as he may have suffered? That was provided in Section 7 of the Sherman Act, and it is one of the things that big business in the United States, and small business, too, fears most—the action for triple damages. So much so that they frequently give in under an ordinary preliminary charge by the Department of Justice, because a consent degree does not carry with it the same authority for the purpose of a subsequent suit for triple damages. I suggest to the Government, therefore, that they should look to see whether we cannot make this more self-regulatory and thus relieve public authorities of what—if they do their job well, which I am sure they will—may be an enormous burden.
Finally, I think it is not altogether realised that this Bill brings established positions of established traders into great danger. I have no doubt that it will give the competitive system a life and elasticity which at present it lacks, and I was glad to hear the right hon. Member for Battersea, North saying that in his view and in the view of the majority of hon. Members behind him—though not all of them—the mixed economy has come to stay; and that he wishes to see the competitive part of it as competitive as possible. That means that a lot of people in established positions, and some of them quite small and least able to withstand the blows, will nevertheless suffer a lot of blows from this Bill, if it is operated properly. It would be wrong for us to disguise that fact from the country.
A lot of established retailers, particularly small retailers, will find that maybe there are too many small shops. I do not know. But unless the test of efficiency is applied all round in British industry, there is no doubt that we cannot survive in the complicated and dangerous battle which this country is facing. In the new and bitter cold winds from the world we have to pay the price of a good deal of disorganisation if we are to get any growth; and it is only if we get some 2000 growth and put forth new shoots that we shall be able to weather the twentieth century.
§ 7.24 p.m.
§ Mrs. Barbara Castle (Blackburn)
The hon. Member for Darwen (Mr. Fletcher-Cooke), like the hon. Member for Chichester (Sir L. Joynson-Hicks), made great play with what he called the equivocal position in which the Opposition finds itself on this question of civil or criminal sanction. The point has been made several times tonight that we have not provided a viable alternative in our suggestion for a general prohibition of certain practices, because it is maintained that such a general prohibition would involve creating criminal offences and putting a large number of people in this country into the position of being criminals in the dock.
I do not claim to be a lawyer, I am just an innocent-minded layman—or laywoman. But I feel very puzzled about this complaint, because it seems to me that the Government in their own Bill have exactly pointed the way to the sort of procedure we wish to adopt or may adopt. I would call attention to Clause 19, which makes a general prohibition of a certain practice. Clause 19 states that it shall be "unlawful" to enforce collective resale price maintenance. In subsection (6) it goes on to say:£ compliance with this section shall be enforceable by civil proceedings on behalf of the Crown for an injunction or other appropriate relief.Nobody has suggested that there is anything wrong with that procedure; of course not. The hon. Gentleman might argue that it would not be efficacious, in which case he is condemning the Government's policy for dealing with collective enforcement of retail price maintenance. I ask hon. Gentlemen opposite, what is the difference between a general prohibition on collective enforcement of resale price maintenance under Clause 19 and the general prohibition of other specified practices which we wish to incorporate in the Bill? I suggest to hon. Gentlemen opposite that they cannot say that we have no alternative that is viable unless they also say that the Government have no viable policy for dealing with collective enforcement. They can take their choice, and I do not mind very much which argument they fall back on.
2001 Surely, as we look at the number of restrictive practices today, we are impressed by the paramount need for the maximum speed in dealing with them. As the economic clouds gather, we know that it is high time this country put itself into fighting competitive trim as quickly as possible. I would suggest to hon. Members opposite that the case-by-case procedure which the Government have advocated is certainly not a fighting answer to that situation.
Why have we got this Bill at all? Simply because this House decided that the case-by-case procedure which we have been following up to now was not good enough. Therefore, we referred to the Monopolies Commission a whole range of practices with the idea of getting an alternative method to the case-by-case method for cleaning up monopolies in British industry. Yet, having done that, having told the Commission of the need for an alternative method so that we could speed things up, we are asked to consider a Bill which brings us back again to the case-by-case procedure.
Having asked the Commission to speed up the procedure, not only does the Bill reject the Commission's own recommendations about the right way of doing it, but, in fact, it further waters down the speedier procedure which the Commission wanted to see operated by adding two wide and important additional exemptions under Clause 16, which so widen the basis on which a prima facie case for exemption could be claimed, that we face a position of intolerable delay. I suggest to the hon. Member for Darwen that if he is worried about the problem of delay, he should vote against these two additions to the grounds on which delay could be created. They are in no way sanctified by any recommendation of the Commission or by public opinion. Newspaper after newspaper has pointed out that these additional exemptions widen the field too much. I suggest that the hon. Member for Darwen should join forces with us in an endeavour to speed up action under Clause 16.
In the meantime, while this case-by-case procedure is adopted, price fixing and market sharing will continue. The President said, with remarkable passion, that the Government wanted to take these practices out of politics. Why do they want to do that? What are these practices? On previous occasions the 2002 President himself has made great play of the fact that restrictive practices should be condemned, not because they are criminal, but because they are economically undesirable. In the debate which we had last July he said:There is nothing whatever in these practices themselves which is either criminal or even morally repulsive.£ Agreements may be good, bad or indifferent from the economic point of view, but no one can say they are a sin."—[OFFICIAL REPORT, 13th July, 1955; Vol. 543, c. 1940.]We agree with him that these are practices upon which an economic and not a legal or moral decision should be taken. That is our whole case.
Why, then, if that is also the right hon. Gentleman's case, does he resort in the Bill to a legal interpretation of the effects of these actions? We agree that these practices should be judged upon economic grounds, but is anybody in this House really suggesting that the responsibility for economic decisions could or should be taken out of the control of the Minister and Parliament? We base our procedure quite firmly on the principle that we should place responsibility for economic decisions where it really lies, namely, with this House of Commons, which is best fitted to make these important decisions. That is why we say, "Let us—as is done in one particular case under Clause 19—have a general prohibition of the practices whose substantial opposition to the public interest has already been established by the Monopolies Commission." That will be a decision by this House, taken in the light of the evidence already given us by the Commission as to the economic effects of these practices.
We then submit that the Commission, or some tribunal drawn from its ranks, should decide what exemptions can be claimed upon the ground that the action is not contrary to the public interest. I suggest to the hon. Member for Darwen that this is really the answer to his complaint that there will be as much delay under our procedure as under his. I suggest that he is wrong, for two reasons. In our tribunal, drawn from the ranks of the Commission, we should have a fund of experience not only of the nature and intricacies of these practices but of their economic effects. The Commission has been studying them for years now. There is no other body which could be quicker in its decision than the sort of tribunal that we suggest.
2003 One hon. Member suggested that there would be appeal after appeal to the House of Commons from our tribunal. We say that there must be an appeal to the Minister, because the question must come back to the House for a decision upon the balance of rights between public and private interests in an important matter of this kind. If we were to have a Bill upon the lines we suggest, starting with the recommendations of the Commission itself, and with the fact that it has already established in principle that these practices are contrary to the public interest, we should find that public opinion became so moulded by that Measure that the Minister would be subjected to enormous political pressure to speed matters up and would probably have a few private talks with chaps who were trying to wriggle out of the provisions of the Bill, and if he thought their grounds for appeal were likely to be flimsy, would bring pressure upon them to recognise that they must conform with the overwhelming demands of public opinion.
That is the basis upon which we should proceed—not according to a moral or a legal decision, but to an economic decision. What is the economic decision which the country is looking to the House of Commons to make, above all others, at this period? Quite clearly it is a decision to bring down prices, reduce the cost of living, and prevent the inflation of profits which results from the rigging of prices. That means a vigorous attack upon price rings.
I have here a letter from a farmer. It went right home to me because I have done a good deal of complaining in this House and elsewhere about the price of food and also about the high costs of British agriculture. I have had some pretty rude things to say about British farmers from time to time. This letter went right to my womanly heart. It complained that:Since the present Minister of Agriculture took office he has said, to farmers again and again 'Reduce your costs' … that is very good advice, but it is exactly what most of us have been trying to do all the time.He maintains that the efficiency of British agriculture is very high, but says that the thing which is hamstringing the farmer more than anything else is the cost of the implements, raw materials and other requirements which he has to buy. He says quite emphatically that: 2004enormous reductions in costs could be made if we were able to buy the things we need at more reasonable prices.He quotes a list including rubber tyres, tractor spare parts, new tractors, new implements, implement spares, petrol, diesel and vaporising oil. He emphatically maintains that the price rings which operate in these fields are sending up agricultural costs in this country and therefore the cost of food. He further says:I estimate that 50 per cent. of farming costs is represented by purchases where price is governed by price fixing associations. Once a price fix is brought about the industry concerned nearly always takes far too high a profit margin. If we could persuade the ancillary industries to reduce their profit margins farming costs would be slashed by 10 per cent, or more immediately. It would take twenty years of technical progress to achieve a similar reduction.What will happen to price rings as a result of the Bill? Every hon. Member would be delighted to find a way of slashing farming costs by 10 per cent. immediately. What the President said today has alarmed me very much. He said that he has decided to withdraw from the Commission the reference of common prices to them. This question was referred to the Commission last October for, we hoped, an early report. The President is now using his powers under Part III to withdraw that question from the purview of the Commission.
In exchange, we are told that these common prices will be "one of the first batch to be recorded." That really is not good enough. Price rigging covers such a vast field and it is, moreover, the very foundation of the profiteering which so many firms have been enjoying for so long. It is a most vital element in profits calculations of the firms concerned that they should be able to rig prices by price rings.
If that possibility is taken away from them we shall find that the fat has quickly gone off much of British industry. We can imagine, therefore, the number of appeals which will be made when the registration process has eventually taken place. If the House is passionately concerned with tackling price rings quickly I suggest that what we should be doing today is deciding that reference to the Commission of common prices must remain. Every effort should be made by the Commission to speed up the production of its report on this. All its resources should be concentrated upon this 2005 objective from now on. It should give overwhelming priority to bringing an early report on price rings before this House.
When we have that report, and if, as we expect, it establishes that price rings are operating contrary to the public interest, then price rings should be made a practice which would be prohibited generally under the Bill. I must ask my lawyer friends whether we can make it possible, when the report of the Commission is produced, for the President of the Board of Trade, by a statutory rule or order, to add the creation of a price ring to the generally-prohibited practices in the Bill. I hope that we shall see to that point when we come to the appropriate stage.
When we have dealt with price rings, we must turn to another problem which overshadows an enormous part of our economy, that of the single-firm monopoly, the firm which can control the market without the need for a price ring, because it has such overwhelming control. Let me refer once again to my farmer friend who holds forth in this letter about the way in which he has to pay for fertilisers. He says:The fertiliser trade is virtually in the hands of two large concerns. They sell at fixed prices, and the price of compound fertilisers is so high as to be nothing short of a scandal compared with straight fertilisers. It is obvious to all who study the position that these fertiliser manufacturers make extortionate profits.He goes on to say:I am convinced that the surest and best way of reducing farm costs would be to scale down immediately by Government compulsion the exorbitant profit margin on fertilisers.I wish he were here to make a speech tonight, but I am afraid he would meet with the derision of Government supporters when suggesting Government compulsion to bring down prices. When one of my right hon. Friends spoke about the need to reimpose price control where necessary, there was a chorus of derision from Government benches.
But what else is the answer of Government supporters to the problem of the single-firm monopoly? We are told that Part III of the Bill entitles the Commission to continue as one of its prime functions, inquiring into cases like the division of the market between a couple of firms so that exorbitant profits are 2006 made and absurdly high prices are charged. Chemical fertilisers are at present before the Commission for review. I was glad to hear the President of the Board of Trade say that that was one of the studies which the Commission would be allowed to complete.
What happens when we have the report on fertilisers, if it bears out what my farmer friend says, that the market is carved up between two concerns who have everything their own way? We are all as taxpayers paying subsidies to farmers, to help them pay these excessive prices. What are we to do when we have discovered that fact? What will the Government do, and how can it deal with the situation except on the lines suggested by my farmer friend of the Government stepping in and regulating prices?
