HC Deb 15 January 1964 vol 687 cc224-30
The Secretary of State for Industry, Trade and Regional Development and President of the Board of Trade (Mr. Edward Heath)

With your permission, Mr. Speaker, and that of the House, I wish to make a statement on monopolies, mergers, restrictive practices and resale price maintenance.

The Government's policy of modernisation requires the promotion of the greatest possible efficiency in all sectors of the economy. Competitive trading conditions are an important element in helping to ensure that the nation's resources are efficiently used. Effective legislative measures in this field are essential if the nation is to enjoy the benefits of a high rate of economic growth and stable prices.

After a thorough review of the operation of the present legislation on monopolies and restrictive practices, the Government have reached the conclusion that this needs to be strengthened and extended.

The Government are satisfied that the "neutral" and uncommitted approach to monopoly on which present legislation is based remains fundamentally right and they do not propose to introduce into the law any presumption that monopoly or size are in themselves undesirable.

There are, nevertheless, occasions when the public and the Government need to know how a monopoly is operating in case intervention is necessary. The Government are satisfied that such inquiries are best carried out by an administrative tribunal like the present Monopolies Commission. But they have concluded that certain changes are necessary to make the Commission more effective, to give it greater authority, and to enable it to work more quickly.

With these objects in mind, the Government propose that the Commission should be strengthened and enlarged to enable it to work in groups. They also intend to enlarge their powers to implement the Commission's recommendations.

I wish to deal now with mergers. Many mergers are beneficial to the economy. They produce stronger units, economies of scale, better management, better research and better sales organisation. The Government do not wish to place any obstacle in the way of such mergers, or of the great number whose effects on the economy are not significant.

There is, however, a small minority of mergers which may lead to monopoly conditions damaging to the public interest. The enlarged powers to be taken by the Government to ensure that the recommendations of the Commission can be implemented should cover this type of case.

I turn now to restrictive practices. It is clear that the Restrictive Trade Practices Act needs to be amended to deal with certain loopholes which are weakening its effectiveness, for example information agreements on prices. The Government propose to close these loopholes.

As it stands, the law makes no provision for monopolies and restrictive practices in the field of services. The Government think that this legislation should now be extended to enable them to refer what I might describe as commercial services to the Monopolies Commission. They would need to take powers to deal with any practices contrary to the public interest which the Commission's reports might reveal.

The Government intend to present a White Paper dealing in more detail with the proposals I have outlined.

I come finally to resale price maintenance. The Government believe that this practice is, in general, incompatible with their objective of encouraging effective competition and keeping down costs and prices. They have reached the conclusion that resale price maintenance should be presumed to be against the public interest unless in any particular case it is proved to the contrary to the satisfaction of a judicial tribunal. They therefore propose to introduce legislation this Session designed to bring the practice to an end subject to the right to apply for exemption to the judicial tribunal to which I have referred.

The Government believe that if this comprehensive series of proposals are put into effect the economy will be strengthened, to the benefit of all sections of the community, and to the advantage of our competitive position in internal ional trade.

Mr. Jay

Is it not extraordinary that these very important proposals and legislation were not mentioned at all in the Queen's Speech only two months ago? Is it not even more extraordinary that it has taken twelve years of indecision by Ministers opposite and the Private Member's Bill of my hon. Friend the Member for Wednesbury (Mr. Stone-house) to get the Government to adopt proposals which we have been putting forward from this side of the House? Is the right hon. Gentleman aware that the Monopolies Commission worked in groups before 1956 and that this was altered by a Bill introduced bythe present Minister of Defence, that we opposed that alteration and that as a result of that Bill it has taken seven years to examine, for instance, the question of electric batteries for motor vehicles? Is the right hon. Gentleman also aware that Section 25 of the 1956 Act, which gives legal powers to manufacturers to enforce retail price maintenance was also introduced by the present Minister of Defence in the 1956 Act and that we on this side of the House voted against it?

Finally, is the right hon. Gentleman aware that his proposals to refer certain mergers to a public tribunal was suggested from this side of the House in the debate on I.C.I. and Courtaulds two years ago and was turned down by the Government? In view of this fantastic record, does the right hon. Gentleman not think that we ought to debate the whole of this matter very soon?

Mr. Heath

The right hon. Gentleman is quite wrong in thinking that there was nothing in the Queen's Speech in connection with these matters. The whole emphasis of the Queen's Speech was on the modernisation of the economy of Great Britain and making it more efficient and more effective. Nothing gives me greater pleasure than to know that we are to have the support of the right hon. Gentleman and his hon. and right hon. Friends in taking the measures necessary to modernise the economy in all respects. I am aware of the facts which the right hon. Gentleman has given It was perfectly well known at the time why the change in the Commission was made by my right hon. Friend. [Hon. Members: "Why?"] Because its terms of reference were very largely previously connected with restrictive practices, which were taken out of the Commission's hands under the 1956 Act. At that time it was believed that it was not necessary for the Commission to continue in its previous state. Therefore, after further experience it is now our conclusion that it should be reorganised and dealt with in the way I have suggested. I believe that this is necessary. I am very glad to have the right hon. Gentleman's support for the measures we are taking on resale price maintenance.

Sir J. Vaughan-Morgan

Is my right hon. Friend aware that there are very many on these benches who will also welcome his proposals, particularly those of us who unsuccessfully in debates have nagged his predecessor to take just this action? Could my right hon. Friend say whether the protective action for resale price maintenance before the courts, which is outlined, will be able to be made effective before resale price maintenance is finally abolished?

