New Clause.—(RESTRICTIVE BUSINESS PRACTICES.) (Hansard, 22 February 1960)

§ Mr. Mitchison
I beg to move, That the Clause be read a Second time.
112 The effect of the Clause would be that if there were an agreement between what are called in the Clause persons carrying on industrial or commercial undertakings and are described in the Convention as "enterprises", having as its object or result, for instance, the restriction of competition within the Convention area, it should be voidable at the election of any party to it subject to two things, that it was an agreement to which the Restrictive Trade Practices Act, 1956, did not apply—that is, it was one of the exempted agreements under Section 8 of that Act—or that the Board of Trade had declared that it was an agreement compatible with the Convention.
The Minister of State, Board of Trade, and the Economic Secretary to the Treasury, who are at the moment sitting opposite me, were at the Second Reading debate and know quite well what I have in mind. Therefore, I will put it quite shortly. The Stockholm Convention deals, by Article 15, with restrictive business practices, and it starts by saying that member States—including, of course, this country—recognise that certain practices are incompatible with the Convention in so far as they frustrate the benefits effected by the removal or absence of duties and quantitative restrictions on trade between member States. It is very easy to think of certain practices which would have that effect, and the ones that are particularly aimed at by the article include agreements between enterprises which have as their object or result the prevention, restriction or distortion of competition". Except for the substitution of the words "persons carrying on undertakings or enterprises" I have put the words of the article in my proposed Clause.
The question is whether the reply which was made on this point when I raised it on Second Reading is a sufficient one. What we were then told was that the two following paragraphs in Article 15 described machinery for a reference to the Council—that is the Council provided for by the Convention—in respect of such a practice, and the action by the Council, including investigation, a report and so on, and also a reconsideration of the matter in the light of experience before, at the latest, the end of 1964.
113 I said then, though I had to interrupt the Economic Secretary to do it, that it did not seem to me that default provisions of this kind—remedies, as it were—really met the point that I was raising. The member States recognise that certain practices are incompatible with the Convention; once they have done that, one expects them to carry out the Convention, not merely apply it but also take such legislative action as is necessary to give effect to it. They have done so in respect of certain things in the Bill, but in this respect they have done nothing whatever.
I took as an instance what I think is a very obvious one, but there are no doubt many others which will occur to the minds of the Minister and other persons concerned with trade. The instance that I took was the very ordinary one of Danish lager beer, which is imported into this country to the extent of between £1½ million and £2 million a year and will meet certain restrictive practices which will deprive it of some of the benefits expected from the removal of duties. Those restrictive practices are the usual tied house arrangements between a brewery company and its tenant.
I should have thought that if a Government became a party to a Convention of this kind they ought to take the necessary steps to ensure that their own legislation was in order and that they did not leave gaps in it, particularly where, as in this case, they had legislation dealing with restrictive business practices, which would result in incompatibility with the Convention.
At any rate it is no moral answer—I do not know whether it is a diplomatic one, for I have never understood the heights and depths of diplomacy—to say, "Yes, we recognise that it is incompatible with the Convention, but unless and until the Council does something about it we do not propose to do so." The Government ought at this stage to explain to us—let them take that instance, if they like—why such a practice as that is not incompatible with the Convention.
If it is not, if they want to rely on the next part of the provision, they are saying that the tied-house system is so well known to everybody in the other countries that they could never have expected a Tory Government to do any- 114 thing to interfere with it in any way. They can hardly rely on an argument of that kind.
If that is the position, what is the objection the Government make to my proposed new Clause, the more so as we are only filling in a gap which is apparent in the Restrictive Trades Practices Act itself. I am not here to discuss that act in detail, but I cannot think that those who drafted it, even if they had a tender eye on tied house restrictions, can have anticipated the Stockholm Convention and have seen that unless something was done about it they would be leading the Government into incompatibility with a treaty which the Government had only just negotiated and signed and of which it was so proud.
I do not rest on beer alone, not even on lager beer. I take them as instances. If, in a treaty of this kind, one decrees as being incompatible with the Convention certain practices, then one should, when the opportunity presents itself, make domestic legislation firm. Most particularly should one do so when, as is the case of the Outer Seven, one is very emphatically the leading partner in terms of population, of trade, and, we hope, in terms of the excellence of legislation—though that has deteriorated somewhat since the Labour Government left office.
This is not a case for making fine distinctions, or trying to wriggle out of things by leaving it all to the Council. The honest thing to do is for the Government to pull themselves together and shake off with determination the strong Tory prejudice in favour of British brewers and tied-houses and follow, for once, the language of the Convention which they have negotiated and signed.

