§ 4.0 p.m.
§ The Chairman
The first Amendment to be moved is No. 18, in page 2, line 31, to leave out "exempted goods" and to insert:registration, to the powers of the Restrictive Practices Court thereunder".
§ Mr. William Yates (The Wrekin)
On a point of order, Sir William. I would be grateful if I could draw your attention, and that of the Committee, to column 194 of the OFFICIAL REPORT dated 24th March. I realise, Sir William, that you cannot always hear everything that goes on in the Chamber, but when I saw these words in print this morning I thought that I had better refer to them.
The hon. Member for Nelson and Colne (Mr. S. Silverman), delivering himself of a great address to the Committee on 23rd March, concluded with the following words:In my political lifetime I have".—[OFFICIAL REPORT, 23rd March, 1964; Vol. 692, c. 194.]
§ The Chairman
Order. The hon. Member will be asking more of me than I am authorised to do if he asks me to consider words spoken in a previous debate. It is quite clearly laid down that the Chair—and that refers either to Mr. Speaker or to the occupant of the lower Chair—cannot entertain a complaint regarding words spoken in the House or in Committee unless attention is drawn to those words at the time. It would be without my capacity to consider a point regarding words used previously.
§ Mr. George Wigg (Dudley)
In order to help the Committee, Sir William, may I repeat the words? I say that they are true—
§ The Chairman
Order. The hon. Member for Dudley (Mr. Wigg) will be 482 aware that the origin of this rule, which is of very old standing, was to prevent questionable words being raised and causing debate on subsequent occasions. I certainly could not allow those words to be stated.
§ Mr. Sydney Silverman (Nelson and Colne)
Further to that point of order, Sir William. Perhaps I may, very respectfully, draw your attention to the fact that, as your yourself have stated, the words were spoken in the full hearing of the Committee. No one who heard them took the slightest exception to them—no doubt because they admitted them to be true.
§ Mr. William Warbey (Ashfield)
Mine is a new point of order, Sir William, but I am quite willing to give way to the hon. Member for The Wrekin (Mr. W. Yates) if he wishes to continue the point of order he raised.
§ The Chairman
Order. I understood myself to have ruled quite clearly on that point of order, and I cannot entertain it any more. If the hon. Member for The Wrekin (Mr. W. Yates) has a different point, of course, I will hear it.
§ The Chairman
Order. Again, the hon. Member asks me to do more than I am empowered to do. Such a Motion would be a matter for Mr. Speaker, and not for myself. Mr. Warbey.
§ Mr. Warbey
On a point of order, Sir William. I desire to move that further consideration of the Bill be adjourned 483 until such a time as hon. Members have in their possession a verbatim report of yesterday's proceedings of the Committee. If I have your permission to move—
§ The Chairman
Order. That I am paying attention to the hon. Member is not to assume that I am accepting his Motion to report Progress. Perhaps, at this stage, I should say that, as far as I have heard it, I do not think that I could entertain the hon. Gentleman's Motion. I heard, as did the full House, the question asked by him of Mr. Speaker, and heard Mr. Speaker dispose of it. The Committee is well aware of what is possible for HANSARD and what is not possible, and we ourselves must presume that the hon. Member was in his place throughout the debate and knows what happened.
§ Mr. Warbey
Further to that point of order, Sir William. You were kind enough to indicate that you would be willing to hear me, at least while I was claiming to move this Motion. May I, first, say—
§ Mr. Warbey
I am much obliged, Sir. William. I should like to say that I did not claim to move that the Committee should report Progress, but that the Committee should adjourn its proceedings for such time—
§ The Chairman
Order. There is no such Motion. It may save the time of the Committee if I tell the hon. Gentleman that I am sure that I cannot help him upon the point he is raising. I should like to deal with other points of order.
§ The Chairman
Order. If the hon. Member for Ashfield is convinced that there is weight in what he says, I shall hear him.
§ Mr. Warbey
I only desire to move a Motion under the Standing Order 484 which provides for dilatory Motions. One of the dilatory Motions provided for under the Standing Order is a Motion for the Adjournment of the discussion in Committee of the whole House, and that is what I am seeking to do.
§ The Chairman
The proper Motion would be that I do report Progress and ask leave to sit again. I am not going to entertain that Motion and I cannot help the hon. Member further.
§ Mr. Raymond Gower (Barry)
You ruled, Sir William, and, of course, we all accept your Ruling, that you cannot entertain a point of order on remarks made at an earlier stage, but after that matter was raised by my hon. Friend the Member for The Wrekin (Mr. Yates) my hon. Friends and I distinctly heard the hon. Member for Dudley (Mr. Wigg) assert that he repeated these words and held them to be true. I respectfully submit that this was a new assertion of these objectionable words upon which you can rule.
§ The Chairman
I heard no disorderly words. I hope that the Committee will make matters easier and not more difficult by encouraging hon. Members on either side of the Committee to say words which will create a difficulty. I should much prefer to get on with the business of the Committee.
§ Mr. George Brown (Belper)
On a point of order. I wonder whether you would allow me to enter an appeal to the Committee? This is not our Bill, but on either side of the Committee I am sure that we are not doing the reputation of the House of Commons much good—[HON. MEMBERS: "Hear, hear."] This also applies to hon. Members opposite. May I appeal for tolerance so that we can get on and start the business?
§ The Chairman
The first Amendment, which is called for decision only and 485 has previously been debated, is Amendment No. 18.
Amendment made: In page 2, line 31, leave out "exempted goods" and insert:
registration, to the powers of the Restrictive Practices Court thereunder".—[Mr. John Hall.]
§ Mr. Marcus Lipton (Brixton)
On a point of order. You were good enough, Sir William, to indicate, when Amendment No. 7 was before the Committee yesterday, that Amendments Nos. 14, 17 and 27 and new Clause 10 were also before the Committee. You were good enough to indicate that if it were the wish of hon. Members a Division could be taken on Amendments Nos. 14 and 17. It seems that the Committee, inadvertently perhaps, is being denied an opportunity of voting on Amendments Nos. 14 and 17—[HON. MEMBERS: "It is the wrong number."]
§ Mr. Lipton
I have not finished my point of order. I apologise for making a mistake about the number. I should like an opportunity to be afforded to the Committee of dividing on Amendment No. 14.
§ The Chairman
The Committee has already divided on Amendment No. 17 and it would be out of order to go back to Amendment No. 14.
§ Mr. Lipton
In those circumstances, would you allow a Division to take place on new Clause 10, because that relates to an entirely different category of goods?
§ The Chairman
That had not been selected or starred for a Division. In addition, it is a very long way off. I would much sooner get on with the next Amendment.
§ 4.15 p.m.
§ Mr. A. J. Irvine
I beg to move, Amendment No. 19, in page 3, line 9, at beginning insert:Without prejudice to the generality of the foregoing provisions of this section".486 At this stage in its deliberations the Committee turns to Clause 2, which deals with the unlawful withholding of goods by a supplier. We feel that the Clause would be improved if this Amendment were adopted by the Committee. We think this is so for one good reason in particular. If hon. Members look at the wording of subsection (3) I think that they will agree, at first reading, anyway, that in its terms it is definitive of what shall be "withholding" under the Bill.
