HARDWOOD AND SOFTWOOD (IMPORT) (Hansard, 6 July 1960)

§ The Parliamentary Secretary to the Board of Trade (Mr. John Rodgers)
I beg to move, That the Monopolies and Restrictive Practices (Imported Hardwood and Softwood Timber) Order, 1960, a draft of which was laid before this House on 21st June, be approved. The House will recall that the Board of Trade has power under the Monopolies and Restrictive Practices (Inquiry and Control) Act, 1948, to refer the supply of goods of any description to the Monopolies Commission for inquiry and report. In the exercise of that power, the Board, on 8th October, 1951, referred to the Commission for investigation and report the supply of imported hardwood, imported softwood and imported plywood timber.
On 23rd July, 1953, the Commission delivered its Report and in it objected to certain exclusive selling arrangements between importers and agents in these sections of the trade. By these arrangements importers in the softwood, hardwood and plywood sections undertook to buy only from agents on approved lists—there was a separate list for each section—and the agents, for their part, undertook to sell only to importers on similar lists.
The Commission found that traders excluded from the lists had little opportunity to deal in these main classes of timber and that the system tended to create an inflexible pattern of trade. It concluded that the agreements and undertakings operated against the public interest, that they should be abrogated and should not be replaced by other arrangements or undertakings having similar effects. As appears from the recitals to the proposed Order, an undertaking or assurance was given in March, 1954, that these recommendations would be carried into effect. That undertaking was given to the Ministry of Materials through the Timber Trade Federation, the principal association of agents, importers and merchants
. Shortly thereafter the Board of Trade took over responsibility for the trade from the Ministry and an assurance was given to the Board that circulation by 651 the Timber Trade Federation of up-to-date lists of agents and importers did not conflict with these undertakings. However, between 1954 and 1956 several complaints were made by timber merchants and users that they could not place orders direct with agents but only through importers. As a result, a reference to the Commission was made by the Board under Section 12 of the Act, which enables the Monopolies Commission to investigate whether or not parties have complied with its recommendation.
This second reference was made on 13th February, 1957, and on 24th July, 1958, the Commission reported that the trade had in fact carried out their undertakings to abrogate their old agreements, but that the hardwood and softwood section of the trade had acted contrary to the second part of the recommendation in making fresh arrangements having a similar effect. On that Report, laid before the House on 31st July, 1958, the trade were approached and the Timber Trade Federation assured me that there had been a genuine misunderstanding by their members as to the purport of the recommendation in 1953 and so of their own undertakings, and this assurance I entirely accept.
The Board has accepted that report and, under the authority of its powers under Section 10 (1) of the 1948 Act, as having effect by Section 30 of the Restrictive Practices Act, 1956, has drafted the present Order, for which I now seek the approval of the House. The Order makes unlawful these exclusive selling agreements or arrangements with similar effects, relating to the supply of imported hardwood or imported softwood timber. The House will appreciate that imported plywood is not covered by the Order since the Commission found that that section of the trade had abrogated and not replaced the arrangements which were found in 1953 to be against the public interest.
The Order prevents two or more firms from agreeing or arranging to operate the kind of exclusive dealing arrangements to which the Commission objected. It does not, of course, prohibit the exercise of commercial judgment in deciding with whom business is conducted. The terms of the Order are brief. Article 2 (1) is the general provision making unlawful the making or carrying out of 652 agreements or arrangements having effects similar to those condemned. Article 2 (2) deals with agreements or arrangements already made and merely prohibits their carrying out.
The proviso protects such parts of these which would continue to be lawful if contained in a separate agreement. Article 3 is the usual provision exempting agreements between interconnected bodies corporate or partnerships. Enforcement would be by civil suit at the instance of the Board of Trade or other persons aggrieved. The House will be aware that the Order requires an affirmative Resolution of each House of Parliament to come into operation on 8th August, 1960, a convenient time at the end of the present Session.
Some may ask why there has been so much delay. The issue facing the Board was a complicated one. It could be resolved either by way of an Order or by some less formal method, such as further undertakings by the Trade. There were of necessity prolonged discussions with the trade and, as a result of these, we were able to satisfy ourselves that the best way to proceed was by way of an Order. A happy result of this is that the trade recognises the necessity for this step and that we can count on its co-operation. I am now firmly convinced that the Order will not be broken. It has been introduced to make the matter clear and to avoid further misunderstanding. Should, however, further complaint arise, the matter, if reported to the Board, will be looked into as to whether in our judgment it constitutes evidence of breach. Supposing it to do so, the Board would seek compliance with the Order by way of an injunction to preclude the offending agreement or arrangement being carried into effect under Section 11 of the 1948 Act. It is, of course, open to any person to bring civil proceedings for enforcement of the Order. I would wish, however, to reiterate that there is, and can be, nothing done to make any unwilling seller dispose of his goods where he does not desire to do so.
I hope the House will agree that we have taken the proper course in the light of the reports and recommendations of the Monopolies Commission and I ask it to approve the Order.