§ Mr. Erroll
The hon. and learned Gentleman the Member for Kettering (Mr. Mitchison) has moved his new Clause with that agreeable courtesy for which he is well known and has managed to explain a complicated matter against the easy domestic references which he made to lager beer. However, I remind him of the nature of Article 15, from which he quoted in part. The article does not place any obligation on member-countries to introduce legislation.
In Section 2, it provides an opportunity for anyone who thinks that his trade is being adversely affected by the 115 practices referred to in Section 1, to refer the matter to the Council. The Council can then make a decision and make provision for publication of a report on the circumstances of the matter. If the report is a serious affair, it becomes possible to take further steps under Section 3 of Article 15, where it is clearly stated that "In the light of experience gained",—that means obviously whether there are a lot of reports or not, or whether they refer to one class of activity or whether it is widespread— … the Council shall consider not later than 31st December. 1964, and may consider at any time thereafter, whether further or different provisions are necessary to deal with the effects of restrictive business practices or dominant enterprises on trade between Member States. 7.45 p.m.
The article is quite clear in its scope and purpose. It recognises that there are certain restrictive practices and sets out what procedure should be followed—namely, the complaint to the Council, then the report, then the study of the report by the member States who decide whether or not any further action is necessary.
The hon. and learned Gentleman referred to lager beer. If Danish brewers felt they were unable to sell in Britain all the lager beer they thought they could sell because of the practices which he has described—and which I am not necessarily codemning myself but accept his point for the time being—it would be for them to lodge a complaint with the Council which would then be considered. But, of course, it is quite possible that the Danish brewers will be able to sell all the lager beer in this country that they wish, either through the assistance of the various retail distribution organisations or in another way.
It seems rather pointless to imagine in advance that the Danes will be restricted from selling their lager beer here, when in fact they may be perfectly content with the share of the market they may achieve in the coming years. The procedure is fully adequate to deal with any troubles that may arise.
The hon. and learned Gentleman referred to the 1956 Act, but that is not the only power which the Government possess, particularly in regard to tied houses, because it would be possible to 116 have an investigation by the Monopolies Commission under the Monopolies and Restrictive Practices (Enquiry and Control) Act, 1948. Some of the arrangements mentioned both this evening and on Second Reading might well be eligible for reference to the Commission.
There is little further I need add, except to point out that even if we could issue regulations under paragraph 2 of his proposed new Clause the fact is that they would not be binding on the other countries. This is a Convention which will be binding on all the countries. We might merely be passing regulations which would affect this country only and would not achieve the more widespread loosening up of restrictions which might be deemed necessary in the light of experience. I hope the House will not consider it necessary to include this proposed Clause.

§ Mr. Mitchison
The hon. Gentleman has given a thoroughly unsatisfactory explanation. Clearly he has never heard of a tied house before. He does not really believe such houses exist. Such is the separation of powers in this country that tied houses must in some way or other fall within the purview of some other department. He does not need me to tell him something which my friend, Mr. Geoffrey Bing, now the Attorney-General of Ghana, expounded from time to time in this House.
The ordinary tied house arrangements oblige the tenant of a tied house to buy not only all drinks but also a lot of other things only from one firm of brewers. I recognise that there is something to be said on both sides, even for arrangements of that sort, but here we have a clear recognition that those arrangements are incompatible with the Convention in so far as they frustrate the benefits to be expected by the Danes, say, from the removal of duties.
I do not know how much the Danes or other people expect, but I think that people who are selling something usually expect to have as wide a market as possible and want to have as wide a market as possible and, unless there is some provision to the contrary, expect to have as wide a margin as possible. It is no answer in a case of this kind to say that they can sell all they want to sell, anyhow. The point is that they want to have the benefit of a wide market, but 117 in fact they will be restricted to a narrow market.
The hon. Gentleman says that this is merely a recognition that some practices are incompatible with the Convention and that the only consequence is that the Council may in certain circumstances be called to act. He is saying, "We recognise that for the purposes of the Convention this is, indeed, sin; there is no specific provision for my punishment in it and I therefore propose to go on sinning". That seems to be the attitude of the Government in this matter. What do they mean by saying that they recognise that certain practices are incompatible with the Convention when, someone inviting them to correct those practices, they reply, "No. We shall go on carrying on with them until we are stopped by the Council and the Council will have to look at the matter within three or four years"?
I cannot think that that is right. I repeat that I have never understood the heights and depths of diplomacy. I cannot say that the Government are bound to bring in legislation of this kind, but I can say that when they are offered a nice, although somewhat imperfect, bit of legislation on the subject, it is not good enough for them to refuse it purely on the ground that they intend to carry on the incompatibility until punished by some higher authority. It is no sufficient excuse morally, whatever it may be diplomatically.
I hope the hon. Gentleman and his right hon. Friends are, therefore, feeling that inner shame which characterises a Government who know that they are doing something which they should not do and who know, too, that being the Government, they are unlikely to be properly punished. I suppose that I shall have to leave them with that sense of hidden guilt and in the future to drink whatever lager beer may be forced upon them by the brewers of England. If I understand the legislation about the Monopolies Commission correctly, there has to be a monopoly to the extent of one-third of the product before it can be referred to the Monopolies Commission.
Since Mr. Charles Clore failed in his first attempt, I doubt whether there is any brewer in a position to say that he has a monopoly, unless one can regard all the brewers as sufficiently ganged up together in the matter of lager beer and 118 other respects to constitute some sort of curious collective monopoly. It may well be. I must leave the Government with their sense of guilt.