HC Deb 08 April 1964 vol 692 cc1142-69

Again considered in Committee.

Question again proposed.

Mr. Irvine

What we say at this point is that the event of simultaneous action being taken by suppliers is not sufficiently or adequately safeguarded by the provisions in the 1956 Act relating to collective toycotts and collective agreements among suppliers. We regard ourselves as reasonably reinforced in that view by the reflection that in its experience of the operation of the 1956 Act the Restrictive Practices Court has found the greatest difficulty in the treatment of information agreements. There was a loophole in the 1956 Act in that respect which gave rise to the need to make further inquiries and we understand that the desire for these further inquiries was initiated by the Registrar and the need for some treatment of the matter accepted by the Government.

Under all the heads of collective boycott, information agreements and simultaneous action, there are situations with which it is important to deal expressly in the Bill. My hon. Friend's second Amendment sought to deal with this matter and we are asking for an undertaking by the Government that the matter will be further considered, because it is important and serious.

On my hon. Friend's first Amendment, the point with which the Committee is concerned is that under the Bill it is to be not unlawful to withhold supplies of goods to a dealer engaged in loss leadering in certain circumstances. The question arises how closely should the practice of loss leadering be related for the purposes of the Bill to the character of the goods being withheld. That seems to be a very important question and it is dealt with seriously and constructively in my hon. Friend's first Amendment.

If what the Bill was doing was to make the practice of loss leadering unlawful, as the hon. Member for Shipley (Mr. Hirst) sought to do in an Amendment he moved earlier—

Mr. Hirst

I did not move it. I said that it was on the Notice Paper in advance of the Government's comparable Amendment, but that I accepted the Government's Amendment subject to certain conditions.

Mr. Irvine

I am obliged to the hon. Gentleman. I should have said that he had tabled that Amendment.

My point is that if the Bill were making the practice of loss leadering unlawful, in that context any exercise of the practice should make the with-holding of goods lawful. If the purpose of the Government is to make the whole practice contrary to the public interest and unlawful, then any type of with-holding of goods and supplies from anybody carrying on that practice should be justified.

But that is not what is proposed. That is not the basis of the Bill. That being so, I should have thought that the practice of loss leadering for the purpose of the Bill should be very closely related to the character of the goods being with-held. That seems to be the logic and good sense of the position.

On that point of criticism, the first Amendment to the Amendment not only has the purpose that I have sought to indicate, but has that effect, because if one leaves out the words "or a similar description" and one is left with the words "of the same description", that markedly and clearly narrows the scope of the loss leadering which may have the effect envisaged by the Bill.

With those observations to put before the Committee, I would strongly recommend support for the first of my hon. Friend's Amendments, and I would also hope that we would find general agreement, at any rate, with the purpose that he entertained when he put down his second Amendment.

Mr. Paget

Perhaps I might ask my hon. Friend one question: is the position as the Bill stands without the Amendment that if a trade journal of the tobacco manufacturers says that Messrs. Jones and Company have used cigarettes as a loss leader, then every cigarette manufacturer reading that in the journal has reasonable grounds for believing that cigarettes are being used as a loss leader, and a collective boycott by consent, or a simultaneous boycott, then results, and as the Clause is drafted at the moment that is proper?

Mr. Irvine

As far as I understand the matter, my hon. and learned Friend has expresed it correctly.

Mr. Winterbottom

I think that I ought to reply to the right hon. Gentleman's challenge about loss leaders. I have been against them all my life, and have suffered from them. The original Clause and the Amendment will not only not affect loss leaders, but will to a large extent promote them.

The question of loss leaders is not always a problem of retailing. It is sometimes a problem of wholesaling as well. Many of the loss leaders are promoted by the suppliers of goods themselves. Because of the stocks that they hold, and the need to turn over those stocks, many of the so-called loss leaders are thrown into the retail shops of the country. By the Amendment we are putting the responsibility for deciding what are loss leaders on to the shoulders of some people who want them. That is the paradox of the right hon. Gentleman's Amendment.

I want to tell the right hon. Gentleman that, so that there will be no doubt about it in the future. Wholesalers will still use this method of getting rid of bulk consumption goods. They will use retailing establishments for loss leadering. But they are the very persons whom the right hon. Gentleman is making responsible for exercising judgment in this matter.

Twelve months ago, in the City of Sheffield, Nescafé was being sold in Woolworth's establishments at less than the wholesale price, including cash discount. The result was that Woolworth's was capturing a tremendous amount of trade from many other retail establishments. I wrote to Nescafé asking for an explanation, and received a reply to the effect that the firm could not interfere; it got its price, and so it was satisfied.

If we consider the question from that point of view we see that there is a temptation to indulge in loss leadering not on the part of retailers but on the part of wholesalers, upon whose shoulders we are placing responsibility for judgment. This will create a new situation in the distributive trade, in which the law will be flouted by the very people who are to be asked to be the first judges of the undesirable practice of loss leadering.

That point must be made before a decision is taken on the matter. The right hon. Gentleman must be told that he is making a tremendous mistake.

Mr. M. Foot

The right hon. Gentleman put a perfectly direct question to me, and he is entitled to have a reply. He asked whether I wanted to see an effective deterrent against loss leadering. I am in favour of such an effective deterrent, if it can be found, but I do not believe that what the right hon. Gentleman has put forward is an effective deterrent. I very much doubt whether he thinks that it is, either, because in the Second Reading debate he told us that every country that has attempted to deal with loss leadering has found it immensely difficult.

The right hon. Gentleman did not say that it is impossible to find the solution, but he said that it is immensely difficult. He is now trying to pretend that he has solved this immensely difficult problem, and has produced an effective deterrent in his Amendment, which we know is an entirely subjective one. When he is confronted with his own words I doubt whether he will claim that this is an effective deterrent. When he examines it he will discover that he has produced an effective deterrent only in so far as he is inflicting an injustice upon the retailer.

That is the exact point which was put by my hon. and learned Friend the Member for Northampton (Mr. Paget) and my hon. Friend the Member for Oldham, West (Mr. Hale). If the right hon. Gentleman can produce an effective deterrent against loss leadering which is clear and understandable, and which gives proper instructions to the courts as to how they should interpret it, the Committee will vote for it. But the right hon. Gentleman has not done that. Instead, he has produced a shoddy Amendment, which cannot be explained—a piece of fudge which will lead to misinterpretations and injustices in the Court, and which may do grave damage to the very purposes that he claims he is trying to carry out in the Bill.

10.15 p.m

That is why I was entitled, at the beginning of my remarks, to say that the question that we have been debating all day is whether the right hon. Gentleman is introducing an Amendment which wrecks his Bill. It is no good saying that it does not arise, because the more effective we make the Bill against every conceivable form of loss-leadering, he more we would be interfering with the purpose of abolishing resale price maintenance. Nobody can deny that proposition. It is, therefore, a delicate matter to deal with. The right hon. Gentleman asked me a question as if it solved the whole issue. He asked whether I agreed that we needed an effective deterrent against loss-leadering, as if that what he has been presenting to the Committee throughout today, when he knows probably better than anybody else that what he proposed is nothing of the kind.

Mr. Heath

Had the hon. Member for Ebbw vale (Mr. M. Foot) heard my remarks on starting this series of Amendments, I quoted from my Second Reading speech exactly the words which he has read, because I emphasised again the difficulty of dealing with this problem. All I would say to the hon. Member is that the Amendment which his hon. Friend the Member for Oldham, West (Mr. Hale) has moved would only weaken such effectiveness as we have been able to create. It does not prevent injustice to the retailer, nor is it compatible with the whole purpose of removing r.p.m. except where there is exemption.