When one studies the subsection, however, one finds that, on analysis, it is not intended to be definitive, but is designed to refer to some particular types of withholding of supplies which are regarded as a withholding for the purposes of the Act. There is a reference to refusal to supplygoods to the dealer except at prices, or on terms or condiitons as to credit, discount or other matters, which are significantly less favourable than those available to other dealers carrying on business in similar circumstances".The Minister will be the first to recognise that the language in subsection (3) does not comprise what, in practical terms, is likely to be the most common form of withholding of all the withholdings which will occur. In other words, the language of the subsection does not comprise what I may call a complete blanket withholding of goods without anything said or any conditions attached or any offer made. It is the type of withholding of supplies which I should have thought would be most likely in practice to occur and which the Bill is plainly designed to cover.
The language of the subsection is definitive in character. It is only on further inquiry, and, as I think, un-necessary inquiry, that one finds that it is not, in fact, definitive of withholding and does not refer to the simple decision of a supplier to stop supplying without any conditional comment or condition, a compact on the part of the supplier which in the context of the Bill it is manifestly intended to make unlawful.
There is a sense in which this is a drafting point, but it is an important point none the less. If our wording were adopted it would become abundantly clear that the language of subsection (3) is very illustrative of certain somewhat exceptional circumstances which, but for the 487 subsection, might be thought not to constitute withholding and that the intention of the Clause as a whole is to deal with all types of withholding as an act of cutting off supplies of goods.
That is our objective and I ask the Minister to say that the Government will give serious consideration to it. During the course of our considerations of matters in the Committee I have had the privilege, on behalf of the Opposition, of raising from time to time one or two points of a legal, or maybe drafting, character and the Minister has dealt with them with unfailing courtesy. There is no question about that. But he has always turned them down, and I think it fair to say that he has done so mainly upon the ground that he has received advice and that he can assure hon. Members on both sides of the Committee that anxieties that we have expressed are without foundation.
That is all very well. I have the greatest respect—no one more so—for the advice which the Minister receives. Let there be no misunderstanding about that. On the other hand, it has been a very common experience of mine, and, I have no doubt, of other hon. Members, that we have considered a point like this, we have been told that advice has been received, we have been given assurances and we have been invited, on the strength of those assurances, to let the matter drop; and then, after perhaps eighteen months or two years, the whole issue has come before the court.
The plain truth is that although, as I say, one respects the advice given, none the less the Committee has the opportunity here of improving the language of the Bill and getting rid of what, at the worst, may be an ambiguity and, at the very best, is an obstacle to the ready and clear understanding of the purpose of the Clause.
This time, I hope that the Minister will go rather further than he has done on other occasions. I am confident that he will be extraordinarily polite about it. Let him go just this little bit further on this occasion and either say that he will accept the Amendment on behalf of the Government, or that he will give further consideration to the merits of the argument and consider rewording to meet the point.
§ The Minister of State, Board of Trade (Mr. Edward du Cann)
This is the third occasion on which the hon. and learned Member for Liverpool, Edge Hill (Mr. A. J. Irvine) has been of assistance to the Committee. As he quite rightly pointed out, without teasing me too hard, on each of the first two occasions I found myself unable to accept his suggestions. None the less, for all that he said at the tailpiece of his short speech I hope that he may have thought that I was suitably reassuring. It was my intention to be, and I can assure him that there is no prejudice against Amendments of this sort. Indeed, we would be ready to accept them if we thought them appropriate.
The purpose of the Amendment under consideration is, as the hon. and learned Member said, to clarify the wording of Clause 2(3). It is intended, as he went on to point out, to make it abundantly clear that Clause 2(3), which covers cases of supply at less favourable terms, is not an exhaustive definition of withholding supplies. I say at once, in case he should think that, like a gramophone record, I shall repeat the speeches that I have made twice already, that we regard the idea of the Amendment as both desirable and wise. I confirm that it is the intention of the Clause to deal with all types of withholding. This is the point that the hon. and learned Gentleman was asking me about. I agree that there would be advantages in tightening up the wording of the subsection. Therefore, I say to him at once that the Government fully accept the principle of the Amendment.
I should like to accept the second of the hon. and learned Gentleman's proposals, but with reservations. He suggested that perhaps we would consider this matter again. I do not wish to do that, because my mind is made up about it—
§ Mr. Norman Cole (Bedfordshire, South)
I apologise for interrupting my hon. Friend, but he referred to "tightening up" the provisions of subsection (3). Surely, that is not what is wanted. What is wanted is a comprehensive net to catch any kind of new method of avoiding the abolition of resale price maintenance which might be thought of in the future. In other words, these two examples that are given 489 in Clause 2 are surely a little exclusive. They tend to make everything else look as if it is all right. We do not want a tightening up of that subsection. We want a widening of the subsection to catch everything in its net.
§ Mr. du Cann
My hon. Friend is entirely right. I apologise for my some-what loose language. In saying "tightening up" I meant "improve, clarify". That is precisely what we propose to do. "Widen" is exactly right.
If the hon. and learned Gentleman will withdraw the Amendment we will certainly table a new Amendment which will, I hope, precisely take care of the point that he has made. I would accept this Amendment if I could. I am advised, however, that it would not precisely do the job which the hon. and learned Gentleman and the Committee, particularly in the context of what my hon. Friend has just said, seek to do. That is why I seek to replace it with other wording. I apologise if I misled the Committee with my explanation.
§ Mr. Irvine
We are most grateful for that assurance. Bearing it in mind, I beg to ask leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Mr. A. J. Irvine
I beg to move, Amendment No. 24, in page 3, line 19, after "delivery", to insert "or terms of payment".
At this point in the Clause we are still considering the matter of the with-holding of supplies of goods from a dealer. We are now dealing with the narrow cases which this subsection is designed to exemplify and contain. In paragraph (b) there is provision, in effect, as to what shall constitute discrimination towards a dealer. It is not left open just to the discretion of the court to determine in those circumstances what shall amount to discrimination.
The method that is chosen to be adopted by the Bill is to refer to certain matters, namely, treatmentsignificantly less favourable than other such dealersreceivein respect of times or methods of delivery…These two matters are selected to be given specific reference in the language 490 of the paragraph. We would think it appropriate, therefore, if the Clause is to be specific to that extent, to have, also, a reference to what will presumably be, in practical terms, a very common type of discrimination—more common than discrimination in respect of times or methods of delivery—namely, discrimination of a pecuniary character affecting matters of credit or amount or time of payment. That is the object of this Amendment.
It will be observed by anyone who studies this Clause that when dealing with the case of refusal to supply goods to a dealerexcept at prices, or on terms or conditions as to credit, discount or other mattersthe Clause goes in some detail into what are the relevant circumstances that will constitute discrimination under that head.
When it comes to the separate case of a supplier who, although he contracts to supply goods to the dealer, treats him in a manner significantly less favourable than other dealers, there is no reference to method of payment and pecuniary conditions. I suggest that that is not a logical distinction to draw, and that if the Court is not to be given complete discretion but will have its mind directed to particular matters, then in addition to a reference to times and methods of delivery, there should be an express reference to terms of payment.
§ Mr. Harold Lever (Manchester, Cheetham)
Do I understand that the purpose of the Amendment is that if a manufacturer or supplier gives credit to one firm he will automatically be obliged to give similar credit to every other firm?