The Government are avoiding this issue. I hope that the Minister who replies to this debate will answer these questions. The Government have abandoned all the machinery of price control which would have enabled them to step in and deal with vigour and fervour with this situation. Is it not a fact that they have abandoned not only the administrative machinery of price control for bringing down exorbitant prices charged by single-firm monopolies but have also divested themselves of the legal power to do so? By abandoning the price control established by the Labour Government, in the fine flush of Tory freedom, the Government have deprived themselves of the power to deal with these monopolies. Could we not have a Clause in the Bill to make this Bill really an anti-monopoly measure? This can be done by restoring to the Government the legal power which the Labour Government had and which this Government have thrown away.
The Government are not really in earnest about monopolies. If they were, they would have built the Bill on the experience gained from the operation of the Monopolies Commission and they would have adopted over a wide range of undesirable practices the procedure which they advocate in Clause 19.
§ 7.46 p.m.
§ Mr. E. H. C. Leather (Somerset, North)
It is always a pleasure to follow the hon. Lady, the Member for Blackburn (Mrs. Castle) particularly when, as she has said, she is being passionate. On this subject, as on several others, I could 2007 go a very long way with the hon. Lady, assuming that she would allow me, of course.
I do not come to quite the same conclusions as she does on this question. The hon. Lady has given us a great discourse on the power of price control to keep down prices. I assure her that I feel as strongly about price rings, collective boycotts and all such things as she does. I took this line even when her party was in power and when she was excusing them for not having done anything about these things. But it is wrong to give the public the idea that what we are doing or what the Opposition propose to do in tackling restrictive practices and monopolies will have very much effect on prices.
I do not believe that it will. I wish it were true. It would create a very happy prospect if we could reduce prices substantially by these measures. Experience is against us. The hon. Lady said that we should learn by the experience of the Monopolies Commission. I speak from memory and without the book when I say—although I think I am right—that no single case was found by the Commission in which exorbitant profits were being made. The Commission objected to many practices, and said that some things done were economically harmful; I agree with the Commission; but on no occasion has it said that the firm or industry being investigated had been making exorbitant profits. It found firms guilty on many counts, but not on that one. Therefore it is wrong to build up the idea that there is room for some great improvement in prices.
The hon. Lady got very passionate about the virtues of price control, but, bless my soul, we had six years' experience of price control, and it did not work.
§ Mr. Leather
If it had worked, the simple truth is that the hon. Lady would still be on this side of the House and we should be over there. The idea of saying to every manufacturer, "We are going to control your prices through chaps in the Board of Trade" was given a very fair experiment by right hon. Gentlemen opposite. They tried very hard, and I give them full marks for their sincerity, but prices went up just the same.
§ Mrs. Castle
The hon. Gentleman is perfectly correct in saying that the cost of living broke the bounds of our price control. I concede him that point, but it was because of a world wave of price inflation due to the starting of the Korean war. The hon. Gentleman will find that until then, the Labour Government—it is on record in independent statistics—held the cost of living lower than that in any comparable industrial nation.
§ Mr. Leather
With great respect to the hon. Lady, I know that that is the standard textbook excuse, but I say to the party opposite that, if it wants to dig in order to find an excuse to justify something which everyone else has rejected, that can always be done.
§ Mr. Paget
Statistics show that when we had price control, prices in this country rose less than in any other major industrial country in the world, but over the past 4½ years since price controls were removed prices here have risen more than they have done anywhere else—and indeed have risen here at a time when they have been falling elsewhere.
§ Mr. Leather
Again, that, of course, is the standard textbook answer.
Hon. Members opposite accept the facts that happen to suit them, while carefully ignoring other facts which do not. They take the import index, for example, and ignore the food index. I simply want to point out that it is no use saying that price control will solve the problem, because price control did not solve it and it is quite misleading to try to give the public the idea that there is any hope in price control.
I do not know where the hon. Lady's farmer friend farms but in the west—
§ Mr. Leather
Of course, that is a good deal east of Somerset—they are just cattle men. The fact of the matter is that in the whole field of feeding stuffs it is perfectly true that, while there are one or two very big firms, there are also thousands of small millers all over the country, and that makes for a very competitive trade. In addition, many farmers grow all their own feeding stuffs and fertilisers.
§ Mr. Leather
It is difficult, of course, to answer the hon. Lady in the barnyard terms that we would employ in Somerset, but I can assure her that many farmers have the means of supplying the fertilisers they need. [An HON. MEMBER: "Bull."] Precisely. Perhaps we may leave the subject there.
May I comment on the general line of the speeches made by hon. Members opposite. It has been quite remarkable that, with only two exceptions, they have spent their time, when attacking the Bill, in attacking pure technicalities and legal niceties. They have given great vent to their enthusiasm for the competitive spirit in industry. That is a conversion long overdue, but one nevertheless to be welcomed.
They have also all very carefully avoided committing themselves to the dictum of the right hon. Gentleman the Member for Battersea, North (Mr. Jay) as to the desirability of the mixed economy—the Ebbw Vale-Easington axis to the contrary notwithstanding. It is interesting to see how all the right hon. Gentleman's friends have carefully avoided committing themselves, but if his dictum is now the official policy of the party opposite, we welcome the change.
This desire that competition should be as widespread as possible, this belief in competition as a wonderful motive for running the economy, has long been regarded by us as plain common sense. We welcome converts even at this late date and for a party which during its term of office did more to wipe out competition in this country over a wider field than any other Government in history, that conversion is great indeed.
Those have been the so-called attacks from the Left. I repeat that they have been largely confined to technicalities and legal points, but as my hon. Friend the Member for Rye (Mr. Godman Irvine) said, in his excellent maiden speech, if a Bill is attacked from both the Left and the Right one can conclude that it is probably just about right. That is my own conclusion.
I should now like to deal for a moment with the attacks and criticisms, or the fears, that have been expressed from the Right. I do not happen to agree with them. I think that many of my friends in business are much too afraid, completely underestimating the strength of 2010 the British economy and fearing catastrophes ahead that simply are not going to happen.
I am sorry that the hon. Member for Hillsborough (Mr. G. Darling) has left the Chamber, because he did make certain innuendoes about the people who indulge in these particular practices. I think that the House might start by accepting that the vast majority of the people who have got together and have arranged restrictive practices—on both sides of industry—however wrong-headed they may be, are decent, honest, patriotic citizens. The idea that one lot of people are all rogues and that the other lot are all saints is unworthy of this House.
I do not question for a moment the motives of many people whom I know in business who do things of which I thoroughly disapprove. I think the trouble is that they have what I would call a depression mentality. It is quite remarkable to talk to an industrialist about the restrictive practices of the people in his factory. He will say, "Of course, those are just the things that can bring back depression and unemployment, and if only the workers could get the depression of the 'twenties and 'thirties out of their minds we could really get on." But ask him about his own restrictive practices and rings and so on; and he immediately says, "Back in 1932 …" One can talk to the convener of the shop stewards and he says precisely the same things the other way round. I believe that this depression mentality, this fear on both sides, is wrong. If ever there was a time when British industry, both management and labour, can really try their arm that time is now.
There are perfectly genuine fears held by employers' associations in regard to some of the results of the Bill, but I think, with great respect, that those fears are unfounded. Indeed, I think the answer to many of the attacks made against the Bill by hon. Gentlemen opposite lies in the very fact that it bans collective resale price maintenance outright. One criticism has been that there will be great delay, but if collective resale price maintenance is banned the reason for doing many other things disappears.
There is no point in having a black list or a collective boycott if collective resale price maintenance is not allowed. 2011 Therefore, we need not worry too much about the criticism that it will be years before anything can be done. Many of the things of which complaint is made will disappear overnight. The very fact that there is this Bill is a deterrent in itself. It is easy to ridicule the Sherman Act in the United States of America or the much more workable Combines Act in Canada, but the very fact that they exist acts as a deterrent.
As one of my hon. Friends said earlier today, the very fact that we are having this debate is already causing many industries to examine their practices and agreements, and to say "Perhaps we had better get rid of these—we do not want to find ourselves in the dock." The very fact that this Bill now exists is good in itself—and I do not believe for one moment that banning collective resale price maintenance will jeopardise the whole of the country's motor trade, for example. I do not believe that the Pharmaceutical Union is right in saying that by banning collective resale price maintenance we shall put thousands of small chemists out of business. It has not happened in other countries, and nothing has been put forward to show why it should happen here.
In Canada and the United States there are two different systems, and the hon. Member for Stechford (Mr. Roy Jenkins) has referred already to what has happened recently in Canada. In the United States, there are the State fair-trade laws, with a procedure which is very similar to what we are now suggesting in this Bill, whereby an individual manufacturer, if aggrieved, can take the matter to the courts. It seems to me a fair enough method, but it does not commit us to saying "You must have individual resale price maintenance." All we are saying is that we are prepared to be reasonable about it, and if some people think it is vital, we will give it a trial. At any rate, that is my understanding of it. I think that my right hon. Friend the President of the Board of Trade agrees.
It is particularly interesting to note that in the United States fewer and fewer manufacturers are taking the trouble to use the facilities which the courts provide, and the reason for that is quite simple. They are finding that they do not need to do so. The exaggerated stories of the dreadful doings of the man who sells on 2012 loss leaders, the suggestion that all kinds of awful things will happen which happen only once in a blue moon, and the talk of those people who are afraid that such laws mean the undercutting of prices right, left and centre, are gross exaggerations. The fact that the fair-trade laws in the United States are not put into operation demonstrates that all these terrible things which were so confidently prophesied simply do not happen.
In Canada, the same was the case up to four years ago, when the ultimate step was taken of banning the whole price maintenance procedure altogether. Last year they said "We have had three years now. Let us have a careful examination by a Royal Commission and see whether any of those calamities which industry so confidently predicted have happened." After six months of careful study, the answer was "None."
Therefore, I really do not believe that industry in this country is so weak or so inexperienced that, where Canadians and Americans can survive in a more competitive atmosphere, our industry will be wiped out or become profitless, with mass unemployment. I just do not believe it, and I would plead with my own friends in industry not to allow themselves to become panic-stricken, but to look at the evidence and see what has happened in other countries. The trade associations have produced nothing to prove that experience here should be different.
Finally, there is one other point I wish to make in reply to the attacks on this Bill from the Right. It is this idea that industry is being treated worse than an ordinary criminal and is being assumed to be guilty until proved innocent. That is the most ingenious and most invalid analogy that could be imagined. The criminal goes into court and protests his innocence, and places upon the prosecution the duty of proving him guilty. In This case, the industry or the manufacturer goes into court proudly proclaiming his guilt, and saying, "Of course, I do these things, and I maintain it is quite justified."
We are going to say to him that, far from treating him worse than a criminal, we shall treat him better, and shall give him the chance to prove that his "crimes" may have been justified. Indeed, I think there are cases where they are justified. I am not so dogmatic as to say that they cannot be justified, 2013 because I have myself known some cases where regretfully I have had to admit that what was being done was the right thing to do. Therefore, I think that the analogy of the criminal is a grievance artificially generated and quite untenable.
This is a blow for competitive enterprise. These are the sacred principles on which the party on this side of the House has stood, and it has only got into trouble in the past when it has been wooed away from these principles. I am delighted to note that the party opposite is now converted to these principles, and I hope that this Bill will go through in its entirety.
§ 8.5 p.m.
§ Mr. Donald Wade (Huddersfield, West)
I agree with much that has been said by the hon. Member for Somerset, North (Mr. Leather), and I was very interested in his remarks about Canada, but I am rather surprised, in view of what he said, that he should be entirely satisfied with this Bill. In my opinion, the Bill is likely to be ineffective, unless it is amended in Committee, and I hope that the Minister in charge of it will not rely on the favourite argument of Ministers that, because some hon. Members think he has gone too far and others say he has not gone far enough, he must therefore be right. It is possible to introduce a Bill which is irritating to industrialists, but which may nevertheless be ineffective.
It would be tempting to ignore the Bill altogether and to give an outline of what one thinks should have been done, but I will resist that temptation. If I was asked what I should do, I should be inclined to remind the House of the oft-quoted case of the country yokel who, when asked the way, replied that if he were going to that place he would not start from here. I would not start from this point in time, but would begin several years back.
