HC Deb 19 November 1956 vol 560 cc1448-60

6.45 p.m.

The President of the Board of Trade (Mr. Peter Thorneycroft)

I beg to move, That the Registration of Restrictive Trading Agreements Order, 1956, a copy of which was laid before this House on 6th November, be approved. This Order was laid before the House on 6th November. The Restrictive Trade Practices Act, 1956, makes, broadly speaking, the generality of restrictive trade practices registrable, and it requires the Board of Trade to appoint a date on which particular classes are called up for registration, and the period within which particulars are to be provided. Those Orders require an affirmative Resolution of the type I am now moving.

The present Order does two things. It selects certain classes of agreement for registration and it provides for a period of three months in which registration can be made. The agreements are defined in the Order, as they are in the Act, fairly widely. That is to say, they are not simply formal or written agreements, but can be informal and unwritten; a matter which we debated at considerable length on the Bill. We could have limited the Order by reference to certain trades or industries, but we preferred to define by reference to the type of restriction, selected—as of course they have to be selected—from those restrictive agreements set out in Section 6 of the Act.

The types of restriction with which we are dealing here are set out in the Schedule but, broadly speaking, they cover price rings and what is known as collective discrimination. The type of restrictive agreements which are not covered by this Order, though might be covered by a subsequent one, are market sharing and various arrangements for restricting production unless these form part of wider arrangements included in the type now to be registered.

The House will recall that under the Act special arrangements are made in the case of export agreements. They are exempted from registration unless they contain provisions affecting the home market, but particulars have to be notified to the Board of Trade under Section 31 of the Act.

Turning to the registration period, the Order comes into force on 30th November, 1956. There are three months for registration, during which particulars must be furnished. The last date, therefore, will be 28th February, 1957, or, in the case of any new agreements, three months from the date on which the agreement is made. Provisions are made in the Act for agreements which are varied or dropped. Particulars of agreements which are dropped before 28th February do not have to be furnished for registration, and where agreements are modified during the period I am talking about, the modified version is registered, not the original version.

I believe that during the last year quite a number of industries have done what all of us hoped they would do; namely, they have examined their practices to see if these were really necessary. I hope that they will examine these again before registering them, and cut out the dead wood or, if possible, do without them altogether.

I hope also the House will agree that we have lost no time. The Order was made on the day on which the Bill received the Royal Assent, and we are seeking Parliamentary approval as early as possible. In the meantime the Registrar has issued his Regulations, which hon. Members may have seen, and also a useful guide to registration. Registration is an essential prerequisite to bringing cases before the Court and I ask the House, therefore, to approve the Order.

6.50 p.m.

Mr. A. J. Irvine (Liverpool, Edge Hill)

I desire to refer to one point arising from the Order. Section 6 (1, a and b) of the Act dealt, in effect, with three categories of restriction—restrictions affecting the prices charged for goods supplied, restrictions affecting prices quoted for goods offered, and restrictions affecting prices paid for goods acquired. In the Schedule to the Order, for some reason which I should be grateful to have explained, the first two categories are dealt with under one head—in paragraph I of the Schedule—and the third is dealt with separately—in paragraph 2 of the Schedule. No doubt that was done for some reason which appeared to the draftsman of the Order to be good. I would like to know why this method was adopted in the Order.

I feel that the form of words adopted in the Order may have some bearing upon an ambiguity which exists in the Act, and which I think might usefully be cleared up now. As the right hon. Gentleman said, large numbers of people, companies, associations and so on, are now examining their agreements to ascertain whether they require to be registered, and it is very desirable that every assistance should be given to them to enable them to know what type of agreement it is necessary to register.

One thing which is troubling people—to my knowledge, it is troubling a large number of companies and associations affected by the Act and the Order—is a matter which was probably in the mind of the draftsman of the schedule when he made the distinction in the treatment of the categories to which I have referred. The ambiguity may be illustrated by reference to an agreement for the supply of goods in its simplest form. Take the case where A agrees with B to supply goods to B, and A says to B "For a period commencing with the date of the agreement, I will supply goods to you and to no one else, and you will distribute them at the prices referred to in the agreement and at no other prices."