§ Mr. Douglas Jay (Battersea, North)
I am sure the Board of Trade is quite 653 right to make this Order. Indeed, I congratulate this Government on having at last made an Order under the 1948 Monopolies Act. This is the first Order they have made in their nine years under the Act. I believe the Labour Government made one Order relating to dental goods in the short time it was possible to do so before the election in 1951. We have at last reached one Order introduced by the present Government, if I am correct.
The Parliamentary Secretary said that there might be some complaints of delay, but I did not think he gave a very effective answer to that objection. It is a little sobering to look at the time sequence which is ending tonight—or, to be strictly accurate, not until 8th August, 1960. I think the Parliamentary Secretary said the original reference of this industry to the Monopolies Commission was on 8th October, 1951. That is when it all started; a rather interesting date. The next thing that happened was that we had the first Report of the Monopolies Commission in July, 1953, nearly a year later, and in March, 1954, an undertaking was given by representatives of the industry to the Board of Trade. It subsequently transpired that this was not being carried out by certain people and a further report was made by the Commission in July, 1958. Tonight we are approving an Order to come into operation on 8th August, 1960. Even if we have reached the final right results and even though there may have been great difficulties and—as I entirely accept from the Parliamentary Secretary—prolonged discussions, this is a somewhat solemn and stately method of legislation and action. I hope it will not take quite so long on another occasion.
I was a little puzzled by what the Parliamentary Secretary called a proviso in paragraph 2. He purported to explain what this meant, but I think he more or less repeated the words in the Order, which says: Provided that the said paragraph should not make it unlawful to carry out any provisions contained in such agreements or arrangements aforesaid, being provisions the carrying out of which would, if they were contained in a separate agreement or arrangement, not be unlawful under the paragraph. Certainly at this time of night—it was the case even when I looked at it earlier—I am not entirely clear what the effect 654 of the proviso is and how far it makes things not unlawful—as it apparently does—which would otherwise have been unlawful under the Order. Perhaps the Parliamentary Secretary can help us a little further there.
We ought also to be clear about the relation of this Order to the general procedure now in force under the Restrictive Practices Act. We are now— this is the novelty of it—making an Order under the 1948 Act which originally set up the Monopolies Commission. Since then we have had the 1956 Act, which established the parallel and simultaneous, though entirely different, procedure by which certain arrangements and agreements—the same words as we have used here—of a restrictive character have to be registered with the Registrar and at the instance of the Registrar they have to go before the Restrictive Practices Court, and, as the last stage of that process, the Court can declare them to be illegal and make an order carrying out its decision
What I understand we are doing tonight is making an Order which will, in effect, say that any arrangements or agreements of this kind must not be made at all. We are going much further than if we said that we could say under the other Act that any agreements, if there are any, have to he registered and come before the Court. We are saying that no such arrangements or agreements can lawfully be made at all. But I take it that these arrangements and agreements that we are discussing are of such a character that, were it not for this Order, they would in any case have to be registered under the 1956 Act—that they are that type of arrangements and agreements.
I ask the Parliamentary Secretary this only in order that we may be clear how these two procedures relate to one another. Apart from that, as I have said, I think he is perfectly right to make the Order, and I only hope that if there is another case the process will not be quite so long drawn out as it has been this time.

§ Sir Harry Legge-Bourke (Isle of Ely)
I imagine that the whole object of the Monopolies Commission was to ensure that the interests of the consumer were properly protected. The one thing that we have not been told—and it is a matter of some importance—is what effect the 655 Order is likely to have on the price to the eventual consumer.

§ Mr. J. Rodgers
I am grateful to the right hon. Member for Battersea, North (Mr. Jay) for the welcome which he has given to the order.
To deal with his second point first, the drill now under the Order is that we should apply to the Court of Chancery for an injunction to prevent an arrangement or agreement which the Order specifies to be unlawful from being carried out. We should support this by a body of evidence which tended to show that such an arrangement or agreement had been arrived at. If the injunction were obtained and this practice still continued, we should apply for an order for committal for contempt of court, the evidence being similar to that in the previous application to the Court of Chancery.
On the first point about the proviso, as I called it, the exact words were: The proviso protects such parts of these which would continue to be lawful if contained in a separate agreement. That was the object. That refers to Article 2 (2) which dealt with agreements or arrangements which are already made and merely prevents their being carried out.
On the point made by my hon. Friend the Member for the Isle of Ely (Sir H. Legge-Bourke), I am afraid that I am not in a position to state what effect the Order might have on the price structure to the consumers, but I do not anticipate 656 that there will be any change here at all. I do not think that the price will go either up or down as a result of the order.

§ Mr. Jay
In order to help the hon. Member, would it not be reasonable to assume that the Order could not have the effect of making the price higher than it would otherwise have been? It is an Order which will prevent restrictions on competition. Can we not at least assume that the price cannot be higher as a result of the Order, even if not lower?

§ Sir Hendrie Oakshott (Bebington)
Before my hon. Friend replies, might I say, having had many years' experience in it, that the timber trade is about the most competitive trade that one could find in this country? Therefore, I cannot imagine that any arrangements like an Order of this sort would have the slightest effect on the price either way. The trade will still remain competitive whatever is done.

§ Mr. Rodgers
I agree with the right hon. Gentleman that certainly the Order will ensure that the price will not rise. One hopes that it will go down. I agree with my hon. Friend the Member for Bebington (Sir H. Oakshott) that there is great competition in the industry, and therefore the Order will probably not have much effect on prices.