I agree with a number of the comments made by hon. Members who apparently intend to oppose this Bill, and I agree with some of the remarks of the right hon. Member for Battersea, North (Mr. Jay), although I should add only in so far as I could follow them. I should have been more impressed by the right hon. Gentleman if he had appeared in sackcloth and ashes, duly repentant for the failure of the Government of which he was a Member to introduce speedy and effective action during the time when 2014 that Government was in office. I should like to outline my own proposals, but I will resist that temptation and, being a realist, consider this Bill.
First, Part I of the Bill really does no more than set up machinery. When the Bill comes into effect, nothing actually happens to those who are carrying on these restrictive practices. It may well be that many parties to restrictive agreements and many trade associations, fearing the publicity of the registration procedure and fearing the possibility and the expense of going to the courts, may scrap some of their agreements and alter their rules, but that attitude, I suggest, will change. It will not last. There should be no illusions about that. If in 18 months or two years' time it is found that this Bill is not effective and is not taken seriously, they will start their agreements all over again. That I regard as one of the most serious factors which we have to take into account in dealing with the Bill now.
I should like to ask the President two questions. What length of time does he estimate will elapse between this Bill reaching the Statute Book and the first case being brought before the court? Further, let us suppose that a case is brought before the court and that it is so clearly contrary to the public interest that the applicant fails to satisfy the court on any of the many grounds provided in the Bill. Let us suppose that the agreement is declared to be contrary to the public interest. Let us also suppose that the parties to that agreement draw up a new agreement with the same objects, though differently worded and with different rules. Will they be entitled to operate that new agreement until they have gone through all the procedure again of registration and appearing before the court?
So far as the court is concerned, it will have an appallingly difficult task. Some of the issues will be political and economic, and it will not be merely a case of interpreting the law. Clause 16 is really a nightmare. Perhaps, as a humble member of the legal profession, I should not say that, for I agree that of all the members of the community affected by the Bill, those who are likely to benefit most will be the lawyers.
On the subject of Clause 16—time does not permit me to deal with all the Clauses—in my opinion, paragraphs (f) and (g) 2015 might well be deleted. I am particularly concerned about (f), which in my view raises an important principle. It seems to me to be based upon the view that a restrictive practice may be permissible if there is a fear of unemployment or expected unemployment. Surely it is the function of the Government so to guide the economy that there will not be large scale unemployment or even large pockets of unemployment. I do not think it right to justify or attempt to justify the continuance of restrictive practices on the ground that there is fear of unemployment. Nearly all these practices have grown out of a desire for security. Often they are the result of the fear of unemployment or of the closing down of a business.
I have read again the speeches of the right hon. Member for Huyton (Mr. H. Wilson) on 24th February and 13th July last year, and it almost seems that he was the father of this subsection, because he expressed views which in effect were, "If there is fear of reverting to the conditions of the inter-war years, that should justify the operation of these restrictive practices." If we once accepted that principle we should knock the bottom out of any legislation designed to remove restrictive trade practices. Furthermore, it would make it impossible for us to persuade employees to abolish any of their restrictive practices, for these have so often been based on the fear of unemployment.
Subsection (g) also has serious defects, but time does not permit me to deal with them. I have tried to be fair-minded in examining the Bill but I have already found 20 major loopholes. I understand that attempts may be made to add others in Committee.
In considering the Bill, we have to consider the procedure, the exemptions and the field of industrial activity not covered by the Bill—the nationalised industries, marketing boards, the egg marketing scheme, the potato marketing scheme and inter-connected bodies corporate. This calls for serious reflection. Will the Bill encourage the creation of monopolies? Will it encourage firms to become inter-connected bodies? It would be strange irony if the effect of the Bill were to create a charter for monopolists.
2016 I calculate that roughly one-third of industrial output already comes into this category of inter-connected bodies corporate. That brings home the need for other policies apart from this Bill—the need for free imports to create a degree of competition if there is no competition between firms in this country and also the need for the continued use of the Monopolies Commission. I urge the Minister to be very cautious about cutting down the power and functions of the Monopolies Commission, and I am sorry to hear that he intends to cancel the inquiry into level tendering and common prices. The Commission might have produced valuable and illuminating information which might have been useful to the House and to the courts which the Minister proposes to set up.
Time does not permit me to deal with retail price maintenance except to say that I have always made a distinction between individual retail price maintenance and price fixing, on the one hand, and collective price fixing on the other hand. There is a danger under this Bill, where there are a few powerful concerns, that the new powers will in effect put them in as strong a position as if they were still to be permitted to carry on with collective price maintenance.
We should consider the relation between Clause 16 and Clause 20, and I will give an example. Assuming, as is possible under Clause 16, that a group of firms succeeded in satisfying the court that they were entitled to operate an exclusive list of dealers; and assuming that, added to it, was the new power of enforcing fixed prices through the courts, we might well find that we had closed the door of the closed shop even more tightly than at present.
In view of all these uncertainties and defects, it would be easy to ask the Government to take the Bill away and try again, but we on these benches have waited for ten years for a Bill to be introduced which would incorporate the principles pf registration and prohibition. It would therefore be inconsistent to try to reject the Bill on Second Reading.
If we were divided among ourselves, some wishing to see more advanced measures and others not being anxious to see any major change, the wisest tactics might be to vote against the Second Reading, but fortunately we are not in that predicament.
§ Mr. Wade
We should therefore seek to persuade the House to accept major Amendments in Committee. Whether we can conscientiously vote for the Bill on Third Reading will depend on the alterations made between now and Third Reading.
We may have hard words to say about industrialists who draw up these agreements, some of which are undoubtedly restrictive, some of which hamper new enterprises and some of which maintain prices at an unduly high level, but let us be fair. These business men sometimes say, "Why do you blame us? Why do you treat us as if we were criminals? We are only doing what we were encouraged to do before the war." There is some truth in that. If I had to apportion blame I should blame Governments pre-war and post-war more than businessmen. Pre-war Governments I should blame for having failed to deal effectively with large-scale unemployment. Post-war Governments I should blame for having failed to see the need for dealing with these restrictive practices which are so widspread in industry.
We now have an opportunity—I would put it no higher—to make up for our past errors. We have an opportunity to tackle this extremely complex problem of restrictive practices. By the time we reach Third Reading we shall have a pretty clear idea, maybe all to clear, whether or not the assurances which have been given about resolute action are valueless, whether or not the Minister's eloquent remarks are just a smoke screen whether or not the opportunity has been missed.
§ 8.19 p.m.
§ Mr. M. Turner-Samuels (Gloucester)
I quite agree with the criticisms which have been made by the hon. Member for Huddersfield, West (Mr. Wade), but I part company from him in his curious desire to keep the Bill alive. It seems to me that, Liberal-like, he was desirous of wounding but was afraid to strike.
I want to ask the President of the Board of Trade whether he is asking the House to believe that this is a straightforward, genuine Bill. I listened to his introduction of it, and there was not a single sentence in the whole of his usual eloquent and adroit oratory which dealt 2018 with any real necessity for the Bill. It is perfectly true of course that seriatim, Clause by Clause, he took the contents of its provisions and explained them to the House in a very clever, evasive performance which never really got to the point at issue at all.
Although very reluctant to do so, I interrupted the right hon. Gentleman whilst he was browsing on that extraordinary provision of Clause 16 because he was laying down the thesis, which of course he has to have as a screen, that it was Parliament which was going to prescribe what the principles were to be, that it was Parliament which was going to be the master of this legislation and the judiciary only the servants. I put it to the President that he should look at this matter again honestly and fairly. How can he reconcile that dictum of his about Parliament being the master with the unlimited powers that the Bill gives the court to deal with the matter? Take two examples. There is not a lawyer in this House—[HON. MEMBERS: "Hear, hear."] Wait for it. There is not a lawyer in this House who does not honestly know that all the provisions of the Bill, so far as they are contained in Part I, are confiding the decision, the fate, the operation, the scope and the power of these agreements exclusively and finally to the hands of the court.
In a moment I shall tell the House how these agreements came into existence. These restrictive agreements did not come into existence by legislation. These restrictive agreements were founded on judge-made law. It was a decision of the House of Lords which held that it was perfectly legal in a case where a collection of suppliers, associations or firms, got together and entered into an agreement which in effect was a conspiracy but which was for the benefit of their own private interests. The House of Lords decided that in such a case it was perfectly legal to do so, and in that way the judges legalised these restrictive agreements. This Bill is now seeking holus bolus to hand the whole thing over to them again.
The President of the Board of Trade smiles. His smile is enhanced by the cherubic effect which he gives it, but the public are not going to smile when they discover that this Bill, instead of curing the mischief which it is alleged to aim at, aggravates it and does not remedy it 2019 at all. I take two of the items in Clause 16 by which, the President boldly announced to the House, the courts were to be curbed by the powers of Parliament. First, I take the element to which the hon. Member for Huddersfield, West referred, namely, not to do away with an agreement which might thereby cause unemployment. I do not know what the extent of that unemployment is to be, or how long it is to last or what the implications of that are to be, but imagine the questions of fact, the intricacies, and the perplexities, that will surround an issue of that kind. Not only will it be difficult for the courts to deal with it, but it is an open invitation to those who are concerned to appeal from the special court that is to be set up to the Court of Appeal, and from the Court of Appeal to the House of Lords. How long that delay will be is almost immeasurable.
Let us consider Clause 16 (g). That is a paragraph by which the court will have to decide on the element of reasonableness and whether a restrictive agreement is reasonably necessary, or should reasonably be allowed to stand. What is reasonable is a question of fact. Parliament cannot prescribe in specific terms or principles the limitations of facts—they depend upon evidence. It is for the court and the court only, just as it is where there is a jury in a case, to decide whether the facts are such that they amount to a case which justifies finding that it comes within the definition of what is reasonable. Therefore, I say to the President M. the Board of Trade he must really shake himself up on this plain issue.
The Government cannot go on deluding the public on this matter. I say to the President, to those who flank the right hon. Gentleman on the Front Bench, and those who are behind him, "Sooner or later you are going to be found out on this. Then you will have what you deserve, a rude awakening." There is absolutely no need for the Bill at all. Apart from the fact that it is a very bad Bill indeed it is nothing more nor less than a façade to protect big industry from the fate that it would have had if the Monopolies Commission was allowed to work in its full scope.
Let us see what machinery we now have to deal with it. Under the Labour Government we had introduced in this House the Monopolies and Restrictive 2020 Practices (Inquiry and Control) Act in 1948. I do not want to go into all the terms of that Act, but I can sum it up in this way. Under that Act the Monopolies Commission had the fullest power and scope to deal with anything immediately or urgently necessary with which this Bill is alleged to deal. It is true that the Monopolies Commission cannot initiate anything and can only report to the President of the Board of Trade. It cannot initiate an inquiry into a restrictive practice or into something going on by means of a trade restriction which ought not properly to be taking place.
Yet the President of the Board of Trade has unbridled powers to refer any case to the Monopolies Commission and to act on its report. Also he has a power that is not given under the Bill, even to the courts. Whereas this Bill gives an individual supplier protection, under the Act setting up the Monopolies Commission the President of the Board of Trade has power to refer to the Commission the case regarding any firm, individual, association, corporation or company in relation to dealings in goods or the processing of goods.
The truth is, of course, that it is not the Monopolies Commission which has failed; it is not the Monopolies Commission which has been slow. The default is that the President of the Board of Trade has not referred cases to the Commission as quickly as he should have done and has not amplified the machinery of the Commission so that it could deal with matters speedily and properly. There is therefore absolutely no need for this Bill.
What is really the problem with which we are faced in discussing this matter? The problem is how we are to outlaw trade restrictive agreements, collective discrimination, exclusive dealings, boycott and a whole range of pernicious practices of that character. Surely that is a straightforward issue and what it needs is a straightforward remedy. This Bill is not straightforward in any of its provisions. I think we all accept—and it is very important to do so as a preliminary—that all responsible opinion condemns restrictive practices. Certainly that was done at a very high level in two cases. The Lloyd Jacob Report in 1949 made it very plain, after getting the most detailed and searching evidence which left very little more 2021 for inquiry. Then there was the report full and authoritative of the Monopolies Commission in 1955.