Mr. Heath

I must ask my right hon. Friend to await the actual detailed proposals in the Bill. I do not think that he will expect me to go into detailed explanation now. It would be right obviously that those trades which are applying for exemption should maintain the exemption from abolition while the case is before the court.

Mr. Oram

On the last point made by the right hon. Gentleman, may I ask whether he recalls that the investigation by the Monopolies Commission into resale price maintenance on electrical accessories for vehicles took six years? Does the right hon. Gentleman's statement not mean that anyone who practises resale price maintenance will be able to continue all the time the tribunal is investigating the case and that this means in practice that the resale price maintenance will be going on while the Government are pretending to stop it?

Mr. Heath

No, Sir. The hon. Member is quite wrong. The Monopolies Commission's investigation into a limited number of electrical goods in motor vehicles was an investigation into monopolistic tendencies, in the course of which the Commission came to certain conclusions about resale price maintenance. It was not an investigation into resale price maintenance as such. I do not believe that there is any comparison between the procedure I suggest here and what the hon. Member has been dicussing under the Monopolies Commission.

Mr. Emery

Does the right hon. Gentleman realise that there is great concern in industry about the way in which price leadership has been able to get round certain of the actions of the Monopolies Commission and that it will be most welcome that this is being dealt with? Will my right hon. Friend give an assurance that certain of the resale price maintenance field—and I speak particularly of the pharmaceutical field—will be thoroughly assured that their safeguards can be investigated before the action suggested by the Bill would take place?

Mr. Heath

I thank my hon. Friend for the first part of his remarks. As for the second part, that industry or trade will be in the same position as any other. It will have the safeguard under the Bill that if it applies for exemption it will retain powers of resale price maintenance until the matter is settled by the court.

Mr. Holt

Is the right hon. Gentleman aware that repentances are always welcome, even though they may be deathbed repentances? When can we expect to see the White Paper to which he has referred? If the right hon. Gentleman proposes to repeal Section 25 of the Restrictive Practices Act, will he also be making it illegal to enforce resale price maintenance at common law and bringing in Amendments to the Patents and Designs Act, 1949, which also gives protection to get round retail price maintenance?

Mr. Heath

The White Paper will be published in good time for a discussion in the House, if the hon. Gentleman so desires and can arrange it through the usual channels. Amendments to the 1956 and other Acts will be covered in the Bill and in the process resale price maintenance will become unlawful.

Dame Irene Ward

Is my hon. Friend aware that I think that he assumes too much in the way in which he has put all this to the House? Is he aware that without any guarantees about reduction of prices over a very wide field I have no intention of supporting throwing a lot of people to the wolves for pie in the sky?

Mr. Heath

I am not an authority on my hon. Friend's pie in the sky, but I would say that there is absolutely no justification for talking in terms of throwing people to the wolves. The proposals which I have put forward contain very full safeguards indeed, which I have explained to the House and which will be set out in the legislation which the House will then have the opportunity of debating. Perhaps I might say to my hon. Friend that there are very many small shopkeepers, as I think she would describe them, who are engaged in trades in which resale price maintenance is not practised and who carry on a very successful and effective living. There are many small shopkeepers engaged in trade in groceries, in which resale price maintenance has now broken down, who are carrying on a very successful, prosperous and efficient living. I therefore hope that on mature reflection she will withdraw any accusation of the kind which she made.

Hon. Members


Dame Irene Ward

Why should I?

Mr. Heath

Perhaps I might tell my hon. Friend privately.

Mr. Wilson

Is the right hon. Gentleman aware that there is fairly general understanding that the splits on this matter are not confined to his back benches? We understand that his Front Bench is similarly split. Since no doubt the right hon. Gentlemen has studied the debate of 24th February, 1955, in which most of the proposals mentioned this afternoon were put forward from this Box, will he accept our congratulations on his speedy conversion to those ideas of nine years ago, and, indeed, to the points which we put subsequently on the 1956 Act? Secondly, will he tell us what he now thinks was wrong with the changes made by his predecessor which involved the Monopolies Com- mission in nearly seven years in reporting on the batteries case? Something must have been wrong somewhere. Will he tell us why his Department took nearly twelve months to publish that report once it was available? Finally, will he tell us the prospective date for the White Paper and for the Bill to which he referred?

Mr. Heath

I cannot at this moment give the right hon. Gentlemen the exact date for publication of the White Paper and the Bill,but it will be comparatively soon, obviously. This will give the House the opportunity of the discussion which it wants. The right hon. Gentleman referred to the points made in the debate in February. If he reads my statement carefully, and if the right hon. Member for Battersea, North (Mr. Jay) reads it, they will find that he has misunderstood part of it dealing with mergers and monopolies. I therefore suggest that he await the White Paper and that we discuss it in detail. The examination of the electrical goods for motor vehicles was very detailed and very complex, as he can tell from the size and length of the report. Nevertheless, there has been criticism for some time, not only since 1956, of the Monopolies Commission for the length of time which it took and also sometimes for the immense detail into which it went in comparison with the task which was required of it. This has been a general problem to which we have had to address our minds.

Mr. Wilson

After the eleven months which his own Department took to read and publish the report, will he tell us whether he intends to introduce forthwith a "cease and desist" order in respect of points affecting the public interest or which the Monopolies Commission reported? Will he take powers under the Act or shall we have further procrastination until finally we have a General Election and can settle these things?

Mr. Heath

There will be no procrastination and delay of action on this report. I shall make a separate statement about it.

Several Hon. Members


Mr. Speaker

Order. We cannot debate this matter now.