The purpose is to allow the consumer to get the benefit, through reduced prices, of improved retailing. But it was not the intention that this practice, if there should be any intention to introduce it, should be pursued. I made clear at the time that although the risks were small and past experience shows that there is little of it, one should do what one can to prevent it. That is what we have done in our Amendments. What the hon. Member and his hon. Friends propose would only weaken what we have been able to do.

Question put, That "or a similar" stand part of the proposed Amendment:—

The Committee divided: Ayes 249, Noes 177.

Division No. 62.] AYES [10.17 p.m.
Agnew, Sir Peter Goodhew, Victor Maude, Angus (Stratford-on-Avon)
Allason, James Gough, Frederick Maudling, Rt. Hon. Reginald
Amery, Rt. Hon. Julian Gower, Raymond Mawby, Ray
Arbuthnot, John Grant-Ferris, R. Maxwell-Hyslop, R. J.
Atkins, Humphrey Green, Alan Maydon, Lt.-Cmdr. S. L. C.
Awdry, Daniel (Chippenham) Gresham Cooke, R. Mills, Stratton
Barber, Anthony Grimond, Rt. Hon. J. Miscampbell, Norman
Barlow, Sir John Grosvenor, Lord Robert Montgomery, Fergus
Barter, John Gurden, Harold More, Jasper (Ludlow)
Batsford, Brian Hamilton, Michael (Wellingborough) Morgan, William
Bevins, Rt. Hon. Reginald Harrison, Col. Sir Harwood (Eye) Mott-Radclyffe, Sir Charles
Biffen, John Harvey, Sir Arthur Vere (Macclesf'd) Neave, Airey
Bingham, R. M. Harvey, John (Walthamstow, E.) Nicholls, Sir Harmar
Birch, Rt. Hon. Nigel Harvie Anderson, Miss Noble, Rt. Hon. Michael
Bishop, F. P. Hastings, Stephen Nugent, Rt. Hon. Sir Richard
Black, Sir Cyril Hay, John Orr-Ewing, Sir Ian (Hendon, North)
Bourne-Arton, A. Heald, Rt. Hon. Sir Lionel Page, John (Harrow, West)
Box, Donald Heath, Rt. Hon. Edward Page, Graham (Crosby)
Boyd-Carpenter, Rt. Hon. John Hendry, Forbes Pannell, Norman (Kirkdale)
Boyle, Rt. Hon. Sir Edward Hiley, Joseph Pearson, Frank (Clitheroe)
Braine, Bernard Hill, Mrs. Eveline (Wythenshawe) Peel, John
Brewis, John Hill, J. E. B. (S. Norfolk) Percival, Ian
Bromley-Davenport, Lt.-Col. Sir Walter Hirst, Geoffrey Peyton, John
Brown, Alan (Tottenham) Hobson, Rt. Hon. Sir John Pickthorn, Sir Kenneth
Bryan, Paul Hocking, Philip N. Pike, Miss Mervyn
Buck, Antony Hogg, Rt. Hon. Quintin Pitman, Sir James
Bullard, Denys Holland, Philip Pitt, Dame Edith
Bullus, Wing Commander Eric Hollingworth, John Pounder, Rafton
Campbell, Gordon Holt, Arthur Powell, Rt. Hon. J. Enoch
Carr, Robert (Mitcham) Hopkins, Alan Price, David (Eastleigh)
Cary, Sir Robert Hornby, R. P. Prior, J. M. L.
Chataway, Christopher Howard, Hon. G. R. (St. Ives) Prior-Palmer, Brig. Sir Otho
Clark, Henry (Antrim, N.) Hughes Hallett, Vice-Admiral John Proudfoot, Wilfred
Clark, William (Nottingham, S.) Hughes-Young, Michael Quennell, Miss J. M.
Cleaver, Leonard Hulbert, Sir Norman Ramsden, Rt. Hon. James
Cole, Norman Hurd, Sir Anthony Rawlinson, Rt. Hon. Sir Peter
Cooke, Robert Hutchison, Michael Clark Redmayne, Rt. Hon. Martin
Cooper-Key, Sir Neill Iremonger, T. L. Rees, Hugh (Swansea, W.)
Corfield, F. V. Irvine, Bryant Godman (Rye) Renton, Rt. Hon. David
Costain, A. P. James, David Ridley, Hon. Nicholas
Coulson, Michael Johnson, Eric (Blackley) Ridsdale, Julian
Courtney, Cdr. Anthony Johnson Smith, Geoffrey Rippon, Rt. Hon. Geoffrey
Critchley, Julian Jones, Arthur (Northants, S.) Roots, William
Crowder, F. P. Joseph, Rt. Hon. Sir Keith Ropner, Col. Sir Leonard
Curran, Charles Kaberry, Sir Donald Royle, Anthony (Richmond, Surrey)
Currie, G. B. H. Kerans, Cdr. J. S. Russell, Sir Ronald
Dalkeith, Earl of Kerr, Sir Hamilton Scott-Hopkins, James
Dance, James Kershaw, Anthony Seymour, Leslie
d'Avigdor-Goldsmid, Sir Henry Kirk, Peter Sharples, Richard
Deedes, Rt. Hon. W. F. Kitson, Timothy Shaw, M.
Digby, Simon Wingfield Lancaster, Col. C. G. Shepherd, William
Donaldson, Cmdr. C. E. M. Leather, Sir Edwin Skeet, T. H. H.
Douglas-Home, Rt. Hon. Sir Alec Legge-Bourke, Sir Harry Smith, Dudley (Br'ntf'd & Chiswick)
Drayson, G. B. Lindsay, Sir Martin Smyth, Rt. Hon. Brig. Sir John
du Cann, Edward Linstead, Sir Hugh Spearman, Sir Alexander
Duncan, Sir James Litchfield, Capt. John Stainton, Keith
Eden, Sir John Lloyd, Rt. Hon. Selwyn (Wirral) Stanley, Hon. Richard
Elliott, R. W. (Newc'tle-upon-Tyne, N.) Longbottom, Charles Stevens, Geoffrey
Emery, Peter Longden, Gilbert Stodart, J. A.
Erroll, Rt. Hon. F. J. Loveys, Walter H. Stoddart-Scott, Col. Sir Malcolm
Farr, John Lubbock, Eric Taylor, Sir Charles (Eastbourne)
Fell, Anthony Lucas-Tooth, Sir Hugh Taylor, Frank (M'ch'st', Moss Side)
Finlay, Graeme McAdden, Sir Stephen Thatcher, Mrs. Margaret
Fisher, Nigel MacArthur, Ian Thomas, Sir Leslie (Canterbury)
Fletcher-Cooke, Charles McLaren, Martin Thomas, Peter (Conway)
Fraser, Rt. Hn. Hugh (Stafford & Stone) Maclean, Sir Fitzroy (Bute & N. Ayrs) Thompson, Sir Richard (Croydon, S.)
Fraser, Ian (Plymouth, Sutton) McLean, Neil (Inverness) Thorneycroft, Rt. Hon. Peter
Freeth, Denzil McMaster, Stanley R. Thornton-Kemsley, Sir Colin
Galbraith, Hon. T. G. D. Macmillan, Maurice (Halifax) Tiley, Arthur (Bradford, W.)
Gammans, Lady Maddan, Martin Tilney, John (Wavertree)
Gardner, Edward Maginnis, John E. Turner, Colin
Gibson-Watt, David Maitland, Sir John Turton, Rt. Hon. R. H.
