§ 3.32 p.m.
§ Mr. Eric Fletcher (Islington, East)
beg to move, in page 16, line 6, after "out", to insert:or to seek directly or indirectly to give effect to or by any method whatsoever to enforce or secure the performance of ".
§ The Chairman
I think it would be convenient for the Committee if the next Amendment, in page 16, line 6, at end insert:(whether any such agreement or arrangement has been made by such persons or others) ".were taken with the one moved by the hon. Member.
§ Mr. Fletcher
I quite agree, Sir Charles. I have had the opportunity of consulting my hon. and learned Friend the Member for Aberdeen, North (Mr. Hector Hughes), who has been good enough to be a signatory to these Amendments.
§ The President of the Board of Trade (Mr. Peter Thorneycroft)
Perhaps I may intervene to point out that there are three further Amendments which, I think, raise the same point. They are the Amendments in page 16, line 15, after "circumstances", insert:and offering the same facilities or rendering the same services either to the suppliers or to the public or otherwise ".;In line 18, at end insert:or to seek directly or indirectly to give effect to or by any method whatsoever to enforce or secure the performance of".In line 19, at end insert:(whether any such agreement or arrangement has been made by such persons or others)".
§ Mr. Fletcher
I am much obliged to you, Sir Charles, and to the President, for a very helpful suggestion. It certainly would be most convenient to us also to take the three Amendments to which the 1014 President has referred while the Committee is preparing itself for the ordeal of trying to finish the Committee stage this evening.
My hon. Friends and I attach some importance to the Amendment which I have moved. I am sure that the President will accept what I say when I tell him that these Amendments are put forward in no critical spirit. They are an attempt to be constructive. The right hon. Gentleman will appreciate that by putting down these Amendments we are attempting to help in the draftsmanship of this very important Clause.
We are now embarking upon the consideration of Part II of the Bill, which enshrines a very important decision of Government policy which we cordially welcome, namely, the decision to prohibit collective resale price maintenance. That decision is one of the cardinal points of policy put forward by the Monopolies Commission. The Government's decision no doubt results from the majority Report of the Commission upon collective discrimination.
I think that we would all wish to pay a tribute to the work of the Commission in bringing forward that most valuable Report. Having examined the matter in very great detail, the Commission came down conclusively in support of the view that the methods at present adopted for the collective enforcement of resale price maintenance were both excessive and dangerous. It condemned such practices as the collective boycott; the stop list, and private courts.
The Parliamentary Secretary and, I believe, the President, have quite rightly told us that although there is nothing specific in the Bill to prohibit collective boycotts, stop lists or private courts, the Government's view is that they are effectively prevented by the implications which can be read into the Clause. That view was expressed by the Parliamentary Secretary during the Second Reading debate. He said that if one doubted the matter all that one had to do was to ask what industry itself thought of the matter, and they would find that it took the view that these practices, which it has always regarded in the past as being so necessary and efficacious for enforcing collective resale price maintenance, are brought to an end by the Clause, although it contains no specific, express prohibition.
§ The Parliamentary Secretary to the Board of Trade (Mr. Derek Walker-Smith)
The hon. Member will realise that there is a specific exclusion of the collective boycott. It is only in regard to private courts that the prohibition is implicit and not expressly stated.
§ Mr. Fletcher
I am much obliged. The collective boycott is expressly stated, but private courts and stop lists are not.
We think that the Clause will be strengthened and made more nearly perfect if, in subsection (1, a), which makes unlawful the withholding of supplies or the refusal to supply goods, there were inserted the words:or to seek directly or indirectly to give effect to or by any method whatsoever to enforce or secure the performance of".We think that it would be a salutary precaution to insert those words, because, whereas in the past the final sanction which traders have adopted is the stop list or the refusal to put a person upon an approved list, it is difficult to foresee exactly what other devices might be resorted to in the future. We want to make it abundantly clear that by no device, mechanism or invention of any kind will manufacturers and suppliers be able, directly or indirectly, to enforce a policy of collective resale price maintenance.
The Amendments in line 18 which duplicate the Amendment I have moved are necessary because as the Bill is drafted subsection (1) applies to the supply of goods and subsection (2) applies to dealers in goods. Therefore, what applies to goods applies in the second case inpari materia.
The second Amendment is somewhat different and I attach more importance to it. It is designed to make clear that this prohibition on the withholding of supplies or the refusal to supply goods, or any enforcing of collective resale price maintenance, is effective not only against the parties to the agreement, but also against persons who may not be parties to the agreement.
Hitherto, manufacturers and dealers have made these restrictive agreements to which objection is taken and, as in the case of the motor car industry, we have found that methods of enforcement have not been left to the parties who made the agreement. The party who has 1016 enforced the agreement has been a trade association, or at any rate, someone outside the agreement. Experience has shown that when it has been found necessary to control a recalcitrant retailer who wished to charge lower prices to the public than his agreement permitted, he has been called up, not before his contracting party, but before a trade association or some other body, or some kind of court, and told, "If you do not carry out your agreement with Mr. X, Mr. Y and Mr. Z will not supply you, and you will come before the court and fines will be imposed on you."
Therefore, it is not sufficient merely to say that it shall be unlawful for parties to make such an agreement. The President will appreciate that it is not sufficient merely to say to people that it shall be unlawful for them to make an agreement, or that it shall be unlawful for them to enforce the agreement. It is necessary to make sure that no one else shall endeavour, directly or indirectly, to enforce the agreement; and that is the object of the second Amendment.
I know what the President will say in reply. He will endeavour to rely on subsection (4). Of course, if he proposes to accept the Amendment, I will not say any more. But if the right hon. Gentleman proposes to resist the Amendment, as he has tried to resist some earlier Amendments, on the ground that they are not necessary because there is something else in the Bill which makes them superfluous or redundant, or something or other; if he proposes to say that subsection (4) makes them unnecessary, I will draw his attention to the fact that although subsection (4) states thatThis section applies in relation to an association…as it applies in relation to a person so carrying on business…That is all right so far as it goes; but it does not prevent an association, not being a party to an unlawful agreement, from taking an indirect step or introducing some kind of mechanism to enforce the agreement.
What we are endeavouring to avoid is that, whereas a party to an agreement may be effectively prevented from enforcing it, there may be someone outside the agreement who will try to enforce it. Should that position arise we should find ourselves back in the same kind of 1017 trouble as we are now in, and the door would be wide open for people to abuse the provision of the Bill. I have endeavoured to put the object of these Amendments as helpfully as I can, and I hope that they will commend themselves to the Government.
§ 3.45 p.m.
§ Mr. P. Thorneycroft
I accept entirely the spirit in which this Amendment was moved by the hon. Member for Islington, East (Mr. E. Fletcher). He made a very helpful and conciliatory speech. The purpose of the Amendments which we are discussing is simple. It is to ensure that collective enforcement is, in fact, banned by the Bill. The Government are absolutely at one with the Opposition in that intention. It is our purpose to ban collective enforcement of resale price maintenance and we believe that we have done so. Under subsection (1) we make it unlawful to withhold supplies or to refuse supply of goods and, under subsection (2) to withold orders for supplies of goods and, as the hon. Gentleman says, later we catch up with the associations, and so forth.
It is tempting to make certain about these things by adding further words. The danger is that by so doing one does not necessarily clarify the drafting, but may blur the issue. That would apply to the first pair of Amendments to subsections (1) and (2). But I am not prepared to say "No" on that ground alone. I am ready to see whether there are any words which may he added and which would make absolutely clear what the hon. Member and the Government wish to carry out.
The second point is one to which I am more attracted. It is not altogether a drafting point; it is a little more a policy point. It deals with the case where one group of people is seeking to enforce someone else's arrangement. There are such instances, or at any rate there might be, and I should like to examine that. I think that this Amendment may be a test of many things, including, perhaps, whether we shall finish at an early hour or a late hour tonight.