§ Mr. Turner-Samuels
Just let me finish my argument. There is no need to waste any more time on whether agreements of this kind should have their lives prolonged.
§ Mr. Deputy-Speaker (Sir Rhys Hopkin Morris)
I hope there will be no interruptions, because there are other hon. Members who want to speak.
§ Mr. Turner-Samuels
There is no need for any elaborate mechanism or inquiry and delay in this matter. In any case, the principle of the Bill is fundamentally bad, for this reason. It seeks to register these agreements instead of rendering them invalid. Why should there be this dilatory preliminary step, all this technical and formal trouble in having to register these objectionable, mischievous practices, instead of taking the immediate course of seeing that they are declared invalid?
§ Mr. Turner-Samuels
I am sorry, there is no time. The President of the Board of Trade has proposed that a special branch of the High Court should be created. The reason for this is that he wants the court to decide what is in the public interest.
§ Mr. Deputy-Speaker
I do not want to interrupt the hon. and learned Member, but he seems to me to be dealing largely with points that would be more appropriate to the Committee stage of the Bill.
§ Mr. Turner-Samuels
What I am criticising, Mr. Deputy-Speaker, is these provisions in the Bill and the fact that they are unnecessary. I am not criticising them on the basis that they are amendable.
The President of the Board of Trade is trying to put the onus in these matters on the parties to agreements But the public is not a party to these agreements. It is all very well for the right hon. 2022 Gentleman to say that the parties to an agreement will be brought to court, but where does the public come in? One result, to which the right hon. Gentleman should apply his mind, is that this may lead to the most serious corruption. Whereas at present traders often protest and object to conditions and restrictions imposed upon them, it will now be open to traders, for a price—it is no use closing our eyes to this—to combine with suppliers on the pretext that these agreements are for the public interest. The result will be most mischievous to the public interest.
Who in court will put the case for the public? Where will the evidence be obtained? The suppliers, of course, will very easily give a hundred and one different reasons to justify any restrictive agreement, and that is all that will be before the court. The traders will in the main back this procedure because the suppliers will make it pay them to do so. It is no use people talking about honesty in trade. [Laughter.] Oh, yes. When we are dealing with profits of this kind, we are getting very near the raw. The saying that "Money is the root of all evil" was not said for nothing.
The next objection is that the Bill will lead to extensive and complicated delays. It will give to suppliers and to the parties, as they are called, the opportunity of using legal obstruction and technical refinement. Not only is there the question of going to court, but there may be an appeal to the Court of Appeal and the House of Lords. Clause 2 (3) lays down that the decision of the court is to be enforcedas … an order of the High Court.Very carefully, the Bill says not a word about appeal—[HON. MEMBERS: "Yes, it does."]—nor did the President of the Board of Trade say anything about the delays that appeals may cause. Years may elapse before these matters are decided.
First, there must be the decision whether a restrictive agreement should be registered. That can be taken to court. That, too, can take years to decide. [Interruption.] I must tell hon. Members opposite that I have not been a lawyer for 35 years without learning something about the workings of the legal system. So the only good result of this legislation 2023 will be lengthy and lucrative litigation for lawyers. The public will not stand a chance. It is the big battalions which will benefit, because they have the wealth and therefore will have the advantages of the delays possible under the Bill.
I want to deal with another very important point. The pivot of the Bill and its sole test is on this question of public interest. As I have said before, public interest is not a question of law, it is a question of fact. The proper tribunal for a question of fact is not a legal tribunal but a lay tribunal. That is why we have juries. The most suitable medium for trying a question of fact is, of course, a lay tribunal. The reason why a lay tribunal is better than a legal tribunal in this respect is that it can explore all sources. There are no legal formalities or procedures, and it is the best judge of what is fair dealing or unfair competition.
I should like to read to the House the view of two judges about this, because that is very important. A very eminent judge, in the important case of the Mogul Steamship Company v. MacGregor, reported in 1892 Appeal Cases, at page 25, is quoted as saying:It is a branch of the law"—that is the question of public interest, or public policy,which should not be extended, as judges are more to be trusted as interpreters of the law than as expounders of what is called public policy.That is the experienced, considered view of a judge. Another very eminent judge, Lord Justice Fry, said:To draw the line between fair and unfair competition, between what is reasonable and unreasonable"—and this is what the Bill wants the courts to deal with—passes the power of the court.The Parliamentary Secretary in his reply will have to deal with this view because it is a judicial view, and what the Government are now trying to do is to say that the court is the proper avenue for this, whereas the judges themselves have put it on record that it is not the place to which it ought to go.
There is a further provision in the Bill—and the Parliamentary Secretary ought to appreciate this because he is a lawyer 2024 —which introduces a most revolutionary change in the law. It has always been the law of this country, quite rightly, that a contract, except in the rarest possible cases, is only enforceable as between the parties to it. It would be a very grave thing if a stranger who had nothing to do with the making of the contract and no say in its terms suddenly found himself bound by it.
The Bill, however, departs from that in a very serious respect. It states that an individual trader or firm can bring a person who is not a party to a restrictive agreement to the court and enforce the conditions of the agreement against him. It is a something which cannot be done now, and it is a liability which can continue for years, notwithstanding the fact that ultimately the restrictive agreement may be found to be illegal. In the case of an individual, of course, even the court will not be able to deal with a matter of that kind.
It is quite wrong that the Government should seek to impose a Measure of this kind upon the country. Hon. and right hon. Members opposite said in what they called the "Right Road for Britain" in 1951—and now the country knows that it is the wrong road—that they were going to give the Monopolies Commission more power and were going to use the Commision to the full. This is how the Government are going to use the Commission—by taking away its powers and reducing it to almost a nonentity.
Restrictive trade practices are a very serious matter. They probably have more effect on the rise in the cost of living than any other cause, but the Government are insisting upon bringing forward this Measure which is designed not to remedy the mischief but to protect those who have restrictive agreements, either by delay or by the complications and technicalities engendered in the Bill. I am glad that this side of the House intends to divide on the Bill. It is a bad Bill and its presence on the Statute Book, should it reach there, cannot make it otherwise.
§ 8.47 p.m.
§ Sir Lynn Ungoed-Thomas (Leicester, North-East)
I am sorry that I have had to rise at this hour, particularly before the hon. and learned Member for Middlesbrough, West (Mr. Simon), because I should have liked to have 2025 heard him on the more legal aspects of the Bill. We have had an interesting debate, and I should like to associate myself with the congratulations extended to the maiden speakers. I hope that we shall hear them again, as doubtless we shall on this Bill as well as on others in the weeks to come.
It is impossible in the time at my disposal to cover all the various aspects of the Bill which have been canvassed in the debate. I want to try to put the Bill in perspective from the point of view of this side of the House, and I shall therefore limit myself to the main considerations and to the Bill's main objectives.
I hope I may be forgiven if I begin by stating three platitudes with which I hope everyone in the House will agree. It may be that when we come to apply those platitudes to the provisions of the Bill the operation may be more painful. However, I will state first the principles of our approach to this Measure.
First, I think we will all agree with the important platitude that the public interest should prevail. It follows from this that private property, including the private sector of industry, must serve and be subservient to the public interest. Again it follows that in this House we are all concerned with the economic efficiency of the private sector. On this occasion, I shall not enter into the question of the extent of public ownership or the advantages of public ownership or the form of public ownership. The naked fact is that we have the private sector here, that it is 80 per cent. of our economy, and that it is of vital interest to all of us in this country that the private sector should be efficient. The last platitude is that the ultimate responsibility for the supremacy of the public interest must lie in Government responsibility to Parliament.
The two fundamental principles in approaching this Bill on restrictive practices are, first, that the interests of the country should prevail and, secondly, that the Government and Parliament alone can ultimately judge and be responsible for the decisions affecting our general economic situation. Subject to those two considerations, our approach to restrictive practices and their problems is purely pragmatic. As the President of the Board of Trade stated so clearly in the last 2026 debate, it is purely a question of whether a particular practice is beneficial or is not.
It is in accordance with these fundamental considerations that we introduced what became the 1948 Act. That Act provided for a Commission to inquire into and to report on facts, and to indicate whether in its view a particular restrictive practice was contrary to public policy. In the light of the Report of that Commission, it was for the Government to be responsible for the decision to be taken, and the responsibility of the Government was, of course, subject to Parliament.
Therefore, in the 1948 Bill, there was no need to define and no difficulty about the definition of public interest, because it was in the hands of the authorities where the public interest should lie, namely, Government and Parliament. So we put into that Act not a definition of public interest but of matters which should be taken into consideration by the Commission when it was considering public interest, and those matters were set out in Section 14. They were directed not to preserving the status quo, but to the efficiency and the development of industry. In the matters specifically mentioned in that Section, we see a strong contrast with the matters specifically mentioned in Clause 16 of this Bill.
It was as a result of that Act that we have had these Reports, and I should like to associate myself, as would we all, with the President in the tribute he paid to the magnificent work done by the Restrictive Practices and Monopolies Commission, and I should particularly like to associate myself with the tribute to Sir David Cairns. The Commission has thrown light on dark places, some of them rather too dark. As a result of the work of the Commission, we have now had in its latest Report a proposal that six categories of practices should be condemned. It is not easy precisely to compare what is in the Report with what is in the Bill, but I understand that the six categories are in fact covered by Clause 5.
The first main issue between that side of the House and this is the question whether the six categories which have been considered by the Monopolies Commission should be prohibited unless allowed, or should be allowed until pro- 2027 hibited. We say that they should be prohibited unless allowed. We follow in that the recommendation of the Majority Report. Here the fundamental consideration that the country's interest must prevail comes into operation. If it is clear, as we say it is clear, from the Report that these practices are generally pernicious, then they should be generally banned. It is in the interest of the country as a whole that these practices should not be allowed to continue. That is the Report's conclusion.
I should like to read two or three passages from the Report which bear on this problem. The first, is in paragraph 240, where the Report says:We have considered whether there may be circumstances in which our conclusion that the practices with which our reference is concerned are generally against the public interest may not hold good.It goes on:We have not in the course of our inquiry come across any instances in which we were clearly satisfied that such practices were beneficial.Of course, the Commision considered a great mass of evidence bearing on this range of practices. In paragraph 245 the Report says:If those conclusions are right, …—the reference is to the conclusion that these six practices are against the public interest—… further individual review of the agreements to which they apply could only be of any value in exceptional cases, for the great majority of agreements would be found not to be in the public interest.Then comes the passage which my right hon. Friend the Member for Battersea, North (Mr. Jay) quoted:Further, this procedure would be cumbersome, slow and unfair. To complete the task would take the reviewing authority many years.At the end of paragraph 245 and the beginning of paragraph 246 the Report says:… if there are quite limited provisions for dealing with exceptional cases, such action can be taken without risk of injustice and with great benefit to the public interest.We believe it follows logically from the conclusion that these practices operate generally against the public interest that they should be generally prohibited. They exist in a large number of trades and, once it is accepted that they are generally harmful to the public 2028 interest, it is wrong that they should be permitted to continue because upon examination a few exceptional cases may be found in which they are on balance advantageous.Surely, in view of that conclusion, if we hold that the public interest must prevail, it inevitably follows that these practices should be generally prohibited, subject to applications being made for their being permitted; not to their being generally allowed, as proposed by this Bill, until they are in each particular case prohibited.
In what was, in effect, an extremely powerful speech for our proposal on this issue, the hon. Member for Somerset, North (Mr. Leather) referred to Canada, where restrictive practices have been prohibited. And not only in Canada. I believe I am right in saying that in the United States these six practices are prohibited without exception. In Germany they have a Bill in which there is a proposal, exactly the same as we are here putting forward, for general prohibtion not to be held up for individual cases. In Sweden, which is a very different country from ours—where everything is in a small compass and where, therefore, they could deal with individual cases much more conveniently—they have a general prohibition, not of these practices, but of resale price maintenance, not being held up by applications for allowing exceptions to take place. If in all these countries, highly industrialised like our own, Germany, Canada, and the United States, they can have general prohibition, why cannot we have it in this country?
