HC Deb 30 May 1962 vol 660 cc1547-56

Motion made, and Question proposed,That this House do now adjourn.—[Mr. G. Campbell.]

12.46 a.m.

Mr. Leslie Spriggs (St. Helens)

This Adjournment debate is necessary because the Restrictive Trade Practices Act, 1956, has been contravened. I shall show the House why. Section 24 of the Act makes it illegal to make agreements for collective enforcement of conditions as to resale prices. I shall quote from two letters sent to Mr. Lennon dated 20th and 24th October, 1960, from the Brands (Wines and Spirits) Protection Association. This Association marks its letters "Private and Confidential", but what it has to conceal is a matter for us to consider.

My constituent was challenging the right of the Brands (Wines and Spirits) Protection Association to decide resale prices on behalf of its members. The letter of 20th October, 1960, says: I note your remarks and I feel that it would be desirable to explain to you the exact position of this association in regard to the enforcement of resale prices. This association, as stated in your letter, has never assumed the responsibility of fixing prices. Indeed, since the passing of the Restrictive Trade Practices Act, 1956, this would be an offence. All the association does is to act on behalf of individual producers and distributors who prescribe resale prices for their products. The various members of this association then circulate these prices for the guidance of those traders handling these products. In the circumstances, I think you will agree that no useful purpose would be served in getting the individual firms to communicate with you direct on the matter. This association is authorised to act on their behalf and I would respectfully suggest that the matter could be well covered by an assurance from you that you will in future conform to the prices laid down by our individual members, such prices being set out in our list of protected brands. The letter of the 24th October acknowledged my constituent's letter of 21st October and said it had been noted …that you are not prepared to give us a general undertaking to conform to the retail prices laid down by the members of this association in respect to their own brands. It went on: I made this suggestion merely to obviate unnecessary correspondence in this connection. However, my committee are meeting shortly and I will put the matter before them for their attention and no doubt I shall be instructed to communicate with you further on the subject. Hon. Members, and particularly the Parliamentary Secretary, should note that the third paragraph of the letter of 20th October means, in effect "You either do as we say or you have had it. You will not get your supplies."

Mr. Deputy-Speaker (Sir Robert Grimston)

Order. I hope that the hon. Gentleman is going to show how there is Ministerial responsibility in the matter he is raising.

Mr. Spriggs

It is not difficult for me to do so, Mr. Deputy-Speaker. I have here the Restrictive Trade Practices Act, 1956. Sections 24 (1, a), (4) and (7) makes it illegal for any organisation to join in agreements for the collective enforcement of conditions as to re-sale prices. I think that you will follow me more closely when I say that not only has the Distillers Company, Ltd., through the Brandy (Wines and Spirits) Protection Association, taken action against my constituent, who is a well known and successful businessman in St. Helens. I also have a letter dated 19th March. This is where the law has been broken. It is to Mr. Lennon—

Mr. Deputy-Speaker

I am sorry, but the fact that an offence may have been committed is not necessarily a matter for the Minister. It may be a matter for the courts, but it is not necessarily for him. I hope the hon. Member will show how the Minister is responsible.

Mr. Spriggs

I am asking the Board of Trade to take the Distillers Company, Ltd. to the Restrictive Trade Practices Court, and I shall also ask it to submit this case to the Monopolies Commission as well because of the evidence I have in hand, which goes to show that the Company produces over 50 per cent. of gin and spirits produced and distributed in this country.

This firm is guilty of contravening the 1956 Act, because W. and A. Gilbey, while not a part of the Distillers Company, Ltd., has decided that it will not execute an order for 50 cases of gin because it belongs to an association which protects retail prices of wines and spirits. It has done this even though my constituent has not sold its brands below the listed prices. In effect, the firm had been under pressure to refuse to execute an order and to play its part in enforcing resale price maintenance. This is a clear case upon which the Board of Trade could take action. The firm took this action not to enforce its own listed prices, but to enforce resale price maintenance which did not directly affect it.

Another example concerns Seager Evans from whom my constituent was buying Long John whisky and Seager's gin and selling them at reduced prices. The firm had never protested about the reduced prices, and, in fact, had aided and abetted them. It wrote to my constituent that previously it had had no objection to the reduced prices, but was now sorry to have to tell him that it was being told to "toe the line." If it did not, it said, it would lose much larger orders from the brewers.

I submit that these firms, particularly in one case, are infringing the provisions of the 1956 Act. Hon. Members expect the laws which we make to be observed and respected, but here we have a clear case of breaking the law. These messages were given to Mr. Lennon not by the Brands (Wines and Spirits) Protection Association but by Gilbey's and Seager's own representatives.