I will try to give a helpful answer to it. We are at one about policy in this matter. I do not wish to leave a loophole in the Bill. I have made my position and that of the Government plain throughout our discussions. We desire 1018 to make unlawful the collective enforcement of resale price maintenance and I hope that the Committee will accept what I have said.
§ Mrs. Barbara Castle (Blackburn)
The Committee will welcome the helpful way in which the right hon. Gentleman has replied to these Amendments. But there is a point of substance in the Amendment in my name which is rather different. The Amendment to which I refer is in line 15, at the end to insert:(c) to enforce or to attempt to enforce by any other method any condition as to the price at which goods may be resold.The President assumed, as is assumed in the Clause, that the only method of collective enforcement of resale price maintenance is by the withholding of supplies. We accept from the right hon. Gentleman that he is anxious to prevent the collective enforcement of resale price maintenance, but we suggest that he has left a loophole here of which he may not be aware.
We all feel that we must close all possible loopholes which may be used to defeat the purpose of this Clause. We are aware—or we ought to be at the end of the long debates which we have had on this Bill—of the vast ingenuity of lawyers and the immense importance of not leaving anything to chance when lawyers are about. I suggest most seriously to the President that if he does not accept this wording, or similar wording, to reinforce the Clause he may find that his purpose of banning collective enforcement has been defeated.
The right hon. Gentleman may say that the real sanction is the stop list and that if any other action is considered it comes back to that, but it is not quite so simple as that. It is true that the most effective and most generally used sanction is the stop list, but in all our experience of the way in which collective enforcement has been working we have found that that is used as the long stop and is not the first stage of the pressure brought to bear on firms and individuals.
For example, take the case of the garage proprietor or the motor dealer who has been under pressure from the British Motor Trade Association for having evaded the list price on any article. I have had two cases sent to me. In one case a dealer was charged with having given£3 10s. for four old tyres 1019 as an inducement to purchase new tyres and had thus circumvented the list price. He felt that it was unjust but he paid a £50 fine.
That was a case in which the punishment was a fine. The President may argue that the fine was paid only because behind the fine lay the sanction of the stop list, and there is something in that argument. In another case a dealer wrote complaining that he was fined £25 for having inserted an advertisement in the local Press saying that he would make a good allowance for any car in part exchange and he pointed out that the alternative to paying the fine was to be placed on the stop list.
I suggest to the President, however, that for the purpose of clarity and to give support and reassurance to individuals who may be under pressure of this kind, we ought to make the first stage, as well as the long stop, subject to this prohibition, because a small dealer may not know that although the fine is not illegal, the stop list is, and, therefore, by banning the fine as well we may be strengthening his resistance to this kind of pressure. That is one argument which I want to advance, but there is an even more important argument.
If, in future, a dealer resists a fine in the belief that he is safe and cannot be interfered with in any way, there is the possibility that he may find himself subject to another form of blackmail brought to bear on him under subsection (1, a) of Clause 16, which enables a restrictive agreement to pass through the net provided it is necessary for the safety of the public. It might be that the Motor Trade Association could make it known to a garage proprietor resisting this kind of pressure that if he was recalcitrant he would be placed on their list of unsatisfactory dealers on the ground that he could not be trusted to carry out his work to the safety of the public.
I agree that some of this is hypothetical, but it is not impossible to think of many ways in which really astute lawyers might get round the Clause because for some unknown reason the House of Commons had restricted collective enforcement in this Clause merely to the withholding of supplies. I suggest that there could be no harm done by adding these words, which would make quite clear that the 1020 purpose is to ban collective enforcement whatever the defence of an astute lawyer might be.
§ Mr. P. Thorneycroft
I entirely included the Amendment in the name of the hon. Lady in my promise to reconsider this matter. Indeed, it is the other side of the coin—one is dealing with supply and the other deals with the acquiring end of the business. I am only anxious not to add words which might blur the intention, but I will look at the Clause again to see that it carries out the intention we all have. I will look at the question of one association enforcing the arrangements of another association. I hope that with that assurance the Committee will allow us to proceed.
§ Sir Lynn Ungoed-Thomas (Leicester, North-East)
We are very much obliged to the President for his reply on the first of this series of Amendments, but I am not clear about the Amendment in the name of my hon. Friend the Member for Blackburn (Mrs. Castle). There may be some doubt about that. I should like to know whether it is intended to include that Amendment within the reconsideration which the President said he would be good enough to give to the Clause.
§ Mr. Thorneycroft
I think that what I have said covers the same point. It is whether, in fact, we are closing the door to anything which could be called collective enforcement of resale price maintainance. I am not going to argue again whether fines are paid against the background of the stop list, but I am prepared to look at the question to make certain that our intention is carried out.
§ Mr. E. Fletcher
I am very glad to have the assurance given by the President. I beg to ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
§ Mr. P. Thorneycroft
I beg to move, in page 16, line 23, after "aforesaid" to insert:or who refrain or have refrained from taking steps to ensure compliance with such conditions in respect of goods supplied by them".This Amendment has the same purpose of strengthening the method of dealing with collective enforcement. The Clause makes it unlawful for two or more persons to withhold supply from a man who cuts his price, but that does not go far enough. It should also be unlawful to 1021 agree to withhold supply from a man who, although he lays down price conditions does not choose to enforce them. It would mean collective boycott of a man until he enforced to the last inch every price list he issued and that would be an obvious intention to defeat the purpose of the Clause.
§ Amendment agreed to.
§ 4.0 p.m.
§ Mr. Frederick Mulley (Sheffield, Park)
I beg to move, in page 16, line 27, to leave out paragraph (a).
On the face of it, this Amendment appears to be on a similar point to that in Clause 6 subsection (1). The President gave an undertaking to look into the question of how far partnership agreements would come within the Bill. I submit to the Committee that whereas we agreed that there was a case for having a provision of this sort in Clause 6. there could be no similar ground for having it in Clause 19.
This Clause relates exclusively to collective resale price maintenance. Perhaps, unlike the majority of hon. Members on both sides of the Committee, I am not an enthusiast for the abolition of resale price maintenance. I agree with what the President said in July, that very often the collective way is the only way to enforce resale price maintenance, but I do not want to argue that point now. I want to see, if we are to begin to have the abolition of collective resale price maintenance that it is fair as between small and large firms and as between manufacturers and retailers alike.
The Monopolies Commission said, on the question of tyres, that the abolition in that case would probably result to the disadvantage of the small manufacturer. As drafted, I think that this subsection is a clear invitation to companies to form trusts. Why, for example, should Unilever be in a position, if a trader cut the price of margarine to be able to stop his supply and to discriminate in the supply of ice-cream, sausages, fish and all the rest of the things which it deals with in its enormous empire?
In the tobacco trade we would not want one large manufacturer to be in the position to stop the whole of its supplies where the small manufacturer had not corresponding powers. It seems that much more than one advantage flows 1022 from having various sections of a firm in separate companies, and if organisations want the advantages of separate legal entities they must take some of the disadvantages as well. There is no case for giving monopolies or inter-connected bodies corporate privileges in this collective resale price maintenance which are not open to smaller firms.
It does not seem to me that there is any justification for the exception in this case, which may have got in as a consequential provision following that in Clause 6. if inter-connected bodies corporate can be given that special exemption in Clause 6, it is contrary to the whole spirit of this Clause to include this subsection. I hope that the President will be able to accept the Amendment, or give us an assurance that he will introduce a subsequent Amendment at a later stage.
§ Mr. P. Thorneycroft
I hope that the Committee will be concilliatory about this point, which is one that we have discussed before. In Jaw, the partnership and the inter-connected body corporate are to be treated as one person.