Gilmour, Ian (Norfolk, central) Markham, Major Sir Frank Tweedsmuir, Lady
Gilmour, Sir John (East Fife) Marples, Rt. Hon. Ernest van Straubenzee, W. R.
Glover, Sir Douglas Marten, Neil Vane, W. M. F.
Glyn, Dr. Alan (Clapham) Mathew, Robert (Honiton) Vickers, Miss Joan
Godber, Rt. Hon. J. B. Matthews, Gordon (Meriden) Wade, Donald
Goodhart, Philip
Walker-Smith, Rt. Hon. Sir Derek Williams, Paul (Sunderland, S.) Woodnutt, Mark
Ward, Dame Irene Wills, Sir Gerald (Bridgwater) Worsley, Marcus
Watkinson, Rt. Hon. Harold Wilson, Geoffrey (Truro) Yates, William (The Wrekin)
Webster, David Wise, A. R.
Wells, John (Maidstone) Wolrige-Gordon, Patrick TELLERS FOR THE AYES:
Whitelaw, William Wood, Rt. Hon. Richard Mr. Chichester-Clark and
Williams, Dudley (Exeter) Woodhouse, C. M. Mr. Pym.
Abse, Leo Ginsburg, David O'Malley, B. K.
Ainsley, William Gordon Walker, Rt. Hon. P. C. Oram, A. E.
Allaun, Frank (Salford, E.) Gourley, Harry Oswald, Thomas
Awbery, Stan (Bristol, Central) Griffiths, David (Rother Valley) Padley, W. E.
Bacon, Miss Alice Griffiths, Rt. Hon. James (Llanelly) Paget, R. T.
Barnett, Guy Griffiths, W. (Exchange) Parker, John
Baxter, William (Stirlingshire, W.) Hale, Leslie (Oldham, W.) Pavitt, Laurence
Beaney, Alan Hamilton William (West Fife) Pearson, Arthur (Pontypridd)
Ballenger, Rt. Hon. F. J. Hannan, William Peart, Frederick
Bence, Cyril Harper, Joseph Pentland, Norman
Bann, Anthony Wedgwood Hart, Mrs. Judith Prentice, R. E.
Bennett, J. (Glasgow, Bridgeton) Hayman, F. H. Price, J. T. (Westhoughton)
Benson, Sir George Henderson, Rt. Hn. Arthur (Rwly Regis) Probert, Arthur
Blackburn, F. Herbison, Miss Margaret Randall, Harry
Blyton, William Hill, J. (Midlothian) Redhead, E. C.
Boardman, H. Holman, Percy Rees, Merlyn (Leeds, S.)
Bottomley, Rt. Hon. A. G. Houghton, Douglas Rhodes, H.
Bowden, Rt. Hn. H. W. (Leics, S.W.) Howell, Denis (Small Heath) Roberts, Albert (Normanton)
Bowen, Roderic (Cardigan) Howie, W. Robertson, John (Paisley)
Bowles, Frank Hoy, James H. Robinson, Kenneth (St. Pancras, N.)
Braddock, Mrs. E. M. Hughes, Cledwyn (Anglesey) Rodgers, W. T. (Stockton)
Broughton, Dr. A. D. D. Hughes, Emrys (S. Ayrshire) Rogers, G. H. R. (Kensington, N.)
Butler, Herbert (Hackney, C.) Hughes, Hector (Aberdeen, N.) Ross, William
Callaghan, James Irvine, A. J. (Edge Hill) Silverman, Julius (Aston)
Carmichael, Neil Irving, Sydney (Dartford) Silverman, Sydney (Nelson)
Castle, Mrs. Barbara Janner, Sir Barnett Skeffington, Arthur
Chapman, Donald Jay, Rt. Hon. Douglas Slater, Mrs. Harriet (Stoke, N.)
Cliffe, Michael Jenkins, Roy (Stechford) Slater, Joseph (Sedgefield)
Collick, Percy Johnson, Carol (Lewisham, S.) Small, William
Craddock, George (Bradford, S.) Jones, Don (Burnley) Smith, Ellis (Stoke, S.)
Crosland, Anthony Jones, Elwyn (West Ham, S.) Snow, Julian
Grossman, R. H. S. Jones, T. W. (Merioneth) Sorensen, R. W.
Cullen, Mrs. Alice Kelley, Richard Spriggs, Leslie
Dalyell, Tam Kenyon, Clifford Stonehouse, John
Darling, George Lawson, George Stones, William
Davies, G. Elfed (Rhondda, E.) Lee, Frederick (Newton) Strauss, Rt. Hn. G. R. (Vauxhall)
Davies, Ifor (Gower) Lever, L. M. (Ardwick) Stross, Sir Barnett (Stoke-On-Trent, C.)
Davies, S. O. (Merthyr) Lewis, Arthur (West Ham, N.) Swain, Thomas
Delargy, Hugh Loughlin, Charles Swingler, Stephen
Dempsey, James Mabon, Dr, J. Dickson Symonds, J. B.
Diamond, James McBride N. Taylor, Bernard (Mansfield)
Dodds, Norman McCann, J. Thomas, Iorwerth (Rhondda, W.)
Donnelly, Desmond MacColl, James Thompson, Dr. Alan (Dunfermline)
Driberg, Tom MacDermot, Niall Thornton, Ernest
Duffy, A. E. P. (Colne Valley) McInnes, James Wainwright, Edwin
Edelman, Maurice MacPherson, Malcolm Warbey, William
Edwards, Rt. Hon. Ness (Caerphilly) Mallalieu, E. L. (Brigg) Watkins, Tudor
Edwards, Robert (Bilston) Manuel, Archie Wells, William (Walsall, N.)
Edwards, Robert (Stepney) Mapp, Charles White, Mrs. Eirene
Evans, Albert Marsh, Richard Whitlock, William
Ferny hough, E. Mason, Roy Wilkins, W. A.
Finch, Harold Mendelson, J. J. Willey, Frederick
Fitch, Alan Millan, Bruce Wilson, Rt. Hon. Harold (Huyton)
Fletcher, Eric Milne, Edward Winterbottom, R. E.
Foot, Dingle (Ipswich) Mitchison, G. R. Woof, Robert
Foot, Michael (Ebbw Vale) Monslow, Walter Wyatt, Woodrow
Forman, J. C. Morris, Charles (Openshaw) Yates, Victor (Ladywood)
Fraser, Thomas (Hamliton) Mulley, Frederick
Galpern, Sir Myer Neal, Harold TELLERS FOR THE NOES:
George, Lady Megan Lloyd (Crmrthn) Oliver, G. H. Mr. Charles A. Howell and
Mr. Grey.
The Chairman

The next Amendment is that in the name of the hon. Member for Shipley (Mr. Hirst), to leave out lines 14 to 16 of the right hon. Gentleman's proposed Amendment. With this it will be possible to discuss the two Amendments—that in the name of the hon. Baronet the Member for Bournemouth, West (Sir J. Eden), in line 15, to leave out from "or" to the end of line 16 and to add in the case of goods made to the order of a supplier of that supplier"; and that in the name of the hon. Member for Shipley, in line 15, to leave out from "or" to the end of line 16 and to add in the case of goods made to the design of a supplier or to the order and bearing the trade mark of a supplier of that supplier". If it is so desired, there can be a second Division on the second Amendment of the hon. Member for Shipley.