§ Mr. Irvine
I conceive that that would not be the consequence of the Amendment if it were carried. What it is designed to do—we are on a narrow point here—is to clarify the points which a court will have to entertain and consider in determining the question whether there is or is not discrimination against a dealer. That is all. We think it desirable that the Court's attention times and methods of delivery but to the wider topic, and, we think, in should be directed not only to the classical to terms a topic more likely to be 491 relevant—the matter of methods of payment and terms of payment.
I hope that the object of the Amendment is clear. I think I can best assist my hon. Friend by emphasising to him that we are concerned with the narrow point of the matters to which the attention of the Court is, by the language of the Bill, to be directed.
§ Sir Patrick Bishop (Harrow, Central)
I am a little doubtful about the meaning of the Amendment in relation to the preceding sub-paragraph, where reference is made to refusing delivery of goods, one reason being because of unfavourable conditions as to credit. It is now proposed, in relation to sub-paragraph (b), which deals with a case where the supplier contracts to supply goods, that he should not be permitted to make less favourable terms than to others with regard to the terms of payment.
There is an Amendment on the Notice Paper in the names of some of my hon. Friends which deals more specifically with the question of credit and whether it is right, in effect, that Parliament should take upon itself to lay down rules which would compel a supplier to give terms of credit to a dealer who he may think, for reasons quite other than those envisaged by the Bill, to be not worthy of credit.
If my hon. Friend were to accept the Amendment to sub-paragraph (b), it would defeat the whole object of a more general discussion on the question whether a supplier could be forbidden to refuse supplies on questions relating purely to credit. For that reason, I hope that my right hon. Friend will not readily consider accepting the Amendment.
§ Mr. Graham Page (Crosby)
On a point of order, Sir William. Would it be convenient for the Committee to discuss, at the same time, the Amendment No. 25 in my name, page 3, line 20, at end insert:(4) Nothing in this section shall make it unlawful for a supplier to refuse to supply goods to any dealer otherwise than on terms that cash or the equivalent of cash shall be paid with the order for the goods.as it seems so closely related to this one?
§ Mr. du Cann
Perhaps I might assist the Committee, Sir William. I should be perfectly willing to intervene at this 492 stage if that is what hon. Gentlemen wish, because the Amendment moved by the hon. and learned Member for Liverpool, Edge Hill (Mr. A. J. Irvine) covers rather a narrow point, whereas the point raised by my hon. Friend the Member for Harrow, Central (Sir P. Bishop) and the one which I think my hon. Friend the Member for Crosby (Mr. Graham Page) has in mind is very much wider and we could go on to deal with it adequately and normally in the case of the next Amendment. In any case, what I should have to say to the Committee would, I think, be satisfactory to my hon. Friends.
§ Mr. R. T. Paget (Northampton)
I find myself in considerable sympathy with the observations of the hon. Member for Harrow, Central (Sir P. Bishop). It seems to me that the more one looks at the terms of the subsection with a view to widening it, the more unworkable the whole scheme becomes.
After all, if one is required to give credit without having regard to the circumstances which, in the mind of the supplier, affect the credit-worthiness of the person to whom he is required to give credit, amongst the factors which affect credit-worthiness is surely trust-worthiness. If a supplier finds, whether or not the contract is enforceable or void, that a man does not behave in a trust-worthy manner with regard to the methods of dealing which have been understood between them, surely he is entitled to limit credit to a man whose conduct has proved untrustworthy in his eyes. Surely the man who gives credit is the man who must judge the trust-worthiness of the person to whom he gives it.
Again, people may legitimately fear that traders who go in for cutting prices may land themselves with an insufficient margin to carry on their business and may involve themselves in wars which they are likely to lose, and that they are likely in consequence to go bankrupt and become uncreditworthy. To say that one is compelled to give credit to a man of whose method of business one disapproves, and whose method of business, one feels, will get him into trouble, seems to be not only absurd but impossible in practice. This goes for the whole conception of the proposal.
493 Perhaps it would be more appropriate to deal with this on the Question, That the Clause stand part of the Bill, but I do not think that in the process of dealing with the Clause, against which I shall certainly vote, one ought to remain silent when Amendments are considered which seek to make it more and more absurd.
§ Mr. R. J. Maxwell-Hyslop (Tiverton)
I am very worried about the Clause and the necessity for these Amendments on a somewhat different ground. Although, at the beginning of the Clause, the words used are "for resale in the United Kingdom" I presume that it is resale in the United Kingdom if, as in so many export orders, the contract of sale is signed in the United Kingdom. This is often done specifically so that if the terms of the contract are in dispute they can be tested and adjudicated in a British court rather than, for instance, in a Venezuelan court or whatever the country might be.
We might, therefore, bear in mind that we are not just concerned with goods changing hands in the United Kingdom, but that, potentially, there is a very wide range of export contracts which are not excluded by the phrase "resale in the United Kingdom". In the export sales of expensive capital equipment the actual terms of sale vary widely from country to country. There are such questions as whether the Export Credits Guarantee Department will or will not give cover and, if it will, on what terms and whether it is or it is not advisable to secure a contract by confirmed and reputable letters of credit if such are forthcoming.
Every case is different and yet all of them can fall within the term of "resale in the United Kingdom". This is a point of significant substance which may well be overlooked when the words "resale in the United Kingdom" suggest that they exclude export orders. We must also remember that in many export orders there is a favoured nation clause.
§ The Chairman
Perhaps the hon. Member could help me to relate his remarks to the one Amendment which we are considering, which is in page 3, line 19, after "delivery", to insert "or terms of payment".
§ Mr. Maxwell-Hyslop
Yes, Sir William, I would indeed, because the 494 terms of payment may or may not include underwriting by the Export Credits Guarantee Department or may require letters of credit or insurance in the currency specified. There are a very large number of matters which may or may not have to be covered in the term "resale".
The Amendment applies to the subsection where the major Clause refers to…any goods from a dealer seeking to obtain them for resale in the United Kingdom…The aircraft manufacturer, for instance, is presumably a retailer for this purpose of all the components embodied in an aeroplane such as the radar in the nose, the engines in the wings and everything of that kind.
He is presumably, for the purposes of the Amendment, the subsection and the Clause, a dealer and, therefore, we have to be careful that the commitments which the supplier, that is, the manufacturer, may have entered into are not invalidated by the actions of a dealer who might not necessarily occur to the Committee as being a dealer in the phraseology of the Clause. In other words, this whole matter is much more complicated than the initial grounds in the Clause suggest.
I repeat that if we merely debate the merits of Amendment No. 24 in terms of payments, with minds focused on the sale of electric bulbs in the home market we shall exclude very important considerations which we may bitterly regret afterwards
§ Mr. H. Lever
I am reluctant to attack vigorously the wording of the Bill, it being conventional not to speak ill of the dead or about the dying. I do not want to point unnecessarily the comments made about the ill-conceived character of the drafting which is not related from general electioneering intentions or even commercial intentions to the true experience of commerce as illustrated by the hon. Member for Tiverton (Mr. Maxwell-Hyslop).
It is true that the Clause could interfere with entrepôt trade. Although the Chair is human, as we have now had it authoritatively stated, we do not propose to stray beyond the Amendment to the Motion that the Clause stand part of the Bill. Although my hon. and 495 learned Friend the Member for Northampton (Mr. Paget) made remarks with which I am in profound agreement, I think that we shall have the proper opportunity of expressing them on the Question, That the Clause stand part of the Bill. My hon. and learned Friend the Member for Liverpool, Edge Hill (Mr. A. J. Irvine) is the apotheosis of courtesy and clarity, but I cannot understand what his Amendment means if it does not mean opening the doors to some of the dangers about which some hon. Members are concerned.