§ Mr. Mulley
I thought that the whole point of forming several companies was that they would be, in law, different persons. Surely the right hon. Gentleman is now going right against the whole point of company legislation.
§ Mr. Thorneycroft
I am sorry; I have got it wrong. I am told that, in law, they are not one person. The purpose of the Bill is that if the partnership agrees that it is no longer going to supply, it must be treated as one person for that purpose. It is the same for an interconnected body corporate. I apologise for having got the exact legal statement wrong, but under the principle of the Bill I do not think that we could deal with it in any other way.
§ Sir L. Ungoed-Thomas
We voted against the principle of this point before. My hon. Friend the Member for Sheffield, Park (Mr. Mulley) has very rightly brought it up on this Clause because it is obviously relevant to our consideration of the Clause, but perhaps, in all the circumstances, he will not press the Amendment.
§ Mr. Mulley
In view of the President's explanation, I beg to ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
§ Mr. George Darling (Sheffield, Hillsborough)
I beg to move, in page 16, line 32. to leave out paragraph (b).
By this Amendment, we are really asking for clarification. I understand that at present we can have a group of manufacturers working together and that they can enforce their price agreement on the whole of their supplies collectively, so that if a trader offends against one of the manufacturers his supplies can be cut off by the whole lot.
I gather that the purpose of this paragraph is to make sure that if the manufacturer is enforcing a contract of sale, it can be enforced only by him and only on the goods supplied by him and no one else can come into the arrangement. But it may be possible, when we come to Clause 20, for groups of manufacturers who, under Clause 19, are prevented from having their collective agreement, each to make a separate agreement to enforce its condition of sale and, without any formal agreement, agreeing among themselves to be able—I do not put it any higher than that—to say that the offending trader has offended against each one of them and that supplies may therefore, be collectively cut off. I want to make sure that there is nothing in this Clause to enable any further collective arrangement of that kind to operate.
§ Mr. P. Thorneycroft
I can give an assurance that this does not affect collective enforcement. It is obvious that the individual manufacturer, to take the simplest case, can sell at a certain price and, if there is price cutting of those goods he can cut off his supply. There is nothing to prevent him doing so. The paragraph sets out the position where the manufacturer or supplier sells to a wholesaler. He can put in the contract that the goods must be sold at a certain price. If those goods—not any other goods or any other goods supplied to that wholesaler—are being price cut the wholesaler undertakes not to supply. It is the same as the individual doing it, but further down the line. There is no question of any form of collective enforcement here, and I want to make plain that this is a restriction only on the manufacturer's own goods and only those goods mentioned in the contract of sale.
§ Mr. Douglas Jay (Battersea, North)
I am sure that that is what the President means to do, but for the sake of clarity 1024 is he sure that there is no ambiguity in the word "those"? Supposing a number of manufacturers met together and agreed that they would each of them sell identically the same type of goods and made the same corresponding agreement about those types of goods, nevertheless to be sold by each one of six firms, can they argue that this contract referred exclusively to those goods? Does "those" mean a particular type?
That is a fresh point. I know what the paragraph is intended to mean. It is intended to mean the goods of the manufacturer and to be restricted to them. I will, however, examine the paragraph again to see whether the words could be open to a wider interpretation, but that is certainly not the intention.
§ Sir L. Ungoed-Thomas
I appreciate the intention of the Minister and, in view of what he has said, I do not think we are at cross-purposes on the intention. We put down this Amendment to secure the objective which, he says, he does not controvert by reason of including subsection (6). I will tell him how it occurred to us. In this Clause, we are dealing with collective agreements withholding supplies. Therefore, we are starting off with collective agreements withholding supplies. When we come to subsection (3), which is dealing with the exception, we can only construe that as an exception to a collective agreement and not as being the case of an individual agreement at all. Therefore, we argue from the case of a collective agreement that this may operate as an exception.
Let us take the case of A, B and C agreeing together to supply goods to D—-the last named being a wholesaler. They might sell the whole of their production through the agent D. If they do that, then surely on the wording of this subsection, A, B and C are all agreed to sell goods to D; it is a contract of sale between A, B, C and D. In those circumstances, would not A, B and C, and their contract with D, be outside the ambit of the Clause and within this exception? That is the danger about which we are concerned.
I appreciate from what the right hon. Gentleman has said that if that happened it would be contrary to his intention, and we suggest that he should look into this case to make certain that it is covered by the Clause.
§ Mr. M. Turner-Samuels (Gloucester)
I am sure that the President will look at the subsection again, because it might raise a network of restrictions, and I am sure he does not want to do that. He used the phrase "down the line", and that is where the difficulty may occur. The subsection relates to a contract of sale of any goods relating "exclusively to those goods." The same wholesaler or manufacturer may deal with many species of goods and we may, therefore, have a multiplicity of contracts which are "exclusive to those goods." All down the line there could be restrictions in prices imposed on different goods. A network of restrictions could be built up. In that sense, the problem is technical, and I think that the President should look at it again.
§ Mr. Thorneycroft
The phrase "those goods" is meant to refer to the goods in that contract of supply. I will certainly look at the point which has been rasied.
§ Mr. G. Darling
In view of the President's very satisfactory statement, I beg to ask leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Motion made, and Question proposed. That the Clause, as amended, stand part of the Bill.
§ 4.15 p.m.
§ Sir Hugh Linstead (Putney)
Before we leave the Clause, I want to draw the attention of my right hon. Friend and the Committee to the whole question of resale price maintenance which the Committee almost lightheartedly seems to be engaged in abolishing from the manufacturing, wholesaling and retailing activities of the country.
Listening to my right hon. Friend's replies to Amendments which have been moved to the Clause, it has seemed to me that he is more and more hardening his mind against making it at all possible for any reasonable form of retail price maintenance to be operated in this country. If that is my right hon. Friend's intention, what he is doing in the Bill is to play right into the hands of large combines and large organisations, very much to the prejudice of the small man and the small retailer. He is also saying, in effect, that a very large number of trade associations which have been operating 1026 perfectly within the law, and whose services the Government were frequently glad to use during the war, have now virtually put themselves beyond the pale.
Before we part with the Clause, we must satisfy ourselves whether we should label large classes of the community as potential criminals, which seems to be the tendency which has been developing in the debate. It is one thing for the Government to say that they have no objection to resale price maintenance in the abstract, but it is another for them then to make it virtually impossible for resale price maintenance to be carried on.
It is worth recalling to the Committee that the Monopolies Commission is not the only body which has looked at the question of resale price maintenance. It was first looked at by a public committee as long ago as 1920, when the Standing Committee on Trusts reported that the system of fixing retail prices was to the advantage of the public. Then the Greene Committee, presided over by a gentleman who subsequently became Master of the Rolls, reported that it was not satisfied that if a change in the law were made there was any reason to think that the interests of the public would be better served. Even the Lloyd Jacob Committee, which reported more recently, approved the practice of resale price maintenance, as far as individual manufacturers were concerned, although it criticised its enforcement by collective action.
In other words, there is a danger that in this new-found enthusiasm for trying to bring prices down we may forget not merely the interests of various groups of traders but also the interests of the public.
One of the reasons that I am joining in the debate is that many years ago I served an apprenticeship in retail pharmacy, and I came into that business just as the old price-cutting days were being brought under control. I can just remember how small chemists in those days were often hanging on by the skin of their teeth against price-cutting competition from departmental stores and other large organisations. If we look at that group of businesses we see a very good example of a group of individual business people needed by the community. Chemists are needed for the purpose of the National Health Service and their existence prosperously at the moment is largely determined by their ability to keep prices at 1027 reasonable levels within their particular trade or business.