All that is proposed by this Bill is that a few exceptional cases to which reference is made in the Report shall hold up a general prohibition which is to the advantage of the industry of this country and to the country itself. It is, of course, a proposal that the tail shall wag the dog. It is quite unreasonable, and we are opposed to it. It is a fundamental proposal, because it goes to the whole root of the attitude towards this problem. It is, in one sense, economically the main issue. If there is general prohibition and provision is merely for exceptional cases to be allowed, with general prohibition not being held up for any length of time, then the great difference between ourselves over details in procedure—apart from the constitutional point which I will come to later—would fall to the ground.
In that case all the delays would tell against the applicant and nothing would 2029 more activate trade associations in this country and the industrialists of this country, where there was a real, genuine case for making an exception, nothing would activate them more to speed in getting their cases heard and to come round in favour of a speedy procedure, than a vote in favour of general prohibition.
The difficulty, of course, is that the Conservative Party is too tender about private controls. The party is not opposed to controls, except public controls. About them it is dogmatic and doctrinaire. It is only opposed to controls if they are in the public interest. If they are in the private interest, the Conservative Party is tender about them, and we have all the delay and procedure at great length, as laid down in this Bill, which gives every opportunity possible for the holding up of effective legislation.
Now I come to the court. It has been referred to in various places as a tribunal, and so I wish to make it clear—as it was clear from the speech of the President of the Board of Trade—that it is a court, and a court of law. It is called a court; the Title refers to "judicial investigation"; it will sit in the Royal Courts of Justice; it will be presided over by a High Court judge, and it will have High Court procedure. Is the Registrar to be a party to the procedings? Is he to act as an opponent of the applicant? How will the procedure he conducted in that respect? As in the High Court, there are provisions for an appeal to the Court of Appeal and, I presume, to the House of Lords in the usual manner.
§ The Parliamentary Secretary to the Board of Trade (Mr. Derek Walker-Smith)
Upon a point of law.
§ Sir L. Ungoed-Thomas
Yes. It is not a Division of the High Court for one reason only, namely, that it includes laymen among its members. Otherwise it is a court of law in the ordinary sense.
Government and Parliament will have nothing whatever to do with its decisions. Once we have parted with the Bill we shall have parted with control of the restrictive practices mentioned in it, and with all control over the private sector of the economy. The function of a court is not that which is mentioned in the Bill; it is entirely different, namely, to 2030 interpret and administer law, and not to make it. The Bill hands over to this court governmental and parliamentary power. All judgments are founded upon law or upon facts, but in this case the decision which really matters will be a decision founded neither upon law nor upon fact. It will be a political and economic decision.
The true place of public interest in law is as the foundation and reason for a general rule, which the law then applies. It is not for a judge to conceive what, in all the circumstances, he considers the public interest to be. That is not law; it is the negation of law. The test provided by Clause 15 is a test of the public interest.
Then certain criteria are laid down in Clause 16, to help the court in arriving at a decision. That Clause contains no definition of "public interest"; in fact, it is nowhere defined in the Bill. Clause 16 provides, first, a list of tests any one of which, if passed, enables the applicant to ask the court, in effect, for a decision in his favour upon grounds of public interest. It is a long list. I do not believe that a single one of the multitude of agreements which come within Clause 5 could not be brought under one or other of the tests laid down in Clause 16. The second test was not included in the recommendations of the Majority Report. An applicant will pass the test if he can showthat the removal of the restriction would deny to … consumers … specific and substantial benefits or advantages.…The whole argument for every restrictive practice which I have ever heard of is that it is advantageous to consumers.
§ Sir L. Ungoed-Thomas
Yes. That comes out quite clearly in the Majority Report. Every single one could satisfy this test. There is a number of other tests. Let us take the one to which the hon. Member for Rye (Mr. Godman Irvine) referred in paragraph (f) of Clause 16. It refers toa serious and persistent adverse effect on the general level of unemployment in an area, … a substantial reduction in the volume or earnings of the export trade.That opens up a vast field. The Times refers to it asan immense field of discretion in a major matter of policy.So, of course, it is.
2031 When these tests have been passed, we come to the decision that has to be made. The decision isthat the restriction has not operated and is not calculated to operate to an unreasonable extent to the detriment"—I paraphrase—of competitors, consumers or public. "Unreasonable extent"; what exactly is the court to do about that phrase? I suppose it means an unreasonable extent in all the circumstances, taking into consideration as far as relevant every single circumstance that may conceivably be relevant to the case. Then the court balances the advantages and disadvantages and comes to a conclusion whether or not it is in the interests of competitors or consumers, or otherwise to the detriment of the public, which is the obverse, of course, of public interest.
What the court has to do when these tests are passed is, without limitation and without definition, to decide whether or not the agreement is in the public interest. That is not a function of the court at all. That is a decision of economic policy which should be taken by the Minister, or by the Executive, and for which they should be responsible to Parliament.
"To an unreasonable extent"; let us just test it. Is this a matter of fact or of law? It is important to know. I suspect that it is intended to be a matter of fact. If one can draw in the analogy from restraint-of-trade cases, it would be treated by the court as a matter of law. I do not know which it is. If it is a matter of fact, then the laymen could take part in the decision, but if it is a matter of law the judge only takes part in the decision. If it is a matter of law there might be an appeal to the Court of Appeal, and it could, with leave, go to the House of Lords.
The true answer is that it is neither a matter of fact nor of law. It is a decision of policy. That is why in the power which is handed over to the court we are handing over something which is not justiciable. It is suggested in The Times today, that because we are dealing with individual cases it does not become a matter of policy. That cannot affect the question whether it is a matter of policy or not. It does not affect the nature of what is being decided but only its extent.
2032 Another difficulty is that what matters far more than the decision in any one individual case is the cumulative effect of the decisions on the private sector of the economy as a whole. It would be quite possible for a decision in a particular case to be in favour of the applicant—for the decisions in a series of particular cases to be in favour of the applicants—and yet for the cumulative effect to be against the public interest. That is another reason why the court is not a proper forum for a decision of this kind. The decision has to be—or should be—taken in the light of general knowledge affecting the whole of the economy, and any one particular decision should be taken in the light of the general situation and of the other decisions that are made, too.
This Clause does not contain a definition of the public interest, and the Attorney-General, speaking on the last occasion, fully recognised the difficulty—as indeed I do—of providing a definition. He referred to the speech made by my hon. and learned Friend the Member for Northampton (Mr. Paget) and said:The hon. and learned Gentleman … says that the issues would not be justiciable. That will depend, to a large degree, on the guidance given to the tribunal. It is, as my right hon. Friend said previously, desirable to lay down criteria. Having regard to the nature of the problem, that will not be an easy task, but it will have to be done if it can be done."—[OFFICIAL REPORT, 13th July, 1955; Vol. 543, c. 2059.]It is not done in this Clause. There is no limitation in this Clause on the meaning of public interest. There is no definition of public interest—there is no general rule laid down, and no law laid down that a court of law can apply. Law must, of course, be general and impartial. It is fundamental to law that it should be so. What this is dealing with is a decision under an oak tree—the judge dealing with each case separately, without a general rule of law to apply at all. Therefore, that fundamental consideration that law must be general and impartial is missing in Clause 16.
The other thing that is missing is that it does not draw a clear distinction between the functions of the court and the functions of the Government. Let me test it by one very simple provision contained in the Clause itself. In subsection (e), one test laid down is that the restriction is necessary for the purpose of a rationalisation scheme—if I may para 2033 phrase. A rationalisation scheme is a matter for the Board of Trade. The Board of Trade decides that the scheme is in the national interest and on that ground, amongst others, it approves the scheme. But here we have a restriction necessary to a scheme which the Board of Trade says is in the national interest, subjected to a decision of the court, for the court, if it wishes, to decide that it is not in the national interest. [HON. MEMBERS: "No."] Certainly—to decide that a scheme may be to the detriment of the public, which is the obverse of the public interest.
This is dealing with a restriction which is necessary to the scheme. I am not dealing with the scheme itself but with a restriction necessary to the scheme. Alhough the restriction is necessary to the scheme it can be done away with by the courts. [HON. MEMBERS: "No."] Yes. Of course hon. Gentlemen opposite do not like it, but that is the provision in this Bill. I am dealing with the provisions in the President's own Bill. The whole point of including it in this Clause is to bring it within the jurisdiction of the courts, and, of course, they car decide that the restriction is not in the public interest. There we can have a clash between the decision of the Board of Trade, representing the Government, and the decision of the courts. This goes to the very foundation of all our constitutional arrangements. It goes to the severance which there should be between the courts on the one hand and the Government on the other.
There are dangers in this, and I should like to make one brief reference to the position of the High Court judges. We do not by submitting what are essentially political matters to the decision of a court turn them into legal matters. We cannot convert a political matter into a legal matter merely by asking the opinion of a judge about it. It is in fact the height of folly to drag the judges into these matters. It is not pleasant when we have cases, such as the famous trade union cases, which impinge upon politics. They are not welcome cases, but they are quite inevitable on occasion, and what we are doing here is to drag the judges into the vast field of political and economic matters.
The President has done away with the Monopolies Commission. At least, the restrictive practices part of the Commis- 2034 sion, which he is no longer using for the agreements which are covered by this Bill. He has put that vast field out of the purview altogether. The decisions of the Monopolies Commission have been invaluable. The Commission has gained a vast experience in dealing with this problem, as my hon. Friend the Member for Blackburn (Mrs. Castle), brought forward so clearly. In the work it did for its latest Report, the Commission covered a vast amount of this ground.
Why is it done away with? It is not because it worked too badly, is it? The difficulty is the very opposite. It has been too successful in the work it has done.
What we are all concerned with, I trust, is the efficiency of industry, and The Times wrote yesterday:Britain is no longer a dynamic society. It is that change which the Prime Minister has somehow or other to bring about. If he can do that then our problems will be solved, and the task be not arduous beyond our powers.But there is nothing dynamic in this Bill. The difficulty with the Government is that they are divided between laissez faire and private monopolists. The right hon. Gentleman is a sincere and ardent laissez faire doctrinaire, and there are others alongside him who believe in restrictive practices and in monopoly behaviour.
This Bill, of course, is a compromise between the two. It is not a Bill founded on a clear policy resolutely carried out in the country's interests. For every proposal in the Bill there is a counter-proposal. If we go through it carefully, we find that for every antidote, there is, to use the modern jargon, a "disantidote." There is a careful balancing of one advantage against another, and if there is a step forward here, there is a step back there.
The Bill is a formula to conceal dissension and to placate vested interests within the Conservative Party. It has the appearance of action, but the reality is one of interminable delay and inaction. It is an abnegation of power and responsibility by the Government. In our view it is unconstitutional. And it is a bogus Bill, and we shall vote against it.
§ 9.26 p.m.
§ The Parliamentary Secretary to the Board of Trade (Mr. Derek Walker-Smith)
I should like to start by associating myself in all sincerity and pleasure with the congratulations on the maiden 2035 speeches made by my hon. Friends the Members for Heywood and Royton (Mr. Leavey) and Rye (Mr. Godman Irvine). They both made, as the House will agree, welcome and informative contributions to the debate.
My hon. Friend the Member for Rye cast his speech in a more interrogative vein and put to me a series of questions, in particular about Clause 16. He asked me why unemployment was taken as the test in paragraph (f), rather than employment. The reason is that it is not intended to be a defence or a good plea if the workers in a factory get employment elsewhere. [HON. MEMBERS: "Oh."] Obviously; we should not expect to have a restrictive practice justified by the fact that nobody was thrown out of work, albeit a particular factory had fewer employees. Paragraph (g) is the implementation of a recommendation of the Monopolies Commission Report on collective discrimination.
My hon. Friend the Member for Rye and my hon. Friend the Member for Chichester (Sir L. Joynson-Hicks) asked us to consider the advisability of reversing the onus in the last part of the test in Clause 16. My hon. Friend asked me how I would advise anybody to bring his evidence to discharge that onus. As I am not now in the practice of the law it would perhaps be contrary to the public interest if I answer that question, but I must remind my hon. Friends that this is one of the matters on which the Government are in principle adjured, in the very important and authoritative leading article in The Times this morning, which has been referred to in the debate, to leave the Bill as it is.