I knew that whether the case could be presented to the Monopolies Commission might be dependent on the quantities produced by the Distillers Company. I quote from the Stock Exchange Gazetteof 2nd March, 1962, and both the firms mentioned are subsidiaries of the Distillers Company Limited: Recent estimates suggested that Gordon's still accounts for half the gin market with Booth's a close second. There is a report about Scotch whisky saying: At least half the Scotch whisky produced, and a much larger proportion of gin, is made by Distillers—a giant with extensive and important interests outside spirits. In view of the action towards my constituent and the pressure which has been brought to bear on other firms outside this company, I submit that this is a case for careful investigation by the Monopolies Commission.

My investigations reveal that 94 firms are controlled by the D.C.L., and that quite a large percentage of these firms are distillers. It has its fingers in many trades. The D.C.L. has asked my constituent to sign a certain document. If he signs it, it will mean that he will promise to sell the goods of the D.C.L. at the listed price, and in addition he will be tied to certain firms which are listed in the Schedule to the proposed agreement. These are as follows. White Horse Distillers Limited—White Horse; John Haig and Company Limited—Gold Label, Dimple Scots; James Buchanan and Company Limited—Black & White, Buchanan's De Luxe; Wm. Sanderson and Son Limited—Vat 69; The Distillers Agency Limited—King George IV, Highland Nectar; John Dewar and Sons Limited—White Label, Ancestor; John Walker and Sons Limited—Red Label, Black Label; A. and A. Crawford Limited—Three Star Special Reserve, Five Star and many others.

That gives the House some idea of what my client is up against. There is no doubt that pressure is being brought to bear against him by the D.C.L., and I submit that under Section 24 of the Act to which I have referred there is a suitable case for investigation by the Monopolies Commission. I believe that if the Crown took proceedings against those who have conspired together to enforce these agreements not only my constituent but the whole country would be grateful. Retail price maintenance is holding back the most dynamic elements in the retail trade, and these illegal acts are causing great concern throughout the land.

Action must be taken before irreparable damage is done, and I shall eagerly await the Parliamentary Secretary's reply. The information is available for the taking, and if the will is there to take action, I assure him of success and of massive support from the nation.

1.4 a.m.

The Parliamentary Secretary to the Board of Trade (Mr. Niall Macpherson)

We are under two handicaps tonight, and I am under a third, namely, shortness of time. First, the lateness of the hour. Secondly, that we are dealing with matters which are primarily legal, and neither of us is a lawyer.

The hon. Member for St. Helens (Mr. Spriggs) was good enough to let me have copies of correspondence, and he handed me copies of the letters dated 20th and 24th October from Brands (Wines & Spirits) Protection Association tonight. Perhaps I might go over the facts as they are brought out in these letters, and as the hon. Gentleman has been good enough to bring them to my notice.

This firm of Lennons Supermarkets Ltd. of St. Helens operates a supermarket. They are reasonably anxious to pass on to the consumers economies resulting from the efficiency with which they run their business. They are able to do so by reducing prices of goods which are not bought with a condition attached that they are to be resold to the consumer at a price fixed by the manufacturers. Their complaint, I understand, arises from their finding that they cannot do so on some goods which are sold only subject to such a condition.

The complaint is twofold. First, they say that after the Chancellor had added the 10 per cent. surcharge to excise duties last July they continued to sell at the same prices. It appears that firms in the Distillers Company group declined to do business with Mr. Lennon again unless he sold at the prices they fixed for their products. It seems that he raised his prices as required, but proceeded to give away sample drinks with each bottle sold. The Distillers Company took the view that in doing so he was in breach of the conditions of sale to him and declined to supply him.

Whether he was in breach of the condition or not is a matter of law which would have to be settled by the courts. What is certain is that as the law now stands, and has stood for a very long time, a supplier is perfectly entitled to prescribe the prices at which a purchaser shall resell the goods he supplies to him and to sue for breach of contract where the purchaser fails to observe the prices fixed. Further, under Section 25 of the Restrictive Trade Practices Act, 1956, a supplier may enforce the prices he fixes against third parties who later acquire the goods, that is against those who were not parties to the original transaction of sale, provided that they have notice, that is that they are made aware that the original supplier had made observance of the fixed ultimate selling price a condition of sale.

There is no doubt, therefore, that the Distillers Company would be entirely within its rights in declining to supply to a retailer who refused to give an assurance that he would observe this particular condition on which the Distillers Company sells. I cannot express any opinion on any particular case. As I say, it is a matter for the courts to decide the rights of the parties in the particular circumstances if either of them took the matter to the courts. The hon. Member suggested that the fact that the Distillers Company controls a substantial part of the trade in spirits makes a difference in that it enables the company to exercise a greater pressure on the retailer since he cannot readily turn to other suppliers who do not insist on the same condition. He asked therefore that my right hon. Friend should refer the supply of spirits to the Monopolies Commission for investigation.