Prima facie, that is a registrable agreement under the Act, because in that context A and B are each accepting a restrictive obligation. What is in doubt is whether such an agreement comes within the exemption set out in Section 7 (2) of the Act. I feel that the draftsman who prepared the Order had the point in mind, but I do not think he has really cleared up the ambiguity. The exemption in Section 7 (2) is expressed as an exception referring to goods supplied, and it does not refer—deliberately, one assumes—to goods to be supplied. The proviso to Section 7 (2) reduces the scope of the exemption, and I submit that the use of the words "to be supplied" in that proviso are not conclusive upon the point which I am raising. In the case which I give, where goods are to be supplied in future and over a period only commencing with the agreement, is the agreement registrable?

When goods are acquired and paid for, the problem to which I draw attention does not arise, for it is a completed transaction. But where, under an agreement, goods are to be supplied over a future period and charged for, there is a real doubt. I feel that it is a doubt which was present in the mind of the draftsman of the Order, but I think it is a doubt which survives the Order. I should be grateful for any elucidation on the point from the right hon. Gentleman, or from his hon. Friend, the Parliamentary Secretary, whom we welcome in his new rôle. This is a point of considerable importance, going to the heart of the issue as to whether a great number of restrictive agreements now in use are registrable or not when they provide for future deliveries. A great many people will be grateful if the matter could be cleared up.

6.56 p.m.

Mr. R. Gresham Cooke (Twickenham)

I congratulate my right hon. Friend upon bringing forward the Order, which takes the implementation of the important Restrictive Trade Practices Act, 1956, a stage further. However, we ought not to be under any illusion about the Act placing a tremendous burden of work upon the legal and commercial departments of industrial firms. For instance, one industry about which I know something, in which there are some 70 manufacturers each having several hundred tripartite agreements between manufacturers, wholesalers and retailers, has had to redraw and rewrite some 50,000 agreements.

Mr. Speaker

I ought to point out to the House that we are discussing not the Act but this Order made under it.

Mr. Gresham Cooke

I appreciate that, Mr. Speaker. I was about to show how the placing of even this Order entails a great deal of work, which is, no doubt, very good for the Revenue, and we also hope that it is good for the Bar.

Very few people have much practical experience of the working out of the Order at present. The Registrar and his staff are acting on the principle that everything should be registered. I hope that it is not necessary to register in too much detail. For instance, suppose two fishermen have adjacent stretches of a river and enter into an agreement with each other to put back into the river all fish caught which are under six inches in length. That would be a restrictive agreement affecting the production of fish, which comes within the definition of "goods". Do Parliament and my right hon. Friend want that kind of detailed agreement registered? It is a point to which attention ought to be given.

Mr. J. T. Price (Westhoughton)

The House ought to put the hon. Member's mind at rest on that point. I will do so if nobody else will. The purpose of the Act is to go for fish very different from the ones to which he refers.

Mr. Gresham Cooke

That may be so, but the mesh is small enough to catch tinier fish.

Under Section 10 (4) of the Act, it is required that agreements should be lodged which are not to be registrable. For instance, I understand that an agreement registrable on 2nd August but determined between 30th November and 28th February would still have to be lodged. Equally, in the case of an agreement made after 2nd August and varied after 30th November, both the original and the varied agreements would have to be lodged. That means a great deal of work, Is it not possible to cut it down? I should like to know whether it is strictly necessary to lodge that type of agreement.

There is no provision under the Order or under the Act for the removal from the register of agreements which have been terminated or amended so as to make them no longer registrable. The Registrar is no doubt reluctant to say that such agreements should be removed from the register, but I would ask my right hon. Friend to consider allowing him to remove such agreements without delay in future.

We do not want the machinery under the Act to be bogged down by a great weight of agreements which are not of any real effect, and which have been varied or altered in such a way that they are not going to be registered under the Act. I would ask my right hon. Friend to say a word or two upon the question whether the Registrar is being overloaded, and whether he intends in future to give any lead in connection with the removal of certain small agreements or agreements which have been varied so as not to be registrable, and have them removed from the Registrar's purview.