A number of points have been put about procedural and other matters, and they are perhaps more in the nature of Committee points. We can return to them then. [HON. MEMBERS: "Oh."] I am only paying the hon. and learned Member for Leicester, North-East (Sir L. Ungoed-Thomas) the compliment of doing as he suggested—following the main lines of this debate.
It would be for the convenience of the House, I think, if I referred for a few minutes, first, to the theme of resale price maintenance, which has naturally loomed large in the debate, before turning to the strictures endorsed in the Amendment. The Bill follows the 2036 general principle of prohibiting the collective enforcement of resale price maintenance but provides a legal remedy for individual resale price maintenance.
There has in fact been very little, if any, criticism in this debate of the decision to prohibit collective enforcement of resale price maintenance. It is true that the right hon. Member for Battersea, North (Mr. Jay), who was the opening Opposition speaker in the debate, expressed certain doubts as to whether in fact the Bill succeeded in what it set out to do, to prohibit collective enforcement of resale price maintenance.
I was waiting with interest, as I think the House was waiting, to hear that followed up by the reasoned arguments of the hon. and learned Member for Leicester, North-East, but he did not take up that point. We were certainly left with the impression that he was to give his great legal authority and expertise to what after all, if true, would be an extremely damaging criticism of the Bill. I can assure the House that that criticism is not well-founded.
The practices whereby collective enforcement of resale price maintenance are maintained are collective boycott and discrimination or, to put it in less abstract terms, putting people on the stop list when they do not observe resale price conditions, or taking them off the approved list. I can assure the House that those methods are unlawful under Part II of the Bill.
§ Mr. Walker-Smith
The right hon. Member must appreciate that that, in fact, is how it is done. If the right hon. Member is concerned with the point that there can still be an agreement amongst manufacturers to prescribe an individual resale price, that agreement, of course, is caught by Clause 5. The right hon. Member must not look at this Bill as if it were in watertight compartments merely because, for convenience, the provision is set out in two different parts of the Bill.
§ Mr. Jay
I will not interrupt the hon. Member as often as the President interrupted me, but will he agree that if it is 2037 only done under Clause 5, collective resale price maintenance is not prohibited by the passing of this Bill? Will he deal with the point I made? Suppose that a trade association made it a condition of membership that each individual firm should enforce resale price maintenance by the new legal provisions of the Bill?
§ Mr. Walker-Smith
That is caught under Part I of the Bill. I shall come in a few moments to whether there will be any delay. The right hon. Member must not confuse his terms. What is prohibited here is collective enforcement of resale price maintenance, and that is done in Part II of the Bill.
The right hon. Member said that the Bill outlawed private courts and the like only in so far as they enforced resale price maintenance. That is true, but that, of course, is by far the greatest function of those private courts. If the right hon. Member has any doubt at all as to the mortality of those courts under this Bill, let him go and inquire of industry and he will find that industry accepts it as a death knell.
We have come to the conclusion that on balance there is a proper place for individual resale price maintenance in our economic system. I say "on balance" deliberately, because I do not think it is becoming to make a doctrinaire or dogmatic approach to a question on which there has been honest and informed difference of opinion over many decades. There is a good case on economic grounds for individual resale price maintenance. The Lloyd Jacob Committee, for example, referred to the effect on manufacturers of prolonged price cutting in relation to the quality and production of their products.
It is indeed obvious that price cutting of a product by one retailer is likely to mean that other retailers in the district will not stock that product or push those sales, with the result that the manufacturer is denied the breadth of distributive outlets and the assurance of co-operation in the promotion of sales which is necessary if he is to have the assurance that he must have before embarking on those mass-produced projects which ultimately are very beneficial to the consumer.
That being so, it is not really surprising, as perhaps it might appear at first sight, that there is a large volume of consumer opinion in favour of resale price maintenance. The Lloyd Jacob 2038 Committee, for example, found that the representatives of the major women's organisations with whom they discussed this matter favoured a fixed retail price.
§ Mrs. Jean Mann (Coatbridge and Airdrie)
There is a great deal of doubt, in spite of the articles in the Observer to that effect, on how the questions were put and whether what the women really wanted was price stabilisation.
§ Mr. Walker-Smith
I had the pleasure of making this same point to 700 or 800 women delegates at the Consumer Protection Conference of the National Council of Women, and I was sorry that the hon. Lady was not able to be there on that occasion, when there was no dissent from that proposition when I made it to all those representative women at that time.
§ Mr. Walker-Smith
I must get on. [HON. MEMBERS: "Give way."] While I am very anxious to give way, because I have so far found these interruptions by no means unhelpful to my case, I tend to find that, having given way many times. I am afterwards accused of not having dealt with all the points raised in the debate. I assure the House that I will try to do my best to steer a proper course in that respect.
If there is that good economic case for individual resale price maintenance, then I think the House would agree that we have followed a logical and appropriate procedure in Clause 20. The reason, of course, why it is impossible to enforce individual resale price maintenance in the courts at the present time is that a manufacturer can only sue the immediate purchaser of his product, the one with whom he is in direct contractual relationship. But, of course, in a great many cases, as the House is aware, there are one or more parties intervening between that sale and the ultimate retail disposal of the product.
So, albeit the manufacturer has at present a remedy in law, he has a remedy which is often against the wrong person and is therefore ineffective, save only in cases—as the hon. and learned Member for Leicester, North-East will know—where there is a patent licence or copyright protection because it embodies a registered design. In those cases a manufacturer can sue, as it were, down the line anybody with notice of the resale condi- 2039 tion. All that we are seeking to do in this Bill is to assimilate the general law to what the law already is in these particular cases, and to make the price run with the goods.
The hon. Member for Stechford (Mr. Roy Jenkins) expressed some apprehensions about the provisions dealing with notice. He was apprehensive lest a casual intimation in conversation might constitute a notice for the purposes of this Clause. What is an effective notice would, of course, be a matter for the Court, but I find it difficult to believe that anybody is likely to rely on a casual conversation as constituting such a notice.
I was also asked by the hon. Member for Hillsborough (Mr. G. Darling) about the position of Co-operative dividend or deferred rebates. The answer is that it will depend primarily on how the condition as to price is made by the individual manufacturer. On the question of discount, if the hon. Member looks at Clause 21 (1) he will see what is provided.
If it is right to leave these matters with the great body of retailers—to the private contract between the manufacturer and the retailer—it would not be possible to single out this particular type of transaction for different treatment in law. I venture to suggest, however, that the Co-operative Societies will find that they get the benefit of the abolition of collective enforcement of resale price maintenance—[HON. MEMBERS: "Nonsense."]—which on balance will benefit them. I am sorry that hon. Members do not find my explanation reassuring. No doubt, it can be pursued in Committee.
There is this final point to be made on resale price maintenance. As I understand it, the Opposition now come to the House to say that they would do away with resale price maintenance root and branch, but this does not quite accord with what they were prepared to do when they were themselves in office. We can recall the pattern of events. The Lloyd Jacob Committee reported in March, 1949. In June, 1951, two and a quarter years later, the Labour Government produced their White Paper, three months before their hasty and somewhat premature departure from office.
In their White Paper, the Labour Government indicated their proposals, which, broadly speaking were, for 2040 general legislation, subject to possible exceptions. Their Clause governing the exceptions applied not only to individual resale price maintenance but also to the collective enforcement of resale price maintenance. Therefore, although we are not going as far as the Labour Government said they would go about individual resale price maintenance, we are going further than they were prepared to go in 1951 because we are abolishing collective enforcement, to which the main objection lies.
§ Mr. Walker-Smith
—to deal with the terms of the Amendment and Part I of the Bill.
Two charges are made in the Amendment, first that we disregard the recommendations of the Monopolies Commission Report on collective discrimination, and, secondly, that our action is not sufficiently speedy or effective. Most hon. Members on this side of the House expected right hon. Gentlemen opposite to say that we should follow the Monopolies Commission in making these restrictive trade practices a criminal offence and that we ought to apply general prohibition to all restrictive practices.
§ Mr. Walker-Smith
The right hon. Gentleman shakes his head very confidently. He got 95 per cent. through a fifty-minute speech before he seemed to be clear himself.
Even now, hon. Members opposite seem to be far from clear in their minds between criminal proceedings and civil proceedings. The hon. and learned Member for Leicester, North-East referred to our taking one step forward and one step back. He himself seems to have taken a step or two in the direction of the Old Bailey in this matter and then, with a sigh of relief, taken a few quick steps back to the more familiar atmosphere of the Chancery Court.
2041 Both the right hon. Gentlemen and the hon. and learned Gentleman have given the House some rather selective reading, not uncommon on these occasions, from the Report on collective discrimination. For example, the hon. and learned Gentleman read the first and second sentences of paragraph 240 and then stopped short. The third sentence is:However, it would have been impossible for us to consider in detail all such arrangements and in some of the cases which came to our notice these practices formed only part of more complex arrangements, going beyond the scope of the present inquiry, whose total effect on the public interest we were not in a position to judge.
§ Mr. Walker-Smith
What is clear is that the terms of reference, as the right hon. Gentleman so well knows, were confined to the practices known as collective discrimination. Price rings, level tendering, market sharing or production quotas were not judged. In respect of all those important aspects, the Opposition now comes to the House to say, as I understand it, that there will be no general prohibition of those practices but there will be an examination of them. The only thing which divides us on that is: who shall do the examination? That is a point to which I will come in a moment.
My submission to the House is this. The Government are concerned, not as the Commission was, with a limited field, but with the whole field of restrictive trade practices. Where our solutions differ from those of the Monopolies Commission, I submit that our solutions are preferable to theirs. I believe that when the implications of the Monopolies Commission Report are fully analysed and understood, and when regard is had to the limited field in which the Commission was operating and to the fact that it was not under any obligation to translate its general intentions into practical effect or legislative detail—when allowance is made for these facts the differences between us are much less.
Both our solutions and theirs make the presumption that these practices are contrary to the public interest. Both contemplate the existence of cases which are not in fact against the public interest. Both contemplate the procedure of a tribunal for examination of these cases. Both prescribe criteria for the guidance of 2042 that tribunal, and both contemplate a necessary period of exemption pending and during the examination of these cases however in the result they may turn out.
The method of prohibition, subject to the examination of exceptional cases, has practical advantages over a case-by-case study governed by a presumption that these practices are against the public interest only if it can be shown that these exceptional cases are likely to be both very few and easily recognisable and dealt with. The whole of the history of this matter in many countries, the whole of the balance of probabilities and of the evidence of the Monopolies Commission in other cases which it has studied, show that that presumption would not be well-founded.
Our main issue is as to whether we are right to constitute this judicial court or whether, as the case has been put, this is a matter for Parliament. It is obvious, as was stated in The Times leader this morning, that whatever Parliament does, whether by prohibition or any other method, there must still be an extensive inquiry of individual cases. There is, therefore, no conflict between the Parliamentary solution and a judicial solution. It just is not true to say that Parliament alone is concerned with economic and social matters and that the court has no part in them.
The courts deal with many social and economic matters under the guidance of principles laid down by Parliament. [HON. MEMBERS: "Examples."] There are many examples in the spheres of landlord and tenant and of public health. The distinction is not between the kind of subject dealt with. The true distinction is between the level at which that subject is dealt with. Parliament is not in a position to examine, control or to judge the individual levels of economic activity. [An HON. MEMBER: "A strange doctrine."] It is a doctrine which has proved true in many fields. Why peer into the crystal if we can read the book?
Let right hon. Members opposite consider the analogy of the procedure relating to the compulsory purchase of land. In the middle of the last century every compulsory purchase had to be done by Private Bill in Parliament, which was full Parliamentary control. By the 1870s it was found necessary to introduce a Provisional Order procedure whereby Parliament 2043 abandoned the right of examination and primary judgment to the Executive and retained only the right of confirmation. In this century even the right of confirmation has had to go, there being Ministerial orders which are the subject of review by the Oliver Franks Committee to see if we cannot get nearer the rule of law.