At the moment, for example, the pharmaceutical businesses are subsidising the National Health Service. If we find that, as a result of inability to maintain retail prices in the drug trade, chemists are no longer able to subsidise the National Health Service, we shall have the reverse of the position which we had yesterday; we shall find that the State has to increase the remuneration which it pays under the National Health Service simply in order to keep points of distribution of drugs and medicines open to the public.
The chemists, looking at their history, have every reason to complain to us, as they have certainly complained to me and quite a number of hon. Members, against the likelihood of their being handed over to the mercy of cut-throat competition from large organisations which they will no longer be able to meet. In the Amendment which was in my name and the names of other hon. Members, but which I understand was not selected, we tried to give some indication of hope, not only to pharmacists but to other groups of retailers who have come to us and said that they very much doubt whether the Government's easy optimism about the ability of the manufacturer to maintain his own prices will be borne out in practice. That Amendment at the end of Clause 19 was designed to try—
§ The Chairman
Order. I have no doubt that the Amendment was designed to try to do something, but it was not selected. We can discuss now only what is in the Clause as amended.
§ Sir H. Linstead
I apologise, Sir Charles, and will put my point in the form of a question. Is it the President's view that it would be possible for trade associations to make out a case to a court under Clause 19 which would enable them to act as agents for groups of manufacturers in the enforcement for those manufacturers of the individual contracts which each manufacturer had made with those to whom he supplied his goods? In other words, does my right hon. Friend understand Clause 19 as still affording an opportunity for trade associations to act on behalf of their individual members as agents for price 1028 maintenance? If he is able to indicate that it is his intention—and is within the four corners of the Bill—that trade associations should still do that, he will, I think, reassure a very large number of the smaller retailers that there is some hope for them; and that they are not going back to the bad old days of the early nineteen-hundreds when there was no stability, and when there was cutthroat competition from organisations much larger than their own. I very much hope that before we part with the Clause my right hon. Friend will find it possible to give some reassurance on this matter.
§ Mr. Jay
I hope that the President of the Board of Trade may resist what I think, if I understood him aright, the hon. Member for Putney (Sir H. Linstead) was pushing on him. It seems to us that even if the hon. Member's thesis were accepted we should be in danger of introducing collective resale price maintenance by another name. The hon. Member is frankly in favour of collective resale price maintenance. That is a perfectly respectable point of view—it does not make a man a potential criminal—but I do not think that that, any more than what we said on Second Reading—
§ Sir H. Linstead
Can one be in favour of price maintenance in theory and yet deny to the individual the effective means of carrying out that operation?
§ Mr. Jay
That was precisely the point that I was coming to.
The hon. Member is really saying that it is illogical for the Minister to attempt to say that resale price maintenance may be legitimate in certain cases and yet object to the enforcement of it. I think that there is justification in the President's attitude in making this distinction between collective and individual resale price maintenance. I fully agree that one can say that the real question is whether we are in favour of price competition or whether we are not. If we are not in favour of it we should accept collective resale price maintenance. If we are in favour of it we should not accept individual resale price maintenance.
I do not think that that is the whole story. It is one thing—and on the whole I think that public opinion would accept this, although it is always rash to make guesses about public opinion—for a manufacturer to claim the right to have 1029 some say about the prices at which his goods are sold. It is something else when a number of manufacturers combine together to enforce the prices at which the goods of each one of them are sold. After all, in the latter case we take from the individual retailer the right in the last resort to say "I do not like the price which this manufacturer is prescribing for his goods, and, therefore, I shall not sell the goods at all."
§ Sir H. Linstead
I do not want to continue this debate by means of a series of interruptions, but does the right hon. Gentleman see any objection to an individual manufacturer appointing his trade association to be his agent for the purpose?
§ Mr. Jay
If that amounts, as I should have thought it would, to a collective agreement, through the association, to enforce prices all round, there would be the same objection as there is to resale price maintenance as now worked.
The point which I was about to make is that there is surely an additional element of conspiracy and abuse of power when a number of people join together to deny the retailer the right to sell at what price he wishes. It is quite a different thing from the retailer's point of view if he is to have so many types of goods, or the goods of so many manufacturers, withdrawn from his supply that it becomes difficult or impossible for him to carry on his particular trade, whereas in the last resort, if it is simply a question of individual goods, he can say, "I shall not trade in these goods, but shall carry on my business otherwise."
Very briefly, it seems to me, therefore, that there is a distinction between individual resale price maintenance and collective resale price maintenance in that respect, though not in others, so that I hope that the President will not accept the suggestion, which would let in collective resale price maintenance by the back door at the end of the Clause, having professed to shut it out at the beginning.
§ Mr. I. J. Pitman (Bath)
The right hon. Member for Battersea, North (Mr. Jay) misunderstands the situation, in the sense that I think a great many hon. Members on this side of the Committee would be quite happy to agree that the collective boycott should not be used, but other collective action ought not to be regarded 1030 as illegal: for instance, it does not necessarily follow that because a trade association helps an individual producer in maintaining his price, the producer may not use collective methods other than those of arranging this conspiracy, which is the collective boycott.
I would also say that the hon. Gentleman is a little wrong in thinking that he necessarily wants competition to be only by price. There is the possibility of competition being by quality. In relation to certain commodities I would say that competition by quality is a much better form of competition than competition by price. I am sorry that the hon. Member for Ogmore (Mr. Padley) is not here at present. He believes in competition by service, and knows only too well the really disastrous effect of the "loss leader" upon the ability of the retailer to compete in quality. He knows that a "loss leader" selling a price maintained article below the maintained price can be a competition which indicates that that retail shop is competing by price when it is doing nothing of the kind but is putting up its prices on the non-maintained goods and, as I say, giving a false impression that it is competing in terms of price when it is doing nothing of the kind.
§ Mr. Percy Daines (East Ham, North)
The hon. Member for Bath (Mr. Pitman) says that competition should be by quality and not by price, but surely he would also agree that quality should be reflected in the price.
§ Mr. Pitman
We are talking about the discounts given by the supplier to the retail trade and how the retail trade uses them It can use those discounts either to pass on some of that discount to the public, in which case it is competition in price, or it can compete with other retailers in quality by giving a really good service to the public in their purchasing.
I would say "ditto" to every word which my hon. Friend the Member for Putney (Sir H. Linstead) has said in this respect about the qualified chemist, who must maintain a comprehensive stock of all lines and must keep a qualified staff who are able to advise the public. I shall claim the same for the bookseller. The booksellers do compete on service. A good bookseller such as Blackwell of Oxford can make rings round any other 1031 bookseller who does not give a good service, because he has a really comprehensive stock and has a staff which can be of real assistance to the public when the public come to seek help in buying books. He competes in the quality of his service at the determined fair price.
The publishing industry is a peculiar one, because the copyright protection means, thank goodness, that we have no monopoly, no really big supplier. In fact, the trade is divided among three or four hundred publishers—quite apart from a large additional number of learned societies—from whom the bookseller must also obtain his books. Retail chemists and booksellers are wholly different from the retailers of, shall we say, a packet of cigarettes or a packet of soap powder.
If one goes into a shop to buy a particular brand of soap powder, one is not really badly served if one is sold by the retailer a different one. In such sales, by all means, let us have competition on price. If one wants to buy a book by a particular author or on a particular subject, it is no use the bookseller offering one of the latest "whodunits". Similarly, if one has something wrong with one's chest, for the retailer to sell one something for a completely different—[An HON. MEMBER: "What about one's head?"] In any case, the retailer will have to know quite a good deal about how to make hair grow on my head as well as making one's chest better if he is to do his job and the public wants him to compete on quality.