Mr. Hirst

I beg to move, as an Amendment to the proposed Amendment, to leave out lines 14 to 16.

This Amendment was put down a long time ago in order to provide, as it were, a vacuum for finding the right words, which my hon. Friends and I felt were essential to make the Government's Amendment fully acceptable. It is not my purpose to press this Amendment, although I am keen on my second Amendment. As a matter of procedure, that cannot be moved at present although, Sir William, you have kindly given permission for these Amendments to be discussed together.

The Government Amendment on which we have spent much time has aroused a fair amount of misunderstanding, but apart from the hon. Member for Ebbw Vale (Mr. M. Foot), hon. Members have accepted it as an improvement on the original drafting of the Bill. It does not in any way wreck my right hon. Friend's Bill.

10.30 p.m.

What it does do is to make it a little fairer to a certain number of people who are worried about the Bill, and it gives them a bit more confidence. It is not a major matter, but it is an acceptable and a desirable one, and therefore I welcome it and I stick to that. It does, however, open—according to one's views—some serious criticism; at any rate one considerable criticism, and that is limited to the last words of the Amendment: or of the supplier from whom the dealer acquired the goods. I should like to make clear that there is and could be no difficulty, no criticism whatever, about a manufacturer giving permission or giving consent as to what price his goods should be sold at, or giving permission to cut it. That is nothing new. That has always been the case. Even under r.p.m. the price could actually be laid down at which the goods could be sold. If he likes to give permission to the retailer to cut a certain price, that is perfectly in order. It is nothing new, nothing original; the manufacturer has always had that say.

But there are certain dangers in continuing down the distributive chain where the supplier thinks the manufacturer has given that permission. Under the provisions of the Clause at the moment the manufacturer may not withhold supplies from the wholesaler or supplier who has sold to a chain of shops—[Interruption.] I wish my hon. Friends were less noisy in their conversation. It would help me materially. I am moving an Amendment to the Amendment which, I hope, many of them approve. He has sold to a chain of shops which can resell them for one of the improper purposes mentioned in Clause 2; that is, of course, if the wholesaler has consented to such a resale. The manufacturer is, therefore, by the consent, hamstrung or caught by the wholesaler over whom he has no control, and is powerless to prevent a repetition of that occurrence we have discussed today and said should not take place.

If that is the position, the arrangement tied up and qualified, as I shall show in a minute there would be no objection to it because it would come under the same consideration which applied to the manufacturer, but there is a conceivable danger that there could be a sort of bogus wholesaler, or a sort of organisation which is separate, a corporate body collected together, not necessarily for this purpose, but which might have been in existence for some time, deciding to issue a notice saying in effect that the secretary to the company is empowered so to do, and to send a circular to say that the goods can be cut—giving that sort of consent.

That is not exactly what we are desiring to do; it is not the protection we desire to give: it is the opposite. The point is, can we find a way of ensuring the purpose my right hon. Friend has in the Bill, and about which I have no argument, and about which there is no argument here among my hon. Friends on these benches, that a manufacturer in certain circumstances ought to be allowed to give that particular consent, but keep out that type of consent which should not be given?

The words of the Amendment in the name of my hon. Friend the Member for Bournemouth, West (Sir J. Eden) gave birth, if I may use that phrase, to the thought among my hon. Friends and to myself as to how to go about it, and in my second Amendment to the Amendment we have followed my hon. Friend's words. I hope that he does not mind. I should like to feel that he is flattered that we have substantially followed his words. But vie have gone one better. There is, as I see it, and as I am advised, a loop-hole in the words which my hon. Friend found. It is important that we should cover the type of transaction we are seeking to avoid. I say that because the necessity to cover that has been the whole purpose of our discussion on the Government Amendment, paragraph (b) of which states: where the goods are resold as mentioned in this section with the consent of the manufacturer of the goods or of the supplier from whom the dealer acquired the goods. My hon. Friends and I have endeavoured in our second Amendment to cover the position by saying: …in the case of goods made to the design of a supplier or to the order and bearing the trade mark of a supplier of that supplier. These may be considered to be dreadful words and I agree that they are somewhat complicated, but they simply mean that where a supplier to a retailer orders goods from a manufacturer and the goods are to be made to his expressed requirements, trade mark or design, it shall be regarded that those goods were, as it were, manufactured by that supplier himself. I hope that that is what my right hon. Friend is seeking to achieve. He indicated earlier that he recognises that certain feelings exist about this difficulty and the use of the word "supplied". I hope that the Amendments achieve the object which many hon Members have in mind—including, I hope, my right hon. Friend—and if he cannot accept them I hope that he will accept the principle involved and introduce Government Amendments to the same effect at a later stage.

Mr. Crosland

On a point of order. It is hard to concentrate on these very detailed are complicated arrangements when all our minds are perturbed by anxiety about when the General Election will be held. Since the Prime Minister is present—

The Chairman

Order. We must speak to the Amendment.

Mr. Crosland

On a point of order—

The Chairman


Mr. Crosland

On a new point of order.

The Chairman

If the hon. Member wishes to raise a new point of order, then by all means let him do so.

Mr. Crosland

I am delighted to see that the Prime Minister is not only here but that he is making notes for perhaps a pronouncement of some sort. I wonder if we might invite him, through you, Sir William, to make a statement about the date of the General Election?

The Chairman

That is, in fact, the same point, and it is not a point of order.

Mr. Mendelson

On a completely different point of order. As the hon. Member for Shipley (Mr. Hirst) moved both of his Amendments, will it be in order for me to discuss them both?

The Chairman

Yes. In practice the hon. Member for Shipley (Mr. Hirst) moved his first Amendment, but both are being discussed together, along with the Amend gent in the name of the hon. Member for Bournemouth, West (Sir J. Eden).

Mr. Mendelson

Then, if I may, I shall address myself to the two Amendments in the name of the hon. Member for Shipley. As he said that he would not press the first of them I shall not spend much time on it, but in any case I could not have supported it because there are certain circumstances in which it is decidedly to the benefit of the consumer, and does no harm to any retailer, if certain goods can be sold more cheaply. As we all agreed in our support of any method which makes it easier for savings to be passed to the consumer, that is an Amendment I would not have been able to support.

I very strongly support the hon. Member's second Amendment, which deals with a very important experience of the last 10 years. We are here dealing with the danger of bogus manufacturers entering into agreements in order to re-introduce the loss leadering, against which we are trying to guard, by making it appear that they are genuine manufacturers dealing in all sorts of goods when they are, in fact, established only for the one purpose of producing certain cheap goods which could then be introduced to undermine the position of legitimate traders and do equal harm to the retailer and the genuine manufacturer.

During the last 10 or 12 years, and until quite recently, the country was plagued by what was known as the "dutch auction" sale. In many of our towns and cities we had this performance by a number of people specially trained, I believe, in charm schools and semi-theatrical companies, trying, and very often succeeding, in bamboozling people with very little money to spend, and who found themselves so bamboozled that in one Saturday afternoon they might part with 50 per cent. of the wages they had just that day received.

In investigating that abuse, hon. Members found that most of the goods supplied to these "dutch auction" sales were produced by a special group of manufacturers who concentrated almost exclusively, or even quite exclusively, on producing that kind of rubbish. It is with that experience in mind that I strongly support the second Amendment, which I should have thought would have commended itself to the right hon. Gentleman. If the purpose is to make sure that nobody can drive a coach-and- four through paragraph (b), he should find no difficulty in accepting the Amendment, and I hope that he will do so. Otherwise, I hope that my right hon. and hon. Friends will support it in the Division Lobby.