Our approach is to work out a procedure whereby the sovereignty of Parliament and the rule of law both have their proper place in the matter. The Opposition on the other hand, would have to create an administrative machine, and that machine would either become clogged in its operation or arbitrary in its actions. We are told that our remedies are insufficiently speedy and effective. Speedy and effective action is not necessarily the last word. Action may be speedy and effective without necessarily being just, beneficial or appropriate. When the Pope was minded to make Sir Thomas More a cardinal, King Henry VIII said that he could send him a hat but he would see that there was no head to put it on. That was speedy and effective action, but no hon. Member would say that it was just, beneficial or appropriate.
There will be no delays in our method. I am afraid that the right hon. Member for Battersea, North had very wrong ideas about this registration. We require the approval of Parliament for the order for registration under Clause 7. We shall propose to make a very early registration of common prices, level tendering and collective discrimination, which together form the great bulk of restrictive trade practices, and we shall hope to get those agreements registered within about three months of the making of that order.
The court will be operating under principles and guidance laid down for it by Parliament. It will be operating in a manner which I believe will combine the maximum of speed and effectiveness with justice and fair dealing because, though speed is desirable, it is also right that there should be fair play for those who have to appear before the Court.
If we are to judge the Opposition's case in regard to speed then we should
§ judge what they say now by what they did when they were in office. Consider the pattern of events. In July, 1945, the Labour Party came into power. In July, 1948, it passed the Monopolies Act. By 1951 only three Reports on the whole range of restrictive trade practices had been laid before Parliament, and one of those was on the very day before the Dissolution in 1951. It is veritably a tortoise come to judgment when the Opposition—[Laughter.]
§ I have studied the terms of the Amendment but I have been unable to find anything agreeable to say about its terms. In order to find something pleasant to say I have had to look at the names of its sponsors. These six right hon. and right hon. and learned Gentlemen have two characteristics in common. First, and I say it with great respect and sincerity, they are all men of great ability and high personal quality. The second characteristic is that none of them entered Parliament before 1945. It would seem, therefore, to be a fair inference from this that the sum total of their Parliamentary judgment and tactical wisdom to date does not match their combined intellectual distinction—and I am bound to say that it has failed on this occasion.
§ I say in all frankness and fairness that I believe they will find they have made a great tactical error in deciding to vote against this Bill. They are going to vote tonight against a Bill which does away with the whole unpopular paraphernalia of collective enforcement in this country. Tonight they are going to vote against a Bill which for the first time in our history makes a comprehensive attack on the whole range of restrictive trade practices. They are going to vote tonight against a Bill whose main object is to make our economy freer and more flexible and more vigorous and more vital. I believe that the country will not be slow to condemn what they do, and I ask the House to condemn it now.
§ Question put, That the words proposed to be left out stand part of the Question:—
§ The House divided Ayes 319, Noes 252.2049
|Division No. 116.]||AYES||[10.0 p.m.|
|Agnew, Cmdr. P. G.||Amery, Julian (Preston, N.)||Ashton, H.|
|Aitken, W. T.||Amory, Rt. Hn. Heathcoat (Tiverton)||Astor, Hon. J. J.|
|Allan, R. A. (Paddington, S.)||Anstruther-Gray, Major W. J.||Atkins, H. E.|
|Alport, C. J. M.||Armstrong, C. W.||Baldock, Lt.-Cmdr. J. M.|
|Baldwin, A. E.||Godber, J. B.||Lucas-Tooth, Sir Hugh|
|Barber, Anthony||Gomme-Duncan, Col. Sir Alan||McAdden, S. J.|
|Barlow, Sir John||Gough, C. F. H.||Macdonald, Sir Peter|
|Barter, John||Gower, H. R.||McKibbin, A. J.|
|Baxter, Sir Beverley||Grant, W. (Woodside)||Mackie, J. H. (Galloway)|
|Beamish, Maj. Tufton||Grant-Ferris, Wg Cdr. R. (Nantwich)||McLaughlin, Mrs. P.|
|Bell, Philip (Bolton, E.)||Green, A.||Maclay, Rt. Hon. John|
|Bell, Ronald (Bucks, S.)||Gresham Cooke, R.||Maclean, Fitzroy (Lancaster)|
|Bennett, F. M. (Torquay)||Grimond, J.||McLean, Neil (Inverness)|
|Bennett, Dr. Reginald||Grimston, Hon. John (St. Albans)||Macleod, Rt. Hn. Iain (Enfield, W.)|
|Bevins, J. R. (Toxteth)||Grimston, Sir Robert (Westbury)||MacLeod, John (Ross & Cromarty)|
|Bidgood, J. C.||Gurden, Harold||Macmillan, Rt. Hn. Harold (Bromley)|
|Birch, Rt. Hon. Nigel||Harris, Frederic (Croydon, N. W.)||Macpherson, Niall (Dumfries)|
|Bishop, F. P.||Harris, Reader (Heston)||Maddan, Martin|
|Black, C. W.||Harrison, A. B. C. (Maldon)||Maitland, Cdr. J. F. W.(Horncastle)|
|Body, R. F.||Harrison, Col. J. H. (Eye)||Maitland, Hon. Patrick (Lanark)|
|Boothby, Sir Robert||Harvey, Air Cdre. A. V. (Macclesfd)||Manningham-Buller, Rt. Hn. Sir R.|
|Bossom, Sir A. C.||Harvey, Ian (Harrow, E.)||Markham, Major Sir Frank|
|Bowen, E. R. (Cardigan)||Harvey, John (Walthamstow, E.)||Marlowe, A. A. H.|
|Boyd-Carpenter, Rt. Hon. J. A.||Harvie-Watt, Sir George||Marples, A. E.|
|Boyle, Sir Edward||Hay, John||Marshall, Douglas|
|Braithwaite, Sir Albert (Harrow, W.)||Heald, Rt. Hon. Sir Lionel||Mathew, R.|
|Bromley-Davenport, Lt.-Col. W. H.||Henderson, John (Cathcart)||Maudling, Rt. Hon, R.|
|Brooke, Rt. Hon. Henry||Hicks-Beach, Maj. W. W.||Mawby, R, L.|
|Brooman-White, R. C.||Hill, Rt. Hon. Charles (Luton)||Maydon, Lt.-Comdr, S. L. C.|
|Browne, J. Nixon (Craigton)||Hill, Mrs. E. (Wythenshawe)||Medlicott, Sir Frank|
|Bryan, P.||Hill, John (S. Norfolk)||Milligan, Rt. Hon. W. R.|
|Buchan-Hepburn, Rt. Hon. P. G. T.||Hinchingbrooke, Viscount||Molson, A. H. E.|
|Bullus, Wing Commander E. E.||Hirst, Geoffrey||Monckton, Rt. Hon. Sir Walter|
|Burden, F. F. A.||Holland-Martin, C. J.||Moore, Sir Thomas|
|Butcher, Sir Herbert||Holt, A. F.||Morrison, John (Salisbury)|
|Butler, Rt. Hn. R. A. (Saffron Walden)||Hope, Lord John||Nabarro, G. D. N.|
|Campbell, Sir David||Hornsby-Smith, Miss M. P.||Nairn, D. L. S.|
|Carr, Robert||Horobin, Sir Ian||Neave, Airey|
|Cary, Sir Robert||Horsbrugh, Rt. Hon. Dame Florence||Nicholls, Harmar|
|Channon, H.||Howard, Gerald (Cambridgeshire)||Nicholson, Godfrey (Farnham)|
|Chichester-Clark, R.||Howard, Hon. Greville (St. Ives)||Nicolson, N. (B'n'm'th, E. & Chr'ch)|
|Clarke, Brig. Terence (Portsmth, W.)||Howard, John (Test)||Nield, Basil (Chester)|
|Cole, Norman||Hudson, Sir Austin (Lewisham, N.)||Noble, Comdr, A. H. P.|
|Conant, Maj. Sir Roger||Hughes Hallett, Vice-Admiral J.||Nugent, G. R. H,|
|Cooper, Sqn. Ldr. Albert||Hughes-Young, M. H. C.||Nutting, Rt. Hon. Anthony|
|Cooper-Key, E, M.||Hulbert, Sir Norman||Oakshott, H. D.|
|Cordeaux, Lt.-Col. J. K.||Hurd, A. R.||O'Neill, Hn. Phelim (Co. Antrim, N.)|
|Corfield, Capt. F. V.||Hutchison, Sir Ian Clark (E'b'gh, W.)||Ormsby-Gore, Hon. W. D.|
|Craddock, Beresford (Spelthorne)||Hutchison, Sir James (Scotstoun)||Orr, Capt. L. P. S.|
|Crosthwaite-Eyre, Col. O. E.||Hyde, Montgomery||Orr-Ewing, Charles Ian (Hendon, N.)|
|Crouch, R. F.||Hylton-Foster, Sir H. B. H.||Orr-Ewing, Sir Ian (Weston-S-Mare)|
|Crowder, Sir John (Finchley)||Iremonger, T. L.||Osborne, C.|
|Crowder, Petre (Ruislip—Northwood)||Irvine, Bryant Godman (Rye)||Page, R. G.|
|Cunningham, Knox||Jenkins, Robert (Dulwich)||Pannell, N. A. (Kirkdale)|
|Currie, G. B. H.||Jennings, J. C. (Burton)||Partridge, E.|
|Dance, J. C. G.||Johnson, Dr. Donald (Carlisle)||Paton, J.|
|Davidson, Viscountess||Johnson, Eric (Blackley)||Pickthorn, K. W. M.|
|Davies, Rt. Hon. Clement (Montgomery)||Johnson, Howard (Kemptown)||Pilkington, Capt. R. A.|
|D'Avigdor-Goldsmid, Sir Henry||Jones, Rt. Hon. Aubrey (Hall Green)||Pitman, I. J.|
|Deedes, W. F.||Joseph, Sir Keith||Pitt, Miss E. M.|
|Digby, Simon Wingfield||Joynson-Hicks, Hon. Sir Lancelot||Pott, H. P.|
|Dodds-Parker, A. D.||Kaberry, D.||Powell, J. Enoch|
|Donaldson, Cmdr. C. E. McA.||Keegan, D.||Price, David (Eastleigh)|
|Doughty, C. J. A.||Kerby, Capt. H. B.||Price, Henry (Lewisham, W.)|
|du Cann, E. D. L.||Kerr, H. W.||Prior-Palmer, Brig. O. L.|
|Dugdale, Rt. Hon. Sir T.(Richmond)||Kershaw, J. A.||Profumo, J. D.|
|Duncan, Capt. J. A. L.||Kimball, M.||Raikes, Sir Victor|