7.2 p.m.

Mr. George Darling (Sheffield, Hillsborough)

I think that the mind of the hon. Member for Twickenham (Mr. Gresham Cooke) can be put at rest on the subject of fish. If I correctly remember the debates we had on the Measure itself, any co-operative arrangement by fishermen would be outside the purview of the Act. I agree with the hon. Member that it may be that many commercial interests—managers, directors of companies, and so on—are now going to be involved in a great deal of work, and they will probably complain about it. But I do not think that there will be any complaint from the legal profession about the amount of work which will now fall upon it.

I therefore want to make a plea especially on behalf of small business men, who do not want to become involved in a lot of legal expenditure if they can help it. I should like to know whether the right hon. Gentleman can arrange for Orders like this to be made more simple, so that ordinary people can understand them; or, if we have to stick to this awfully complicated and legal language, which defies explanation except with legal advice, whether it would be possible to put in a longer Explanatory Note, to indicate just what kind of agreements and arrangements have to be registered, not in legal but in ordinary business terms, so that we can understand what is involved. That would be a great help to us all, and would reduce the amount of legal expenditure involved in this business.

I should like to ask three simple questions. First, the Registrar's guide, which the right hon. Gentleman mentioned, is a very great help to everybody, but, seeing that this is the first Registration Order under the Act, I was wondering whether the right hon. Gentleman could tell us a little more about the Registrar's office itself. I should like to know what kind of organisation is involved, and what kind of results are to be expected from the Order, and also how the material will become available to the public. Those of us who have been associated with this work would like to know what kind of agreements have been registered, and what form they take. This is the first attempt to give us a full picture of restrictive practices in this country, and if we could get to know more about how we can get the information it would be helpful.

I should also like to know whether it will still be possible, under the registration of these agreements, to catch the traders and manufacturers who are still going to carry on collective practices although they have now got rid of their collective agreement. These are the people who, by a general understanding, are going to enforce their individual agreements, as is provided for under the Act. I notice that the Scottish Chamber of Trade has asked the clothing manufacturers whether they will all, individually, give an undertaking not to supply co-operative societies with goods if the co-operative societies return the profits to the customers instead of to the shareholders. They could do that by way of individual agreements with traders, which co-operative societies would be unable to accept. If such an appeal is made for traders to act individually, would such an arrangement be caught under the registration procedure?

Finally, I should like to know if the Minister can indicate when the market-sharing arrangements and restriction on competition agreements are likely to be called for registration, and whether the present group of agreements to be registered would cover common price agreements.

7.6 p.m.

Mr. William Shepherd (Cheadle)

I hope that I shall not be out of order in what I propose to say. I do not think I shall, because I want to limit myself merely to saying that I am very pleased that my right hon. Friend has brought forward this Order at the earliest possible date, and not only that, but has drawn, it in very wide terms. If there were any ground for the view expressed by some hon. Members opposite, and some people in the country, that we were not in earnest in our attempt to deal with monopolies and restrictive practices, this Order gives the entire lie to those distortions of the truth. This Order tackles the problem in a really worth while and workmanlike way, and I congratulate my right hon. Friend for the energy which he has shown.

7.7 p.m.

Sir Lynn Ungoed-Thomas (Leicester, North-East)

I shall not attempt to joint the hon. Member for Twickenham (Mr. Gresham Cooke) in trying to provide for alterations to the Act. What we are dealing with now is the administration of the Act. We have to deal with the Act as it stands and try to the utmost of our capacity to make it work as speedily and as effectively as possible.

I agree with the hon. Member for Cheadle (Mr. Shepherd) that it is wise to indicate the registrable agreements by reference to the type of agreement rather than to the trade or anything of that kind. I acknowledge that the President of the Board of Trade has done what he said he would do by including within the Order such things as common price agreements and the rather more pernicious restrictive arrangements of that kind, but I was a little concerned when I heard him say that agreements about market-sharing and the restriction of production might be registered at some time in the future. I am sure that I must have gained a false impression. I hope that he can assure the House that it is his intention that other agreements, within those parts of the Act which are not covered by this Order, will be proceeded with as soon as possible.