Sir John Eden (Bournemouth, West)

Throughout our discussions we have found it very difficult to cater for every eventuality, but we have here one further attempt to cover particular cases that might arise, and to ensure that the law is not put into complete disrepute. I thought my own Amendment was very good until I read that in the name of my hon. Friend the Member for Shipley (Mr. Hirst) and heard his speech. Quite frankly, I think that his explanation fully justifies his Amendment, completely absorbs my own, and to some extent extends it. It merely takes into account a further possibility.

10.45 p.m.

I agree with my hon. Friend that we are here trying to envisage the sort of circumstances in which the supplier virtually takes the place of the manufacturer, and where the dealer is selling at prices agreed by his supplier.

This, I should have thought, is what my right hon. Friend had in mind basically from the start. I therefore am inclined not to press my Amendment but rather to support that of my hon. Friend the Member for Shipley. I hope that my right hon. Friend will find it possible to accept that as meeting the case which I had in mind and which I hope he will agree is valid in the circumstances.

Mr. W. Wells

Circumstances have made it unnecessary for me to say anything about the Amendment in the name of the hon. Member for Bournemouth, West (Sir J. Eden). Nor could we in the circumstances support the first Amendment in the name of the hon. Member for Shipley (Mr. Hirst), but the hon. Member's second Amendment seems to be a different case. As we see it, this is a genuine attempt to meet a genuine difficulty, and anything that would have the effect of preventing bogus transactions between bogus manufacturers and suppliers who intended to carry out the practice of loss leading would have our support.

My only doubt is whether this Amendment is effective for the purpose. I hope that the Secretary of State will say that he appreciates the difficulty to which the hon. Member for Shipley has drawn the Committee's attention and will look further into the matter. That would seem to us to be a happy and sensible way of resolving this difficulty. Nevertheless, although I have my doubts whether the hon. Member's Amendment will go very far in the direction in which we all intend, it will go some distance, and unless the right hon. Gentleman is able to give some assurance that he will seek at a later stage of the Bill to carry out his hon. Friend's intentions, we should certainly be minded to support the hon. Member's Amendment in the Division Lobby.

Mr. Heath

As I explained when I moved the main Amendment, we have inserted subsection (2, b) because we thought that it was right that it should be possible for the retailer, on application to the manufacturer, to be able to sell goods which otherwise by definition would be loss leadering. I think that that has had the general support of the Committee and therefore I am glad to hear from my hon. Friend the Member for Shipley (Mr. Hirst) that he does not wish to press his first Amendment to exclude the whole of paragraph (b). I believe that that is a justifiable provision to include in the approach which we are now making.

It is, however, also true that the second half of paragraph (b): …or of the supplier from whom the dealer acquired the goods. is open to the objection mentioned by my hon. Friends the Member for Shipley, the Member for Bournemouth, West (Sir J. Eden) and the hon. and learned Member for Walsall, North (Mr. W. Wells). It would allow what has been termed bogus organisations to take advantage of this and give permission for loss leading over the head of the genuine manufacturer. I therefore would agree that the second half is not entirely satisfactory because of this loophole.

The Amendment in the name of my hon. Friend the Member for Bournemouth, West would deal with most of the cases with which we want to deal. In other words, it would arrange for a person who is acting in the position of a manufacturer, ordering goods for his own supply and to his own characteristics, to be in a position to give permission without retailers creating an organisaticn which was not really a supplying organisation and granting the permission to themselves. But I agree with my hon. Friend the Member for Bournemouth. West that the second Amendment in the name of my hon. Friend the Member for Shipley is more explicit in this case in its reference to the case of goods made to the design of a supplier or to the order and bearing the trade mark of a supplier of that supplier". In the examination which I have been able to give to it today, it seems to me that it would meet the case which we are trying to deal with, which is not only that of the manufacturer but also that of the man who is deliberately ordering from a manufacturer for his own supply and, therefore, ought to be the person who gives the permission for loss leading, without at the same time allowing bogus organisations to be created by retailers to give the permission over the head of the supplier.

Having come to that conclusion, I should be happy to accept the Amendment put forward by my hon. Friend the Member for Shipley as an Amendment to my own Amendment to deal with this particular point. I think that it will put the assent in the hands of the manufacturer or the dealer who is ordering his own supplies from the manufacturer and exclude other organisations of the kind which have been described. I should, therefore, be prepared to accept that Amendment.

The Chairman

Do I take it that the first Amendment of the hon. Member for Shipley is to be withdrawn, by leave of the Committee?

Mr. Hirst

I beg to ask leave to withdraw the Amendment.

Amendment to the proposed Amendment, by leave, withdrawn.

Amendment to the proposed Amendment made: In line 15, leave out from "or" to end of the proposed Amendment and add: in the case of goods made to the design of a supplier or to the order and bearing the trade mark of a supplier of that supplier".—[Mr. Hirst.]

Mr. Jay

I beg to move, as an Amendment to the proposed Amendment, after the words last added, to add: Subject to the last-mentioned proviso, it shall be presumed, unless the contrary is proved, that where the goods are resold by the dealer at or below the price paid by him for those goods plus two per cent. if he is a wholesaler or five per cent. if he is a dealer other than a wholesaler the dealer has used the goods as loss leaders. In this Amendment, we return to the main definition of what constitutes loss leading. The right hon. Gentleman started with a definition which depended on the retailer selling at cost or below. We never thought that that was satisfactory, and we originally put down an Amendment which would have altered that to bring in the factors of cost plus 5 per cent. in the case of the retailer and cost plus 2 per cent. in the case of the wholesaler. That, I agree, was not necessarily a perfect solution of the difficulty because, no doubt, it could be argued that the costs of the retailer would, in many cases, exceed 5 per cent. of the price at which he bought the goods and, therefore, he might still be selling at a loss to himself although he was selling at a price more than his cost price plus 5 per cent. Nevertheless, it clearly would have made the provision a little more effective than the extremely bald and quite ineffective form of words which the right hon. Gentleman first introduced.

The right hon. Gentleman has, however, now proposed, and the Committee has accepted, an Amendment which shifts the criterion of loss leading from any quantitative or statistical objective test and bases it entirely on the motives of the retailer. The motive which the retailer must have now is the motive of not selling for profit, whatever that means—which we still do not know—and, in addition, the purpose of attracting custom and advertising. This the Committee has accepted.

What we now propose is that there should be two criteria simultaneously, and that the criterion of cost plus 5 per cent, which we originally proposed should be added to the Bill alongside the test of motive which the right hon. Gentleman has proposed. The situation would be that, if it could be shown that the retailer was selling at less than cost plus 5 per cent., that would establish the case right away. It would then be a case of loss leadering. If he was not caught, so to speak, under that simple, objective test, then the right hon. Gentleman's more complicated and much more subjective test of proof of motive would come into effect.

The argument at this stage is that, if the right hon. Gentleman accepts our Amendment in addition to his own Amendment, then, at least in certain cases where it was, prima Jack, obvious that loss leadering was being indulged in, the whole complicated, subjective argument about the motive of the retailer which the manufacturer would be expected to prove would be short-circuited, so that the amount of argument and complications would thereby be reduced. Where this simple test did not apply, the Court would have to fall back on the argument of proof about the double motive of the retailer.