I think it is the thesis of those of us on this side of the Committee who have Amendments down that this is new legislation which is entirely experimental and that nobody knows what is going to happen. It is quite possible that individual price maintenance by individual suppliers may not succeed, and that bookshops will no longer be offering an adequate service or to a large extent will not be available, because in the publishing trade with 300 or 400 publishers, it is quite impossible for any individual publisher, however big, to carry the weight and support of the book trade if the small publishers in their hundreds do not in fact play their parts individually in support of the trader, which they clearly will not be able to do without 1032 some collective support, which need not necessarily be a collective boycott.
It may well be that we shall find that what would work where cigarettes and soap powders are concerned will not work, shall we say, for medicine or books. If that is the case, and it does not work in practice, and if it is admitted that we are not asking for a collective boycott, but only for a very mild form of collective support for one another in the making effective of what is legal, surely we can claim that that is something which is in the interests of the nation as a whole, because it does mean that we shall stop the "loss leader" and also make and maintain free and keen competition on the basis of quality of service, not on price, which will make impossible such a service, so that members of the public will not have a sufficient or sufficiently good service of bookshops at which they can inspect what they may buy and get advice, and will not have the services of chemists to which they can also go for advice. Meanwhile competition on price will be as effective at the supplies level as will be competition on service at the retail level.
§ Mr. P. Thorneycroft
I do not think that we want a far-ranging debate upon an issue which occupied a great deal of time on the Second Reading, but I should like to say a few words to my hon. Friends the Members for Putney (Sir H. Linstead) and Bath (Mr. Pitman), who have put the point extremely clearly and fairly.
There is no question of saying that because someone believes in resale price maintenance that he is a member of the criminal classes. That is not, I think present in the mind of anybody on either side of the Committee. Let me say, too, that there are arguments—and strong arguments—which have been advanced over 35 years or more on this whole vast and complex issue. On the one side, there is the argument that resale price maintenance can be said to give a steady supply and at stable prices, that it benefits the manufacturers sometimes with long runs, that it is convenient for retailers, and that there is even evidence of benefit to the consumer, which was the view of the Lloyd Jacob Committee. On the other hand, fixed prices effectively prevent any benefits from improved methods of distribution being handed on to the consumer.
1033 I should like to say this as a background to the discussion. We are talking here about maintaining prices, but maintaining prices is not the true preoccupation of either party in the House of Commons today. The problem which confronts us is how to get prices down. I think we want to consider a little carefully before we push too far the argument that it must always be wrong if price competition takes place. I am not claiming that there is not or should not be valuable fields for competition in service, quality, and in other ways. I am sure that there are, but do not let us too readily rule out price competition as something of no interest to the British public at this particular time in our affairs.
From all the consideration which has been given to this issue I think two things emerge. First, there is support for the view that an individual manufacturer can fix the price at which his goods are to be sold and retain a proprietary interest in that price right down to the retail stage or even beyond. At least, that is the view which the Government have accepted for the individual manufacturer. We may have sonic discussion on later Clauses about methods, and so forth, but that is the cardinal principle in the Bill.
What all the inquiries have really shown is that, even allowing that and accepting the right of the individual manufacturer to fix his price and pursue it down to the retail stage, nevertheless the complex devices for collective enforcement have really produced a rigidity in profit margins and price competition which is inimical to the economic system. That has been the real result from the full inquiries which have been made into this question.
Let us take the Lloyd Jacob Report for a moment. It said:In short, these associations seem to us to have turned price maintenance from a reasonable means of preventing damage to well-known high quality brands by the operations of unscrupulous shopkeepers into a comprehensive system for regulating and policing entire industries.The majority Report of the Monopolies Commission took exactly the same line, when after a long inquiry into the subject, it said:…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 1034 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.After two inquiries, there has been very substantial support for the attitude which the Government have adopted in Clause 19. I do not want to pursue the matter, but I wish to re-emphasise that a manufacturer can fix his own price and pursue it right down the line through the wholesaler to the retailer; indeed, more can be done, because there is nothing to prevent suppliers agreeing among themselves to maintain prices and issue price lists, except that, if it is done it will be a mutual restriction which is referable to the Restrictive Practices Court under Clauses 15 and 16 of the Bill. It will then be open to them to go before the Court and justify it on its merits under the criteria.
§ Mr. J. Grimond (Orkney and Shetland)
I am very glad to hear many of the statements which the President of the Board of Trade has just made. I agree with the right hon. Gentleman that most people are extremely anxious to see prices come down. If we believe in any sort of system of free enterprise and competition—and, after all, the party opposite does believe in it—it must entail competion in price. There is no other sort of competition which the ordinary man in the street recognises. I also recognise that in certain cases the service given by retailers is useful, though in my opinion it is very often the case that its advantages are very much exaggerated. It is very curious to listen to the argument that there is no competition in price.
§ Mr. Anthony Fell (Yarmouth)
Would the hon. Gentleman really suggest that the service given in some cases, from the point of view of safety, can be exaggerated?
§ Mr. Grimond
Yes, I would say that in many cases they are grossly exaggerated. What has put the small retailer out of business is not by any means always the fact that competition has been allowed. It is since restrictive practices grew that the small retailer has been faced with extinction from the big retail combines and large stores.
Am I to understand that if the Court allows an association under Clause 16 to 1035 continue, that association shall be allowed to continue to enforce resale price maintenance for all the members of that association? I may have misunderstood the right hon. Gentleman, but I thought he said that if the Court agreed that such an association was in the public interest, or was doing something to protect the safety of the public, it must, therefore, continue and should be allowed to protect its members under Clause 19.
I do not think that the right hon. Gentleman meant that. I presume that what he meant was that it might be allowed to enforce a particular sale of goods but not to enforce the general sale of goods.
§ Mr. P. Thorneycroft
A group of suppliers could agree among themselves that all of them should maintain their prices. That is a matter for agreement except in the case of mutual restriction, which is referable under Clauses 15 and 16. If it is agreed, there is nothing to prevent the individual suppliers enforcing their arrangements. Each of them will have the individual right of enforcement.
It will not reopen Clause 19 and allow the whole structure of a collective boycott of individuals, private courts and that sort of thing to be revised. Indeed, I think it would make it much more difficult to get the price maintenance arrangement agreed by the Restrictive Practices Court under Clause 16 if that were so. The method of enforcement will be that prescribed in the Clause to which I hope we are about to turn—Clause 20.
§ Mr. R. Gresham Cooke (Twickenham)
I do not think we should let the Clause pass without saying that the British public ought to be thankful for collective price maintenance in many industries. I refer particularly to the first few years after the war. We have had a lot of criticism of trade associations and collective price maintenance, but whether we consider copper tubes, which were mentioned last week, or cigarettes or motor cars, it was the trade associations acting through their collective machinery which kept down prices of goods when they might have risen considerably.
Resale price maintenance is generally accepted. Most branded goods are now sold at the nationally advertised list price, and a housewife likes to know what the 1036 price is. She does not want to trapse around from one shop to another in the hope of getting an article a halfpenny cheaper. She likes to know what the price is when she goes into the shop.
I would go so far as to claim that mass production requires a regularity of demand and a large number of outlets which are kept alive by resale price maintenance. The question today is whether resale price maintenance at a nationally advertised list price should be maintained collectively or individually. On the next Clause I am going to make proposals for strengthening the individual protection of price maintenance.
The only question today is that of enforcement and of what I believe to be a very valuable principle, namely, that of resale price maintenance which, after all, has been accepted by many Commissions, including the Lloyd Jacob Committee. Unless we strengthen the individual enforcement of resale price maintenance, we shall run the risk of the Bill creating bigger and more monopolies than we have at the moment. It would be a tragedy if the big stores, shops and garages were to wipe out the small ones—
§ Mr. Gresham Cooke
On the next Clause, I shall make suggestions for strengthening resale price maintenance which I believe to be a good principle.