As for the time limit—upon which the hon. Member for Cheadle commended the Government for making it as short as possible—the case which we have made is not that the Government would not act under the Act; quite obviously they will do so. The whole trouble is that the Act itself is such an appallingly complicated and cumbersome one that it will inevitably be a long time before any agreement under it becomes forbidden in practice.

I would ask the President, if he can. to give the House some idea of the number of agreements which will be caught within the ambit of the Order. The hon. Member for Twickenham said that in the particular industry to which he referred there were about 50,000 of these agreements. If we are to deal with 50,000 agreements in only one industry we shall have an amazing mass of agreements for registration in all, which will make it extremely difficult effectively to abolish these restrictive practices. Indeed, it will be a lifetime's job.

Mr. Gresham Cooke

I did not mean to imply that the 50,000 agreements were all registrable. I meant that individual manufacturers had been making new agreements, which in all might amount to as many as 50,000.

Sir L. Ungoed-Thomas

Well, they had a spate of about 50,000 agreements, and that is sufficient for my purpose.

The other point I want to ask the President of the Board of Trade is whether he can now tell the House when the courts are likely to start working on these agreements? They are to be registered within three months' time; how much longer after that will the courts begin to operate under the Act?

I respectfully share the difficulties mentioned by my hon. Friend the Member for Edge Hill (Mr. A. J. Irvine) and also a certain difficulty mentioned by my hon. Friend the Member for Hillsborough (Mr. G. Darling) in understanding this Order. It is extremely important in these matters to have the position put as clearly as possible so that it may be understood by small businessmen without having to consult lawyers for the purpose. I appreciate that a guide has been put out by the Registrar. I acknowledge at once that it is a valuable guide, but it would certainly be valuable if the Registrar could give examples of what agreements might be thought to come within this Order, but which are not agreements he would regard as being registrable. I appreciate that there may be some difficulty about that.

I certainly would not ask him to say definitely, with examples, what agreements are registered. If he did so he would be inviting difficulties as businessmen would then be advised as to what were not registered. He could, however, go to the extent of saying, in view of the advice he has that he does not expect certain agreements to be registered. If he wants examples of agreements on which he could usefully give enlightenment, I am prepared to supply him with a vast schedule of them. There is no difficulty about that.

On the face of it, the Order causes a little difficulty in its language. When I first saw the way in which the Schedule is phrased, the question immediately occurred to my mind whether it was not entirely ultra vires, but when I came to work out the Schedule with reference to the definition provisions in the Order itself, I found it was not ultra vires, but perfectly all right. Nevertheless, any businessman would find difficulty in knowing whether an agreement is registrable on reading paragraph I of the Schedule: Agreements under which restrictions are accepted by the parties or any of them in respect of the prices to be charged or quoted for goods supplied or offered or for the application of any process of manufacture to goods. Before any agreement has to be registered under the Act, there must be a restriction accepted by two or more parties. That is a small point, but it is the kind of point which causes confusion to laymen, and not merely to laymen, in reading a Measure of this kind. I mention that as a small instance of the kind of difficulty which arises.

The Explanatory Note to the Order adds practically nothing to the meaning of the Order except that it is helpful in its reference to the export provisions and the operation of those provisions under the Act. If there could be a fuller Explanatory Note, as suggested by my hon. Friend the Member for Hillsborough, to make the Order more readily intelligible, not only to laymen, that would be a good thing.

7.15 p.m.

Mr. P. Thorneycroft

With the permission of the House, I will reply to the points which have been made. As I spent a great deal of time on the Committee stage of the Bill, I hope I am fairly familiar with some of those points.