It seems to me that this would be a workable arrangement. Although perhaps, on the face of it, it increases complications, it really reduces them because, at any rate in some of the cases, the question at issue would be far simpler and much more objective. The general objective of the Committee is to prevent the real and undesirable cases of loss leadering which we discussed earlier, and we hope that the right hon. Gentleman will accept this Amendment in addition to his own criterion.

Mr. Heath

We have discussed this already to a certain extent because, when we were dealing with the main Amendment, I explained why we had changed the approach from that originally in Clause 3 to the one now accepted by the Committee. One of the main objectives of this was to achieve a flexibility in approach which would not contain the rigidity of the original formula of what would constitute the loss. I explained some of the details, particularly as far as small retailers are concerned.

What the right hon. Member for Battersea, North Mr. Jay) is now asking me to do is to take the original approach, to add a fixed mark-up for either wholesalers or retailers and combine it with the new approach which the Committee has just adopted. This would have all the disadvantages of which I have spoken. It would have the disadvantage of rigidity of approach and this would act particularly against the interests of the small retailer because, if he were buying at a price which gave him very much smaller discounts than the larger purchaser, then the mark up would act more to his disadvantage than to the disadvantage of the larger purchaser.

The right hon. Gentleman is really trying to combine the original Clause 3 with the new approach of selling not for the purpose of making a profit. For that reason I think that his proposal is

unsatisfactory. We have now adopted an approach which gives greater flexibility and greater advantage to retailers of all sizes, and we should not now try to combine it with the original approach and introduce this automatic and more rigid formula, which would act to the disadvantage of the smaller retailer. I hope that the Committee will reject the Amendment.

Question put, That those words be there added to the proposed Amendment:—

The Committee divided: Ayes 144, Noes 215.