§ 4.45 p.m.
§ Mr. Reader Harris (Heston and Isleworth)
The hon. Member for Orkney and Shetland (Mr. Grimond) referred to competition in prices. I am in favour of manufacturers competing in prices. After all, the manufacturers are making the goods, and no doubt they arrive at different prices according to their methods of manufacture.
I am concerned that the people who sell the articles should do so at the prices which have been fixed by the manufacturers. [Interruption.] I have just begun my speech. If hon. Members opposite care to wait, they may hear some of my reasons for what I am saying. The President of the Board of Trade said that we would have a long debate on the Second Reading of this Bill. I did not get a chance of saying anything on Second Reading. In fact, 1037 only two ordinary back benchers like myself managed to speak on the Second Reading. By the time we had heard the Front Bench speakers, two Privy Councillors and maiden speakers, there was time for only two back bench speakers.
§ The Temporary Chairman (Mr. F. Blackburn)
The hon. Member had better direct his remarks to the Question, That the Clause, as amended, stand part of the Bill, instead of going over the Second Reading debate again.
§ Mr. Harris
This Clause is the most important one in the Bill because it is the Clause which departs from the principle laid down in Part I of the Bill, namely, that restrictive agreements should be subject to legislation. In my view, collective enforcement agreements ought to be subject to legislation like the other agreements under Part I. I am opposed to the system of automatically making them illegal.
A number of hon. Members opposite have quoted in their support the Monopolies Commission Report on collective discrimination, but no one has referred to some of the words of wisdom which were uttered by the minority members of the Commission. They said:We are not prepared to say that the referred practices as they exist over a very wide field of trade and industry are in general injurious to the public interest and should be prohibited and made illegal."They said later:A general prohibition… would in our view lead to injustices.I believe that that is what will happen. I think there will be injustices if all collective enforcement is automatically banned. They went on to say:… the question whether or not they should be permitted to continue in the altered circumstances of today may be vital to the industries themselves and we do not think that they should be deprived of the benefits they derive from these practices without having an opportunity of having their cases examined individually.I am sorry that the Government have not accepted that recommendation that these practices should be examined individually. I believe that resale price maintenance agreements are to the small shopkeeper what trade union agreements are to the worker. I have said this 1038 before, and was shouted down by the hon. Member for East Ham, North (Mr. Daines), and no doubt I shall be again.
§ Mr. Daines
The first point that the hon. Member made was that he was in favour of the manufacturer enforcing his own prices. Does the hon. Gentleman apply this principle, in the case of chocolate, to the small retailers?
§ Mr. Harris
There is an hon. Lady, who sits behind the hon. Gentleman, who sells chocolate. No doubt she will be able to discuss that subject with him.
I am convinced that this Clause will hit the small shopkeeper, with whom I am particularly concerned. The hon. Member for Twickenham (Mr. Gresham Cooke) and others have made this point. I think that this Clause is playing into the hands of the big combines. I cannot understand why the Labour Party does not support me in this. I believe I am right in saying that the Labour Party is against what it calls the big interests. I suppose that its method of controlling this sort of thing would be nationalisation of all the means of distribution; I gather that is one of its ultimate objectives.
§ Mr. Harris
The Labour Party has its own methods of public control which it favours, but most of us on this side of the Committee do not believe in those methods of public control; we believe in stability and orderliness in trade and industry, and I, at any rate, believe that it is a good thing when a trade or industry makes some rules for itself and tries to introduce its own methods of ensuring orderliness and stability in order to maintain reasonable conditions. I am not talking about protecting inflated profits, but about maintaining reasonable profits within the trade.
In 1945, the Labour Party made some statements which I find quite unexceptionable; I hope that it will bring them forward again. The Labour Party was referring to conditions after the war, and said:The anti-controllers and anti-planners desire to sweep away public controls, simply in order to give the profiteering interests and the 1039 rivileged rich an entirely free hand to plunder the rest of the nation as shamelessly as they did in the 1920s.
§ Mr. Harris
Yes, I will certainly read on:Just think back over the depressions of the 20 years between the wars, when there were precious few public controls of any kind "—and now we are to sweep away even the private ones—and the Big Interests had things all their own way. Never was so much injury done to so many by so few.It goes on to say:The Labour Party stands for order as against the chaos which would follow the end of all public control. We stand for order for positive constructive progress as against the chaos of economic do-as-they-please anarchy.It seems to me hon. Members opposite cannot have it both ways; either they believe in competition and are against nationalisation and that sort of thing, or they believe in some degree of orderliness and stability in trade and industry.
I believe that trade associations, with their agreements, have done much to contribute towards this orderliness in trade and industry, and I believe that this particular Clause is a bad one because it does away with all that at the stroke of a pen. I am very worried, I must confess, at the possible effects upon shopkeepers of the abolition of all collective enforcement without any investigation of individual agreements; they will be at the mercy of the big combines and big interests.
§ Mr. Grimond
I quite appreciate what the hon. Gentleman says; I do feel that there is a strong argument on his side. But surely he carries the argument too far when he gives us to understand that what moves these associations of manufacturers is the terrible sufferings of the small man. It is asking us to believe too much when he says tears fall from their eyes at the thought of all these poor little retailers, and they do not think of their own profits at all.
§ Mr. Harris
I will concede the hon. Member for Orkney and Shetland (Mr. Grimond) that point if he will concede me this point, that when people cut prices, they are not doing so with tears in their 1040 eyes out of sympathy for the poor exploited public, but they do it in order to make bigger and better profits for themselves and to pinch business from their competitors.
In making that remark, I am supported again by what was said on the subject of collective discrimination by the three gentlemen who signed the minority Report of the Monopolies Commission. In paragraph 265, they say:Equally we do not feel that the retailer who sells below (or above) the prescribed resale price is deserving of any sympathy. Either he has broken one of the conditions of sale on which he bought the goods or he has knowingly bought them from a wholesaler who has done so. He does this in order to gain an advantage over his competitors who honour their obligations".It is clear that I am not the only person who takes the view which I have expressed.
The hon. Member for Orkney and Shetland seemed to pour some scorn upon the small shopkeeper. I do not know why he should do so. They are being hit very hard at the present time. At the risk of being called out of order again by the Chair, I would ask the Temporary Chairman to accept that this problem must be viewed in relation to other things which are happening at the present moment.
The small shopkeeper has been hit very hard by three clubs wielded by Her Majesty's Government. The first is the credit squeeze. which is making things very difficult for him; the second is rating revaluation; and now—the third—he is going to be hit by the abolition of collective price maintenance agreements. The small shopkeeper will not be pleased. He will be hit in a way that he does not deserve. That is why I say we ought to make these collective price maintenance agreements registrable and examinable by the Restrictive Practices Court, instead of banning them willynilly.
There is one further point I must make, despite the desire on all sides of the Committee to rush this Bill through. [HON. MEMBERS: "No"] Yes, there is. If these agreements are abolished by Act of Parliament simply because in present circumstances they are not justified because there is a boom, everybody has money and there is no depression on the horizon, I would ask what is to happen if trade suddenly takes a turn for the worse. These things can come upon us very suddenly.
1041 What is to happen if quite suddenly there is unemployment, and these agreements become desirable again? It will not be easy to pass an Act of Parliament in order to permit them again. Even if the House of Commons were agreed that it was desirable that such agreements should be permitted, the Government of the day, of whichever party, would almost certainly say that our legislative programme was so full that time could not possibly be found to bring in an Act for about three years. The people who need the protection afforded by these agreements would be at the mercy of very adverse trade conditions, and would suffer accordingly.