The subsection makes clear that it is an unlawful withholding if the supplier, although he contracts to supply goods to him, treats the dealer in a manner significantly less favourable than any other dealer in respect of times and methods of delivery or other matters arising in the execution of the contract. I would have thought that that covered sufficient already to arouse the hackles of hon. Members and to include things like terms of payment, but if we insert the words "terms of payment" we shall be forbidding the supplier to make any distinction between one customer and another as to terms of payment. If I am wrong I should be glad if my hon. and learned Friend will correct me.
§ Mr. A. J. Irvine
I venture to put the matter to my hon. Friend in this way. I quite agree that the expression "other matters" probably covers terms of payment. All we seek to do by the Amendment is to draw out from "other matters" the point of "terms of payment", because we attach particular importance to that. That is all.
§ Mr. Lever
I am sorry if I expressed myself in a rather muddled way. May I put the point more clearly? I understand that the effect of my hon. and learned Friend's Amendment is to say that a supplier will be unlawfully with-holding supplies if he treats a dealer, one of his customers, significantly differently as to terms of payment from any other person who he supplies.
§ Mr. Graham Page
I do not think that the hon. and learned Member for Liverpool, Edge Hill (Mr. A. J. Irvine) meant that, but the Clause refers only 496 to "withholding" and not to "unlawfully withholding". To be unlawful reference must be made to Clause 1.
§ Mr. Lever
To build up a case of unlawful withholding one must first have a withholding, and it is a sufficient with-holding under the Clause if apparently a person refuses to give to any of his customers financial terms as favourable as to his most favoured customer. In other words, the question whether or not one is unlawfully withholding may depend on whether one is withholding, and the question whether one is withholding itself depends on an allegation that a person is not treating a customer who has complained as favourably as another customer in the matter of terms of payment.
If the Amendment is accepted it might in certain cases—and we can work out the hypothesis—quite easily happen that a man, as part of the case of unlawfully withholding, will be found to be guilty—and I do not mean that in a criminal sense—because he has withheld goods only in the sense that he was ready to supply them but was not ready to give customer A the same terms of payment as customer B.
In other words, the Amendment might enforce terms on a customer which otherwise would not be available to him on his credit standing. Perhaps my hon. and learned Friend the Member for Edge Hill can clear my mind on this point. I find it impossible to believe that I could fail to support him, but I could not conceivably support an Amendment which underlines still further an obnoxious matter in the Clause, namely, the intention to enforce against a firm the obligation to give the same financial arrangement to the honest and the dishonest, the solvent and the insolvent, the punctilious in payment and the dilatory in payment.
Perhaps I have misunderstood the impact of subsection (3) and of the arguments which have been addressed. I hope that somebody will clear my mind on the point, because as the Amendment stands there are cases in which it would have the effect of compelling a supplier to give the same favourable terms to a dud customer as he gave to his best customer, and I could not support that.
§ Mr. Anthony Fell (Yarmouth)
I, too, should like to clarify my mind on 497 the Amendment which was so courteously presented by the hon. and learned Member for Liverpool, Edge Hill (Mr. A. J. Irvine). Possibly I am looking at this much too simply, but surely subsection (3,a) deals with the making of the arrangements and the contract and subsection (3,b) deals with the execution of the contract. If that is true, does it not make the Amendment irrelevant?
§ Mr. Michael Foot (Ebbw Vale)
I hasten to say that I am not rising to attempt the herculean task of clarifying the mind of my hon. Friend the Member for Manchester, Cheetham (Mr. H. Lever). Most of the previous debates have been conducted by lawyers, although my hon. Friend is not a lawyer. I am reminded of the statement of the most famous journalist who ever sat in the Press Gallery of the House of Commons, William Hazlitt, who said that the only thing that gave him any respect for the House was the contempt which he had for lawyers in the House. Since have some sympathy with this point of view, I hesitate to participate in this discussion.
I have approached the Bill in a spirit which may be rare, if not unique, in the House of Commons. I am approaching every Amendment with a completely open mind, and I like to have the matter fully clarified before I decide which way I shall vote at the end. Since I wish to be equally clear on this Amendment as on others, I wondered whether I should reserve my own participation in the debate until I had heard the Minister. I was not sure whether that would assist the clarification or whether I should run the risk of allowing him first to enlighten the Committee.
Although, in my approach to the Bill, I have a great deal of sympathy with my hon. and learned Friend the Member for Northampton (Mr. Paget) and my hon. Friend the Member for Cheetham, and on other Clauses, after listening to their arguments, I am inclined to come down on their side of the fence, in this case I think that they happen to be wrong. I understood that, throughout, my hon. Friends and many others who have been critical of the Government's Bill have been critical to a large extent because they wish to protect the interests of small shopkeepers. But it seems to 498 me that by their intervention on this Clause my hon. Friends are protecting the interests of the manufacturers.
This Amendment is a protection for the retailer, because it prevents the manufacturer from discriminating between retailers and adds a further underlining of the way in which the manufacturer will be prevented from discriminating between retailers.
§ Mr. Foot
I understand that, but my hon. and learned Friend had the candour to say at one point that perhaps his speech might be better delivered on the Question, That the Clause stand part of the Bill. I thought that that was the most telling part of his intervention.
If he were arguing against the whole Clause I could see some merit in his argument. This is the reason why I began with the claim, not received with overwhelming approval, that I approach all these miners with an open mind. I therefore apply myself to the Amendment before the Committee, and if it is agreed by the Committee that, in general, we wish to abolish resale price maintenance, when we look at how this Clause will operate there is an obligation on hon. Members to ensure that we shall treat retailers as fairly as possible.
In the Clause, therefore, the conditions are laid down on which the manufacturers will be prevented from discriminating between retailers because a retailer has cut his prices. We should make it as fair as possible. If the law lays down that there shall be no resale price maintenance, which is what the Bill will achieve if it is carried, then we must try to ensure that the Bill does not subsequently discriminate unfairly against particular retailers. I would rather that the House of Commons decided the matter than leave it to individual manufacturers, which is what my hon. Friends would do.
I cannot attempt to emulate the legal language which has come from different quarters, but as far as I can see at the moment—and I see it fairly clearly—all those who are supporting the interests of the small shopkeepers should support 499 my hon. and learned Friend's Amendment. I have the matter very clear in my mind at the moment, but I am not sure whether that will survive the intervention of the Government Front Bench.
§ Mr. Gower
I hesitate to quarrel with a member of the senior branch of the profession, but my main objection to the Amendment is that it is a form of circumlocution. I cannot see how it will have any of the effects which are being suggested because on the face of it the Clause specifies the kind of methods of delivery and is followed by the all-embracing expressionother matters arising in the execution of the contract".As the hon. and learned Member for Liverpool, Edge Hill (Mr. A. J. Irvine) has admitted, that certainly includes the expression incorporated in the Amendment. How the Amendment can have the slightest effect one way or another is beyond me. It is a form of circumlocution which is not necessary in the Bill.
§ 5.0 p.m.