Division No. 63.] AYES [10.59 p.m.
Abse, Leo Griffiths, David (Rother Valley) Oliver, G. H.
Ainsley, William Hale, Leslie (Oldham, W.) O'Mailey, B. K.
Allaun, Frank (Salford, E.) Hannan, William Oram, A. E.
Barnett, Guy Harper, Joseph Owen, Will
Baxter, Sir Beverley (Southgate) Hart, Mrs. Judith Paget, R. T.
Beaney, Alan Hayman, F. H. Parker, John
Bellenger, Rt. Hon. F. J. Herbison, Miss Margaret Pavitt, Laurence
Bence, Cyrl Hill, J. (Midlothian) Peart, Frederick
Benn, Anthony Wedgwood Holman, Percy Pentland, Norman
Bennett, J. (Glasgow, Bridgeton) Houghton, Douglas Prentice, R. E.
Blackburn, F. Howell, Charles A. (Perry Barr) Price, J. T. (Westhoughton)
Blyton, William Howell, Denis (Small Heath) Probert, Arthur
Bottomley, Rt. Hon. A. G. Howie, W. Randall, Harry
Bowden, Rt. Hn. H. W. (Leics, S.W.) Hoy, James H. Redhead, E. C.
Bowles, Frank Hughes, Cledwyn (Anglesey) Rees, Merlyn (Leeds, S.)
Braddock, Mrs. E. M. Hughes, Emrys (S. Ayrshire) Roberts, Albert (Normanton)
Broughton, Dr. A. D. D. Hughes, Hector (Aberdeen, N.) Robertson, John (Paisley)
Callaghan, James Hynd, John (Attercliffe) Robinson, Kenneth (St. Pancras, N.)
Carmichael, Neil Irvine, A. J. (Edge Hill) Rodgers, W. T. (Stockton)
Castle, Mrs. Barbara Irving, Sydney (Dartford) Rogers, G. H. R. (Kensington, N.)
Cliffe, Michael Janner, Sir Barnett Ross, William
Corbet, Mrs. Freda Jay, Rt. Hon. Douglas Silverman, Julius (Aston)
Craddock, George (Bradford, S.) Johnson, Carol (Lewisham, S.) Silverman, Sydney (Nelson)
Crosland, Anthony Jones, Dan (Burnley) Slater, Mrs. Harriet (Stoke, N.)
Crossman, R. H. S. Jones, Elwyn (West Ham, S.) Slater, Joseph (Sedgefield)
Cullen, Mrs. Alice Jones, T. W. (Merioneth) Small, William
Dalyell, Tam Kelley, Richard Sorensen, R. W.
Davies, G. Elfed (Rhondda, E.) Lawson, George Spriggs, Leslie
Dempsey, James Lever, L. M. (Ardwick) Stonehouse, John
Diamond, John Lewis, Arthur (West Ham, N.) Stones, William
Dodds, Norman Loughlin, Charles Strauss, Rt. Hon. G. R. (Vauxhall)
Donnelly, Desmond Mabon, Dr. J. Dickson Swingler, Stephen
Driberg, Tom McBride, N. Taylor, Bernard (Mansfield)
Duffy, A. E. P. (Colne Valley) McCann, J. Thomas, Iorwerth (Rhondda, W.)
Edelman, Maurice MacColl, James Thompson, Dr. Alan (Dunfermline)
Edwards, Rt. Hon. Ness (Caerphilly) MacDermot, Niall Thornton, Ernest
Evans, Albert McInnes, James Wainwright, Edwin
Fernyhough, E. MacPherson, Malcolm Watkins, Tudor
Finch, Harold Mallalieu, E. L. (Brigg) Wells, William (Walsall, N.)
Fitch, Alan Manuel, Archie Whitlock, William
Foot, Dingle (Ipswich) Mapp, Charles Wilkins, W. A.
Foot, Michael (Ebbw Vale) Marsh, Richard Wilson, Rt. Hon. Harold (Huyton)
Forman, J. C. Mendelson, J. J. Winterbottom, R. E.
Fraser, Thomas (Hamilton) Millan, Bruce Woof, Robert
Galpern, Sir Myer Milne, Edward Wyatt, Woodrow
George, Lady Megan Lloyd (Crmrthn) Mitchison, G. R. Yates, Victor (Ladywood)
Ginsburg, David Morris, Charles (Openshaw)
Gordon Walker, Rt. Hon. P. C. Mulley, Frederick TELLERS FOR THE AYES:
Gourlay, Harry Neal, Harold Mr. Grey and Mr. Ifor Davies.
Agnew, Sir Peter Barter, John Bishop, Sir Patrick
Allason, James Batsford, Brian Black, Sir Cyril
Amery, Rt. Hon. Julian Bevins, Rt. Hon. Reginald Bourne-Arton, A.
Atkins, Humphrey Biffen, John Bowen, Roderic (Cardigan)
Awdry, Daniel (Chippenham) Blngham, R. M. Box, Donald
Barber, Rt. Hon. Anthony Birch, Rt. Hon. Nigel Boyd-Carpenter, Rt. Hon. John
Boyle, Rt. Hon. Sir Edward Hill, J. E. B. (S. Norfolk) Peel, John
Braine, Bernard Hirst, Geoffrey Percival, Ian
Brewis, John Hobson, Rt. Hon. Sir John Peyton, John
Brown, Alan (Tottenham) Hooking, Philip N. Pickthorn, Sir Kenneth
Bryan, Paul Hogg, Rt. Hon. Quintin Pike, Miss Mervyn
Buck, Antony Holland, Philip Pitman, Sir James
Bullard, Denys Holt, Arthur Pitt, Dame Edith
Camphell, Gordon Hopkins, Alan Pounder, Rafton
Carr, Rt. Hon. Robert (Mitcham) Hornby, R. P. Powell, Rt. Hon. J. Enoch
Chataway, Christopher Hornsby-Smith, Rt. Hon. Dame P. Price, David (Eastleigh)
Chichester-Clark, R. Howard, Hon. G. R. (St. Ives) Prior, J. M. L.
Clark, Henry (Antrim, N.) Hughes Hallett, Vice-Admiral John Prior-Palmer, Brig. Sir Otho
Clark, William (Nottingham, S.) Hughes-Young, Michael Proudfoot, Wilfred
Cleaver, Leonard Iremonger, T. L. Quennell, Miss J. M.
Cole, Norman Irvine, Bryant Godman (Rye) Ramsden, Rt. Hon. James
Cooke, Robert James, David Rawlinson, Rt. Hon. Sir Peter
Corfield, F. V. Johnson, Eric (Blackley) Redmayne, Rt. Hon. Martin
Costain, A. P. Johnson smith, Geoffrey Rees, Hugh (Swansea, W.)
Coulson, Michael Jones, Arthur (Northants, S.) Renton, Rt. Hon. David
Critchley, Julian Joseph, Rt. Hon. Sir Keith Ridley, Hon. Nicholas
Crowder, F. P. Kaberry, Sir Donald Ridsdale, Julian
Dalkeith Earl of Kerans, Cdr. J. S. Rippon, Rt. Hon. Geoffrey
Dance, James Kershaw, Anthony Roots, William
d'Avigdor-Goldsmid, Sir Henry Kirk, Peter Russell, Sir Ronald
Deedes, Rt. Hon. W. F. Kitson, Timothy Scott-Hopkins, James
Donaldson, Cmdr. C. E. M. Lancaster, Col. C. G. Sharples, Richard
Douglas-Home, Rt. Hon. Sir Alec Legge-Bourke, Sir Harry Shaw, M.
Drayson, G. B. Lindsay, Sir Martin Shepherd, William
du Cann, Edward Linstead, Sir Hugh Skeet, T. H. H.
Duncan, Sir James Litchfield, Capt. John Smith, Dudley (Br'ntf'd & Chiswick)
Eden, Sir John Lloyd, Rt. Hon. Selwyn (Wirral) Spearman, Sir Alexander
Elliott, R. W. (Newc'tle-upon-Tyne, N.) Longbottom, Charles Stainton, Keith
Emery, Peter Longden, Gilbert Stanley, Hon. Richard
Erroll, Rt. Hon. F. J. Loveys, Walter H. Stevens, Geoffrey
Farr, John Lucas-Tooth, Sir Hugh Stodart, J. A.
Fell, Anthony McAdden, Sir Stephen Stoddart-Scott, Col. Sir Malcolm
Fisher, Nigel MacArthur, Ian Taylor, Frank (M'ch'st'r, Moss Side)
Fletcher-Cooke, Charles McLaren, Martin Thatcher, Mrs. Margaret
Fraser, Rt. Hn. Hugh (Stafford&Stone) Maclean, Sir Fitzroy (Bute & N. Ayrs.) Thompson, Sir Richard (Croydon, S.)
Fraser, Ian (Plymouth, Sutton) McLean, Neil (Inverness) Thorneycroft, Rt. Hon. Peter
Freeth, Denzil Macmillan, Maurice (Halifax) Tiley, Arthur (Bradford, W.)
Galbraith, Hon. T. G. D. Maddan, Martin Tilney, John (Wavertree)
Gammans, Lady Maginnis, John E. Turner, Colin
Gardner, Edward Marples, Rt. Hon. Ernest Turton, Rt. Hon. R. H.
Gibson-Watt, David Marten, Neil Tweedsmuir, Lady
Gilmour, Sir John (East Fife) Mathew, Robert (Honiton) van Straubenzee, W. R.
Glover, Sir Douglas Matthews, Gordon (Meriden) Vane, W. M. F.
Glyn, Dr. Alan (Clapham) Maude, Angus (Stratford-on-Avon) Vickers, Miss Joan
Godber, Rt. Hon. J. B. Maudling, Rt. Hon. Reginald Walker, Peter
Goodhart, Philip Mawby, Ray Walker-Smith, Rt. Hon. Sir Derek
Goodhew, Victor Maxwell-Hyslop, R. J. Ward, Dame Irene
Gough, Frederick Maydon, Lt.-Cmdr. S. L. C. Watkinson, Rt. Hon. Harold
Gower, Raymond Mills, Stratton Webster, David
Grant-Ferris, R. Miscamphell, Norman Wells, John (Maidstone)
Green, Alan Montgomery, Fergus Whitelaw, William
Grosvenor, Lord Robert More, Jasper (Ludlow) Williams, Dudley (Exeter)
Hamilton, Michael (Wellingborough) Morgan, William Williams, Paul (Sunderland, S.)
Harrison, Col. Sir Harwood (Eye) Mott-Radclyffe, Sir Charles Wilson, Geoffrey (Truro)
Harvey, Sir Arthur Vere (Macclesf'd) Neave, Airey Wise, A. R.
Harvey, John (Walthamstow, E.) Nicholls, Sir Harmar Wolrige-Gordon, Patrick
Harvie Anderson, Miss Noble, Rt. Hon. Michael Wood, Rt. Hon. Richard
Hay, John Nugent, Rt. Hon. Sir Richard Woodhouse, C. M.
Heald, Rt. Hon. Sir Lionel Orr-Ewing, Sir Ian (Hendon, North) Woodnutt, Mark
Heath, Rt. Hon. Edward Page, John (Harrow, West) Worsley, Marcus
Hendry, Forbes Page, Graham (Crosby)
Hitey, Joseph Pannell, Norman (Kirkdale) TELLERS FOR THE NOES:
Hill, Mrs. Eveline (Wythenshawe) Pearson, Frank (Clitheroe) Mr. Finlay and Mr. Pym.

Proposed words, as amended, there added.

Mr. Gresham Cooke

I beg to move, Amendment No. 45, in page 3, line 38, at the end to add (3) For the purposes of this section two or more dealers being interconnected bodies corporate (within the meaning of the Restrictive Trade Practices Act 1956 shall be treated as a single dealer.

The Deputy-Chairman (Sir Robert Grimston)

I think that with that Amendment we might discuss Amendment No. 172, in Clause 11, page 8, line 35, leave out subsection (2).

Mr. Gresham Cooke

This is one of the few Amendments in respect of which I have not the support of the hon. Member for Ebbw Vale (Mr. M. Foot), the hon. Member for Nelson and Colne (Mr. S. Silverman), and other hon. Members. Previously, when I have put down Amendments late at night, the names of the hon. Members have appeared in support of those Amendments the next day—but not on this occasion.

The Amendment is necessary because of the appearance on the Notice Paper of Amendment No. 172. I have no doubt that my hon. Friend the Member for Shipley (Mr. Hirst) will explain the purpose of that Amendment when we reach it. If Clause 11(2) remains in the Bill, the Board of Trade will be able to obtain an injunction against a whole group of suppliers, and will not have to obtain separate ones in respect of every branch. If that subsection is deleted, however, a new situation arises, in which a chain store might operate a series of branches by turning them into limited liability companies, each of which, being a separate company, could manipulate its own prices and introduce loss leaders, and have to be pursued separately by the supplier. He could withhold supplies only from one limited liability company.