That hardly seems an appropriate reason for a reference to the Commission. All the group seeks to do is to exercise its legal right to maintain resale prices for its goods. The hon. Member may feel that it should not have such a right. As he knows, however, it would require legislation to deprive the company of it and I apprehend that it would not be in order to debate the merits of such legislation now. He also knows that my right hon. Friend is at present considering the whole question of resale price maintenance. Quite plainly it would not be sensible to refer the supply of spirits to the Monopolies Commission on these grounds.

The hon. Member also complained that the brewers used their position of strength to force a supplier, Messrs. Seager Evans, to stop Mr. Lennon's supplies. This surely was not a question of the brewers using a position of strength, but simply of availing themselves of the rights the law confers on them. If what was done in this case was simply that the brewers fixed their resale selling price and that the wholesaler stopped Mr. Lennon's supplies because he did not observe, or said he would not observe, the resale price condition, both the brewers and the wholesalers are perfectly entitled as the law stands to protect their interests in that way. The law does not compel anyone to do business with a person with whom he does not choose to do business. Under Section 25 of the Restrictive Trade Practices Act, a supplier can enforce his rights against a third party, but, of course, he can enforce them in particular against the party with whom he is directly dealing under the ordinary laws of contract.

I turn to the second part of the complaint, and that is that Messrs. Gilbey's have refused to supply wines and spirits to Mr. Lennon unless he agrees to observe their resale price conditions. He has declined to give an undertaking, so Gilbey's have refused to supply. If I may say so, it is very much to Mr. Lennon's credit that he has refused to give an undertaking which he did not mean to observe.

The hon. Member suggests that Gilbey's refusal results from an agreement or arrangement between suppliers of wines and spirits to enforce resale prices collectively by withholding supplies. He tells us that Brands (Wines & Spirits) Protection Association notified Lennon's of the prices fixed by the various suppliers of a number of brands, and that it was the Association that asked for the assurance that Lennon's would not sell below the prices fixed. He says that it was in consequence of the refusal he gave to the Association that Gilbey's withheld supplies.

Under Section 24 of the 1956 Act, agreements or arrangements for the collective enforcement of resale prices are prohibited. But the mere fact that several suppliers use the same agency to enforce prices does not necessarily imply that they have agreed together to enforce prices collectively. An agreement among suppliers that each will individually seek to maintain his own resale prices is not prohibited by the Act although, under the Act, such an agreement would be registrable with the Registrar as a restrictive trade agreement. Nor are individual members of a trade association prohibited from making use individually of that association to help them to maintain their resale prices. They can, for example, make use of a common information and advice service provided for members by the association, so that breaches of individual arrangements may be pursued by the individual member concerned.

That, on the face of it, is what appears to have been done in this case; that is to say, a number of members—or, perhaps, all the members, for all I know—of Brands (Wines & Spirits) Protection Association each arranged with the Association to pass their prices to would-be customers, and to ask on their behalf for an assurance that those prices would be observed. As far as I can see, that, as far as it goes, is perfectly legal. It is, of course, arguable that such arrangements, economical as they may be, could lead to abuses. But, again, to alter them would require an alteration in the law, and that we cannot discuss tonight.

I invited the hon. Gentleman to produce evidence that there was an agreement in existence for the collective enforcement of resale price conditions in this case. If he does so, I shall most willingly consider it. If the evidence were sufficient, the Board of Trade could seek an injunction under Section 24 of the 1956 Act. If, on the other hand, there were evidence that the members of the Brands Protection Association had agreed together to enforce their resale prices individually, I would pass it on to the Registrar of Restrictive Trade Agreements.

This is the evidence we would require, but I am advised that the evidence submitted so far by the hon. Gentleman would not enable us to do either of those things. I shall certainly consider the further letter he has made available to me and any further evidence he is able to give us. But we can only act within the law as it now stands and, as I have said, we are also considering the wider aspect of resale maintenance as a whole. My right hon. Friend hopes to make an announcement before long to the House.

I cannot now go further than that. I hope that following what I have said, when the hon. Gentleman has had time to study it in the OFFICIAL REPORT, he will be able to take further advice and see exactly how the law stands on this matter and, of course, I would be glad to receive any further evidence from him.

Mr. Spriggs

I had hoped that the hon. Member would have understood from what I said about Messrs. W. & A. Gilbey that that firm took unilateral action in this matter. That firm's lists were not affected. Its goods were being sold at their listed prices. Surely that firm's action was taken on behalf of the other people who were complaining about my constituent's action in selling below the listed prices?

Mr. Macpherson

If I understood the position correctly, as Messrs. W. & A. Gilbey is also a member of the Brands Protection Association, it would, of course, be given the information that this firm was not prepared to sell at the listed prices. No doubt it invited this firm to do so and then wished to find out whether or not it would before withholding supplies. Certainly we shall consider the further information the hon. Gentleman has given us, but—

The Question having been proposed after Ten o'clock on Wednesday evening and the debate having continued for half an hour, Mr. DEPUTY-SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at sixteen minutes past One o'clock.