§ Mr. Herbert Butler (Hackney, Central)
I am concerned with the smaller retailer and anxious to see that we give a measure of protection to those who are the distribution point of the manufacturers. I want to know what "terms of payment" mean. Is it a question of credit? Is it that the small retailer has to pay on delivery? Is it a question of extended terms? The Clause is designed to protect the small retailer, and to enable him to get terms as good as the large retailer would get. I should like an exact definition of what my hon. and learned Friend the Member for Liverpool, Edge Hill (Mr. A. J. Irvine) means by "terms of payment".
§ Mr. A. J. Irvine
I will deal, first, with the point raised by my hon. Friend the Member for Hackney, Central (Mr. H. Butler). It seems to me that the matters enumerated by him would all come within the expression "terms of payment".
I am particularly glad to have the support in this matter of my hon. Friend the Member for Ebbw Vale (Mr. M. Foot). One of the things which makes life tolerable for me is the knowledge 500 that his dislike of lawyers is not universal. My hon. Friend had seized the point. I am very glad to have his support.
I cannot do more in reply to my hon. Friends, who have insisted upon an explanation of the Amendment, than repeat what I said earlier. I remind my hon. Friends that we are dealing here with what is to be the relevant evidence of whether there has been a withholding of supplies. This is a very limited point indeed. It is this with which we are concerned. I agree with the Minister, who pointed out precisely that in an intervention. We are dealing with the narrow question of what is to be the evidence entertained by the Court in determining whether there has been a withholding of supplies.
§ Mr. Angus Maude (Stratford-on-Avon)
I must confess that, after listening to the speech of the hon. and learned Gentleman and of other hon. Gentlemen, I am by no means clear. Would the hon. and learned Gentleman deal with the point raised by my hon. Friend the Member for Yarmouth (Mr. Fell)? It seems to me that subsection (3,a) deals with terms of a contract made and entered into before delivery arises. Subsection (3,b), deals with the manner in which, after a contract has been signed, notwithstanding that he has contracted a supplier tries to fiddle the retailer in the manner in which he carries the contract out.
I am still waiting for the hon. and learned Gentleman to give me an example of a way in which a supplier could do this in respect of terms of payment without breaking his contract. Surely all the terms of payment—conditions as to credit and time of payment—must have been settled in the original contract. I cannot understand how, at the stage of delivery and execution, a supplier could get round them.
§ Mr. A. J. Irvine
I am much obliged to the hon. Member for Stratford-on-Avon (Mr. Maude) for raising this point. I agree with his account of the provisions in the paragraphs. I would point out to him, in passing, that paragraph (b) is alternative to paragraph (a). I entirely agree that paragraph (b) deals with the case where there has been a contract. It assumes, and I should have thought reasonably assumes, that, even 501 where there has been a contract, there may still be a withholding of goods. That is the situation with which the paragraph is designed to deal.
It is a matter for the Committee, but I should have thought that it would be quite possible for there to be some conduct by the supplier relative to terms of payment after a contract had been completed by which the supplier could discriminate in respect of that dealer as distinct from others.
§ Mr. Irvine
The hon. Gentleman, perfectly fairly, asks, "How?" The supplier might write to the dealer telling him that, in view of his conduct, or in view of circumstances which had arisen, he proposed to require payment for the goods to be made in a particular fashion, perhaps at a date earlier than had previously been contemplated by the parties. This might well not be spelled out in the contract. There might well be an enforceable contract between the supplier and the dealer which none the less left open some room for manœuvre on the matter of payment and time of payment.
The Committee will appreciate that this could easily occur. There might well be an enforceable contract between the supplier and the dealer, and yet, within the context of that contract, there might be some room for manœuvre under which the supplier could discriminate, and that room for manœuvre might well affect terms of payment. This is the point. I cannot put it more clearly. It is for the Committee to consider the merits.
I fully acknowledge that most of the criticisms of the whole proposal in the Clause made by my hon. and learned Friend the Member for Northampton (Mr. Paget) and by my hon. Friend the Member for Manchester, Cheetham (Mr. H. Lever) are valid. What we are trying to do is to improve a Bill. It is sometimes desirable to improve a Bill, even if it is a bad Bill. That is what we are trying to do here. To them, I cannot say more than that in the Amendment what we are trying to do is to make clear what are the factors that the Court should be invited to have regard to in determining whether there has been a withholding of goods.
502 Let us leave aside for a moment the whole question whether a withholding of supplies is lawful. That is a different point. At some stage in any proceedings there must be a decision upon the question of fact: has there been a with-holding of supplies? In determining that issue of fact, we think that it would be wholly appropriate that the Court should have regard to any discrimination with respect to terms of payment or methods of payment. That is what we are after. We are not to be taken for one moment as approving the general process here—indeed not. Our effort here is designed to improve the Bill.
As it has been thought appropriate to call attention in the Bill to particular factors, such as terms and methods of delivery, we, rightly or wrongly, take the view that these should not be brought out in this fashion as of special importance when discrimination affecting method of payment may be just as significant.
§ Mr. H. Lever
I am sorry to take up more time on this, but it is quite an important point, although I agree with the hon. Member for Barry (Mr. Gower) that the words are tautologous and not necessary, because the mischief I am criticising would exist as the Clause is drafted. As my hon. and learned Friend the Member for Liverpool, Edge Hill (Mr. A. J. Irvine) has had an Amendment called which underlines the evil character of the subsection, and since that is what we are discussing, it is not improper or unreasonable or illogical to focus attention upon it. We can reserve more general criticism for the debate on the Question, That the Clause stand part of the Bill.
In spite of the objection of some hon. Members, this is law which we are making, if we pass the Clause. It is a most unhappy thing for people who are not lawyers to find that lawyers are apt to interpret law rather better than non-lawyers. It is all very well for my hon. Friend the Member for Ebbw Vale (Mr. M. Foot) to express a general antipathy to lawyers, but he will always find himself in the same anomalous position—that he is not against lawyers, but is only taking sides with one lawyer against another. I want him, with his self-proclaimed and continuous open-mindedness, to come to realise that he 503 has backed the wrong lawyer in this case and come back to our side of the matter, for this reason.
As I understand the Clause—I hope that I shall be corrected if I am wrong; I will readily yield—its purport is that, even though a man contracts to supply goods, even though the terms of payment are exactly specified in the contract, and even though he delivers in accordance with the contract, it will still be a withholding of goods if he has treated the man supplied any less favourably as to terms of payment than somebody else—even after contract and, as far as I understand it, even after delivery.
This abominable piece of innovation is such that the more I listen and wait for an explanation—which is a long time coming—the more indignant I am apt to wax at the meaning of the Clause.
§ Mr. A. J. Irvine
If my hon. Friend's ingenious and attractive criticism is valid, will he agree that it is a criticism of the Bill rather than of the Amendment?
§ Mr. Lever
I am not criticising my hon. and learned Friend, who is trying to assist the Committee in qualifying the meaning of the Clause, even though he thinks that he may be improving it. If it is a mischievous Clause one must qualify it and seek the mischief, and I am merely speaking on this point.
§ Mr. Lever
I am merely following the argument deployed by my hon. and learned Friend the Member for Liverpool, Edge Hill (Mr. A. J. Irvine). I think that non-lawyers will be able to interpret what I am explaining, and if I am wrong I am sure that the Minister will correct me. As I understand the Clause, we are faced with this position. If the Amendment is carried there will be a withholding for the purpose of the provision if the supplier honours the terms of his contract with a customer who has already dishonoured the terms of his contract.