My Amendment would give a definite power to the supplier to withhold his supplies from a whole group if there were to be loss leadering by any one branch in that group. It would prevent the movement of loss leaders from one branch to another round the group. I think that this is a reasonable provision. It is necessary that suppliers should have the power to act against a group, otherwise they would be in a very difficult position. They would have to go from one branch to another—perhaps round 100 branches. It would be an intolerable position.

A supplier could not get a legal injunction; he could not get damages. He would merely have the power to withhold supplies, and that would be a piffling power if he were a small supplier and was up against a large chain of retailers. Therefore, I submit that this provision should be written into the Bill, so that a supplier can act against a whole group. I hope that my right hon. and learned Friend will be able to give the Committee an assurance that it is the intention of the Clause to operate in this way.

Mr. W. Wells

I need say no more than two sentences about the Amendment. It seems a useful one, designed to make more genuine the restrictions on loss leadering, against which the Clause is directed. Because it seems to close an existing gap we shall certainly support it, and we hope that the Government will accept it.

The Attorney-General (Sir John Hobson)

The Amendment is necessary only if the Amendment No. 172 is accepted. If that Amendment is not moved this one is wholly unnecessary. I was going to recommend the Committee to stand upon the basis that Clause 11(2) should not be amended, and that this Amendment is therefore unnecessary.

Mr. Hirst

I am in some difficulty. I did not rise before, because I thought it was reasonable to wait to hear my right hon. And learned Friend's explanation. I am not capable of moving my Amendment now, because it relates to Clause 11, which we have not yet reached.

11.15 p.m.

The Attorney-General

I understand that. We are discussing the two Amendments together, but we cannot vote on Amendment No. 172 until we reach Clause 11. The effect of this Amendment is to provide that two or more dealers who are interconnected bodies incorporated within the meaning of the 1956 Restrictive Trade Practices Act, that is to say companies who are members of the same group, should be treated as one dealer. Therefore a supplier, normally a manufacturer, would be entitled to withhold supplies on the grounds that another dealer in the same group had been loss leadering.

The Bill as drafted already contains precisely such a provision in Clause 11(2) although that Clause is dealing with the position of both dealers and suppliers and provides that both dealers and suppliers who are members of the same group shall be treated as interconnected companies and can be treated as a single supplier or single dealer.

The Amendment which my hon. Friend the Member for Shipley (Mr. Hirst) desires to move is to do the reverse, of course, in relation to suppliers. The combined effect of the two Amendments would be that two or more dealers who are members of one group would be treated as one dealer for the purpose of the loss leadering clause, but that two or more suppliers who are members of one group would not be treated as one supplier under Clause 2, which deals with the problem of withholding supplies.

It seems to me what is sauce for the goose is sauce for the gander. and it is plainly right both dealers and suppliers, if members of connected companies, should be treated as one group and the rules for withholding supplies and loss leadering should be applied in both directions throughout one group. One should not in one case divide the group into sections and in the other not divide it. If the Committee stands upon that basis this Amendment is unnecessary provided Clause 11(2) remains un-amended.

Mr. Hirst

I am very grateful to my right hon. and learned Friend the Attorney General for that advice. I do not think that it is very easy to follow this. It is a very complicated matter.

I have a note here of an instance that I was going to raise on discussing my Amendment to Clause 11, page 8, line 35, if I could have moved it. It is only one sentence and so complicated I do not understand it. Perhaps I can read it out so that it gets on the record, then my right hon. and learned Friend can perhaps read it later and tell me what it means, always provided that we have sufficient time between now and reaching Clause 11.

I am told rather great difficulty is in the construction. For example: if A and B are associated dealer companies and X and Y are associated supply companies and dealer A has within the previous six months indicated to supplier X he intends to cut X's resale prices, supplier Y shall be automatically presumed to be unlawfully withholding supplies from dealer B if he happens to refuse to supply them. There are, I am told wider ramifications. I do not propose to insist on a reply to that tonight.

Mr. Paget

It seems that the case when we get to Clause 11 will be one of considerable complexity. That being so, I feel sure that the Government would not wish to turn down the matter out of hand without having heard the argument. I therefore suggest that the Government give an undertaking that in the event of their eventually deciding to accept the Amendment in the name of the hon. Member for Shipley (Mr. Hirst) in Clause 11, they will introduce on Report the present Amendment of the hon. Member for Twickenham (Mr. Gresham Cooke). That would seem to overcome the difficulty and leave us and, indeed, the Government with full opportunity to consider the obviously serious and difficult Amendment to Clause 11.

The Attorney-General

It is plain that if, when we come to Clause 11, the Amendment which is to be moved by my hon. Friend the Member for Shipley (Mr. Hirst) were passed, carried, accepted or otherwise incorporated into the Bill dealing with suppliers, the question of dealers would have to be considered. I cannot at this stage undertake how it would be reconsidered, but it is plain that the problem would have to be reconsidered and dealt with on Report.

Mr. Gresham Cooke

I am in rather a quandary, because I am not sure whether Amendment No. 172 will be selected when we reach Clause 11. However, as my right hon. and learned Friend the Attorney-General has said that if it were successful the position would be looked at again on Report concerning my present Amendment, and on the understanding that my Amendment would be covered in that way, I beg to ask leave to withdraw the Amendment.

Mr. Paget

May we get this clear? It is clear, I take it, that in these circumstances there will be another opportunity on Clause 11 to discuss the Amendment of the hon. Member for Shipley (Mr. Hirst), who will then be in a position to explain it fully, which he was not able to do tonight.

The Deputy-Chairman

I cannot, at this stage, commit the Chair about what will happen on Clause 11. Of course, note will be taken of what has passed now. Is it your pleasure that the Amendment be withdrawn?

Amendment, by leave, withdrawn.

Clause, as amended, ordered to stand part of the Bill.

Mr. Jay

I beg to move, That the Chairman do report Progress and ask leave to sit again. We have made considerable progress this afternoon. The Secretary of State has shown himself rather more amenable to reason than on certain other occasions. We have confined ourselves today to the question of loss leaders, which is a subject in itself and one of considerable complication. We have now reached a point when even the hon. Member for Shipley (Mr. Hirst), on his own admission, is unable to understand his own notes. I do not suggest that he is the only hon. Member of the Committee who is in that condition at this hour of the night.

Mr. Hirst

It is merely a question of understanding the construction and interpretation of the case put to me. We have all been in that position at times.

Mr. Jay

I agree. I do not want to press the point too far. I merely adduce it as evidence that it would not be conducive to the most rational and thorough discussion of the Bill if we proceeded at this hour to a totally different subject.

Clause 4 deals with the quite separate subject of the motives on account of which a supplier might wish or be permitted to withold supplies. We have already had a taste on Clause 2 of how complicated and controversial this is. The initial Amendments that we would wish to move raise substantial points which should be argued at length. I do not think that the Committee is altogether in the mood or in a position to do justice to the Clause or to the Amendments tonight. As we have completed Clause 3, I very much hope that the right hon. Gentleman may accept the Motion.

Mr. Heath

As the right hon. Member for Battersea, North (Mr. Jay) has said, we have made progress today in achieving Clause 3 and dealing with the matter of loss leaders. I am sorry that the right hon. Gentleman feels that he is not able, at this stage, to make a rational approach to the difficult problems of Clause 4, but I have some sympathy with him and, therefore, I think that it might be wiser to accept the Motion and to make progress next time.

Question put and agreed to.

Committee report Progress; to sit again Tomorrow.