Lastly, it seems to me that this Clause will hit chiefly the small shopkeeper, as opposed to the manufacturer. Most of the agreements which exist between manufacturers will fall to be dealt with under Part I of the Bill. Under the procedure of Part I, it is bound to be a year or two before such cases come before the Restrictive Practices Court; inevitably there will be a large number of agreements to be registered and examined by the Court, and it may be a year or two before they are pronounced upon. On the other hand, under this Clause, the props beneath the small shopkeeper are to be knocked away on 29th July, or on whatever date the Royal Assent is given to the Bill; so that the small shopkeepers will find their agreements taken from them at an early date, whereas the manufacturers who supply them may be able to retain theirs for two or three years.
Such a situation does not seem to be fair at all. All agreements should be dealt with in the same way, by registration, appearance and examination before the Court, and approval, if the Court so holds.
§ Mr. G. Darling
Now that the hon. Member for Heston and Isleworth (Mr. R. Harris) has got his Second Reading speech off his chest at long last, I am sure the Committee can proceed to discuss Clause 19 in its proper context. I agree with a great deal of what the hon. Gentleman said about Clause 19 possibly being used to assist, or having the effect of assisting, big firms as against little firms, and monopolists against those who want to pursue a policy of competition. 1042 There were opportunities given to him to support us on both those issues.
The hon. Member for Heston and Isle-worth is associated with a trade which has already been examined by the Monopolies Commission. In my view, it is wrong that his association or his trade should now go through the mill of the Restrictive Practices Court. On both sides of the Committee, I think, we wanted the whole of this business to be dealt with by the Monopolies Commission.
A few moments ago my hon. Friend the Member for Sheffield, Park (Mr. Mulley) suggested that subsection (3, a) should be deleted. That is one point in the Bill which envisages the possibility of big firms being able to deal adversely with small firms. It was an opportunity which I am sure the hon. Member is sorry that he missed. We should have more sympathy with those who are defending their own trade agreements from the other side of the Committee, if they would admit that there are some parts of those agreements which might be objectionable.
For instance, there is in the book trade an agreement which contains parts relating to public libraries which the publisher—if he has to deal with this matter in the public interest—would have great difficulty in defending. The librarian of the Sheffield City Libraries has written to me on this matter explaining that until a short time ago all libraries were compelled to get their books from retailers, even though they were ordering thousands of books at a time. That system has broken down, but the Sheffield City Libraries take hundreds of thousands of books a year and can get only a flat rate discount of 10 per cent. on their bulk supplies, although anything from 16⅔ per cent. to 33⅓ per cent. discount is given to the private retailer. That sort of thing cannot be defended.
There are features in both the Proprietary Articles Trade Association and the Chemists' Federation List Agreements which, if thrashed out in public, could not be defended. One of the more objectionable features, that of discriminating against co-operative societies, has been dropped from the Publishers' Book Agreement, and when we come to a later Clause we will raise that issue with 1043 regard to the chemists' and other associations. I am sure that now the publishers have dispensed with that feature of their agreement, the chemists will dispense with it in theirs.
If we had some suggestion from those hon. Members opposite who are associated with these agreements that there might be features in the agreements which, with the development of public opinion, are objectionable and that they might be dropped, we would listen to them with more sympathy; but if they stick to the agreements and say that they want, as was suggested in one Amendment, to give power to the trade associations to go to the Court to enforce agreements, then obviously we have to have the agreements altered, even though they have some good, in order that the bad features can be removed.
§ Sir James Hutchison (Glasgow, Scotstoun)
I agree with a great deal of what the hon. Member is saying. My view is that many of these agreements should be temporary. Historically, a great many of the agreements, after the disturbing situation had been put right, were automatically dropped.
§ Mr. Darling
The chemists' agreement in one form or another has continued for more than thirty years. Although public opinion has changed in that period, the fundamental basis of the agreement has not changed.
§ Dr. Donald Johnson (Carlisle)
On a point of order. Is the speech of the hon. Member for Hillsborough (Mr. G. Darling) in order on this Clause? Should not his argument have been made on Clause 16.
§ The Temporary Chairman
I will call the hon. Member for Hillsborough to order if I consider that his speech is not in order.
§ Mr. Darling
We are dealing with the ban on collective agreements, and I am referring to collective agreements which I hope will be banned.
I am very glad that the President of the Board of Trade resisted the last Amendment. I should like to ask him a question about an undertaking which he gave earlier when he promised to study some of the earlier Amendments. I want to give a far-fetched example. I 1044 have been talking about booksellers and I will continue with that example. Suppose that all book publishers got together and set up one wholesale agency and made arrangements with that agency so that the wholesaler was in law the person who was fixing the prices of all the books sold to the retailer, would that arrangement allow the publishers to get round the Clause? I do not think that it would, but it is a point to be considered with other matters which the President of the Board of Trade has promised to consider.
I hope that hon. Members opposite who are associated with restrictive agreements for good or not—and I believe that they are associated with them for what they believe to be good reasons—will admit that the agreements have objectionable features and will say that they are willing to do something about those features. We might then be able to have a better discussion. We are getting closer together now that we have got rid of the conflict about whether this business should be dealt with by the legal procedure or through the Monopolies Commission.
§ Mr. Angus Maude (Ealing, South)
Since I am as anxious as the President of the Board of Trade and anybody else to make progress, I had not intended to intervene in the debate, but I do not feel that I can allow the impression to be given that every speaker from this side of the Committee is hostile to the substance of Clause 19 and is anxious to weaken its effect. There is a considerable majority of my hon. Friends on this side of the Committee who entirely believe in and agree with the solution which the President has found to this problem and who are anxious that the Clause should go through in its present form.
I have noticed that most of the objection has come from trade associations—I have noticed that from reading my mail, looking at the newspapers and listening to speeches. I do not find that, on the whole, manufacturers appear to feel that for them this is a very serious matter. If that is the way in which the balance of opinion lies, some of the inferences are fairly obvious.
§ Mr. R. Harris
I said that most of the manufacturers' agreements were dealt with in Part I of the Bill. They have no 1045 need to grumble, because they will have a chance to register and prove their case before the Court.
§ Mr. Maude
That is precisely the point which I want first to establish. The manufacturers are perfectly happy and believe that the process of individual enforcement of resale price maintenance will work perfectly well under the Bill and they are not concerned with the necessity to keep the collective enforcement by the particularly undesirable methods which are mentioned in Clause 19. They do not consider that that is absolutely essential to them and nor do I.
It is the trade associations which dislike the provision. We have heard a lot of their arguments this afternoon and in the past. My hon. Friend the Member for Twickenham (Mr. Gresham Cooke) said that trade associations did a very good job in the war and after the war, and succeeded in keeping down prices in a period of rising prices. That may well have been true in the war and after the war, in a period of scarcity. The Government took the machinery nearest and most convenient to hand and made use of it, and no doubt trade associations in some commodities kept prices lower than they otherwise might have been. However, that in no way ensures that the same machinery could not be used in a time of falling prices for artificially keeping up prices, and we know that if that sort of machinery exists for that process it will be used.
I used that sort of argument, with no support from hon. Members opposite, except from the hon. Member for Bilston (Mr. R. Edwards), in respect of restrictive practices which could be justified under another Clause if there were a risk of unemployment in a certain area. We had the argument about what happened between the wars and the argument that we should have the machinery in case it was needed again.
We had the same argument from my hon. Friend the Member for Heston and Isleworth (Mr. R. Harris), who said that these agreements were necessary because unemployment might develop and become serious. However, if we had serious and persistent unemployment, it would become almost impossible to hold the line of the Bill in any way. There 1046 would be an assault on every provision in it. We must legislate for the position as we see it now, and try to get economic sanity into the position now.