None the less, if he supplies him with goods and gives him reasonable terms of payment or credit, that will be the case, although those terms need not be as 504 favourable as the terms given to other of the supplier's dealers. In such cases there will be a withholding for the purpose of the Bill. If I am wrong in that interpretation I am ready to yield if I am corrected.
§ Mr. Lever
My objection is really a point of view. My objection is that even if the Amendment is accepted there will be difficulties. An example may help. A man supplies goods and his customer agrees not to charge less than a certain price. That customer breaks the agreement and charges something different and has, therefore, broken his contract. The Clause is intended, as is the Bill, to see that people who break their obligations of this kind are not penalised by the people with whom they are trading.
Let us assume that we allow people to break agreements of this kind and force suppliers to deal with people who will not be persona grata willing to take part in these practices.
§ Mr. Eric Lubbock (Orpington)
Once the Bill is on the Statute Book such an agreement would be void under Clause 1.
§ Mr. Lubbock
The hon. Member has been postulating that there was something in the terms of the contract—
§ The Temporary Chairman (Dr. Horace King)
Order. It will help the Committee and the Official Reporters if hon. Members address the Chair. It is becoming extremely difficult to hear.
§ Mr. Lubbock
The hon. Member for Manchester, Cheetham (Mr. H. Lever) was postulating that there was something in the contract between a supplier 505 and a dealer which stated that the latter had to resell at a certain fixed price. I am pointing out that we have agreed in Clause 1, which now stands part of the Bill, that no such terms under such a contract would be valid. Such a contract would be void under the Bill.
§ 5.15 p.m.
§ Mr. S. Silverman
I intervene in the hope of shortening this discussion. What my hon. Friend is saying, as I understand it, is that it would be wrong to include in the Clause the words proposed by my hon. and learned Friend the Member for Liverpool, Edge Hill (Mr. A. J. Irvine) because this would prevent a supplier from imposing a more onerous condition in the circumstances contemplated by the Clause than he imposes on others. What my hon. Friend is saying is, "Why should he not be allowed to impose an onerous condition because the retailer has broken a clause in his contract?" Since the Bill makes the terms in the contract, of which he is in breach, void, he is, therefore, not in breach of any terms of his contract and, thus, should not be penalised.
§ Mr. Lever
Had my hon. Friend heard the whole of the debate on this subject he might be aware of my point. I am sorry to have to labour this point, but since there are so many non-lawyers present it may help if I explain the matter in a more simple way. The purport of the Clause is to force a supplier to supply a dealer with goods even though he does not want to do so. Such a supplier can be made to do so and he can also be made not to withhold supplies from that dealer. A part of the question of proving the unlawful withholding of supplies from a dealer must be to prove actual withholding.
I have already said that I am willing to be corrected if I am wrong in my view that as the Clause stands it may be possible to prove the withholding of supplies from a customer if that customer is given goods on terms of credit, finance 506 or payment which are less favourable than the terms given to some others of that supplier's customers.
The machinery of the Clause runs something like this. When one is seeking to force a man to deliver goods, one of the things one can say is that he has failed to deliver because he has contracted to supply, or he may already supplied, but that the terms of credit he is giving are significantly less favourable than some of the terms he is giving to a more lucky man with whom he is dealing. It may be asked, "What is wrong with that?", and some hon. Members may suggest, "Let us force all suppliers to treat all their customers on the same basis of credit and if they do not they should become liable to be charged with withholding supplies."
§ Sir Douglas Glover (Ormskirk)
I am listening to the hon. Gentleman with interest. Would he clarify an example I have in mind? Suppose a manufacturer is supplying firm A and is allowing that firm 5 per cent. discount for payment within seven days. Would it be illegal to supply goods to firm B at 2½ per cent. based on monthly terms? Would that be discrimination or would it be allowed?
§ Mr. Lever
It would depend on what had happened. I suppose that there would be nothing wrong and there would be no difficulty in having stickier terms for one customer than for another. This is normal in business, unless the customer who is being discriminated against happens to have broken whatever understanding the supplier had or whatever advice he had been given about the retail price.
Suppose a manufacturer is supplying a trader with cornflakes and that the retail price is 1s. a packet and the terms are cash payment, but because he is not a particularly solvent trader the manufacturer says, "I will supply you but you must pay cash." That is all right and the manufacturer can insist on that—but then the retailer, instead of selling the cornflakes at 1s. a packet, sells them it 10½d.
From then on the manufacturer will be in great difficulties because if he insists on cash payment he has broken the understanding that he had with the 507 retailer, who will say, "You are discriminating against me. You contracted to give me three months' credit and I want all of that. If you do not give it to me you will be withholding goods under the provisions of this Clause."
Here we have a complete and unlawful withholding. The retailer will say, "This is unlawful withholding of goods because you have given me less favourable financial terms than you gave to so-and-so, and my position is a lawful one because I am in the happy position to be able to say that I broke my retail price contract before." To qualify for the full benefit of this Clause, one has to break the resale price in order to enforce more advantageous terms with the manufacturer.
§ Mr. Lubbock
Let me put two points to the hon. Gentleman. First, he talks about the terms of credit—which surely come under subsection (3,a) rather than (3,b)—and, secondly, does he not think that the phrase in "similar circumstances" in (3,a) might apply to the credit service of the two dealers he has described?
§ Mr. Lever
It is no good saying that subsection (3,a) covers (3,b), because it does not. I am talking about (3,b)—terms of payment and terms of credit. I am sorry if that was not obvious. Terms of payment and terms of credit are the same thing.
I am dealing with the Amendment, and I am sure that the Chair would have called me to order if I were dealing with terms of credit under subsection (3,a), I am dealing with what happens after the manufacturer, however unwillingly, has agreed to supply the goods. He may have agreed the terms of payment, but this is the interesting point; according to the Clause—the Minister can challenge me if I am wrong—a manufacturer or supplier is guilty of withholding supplies of goods even if he contracts to supply goods to a dealer whom he dislikes and even if he agrees reasonable credit terms with him.
§ Mr. Lever
I am trying to show hon. Members who are not lawyers that where an Act of Parliament says that someone is witholding goods, there is still a 508 withholding of the goods if one contracts to supply the goods and even if one delivers the goods, even after the man has received the goods and resold them at any price he likes. He can claim that there has been an illegal withholding of goods because he has not been given so much credit as has been given to some other trader.
§ Mr. Lever
A complete answer to the lawfulness of it if it could be proved. Why should he have to prove it? Why should one say that a supplier is withholding goods when he is not withholding goods? I understand that it did not commend itself to the Committee to say in the Bill that a man was deemed to have eaten a fillet steak when he had eaten a cough lozenge. How much more so should it not be attractive to the Committee to say that a supplier is guilty of withholding goods if he is not witholding them. I strongly object to a Clause which deems a man to be withholding goods when he is not, and when all that he is doing is making discrimination in terms of credit or payment, which is a reasonable and commercial thing to do.
There is a second point that I should like to make. Some hon. Members say that discrimination as to terms of payment is one of the things that the Court should be able to look at in deciding whether there has been a withholding of goods. With great respect, if my hon. and learned Friend's Amendment is carried that is not what would happen. I would not mind, assuming that I accepted the general purpose of the Clause, if the Court could be instructed in deciding whether there had been unlawful withholding to take into account all such matters as to whether the terms of credit had been discriminatory, and so on. But, that is not what my hon. and learned Friend says or what the Clause says. It says that once it has occurred the suppliers shall be deemed to have withheld the goods.