|Duthie, W. S.||Kirk, P. M.||Ramsden, J. E.|
|Eccles, Rt. Hon. Sir David||Lagden, G. W.||Rawlinson, Peter|
|Eden, Rt. Hn. Sir A. (Warwick&L'm'tn)||Lambert, Hon. G.||Redmayne, M.|
|Eden, J. B. (Bournemouth, West)||Lancaster, Col. C. G.||Rees-Davies, W. R.|
|Emmet, Hon. Mrs. Evelyn||Langford-Holt, J. A.||Remnant, Hon. P.|
|Errington, Sir Eric||Leather, E. H. C.||Renton, D. L. M.|
|Erroll, F. J.||Leavey, J. A,||Ridsdale, J. E.|
|Farey-Jones, F. W.||Leburn, W. G.||Rippon, A. G. F.|
|Fell, A.||Legge-Bourke, Maj. E. A. H.||Roberts, Sir Peter (Heeley)|
|Finlay, Graeme||Legh, Hon. Peter (Petersfield)||Robertson, Sir David|
|Fisher, Nigel||Lennox-Boyd, Rt. Hon. A. T.||Robinson, Sir Roland (Blackpool, S.)|
|Fleetwood-Hesketh, R. F.||Lindsay, Hon. James (Devon, N.)||Robson-Brown, W.|
|Fletcher-Cooke, C.||Lindsay, Martin (Solihull)||Rodgers, John (Sevenoaks)|
|Foster, John||Linstead, Sir H. N.||Roper, Sir Harold|
|Fraser, Hon. Hugh (Stone)||Llewellyn, D. T.||Ropner, Col. Sir Leonard|
|Fraser, Sir Ian (M'cmbe & Lonsdale)||Lloyd, Maj. Sir Guy (Renfrew, E.)||Russell, R. S.|
|Freeth, D. K.||Lloyd-George, Maj. Rt. Hon. G.||Sandys, Rt. Hon. D.|
|Galbraith, Hon. T. G. D.||Longden, Gilbert||Schofield, Lt.-Col. W.|
|Garner-Evans, E. H.||Low, Rt. Hon. A. R. W.||Scott-Miller, Cmdr. R.|
|George, J. C. (Pollok)||Lucas, Sir Jocelyn (Portsmouth, S.)||Sharples, R. C.|
|Gibson-Watt, D.||Lucas, P. B. (Brentford & Chiswick)||Shepherd, William|
|Simon, J. E. S. (Middlesbrough, W.)||Teeling, W.||Wakefield, Sir Waved (St. M'lebone)|
|Smithers, Peter (Winchester)||Thomas, Leslie (Canterbury)||Walker-Smith, D. C.|
|Smyth, Brig. Sir John (Norwood)||Thomas, P. J. M. (Conway)||Wall, Major Patrick|
|Soames, Capt. C.||Thompson, Kenneth (Walton)||Ward, Hon. George (Worcester)|
|Spearman, A. C. M.||Thompson, Lt.-Cdr. R. (Croydon, S.)||Ward, Dame Irene (Tynemouth)|
|Speir, R. M.||Thorneycroft, Rt, Hon. P.||Waterhouse, Capt, Rt. Hon. C.|
|Spence, H. R. (Aberdeen, W.)||Thornton-Kemsley, C. N.||Watkinson, Rt. Hon. Harold|
|Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)||Tiley, A. (Bradford, W.)||Webbe, Sir H.|
|Stanley, Capt. Hon. Richard||Tilney, John (Wavertree)||Whitelaw, W. S.I. (Penrith & Border)|
|Stevens, Geoffrey||Touche, Sir Gordon||Williams, Paul (Sunderland, S.)|
|Steward, Harold (Stockport, S.)||Turner, H. F. L.||Williams, R. Dudley (Exeter)|
|Steward, Sir William (Woolwich, W.)||Turton, Rt. Hon. R. H.||Wills, G. (Bridgwater)|
|Stewart, Henderson (Fife, E.)||Tweedsmuir Lady||Wilson, Geoffrey (Truro)|
|Stoddart-Scott, Col. M.||Vane, W. M. F.||Wood, Hon. R.|
|Storey, S.||Vaughan-Morgan, J. K.||Woollam, John Victor|
|Stuart, Rt. Hon. James (Moray)||Vickers, Miss J. H.||Yates, William (The Wrekin)|
|Summers, G. S. (Aylesbury)||Vosper, D. F.|
|Sumner, W. D. M. (Orpington)||Wade, D. W.||TELLERS FOR THE AYES:|
|Taylor, William (Bradford, N.)||Wakefield, Edward (Derbyshire, W.)||Mr. Heath and Mr. Studholme.|
|Ainsley, J. W.||Ede, Rt. Hon. J. C.||Ledger, R. J.|
|Albu, A. H.||Edelman, M.||Lee, Frederick (Newton)|
|Allaun, Frank (Salford, E.)||Edwards, Rt. Hon. John (Brighouse)||Lee, Miss Jennie (Cannock)|
|Allen, Arthur (Bosworth)||Edwards, Rt. Hon. Ness (Caerphilly)||Lever, Harold (Cheetham)|
|Allen, Scholefield (Crewe)||Edwards, Robert (Bilston)||Lever, Leslie (Ardwick)|
|Anderson, Frank||Evans, Albert (Islington, S.W.)||Lewis, Arthur|
|Awbery, S. S.||Evans, Edward (Lowestoft)||Lipton, Lt.-Col. M.|
|Bacon, Miss Alice||Fernyhough, E.||Logan, D. G.|
|Baird, J.||Fienburgh, W.||Mabon, Dr. J. Dickson|
|Balfour, A.||Finch, H. J.||MacColl, J. E.|
|Bartley, P.||Fletcher, Eric||McGhee, H. G.|
|Bellenger, Rt. Hon. F. J.||Forman, J. C.||McGovern, J.|
|Bence, C. R. (Dunbartonshire, E.)||Fraser, Thomas (Hamilton)||McInnes, J.|
|Benn, Hn. Wedgwood (Bristol, S.E.)||Gaitskell, Rt. Hon. H. T. N.||McKay, John (Wallsend)|
|Benson, G.||Gibson, C. W.||McLeavy, Frank|
|Beswick, F.||Gordon Walker, Rt. Hon. P. C.||MacMillan, M. K. (Western Isles)|
|Bevan, Rt. Hon. A. (Ebbw Vale)||Greenwood, Anthony||MacPherson, Malcolm (Stirling)|
|Blackburn, F.||Grenfell, Rt. Hon. D. R.||Mahon, S.|
|Blenkinsop, A.||Grey, C. F.||Mainwaring, W. H.|
|Blyton, W. R.||Griffiths, David (Rother Valley)||Mallalieu, E. L. (Brigg)|
|Boardman, H.||Griffiths, Rt. Hon. dames (Llanelly)||Mallalieu, J. P. W. (Huddersfd, E.)|
|Bottomley, Rt. Hon. A. G.||Hale, Leslie||Mann, Mrs. Jean|
|Bowden, H. W. (Leicester, S.W.)||Hall, Rt. Hn. Glenvil (Colne Valley)||Marquand, Rt. Hon. H. A.|
|Bowles, F. G.||Hannan, W.||Mason, Roy|
|Boyd, T. C.||Harrison, J. (Nottingham, N.)||Mellish, R. J.|
|Braddock, Mrs. Elizabeth||Hastings, S.||Messer, Sir F.|
|Brockway, A. F.||Hayman, F. H.||Mitchison, G. R.|
|Broughton, Dr. A. D. D.||Henderson, Rt. Hn. A. (Rwly Regis)||Monslow, W.|
|Brown, Rt. Hon. George (Belper)||Herbison, Miss M.||Moody, A. S.|
|Brown, Thomas (Ince)||Hewitson, Capt. M.||Morris, Percy (Swansea, W.)|
|Burke, W. A.||Hobson, C. R.||Morrison, Rt. Hn. Herbert (Lewis'm, S.)|
|Burton, Miss F. E.||Holman, P.||Mort, D. L.|
|Butler, Herbert (Hackney, C.)||Holmes, Horace||Moss, R.|
|Butler, Mrs. Joyce (Wood Green)||Houghton, Douglas||Moyle, A.|
|Callaghan, L, J.||Howell, Charles (Perry Barr)||Mulley, F. W.|
|Carmichael, J.||Howell, Denis (All Saints)||Neal, Harold (Bolsover)|
|Castle, Mrs. B. A.||Hoy, J. H.||Noel-Baker, Francis (Swindon)|
|Champion, A. J.||Hughes, Cledwyn (Anglesey)||O'Brien, Sir Thomas|
|Chapman, W. D.||Hughes, Emrys (S. Ayrshire)||Oliver, G. H.|
|Chetwynd, G. R.||Hughes, Hector (Aberdeen, N.)||Oram, A. E.|
|Clunie, J.||Hunter, A. E.||Orbach, M.|
|Coldrick, W.||Hynd, H. (Accrington)||Oswald, T.|
|Collick, P. H. (Birkenhead)||Irvine, A. J. (Edge Hill)||Owen, W. J.|
|Collins, V. J. (Shoreditch & Finsbury)||Irving, S. (Dartford)||Padley, W. E.|
|Corbet, Mrs. Freda||Isaacs, Rt. Hon. G. A.||Paget, R. T.|
|Cove, W. G.||Janner, B.||Paling, Rt. Hon. W. (Dearne Valley)|
|Craddock, George (Bradford, S.)||Jay, Rt. Hon. D. P. T.||Paling, Will T. (Dewsbury)|
|Cronin, J. D.||Jeger, George (Goole)||Palmer, A. M. F.|
|Crossman, R. H. S.||Jeger, Mrs. Lena (Holbn & St.Pancs, S.)|
|Cullen, Mrs. A.||Jenkins, Roy (Stechford)||Panned, Charles (Leeds, W.)|
|Daines, P.||Johnson, James (Rugby)||Pargiter, G. A.|
|Dalton, Rt. Hon. H.||Johnston, Douglas (Paisley)||Parker, J.|
|Darling, George (Hillsborough)||Parkin, B. T.|
|Davies, Ernest (Enfield, E.)||Jones, David (The Hartlepools)||Paton, J.|
|Davies, Harold (Leek)||Jones, Elwyn (W. Ham, S.)||Peart, T. F.|
|Davies, Stephen (Merthyr)||Jones, Jack (Rotherham)||Plummer, Sir Leslie|
|Deer, G.||Jones, J. Idwal (Wrexham)||Price, J. T. (Westhoughton)|
|de Freitas, Geoffrey||Jones, T. W. (Merioneth)||Price, Philips (Gloucestershire, W.)|
|Delargy, H. J.||Kenyon, C.||Probert, A. R.|
|Dodds, N. N.||Key, Rt. Hon. C. W.||Proctor, W. T.|
|Dugdale, Rt. Hn. John (W. Brmwch)||King, Dr. H. M.||Pursey, Cmdr. H.|
|Dye, S.||Lawson, G. M.||Randall, H. E.|
|Rankin, John||Stewart, Michael (Fulham)||West, D. G.|
|Redhead, E. C.||Stokes, Rt. Hon. R. R. (Ipswich)||Wheeldon, W. E.|
|Reeves, J.||Stones, w. (Consett)||White, Mrs. Eirene (E. Flint)|
|Reid, William||Strachey, Rt. Hon. J.||White, Henry (Derbyshire, N.E.)|
|Robens, Rt. Hon. A.||Strauss, Rt. Hon. George (Vauxhall)||Wigg, George|
|Roberts, Albert (Normanton)||Stroes, Dr. Barnett (Stoke-on-Trent, C.)||Wilcock, Group Capt. C. A. B.|
|Roberts, Goronwy (Caernarvon)||Summerskill, Rt. Hon. E.||Wilkins, W. A.|
|Robinson, Kenneth (St. Pancras, N.)||Swingler, S. T.||Willey, Frederick|
|Rogers, George (Kensington, N.)||Sylvester, G. O.||Williams, David (Neath)|
|Ross, William||Taylor, Bernard (Mansfield)||Williams, Rev. Llywelyn (Ab'tillery)|
|Royle, C.||Taylor, John (West Lothian)||Williams, Rt. Hon. T. (Don Valley)|
|Shinwell, Rt. Hon. E.||Thomas, George (Cardiff)||Williams, W. R. (Openshaw)|
|Short, E. W.||Thomas, Iorwerth (Rhondda, W.)||Willis, Eustace (Edinburgh, E.)|
|Silverman, Julius (Aston)||Thornton, E.||Wilson, Rt. Hon. Harold (Huyton)|
|Silverman, Sydney (Nelson)||Timmons, J.||Winterbottom, Richard|
|Simmons, C. J. (Brierley Hill)||Turner-Samuels, M.||Woodburn, Rt. Hon. A.|
|Skeffington, A. M.||Ungoed-Thomas, Sir Lynn||Woof, R. E.|
|Slater, Mrs. H. (Stoke, N.)||Usborne, H. C.||Yates, V. (Ladywood)|
|Slater, J. (Sedgefield)||Viant, S. P.||Younger, Rt. Hon. K.|
|Smith, Ellis (Stoke, S.)||Warbey, W. N.||Zilliacus, K.|
|Snow, J. W.||Watkins, T. E.|
|Sorensen, R. W.||Weitzman, D.||TELLERS FOR THE NOES|
|Sparks, J. A.||Wells, Percy (Faversham)||Mr. Popplewell and Mr. Pearson.|
|Steele, T.||Wells, William (Walsall, N.)|
Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Committee of the whole House.—[Mr. Legh.]
§ Committee Tomorrow.