When I hear this talk about the small shopkeepers I really begin to wonder in whose interests we are supposed to be legislating. I sympathise with the small shopkeepers, who do go through difficult times. We know that very well. Many of them are admirable, and they perform a service which nobody else can perform. They know their customers; they know the difficulties of their neighbourhoods. The small shop may save an old lady walking half a mile to a multiple or chain store in the main street. But if the consumer feels that the price level and the service she gets in a large shop make it desirable to walk the extra half mile, we have no right to create an entirely artificial situation which would penalise the more efficient and the cheaper shops. Nothing that has been said today has persuaded me that it is wrong. I am unrepentantly on the side of the consumers in this matter.
It is all very well to talk about competition in quality instead of price, but let the consumer decide between price and quality. Give the consumer a fair chance to decide and there will be no doubt of what will happen. We are told that the housewife likes to know the price of an article before she goes into the shop. That may be true, but there are some housewives who still retain sufficient use of their faculties to be able to walk out of the shop if they do not like the price they find in it, and they do not mind having the opportunity to go elsewhere to find a more attractive one.
I think that most of us considering the Bill objectively will recognise that the solution which has been found is one which gives a pretty fair deal to everybody. It is more likely to work than is any perpetuation of an entirely artifical economic situation which is really not in the interests of the consumers or the country.
§ Sir Leslie Plummer (Deptford)
The thoughtful speech which the hon. Member for Ealing, South (Mr. Maude) has just delivered illustrates the dilemma which has faced all of us who have been actively engaged on the Bill ever since its Second Reading. It is the dilemma 1047 of putting forward what is the immediate public good and risking forgetting what may be the ultimate public good.
I think the hon. Member for Heston and Isleworth (Mr. R. Harris) ought to be congratulated on his eve of the poll speech today. It was illuminating. It explains his presence here. He worked himself into a passion which had little to do with the serious purport of this Bill.
But the President of the Board of Trade put the problem when he said that we were all concerned with reducing prices. There is a problem here to which the hon. Member for Heston and Isleworth did not address himself. One of the problems we face today is that profit margins are too high. They are too high because the manufacturers have insisted on a constant expansion of their retail outlets. Therefore, what they have had to do in getting their goods into as many retail outlets as they can find is to fix profit margins at such a rate that they will be profitable even when sold by the most incompetent of these outlets. The result is that the retail margins are high today so that what is called in the trade the "parlour" shop, the little shop, can make a profit out of the sale of branded goods, while the shopkeeper who has a proper, efficient organisation makes an unnecessarily large profit out of the sale of the same branded goods.
§ Mr. R. Harris
I would not deny what the hon. Gentleman has said, but what I say is that it does not apply universally. There may be some cases in which the profit margins are too high, and some where they are not. If they are too high, they can be registered and examined. In the tyre trade, for instance, there are profit margins of about 20 per cent. In America, where there is no resale price maintenance, the profit margins are up to 45 per cent. and 50 per cent.
§ 5.15 p.m.
§ Sir L. Plummer
Now that the case for the tyre trade has been put with great brevity, perhaps I can go on with my argument about the branded goods. In their desire to get as many retail outlets as possible many manufacturers of branded goods, the sort of goods the hon. Member for Twickenham (Mr. Gresham Cooke) referred to, have fixed retail margins high with the result that we have 1048 artificial support for the existing high prices.
Look what is happening today. If I like to go to a West End store to buy branded goods I walk to the counter over a plush carpet; I have the goods sent home to me and I get three months' credit for them. Yet I pay exactly the same for those branded goods when I buy them from a self-help store.
§ Sir L. Plummer
The hon. Member says "Nonsense." Would he like to develop the argument? I pay the same amount in a self-help store for the branded goods and I take them away, and pay cash for them. I pay exactly the same price as I pay for them in a West End store, with its plush conditions, where I can get credit and where the goods are sent home for me. Thus I am denied the opportunity of being able to buy those goods at a cheaper price at the self-help store.
§ Mr. Pitman
The hon. Member is putting a sound argument, but he is omitting the fact that the self-help store can cut its prices of non-branded goods and that, if he is intelligent, the hon. Member can go to the self-help store and buy all his goods there and save the excess profit he would otherwise pay, and save it in the indirect way of a reduction in the price of the non-branded goods. I cite a bookshop as an example. Many of our books are non-net and may be sold at any price the bookseller likes.
§ Sir L. Plummer
Why should a retailer be permitted to sell loose flour at a cheaper price than his less efficient competitors and not be permitted to sell packaged flour cheaper? I do not understand.
§ Mr. Fell
Would the hon. Gentleman consider the matter from the other point of view, and consider goods that are not controlled in any way in price? Has he considered what the profit margins are or what the result is when those goods are sold at very much higher prices than they are in other shops? [HON. MEMBERS: "No."] Of course they are.
§ Sir L. Plummer
First of all, the hon. Gentleman describes what I say as nonsense and then tries to deal with an argument I am not using. I am discussing only branded goods at the moment.
§ The Temporary Chairman
I think it would be better if we did not have so many interruptions. We are now discussing the collective enforcement of conditions of resale prices.
§ Sir L. Plummer
I am saying that in a system of trade in which efficient retailers are not permitted to hand on to the consumer the results in part of their efficiency we are not making a determined attack on high prices. I have no interest at all in self-help stores or any of the other shops, but those of us who know anything about going shopping know quite well that self-help stores are here to stay and that they will prosper and flourish. In the United States, in the farmers' markets in the United States, one of the benefits of the self-help store is that it enables the customer to benefit by economies in retailing. I should like to see them operating in exactly the same way here. I admit that if they are to develop and are allowed to decide for themselves what margins of retail profit they will make, they will hit some of the small shopkeepers.
This will be a great pity, but no change in our economic system can take place without hurting someone. I do not know how long one can go on piling up, year after year after year, additional costs of distribution. We have now reached the absurd situation where the cost of distribution of some manufactured branded goods, including the advertising, is many times the cost of the product. Advertising, packaging, retailing, distributing, jobbing, and wholesaling costs are making the price of goods to the consumer ridiculous and out of all proportion to their true value. It is no good trailing before us now the spectacle of the orphan and the widow in the little back-street shop. This is a case of developing a retail system under which the benefits of modern rationalised retailing are to be shared by consumers throughout the country.
The hon. Member for Heston and Isleworth (Mr. R. Harris) said that he had difficulty in speaking in the Committee because I had tried to stop him. I think that that is a little facetious. It is obvious that the last thing I should want to do would be to stop the hon. Member, because if he makes more speeches like the one which 1050 we have just heard it will be a distinct advantage to us on this side of the Committee, and will be most helpful in our propaganda.
I want to deal with one or two recurring sentences in the speeches of the President of the Board of Trade. The right hon. Gentleman constantly refers to this or that economic practice as not being criminal. I want to quote an actual case. The chief individual concerned is dead, and therefore I ask the Committee to accept my word. This manufacturer was a very good Conservative and sat opposite me in the council chamber. He manufactured a specialised article connected with the book trade of which, by circumstance, he had a virtual monopoly. There was nobody else in competition with him except in a very small degree.
He was an enterprising man, and he decided to go into the manufacture of another article arising from his own processes. One of the largest combines in the country—and there are only three others who manufacture this article—invited him to their works and told him quite abruptly and brutally that if he did not get out of his second venture they would get into the first and smash him completely.
I say to the President of the Board of Trade that that type of practice is not isolated, and that by any standard of decency that type of practice is criminal. When the President keeps reiterating phrases implying that none of these practices is criminal, I ask him to use his words more carefully. There have been practices in the past in the economic sphere which have been within the bounds of criminality by any kind of test, and there are practices today which break the law and are criminal, and I think that it is misleading of the right hon. Gentleman to imply that they are not.
§ Question put and agreed to.
§ Clause, as amended, ordered to stand part of the Bill.