509 That is a different matter. I agree that the Court should be entitled to take this matter into account in deciding whether there has been a withholding of goods. What I object to is that where a man in supplying a customer holds up the goods on terms of payment, it is mandatory on the Court to say that there has been a withholding of goods. I do not want to go beyond that at this point, because I hope to return to it at greater length and give more thoughtful consideration to it on the Question, That the Clause stand part of the Bill.
We are entitled to some information. It is not necessarily reactionary in dealing with small shopkeepers to say that as between one customer and another the supplier is entitled to have regard to credit-worthiness. It is not a reactionary attitude to grant this normal commercial right to a trader, and I am surprised that the hon. Member who has to supply traders and has to have regard to the credit-worthiness of the people with whom he deals in his capacity as a publisher should think that it is not an un-reasonable thing to ask that manufacturers and suppliers should have this power.
§ 5.30 p.m.
§ Mr. du Cann
I had a certain twinge of regret that we had passed the last two Amendments without any discussion, but we have now had 14 hon. Members intervening in this matter, which is really rather a narrow Amendment. Indeed, I have enjoyed all their speeches. The difficulty has been that I am not sure that I have understood them all. I acknowledge that that, no doubt, is entirely my own fault, but if I may endeavour to cap something said by the hon. Member for Ebbw Vale (Mr. M. Foot) a little while ago, I feel that I ought to withhold the supply of explanation not on the grounds of price cutting but of inadequacy.
I will endeavour to deal with the Amendment, and there is one very general remark I wish to make which I hope will be of assistance to the Committee. To begin with, subsection (3), which we are discussing, provides that two forms of discrimination are to be treated as if they amounted to a withholding of supplies. The hon. and learned Member for Liverpool, Edge Hill (Mr. A. J. Irvine) went through 510 them with some care, and I will not repeat them. To come specifically to the Amendment, the hon. and learned Gentleman stated that a court should have regard to the terms of payment. That must certainly be true, and that is one of the important matters to be considered.
The Amendment would add the words "or terms of payment" after the word "delivery" in paragraph (b). We take the view that it is not necessary to add these words because the terms of payment are not matters which can arise in the execution of a contract. As my hon. Friend the Member for Yarmouth (Mr. Fell) pointed out, and as my hon. Friend the Member for Stratford-on-Avon (Mr. Maude) pointed out, terms of payment would have to be agreed at the time of the contract, even if spread over a period of time. So, if the supplier offers to the dealer significantly less favourable terms of payment than to other dealers, then the case is covered by paragraph (a) which refers to terms or conditions which would include terms of payment. Therefore, I agree with the hon. Gentleman that this is a point which calls for consideration as a matter of some substance. None the less, it is already covered, in our view, and I hope that the Committee will feel reassured by what I have said in that regard.
§ Mr. John Hynd (Sheffield, Attercliffe)
If it were the practice of the supplier to provide in the contract for payment within a certain period of time but it was his practice, none the less, to give a reasonable extension of the time and in one case he refused to give such a concession, would that not be discrimination that occurs afterwards?
§ Mr. du Cann
Yes, it would be part of the contract and could be considered as such, and, indeed, is covered by the Clause as drafted. If the Committee wishes, and if there is any doubt about the matter. I will certainly undertake to look at it again in the light of this discussion.
§ Mr. J. Hynd
It may be part of the contract that payment should be made within a specified period, but it may be the long-established practice of the supplier to give to reliable customers an extension, by a gentleman's agreement or a general concession, in a particular case.
§ Mr. du Cann
My impression is that the matter is covered, but I am perfectly willing to look at it again. If it is not covered, then we will propose an Amendment to deal with the subject. However, I feel quite clearly, although I may be wrong, that it is covered.
§ Mr. H. Butler
All of this case seems to be concentrated on a manufacturer entering into a contract with a retailer. In fact, that is not so. It may be so in the minds of lawyers. The manufacturer may show a small retailer a suite of furniture which he proposes to buy. He may be selling him other goods as well, and the retailer gives the order to the agent who at some time delivers the suite. As far as he knows, he is going to get the normal terms of credit, but, in contradistinction to the credit allowed to a large retailer, the manufacturer says, "You have to pay pro forma". No formal contract is entered into. I appreciate that the Minister says he will give consideration to the matter, but I want to disabuse the minds of hon. Members who believe that the small retailer enters into a fixed contract and terms of payment. Day after day representatives call on small retailers and there is discrimination in these matters which creates the difficulties outlined.
§ Mr. du Cann
I think I understand what the hon. Member for Hackney, Central (Mr. H. Butler) is saying, but, of course, contracts do not necessarily have to be written. They can be verbal and their terms need not be necessarily expressed. They can be implied. Therefore, I think that the circumstances which he has in mind are covered by the Clause. At any rate, I have given a general assurance on the matter.
The other general point I want to make—we shall be discussing this, but I think it relevant to make it now—is that under the Clause as drafted a supplier is perfectly entitled to impose whatever terms he wishes when he supplies the goods so long as he does not offer significantly less favourable terms to a dealer because he is cutting prices or is likely to do so.
Having given the Committee that explanation in regard to the Amendment itself, I hope that the hon. and learned Member for Edge Hill may not wish to press it at the moment. Indeed, should it be necessary, we can discuss it further at another stage.
§ Mr. H. Lever
Am I wrong in supposing that the subsection as it stands will treat the manufacturer as I have alleged, as withholding supplies for the purpose of the Clause, if he delivers the goods in accordance with his contract but thereafter it is discovered that his terms of payment were significantly less favourable than those offered to other customers? Am I right or wrong in alleging that?
§ Mr. du Cann
It would take me a minute or two to reply to the hon. Gentleman. I think that it would be going very far beyond the Amendment, and I would not wish to trepass on your patience, Dr. King, by going outside the rules of order. I will, if I may, give the hon. Gentleman a full answer in the debate on the Question "That the Clause stand part of the Bill."
§ Mr. Niall MacDermot (Derby, North)
May I seek to join in the Herculean task of clearing the minds of hon. Gentlemen on this Amendment? I suppose that, being a lawyer, all I shall succeed in doing is to increase the fog.
Listening to the Minister's reply, I am led to wonder whether he really has himself appreciated the point, as I understand it, of my hon. and learned Friend's Amendment. As has been pointed out by a number of hon. Members, paragraph (a) of the subsection dealing with the making of the contract. Paragraph (b) deals with the performance of the contract. Surely, the point here is that we get the case where a supplier enters into identically the same contract with several different dealers—that he enters into a contract with dealers A, B, C and D—and that these contracts are all in identical terms, but that he discriminates between them in the way in which he enforces the contract.
As I understand my hon. and learned Friend's Amendment, it is directed to the case where the discrimination between dealers does not lie in discrimination as to the terms of the contract but to discrimination in the enforcement of those terms and, in particular, in the terms as to payment. The common terms of all the contracts may be for payment on delivery, but the way in which the supplier who is trying to enforce resale price maintenance can try to get round it is by saying to the offending dealer, as he considers him, "I am going to hold you 513 directly to the terms of the contract, but, of course, if you adhere to resale price maintenance then I will extend to you the same facility which I am granting to other customers, not as a term of the contract"—ex gratia as lawyers call it—"the facility of extended credit."