Taking first the remarks of the hon. and learned Member for Leicester, North-East (Sir L. Ungoed-Thomas) about the agreements not covered by the Order. It is a matter of convenience that we should not now load on to the Registrar all registrable agreements. I selected what I think in the minds of many people were the most pressing and urgent classes—common prices and collective discrimination. As to the number of agreements, I have no idea how many are involved here, but as someone said, "Why use the crystal when you can read the book?" We shall have the Register and we have only to contain ourselves in patience until a few weeks or a few months after 28th February when that doubt which has exercised our minds and debating powers for quite a long time will be resolved.

When will the court start? The last date for registration is 28th February. Then there must be a period—for we must be fair to the Registrar and whether the number is 50,000 or whatever it may be, it is a big job—in which he can set them all out and make them accessible and understood. Then there has to be a selection and the preparation of cases by both sides. August is not an easy month for the Bar, nor for the judges, and it looks as if it will be the autumn of next year before a case can be heard.

With regard to guidance to industry, it is difficult to give official guidance on an Act which, of necessity, cannot be made a very simple one. Looking back to the days when we were debating the Bill, I must say that Clauses 7 and 8, which said what was out rather than what was in, presented almost more difficulties than Clauses which said what was in the Bill. The First Lord of the Admiralty has written a book on the subject, and so, also, has my hon. Friend the Member for Darwen (Mr. Fletcher-Cooke). The Federation of British Industries has prepared an extremely valuable guide. And I share the view of hon. Members on all sides of the House who have paid tribute to the guide prepared by the Registrar which, within the limits of such a document, is of real help to people in deciding whether to register an agreement or not. When in doubt, the Registrar can be consulted. That is about as far as one can go, because these things are so complex and diverse one from another that to lay down generalities which go outside the terms of the Act or the Order might lead to more confusion than to help.

The hon. Member for Edge Hill (Mr. A. J. Irvine) asked why we refer to various types of agreement rather differently in the Order than in the Act. It is simply a drafting point. The draftsmen wanted to put "acquisition" in one section and "supply" in another. One can say that it is a good or a bad piece of drafting, but at any rate it was thought convenient, and it has no effect on the law on the subject.

With regard to the rather difficult point the hon. Member raised about paragraphs (a) and (b) of Section 6 (1) dealing with restrictions relating to prices and terms and conditions, these cover agreements as to the price at which manufacturers will sell their goods—the ordinary common price, or horizontal price agreements—and agreements as to the price at which manufacturers will sell to dealers, which is the vertical kind of agreement. On Committee stage, we had some discussion on this, but in our view both are registrable under the Act and come under this Order.

Mr. Irvine

Will the right hon. Gentleman deal with the point which I raised about the scope of the exemptions under Section 7, which affects this Order? If he is not prepared to deal with the matter now, will he be good enough to say that he will have regard to the points which I raised?

Mr. Thorneycroft

I will always have regard to any points made by the hon. Member, but I was dealing with Section 7. Section 7 (2), to which I think he referred, excludes only the straight contract of sale. That was why it was included. The agreements which are caught, which I have been describing, are those types of agreement in which there is a manufacturer and several dealers or one dealer and several manufacturers engaged collectively in coming to agreements about prices and conditions of sale. Section 7 (2) is of a more limited character than perhaps the hon. Gentleman feared. It applies to and exempts only the ordinary contract of sale.

My hon. Friend the Member for Twickenham (Mr. Gresham Cooke) asked about minnows. I think they are outside the Order, which is the important thing from my point of view, and I do not think I will pursue that illustration. They seem to be more a restriction on production, which awaits the future of some other Order, and I will find out the answer before I lay that Order before the House.

The hon. Member for Hillsborough (Mr. G. Darling) asked for a guide to registration. I do not think we can do much better than the guides which have already been produced. The Register will not be open on 28th February, because we must give the Registrar time to sort out the various information which comes before him, but it will eventually be open and capable of being inspected on the payment of a fee of 1s. It will be open to the public for inspection in the ordinary way. An agreement amongst manufacturers not to supply the Co-op would be registrable.

Question put and agreed to.

Resolved, That the Registration of Restrictive Trading Agreements Order, 1956, a copy of which was laid before this House on 6th November, be approved.