It is that situation which at the moment is not covered by the Bill at all. Whether, in fact, it is practicable to try to render unlawful practices of that kind is a more general question which I think we should discuss on the Question, "That the Clause stand part of the Bill". But, as I understand it, that is the point to which the Amendment is directed. Judging by the Minister's answer, I do not think that he appreciates that this door is still left open in the Clause as at present drafted.
§ Mr. du Cann
I am very grateful to the hon. and learned Member for Derby, North (Mr. MacDermot) for his typically clear explanation, but, whatever impression I may have created in his mind, I am satisfied in my own that I have understood the matter. I certainly understood his extremely clear speech. I am satisfied also that the matter is covered. Nevertheless, I have undertaken to study what has been said in the debate.
§ Mr. A. J. Irvine
If the expression "terms of payment" in the Amendment related to terms contained in the contract, it would, of course, be an illogical Amendment. As I understood it, that was the point taken by the hon. Member for Stratford-on-Avon (Mr. Maude), and I agree with him about that. However, my hon. and learned Friend the Member for Derby, North (Mr. MacDermot) has expressed the matter absolutely correctly. We are concerned to deal with the possibility of discrimination in the enforcement of contracts or the methods of payment pursuant to contracts after the contracts have been concluded.
The Minister has been good enough to give us certain assurances. I am obliged to him for them, because I think that they go fairly far. He will look into the matter and consider it further. I hope that, in his consideration of the points we have raised, he will have particular regard to the question directed to him by my hon. Friend 514 the Member for Sheffield, Attercliffe (Mr. J. Hynd), which, in a very few words, put precisely the question which we wish to have considered further.
I hope that the Committee will think that this has been a useful discussion. In view of the assurances which we have received, I beg to ask leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Mr. Graham Page (Crosby)
I beg to move Amendment No. 25, in page 3, line 20, at the end to insert:(4) Nothing in this section shall make it unlawful for a supplier to refuse to supply goods to any dealer otherwise than on terms that cash or the equivalent of cash shall be paid with the order for the goods.This new subsection is intended to ensure that refusal to supply goods on credit or refusal to supply because of a dealer's lack of financial substance shall not be prejudiced by the Bill. I hope that, in putting the Amendment to the Committee, I shall not be guilty of tedious repetition. What I say is bound to cover some of the points raised on the previous Amendment.
Under subsection (1) of the Clause as it stands, it is unlawful to withhold supplies of goods on the grounds there set out, that is, that the dealer has sold at a price below the recommended resale price or is likely so to do. This is said to be an unlawful withholding.
One turns then to subsection (3) to see what is or what can be a withholding of goods. A supplier shall be treated as withholding supplies of goods if the conditions in paragraphs (a) or (b) exist. Under (a), he shall be treated as withholding supplies if he refuses to supply the goods on terms or conditions "significantly less favourable" and so on.
One turns then to Clause 4(4). Supplies will be wrongfully withheld if the conditions in paragraphs (a) and (b) apply, that is, if down to the time when supplies were so withheldthe supplier was doing business with the dealer or was supplying goods of the same description to other dealers…and he knows that the dealer has been selling goods under the recommended resale price.
Let us suppose that a supplier merely refuses to supply on credit. He does 515 not think that the dealer has the substance to justify the giving of credit and he wants payment in cash. He has then contravened Clause 2(3,a). Never mind whether it is an unlawful withholding or not, at that stage he has withheld goods because he has refused to supply them unless the man pays cash. The question then is, Has he done so unlawfully under Clause 2(1) on the grounds set out in paragraphs (a) or (b) thereof.
In order to answer that question, one turns to Clause 4(4). If he has been doing trade with that retailer or with another retailer in the same line of business, and he knows that the retailer has undercut or has threatened to undercut, he is then presumed to have withheld the goods unlawfully. The undercutting has nothing to do with the matter in his own mind, however; he has refused merely because he wanted cash for the goods.
I shall try to illustrate the point by an example. A supplier has been supplying goods to confectioner A. Confectioner B asks for similar supplies. He says, "You have been supplying A. Please supply me with the sweets which you have been supplying to A". The supplier knows that retailer B has been selling at below the recommended resale price, so Clause 4(4) comes into operation. But he knows also that retailer B is insolvent, so he refuses to supply unless he gets cash for the goods.
However, because he knew of the undercutting by B, he is presumed to have wrongfully refused to supply B with the goods and he can be sued under Clause 4(2). On proof of his requirement of cash for the goods, he at once is turned from a defendant in that action to a plaintiff who has to prove something. He is no longer a defendant who can call on his plaintiff to prove the case. Once the original plaintiff has proved, "You refused these goods except on cash terms", the unfortunate supplier has to say, "Yes, but I did not refuse them because you were undercutting. That was not in my mind". He is thus forced to prove a state of mind in order to justify his refusal to supply the goods except on cash terms.
As the Bill stands, the supplier in such circumstances may well be found by the 516 court to have wrongfully withheld supplies and to be subject to a civil action for damages under Clause 4(2).
§ Mr. Page
For an injunction, yes. A supplier must be allowed to decide for himself whether he will require cash for goods or will grant credit. If the Bill prevents a dealer doing that by this roundabout way of trying to make him prove a state of mind or a negative state of mind, it is going much too far. I think that if we could say this definitely, as I propose in my Amendment, it would be a great relief to both suppliers and retailers and that it would make the Bill workable.
§ Mr. Ronald Bell
I support the Amendment. I do not wish to repeat the arguments used by my hon. Friend the Member for Crosby (Mr. Graham Page) except to say this. If the dealer who has not hitherto been receiving supplies from the supplier goes to the supplier and says, "You have been supplying these goods to other dealers, but not to me. I want to sell them at a cut price", he can force the supplier to supply him on credit unless the supplier is willing to undertake in a civil action the burden of proving affirmatively that his reason for his insistence upon supplying for cash was not due to the fact that he had been told that the man would sell at cut prices. I hope that that is not an involved sentence; I think that the point is clear. [An HON. MEMBER: "It had no verb."] It had a main verb and I believe that it came in the right place. I was receiving so much vocal encouragement from both sides of the Committee that the syntax may have got a bit muddled.
This is a point which, perhaps, we shall want to discuss more on Clause 4, which contains the subsection which is causing the trouble. However, my hon. Friend the Member for Crosby was quite right to raise it by proposing an Amendment to Clause 2 because the consequences of Clause 4 relate back to Clause 2 and one knows how difficult it is to bear the burden of proving affirmatively the state of one's own mind. It seems to me quite wrong that a dealer who has never had any business dealings with a certain supplier 517 should be able to go along to that supplier and say, "I want to sell your goods at a cut price. You supply me for cash or go to the Restrictive Practices Court".
§ Mr. J. Hynd
I follow the hon. Member's argument and I can agree with it, but I do not see how the Amendment alters the position, because it merely says that it will not be unlawful to require payment in cash. However, if it were inserted in the Bill, it still would not affect the situation as laid down in the Bill, which is that everybody must be treated alike.
§ Mr. Bell
I agree with that intervention, but its effect is to point out that the Amendment cures only part of the mischief. I think that that was the point of it. It is a valid point, and I agree that we must return to it on Clause 4 if we agree that Clause 2 should stand part of the Bill. I have grave doubts about that, and we will come to those doubts in due course. This is a useful Amendment, but the main consideration of this point will arise later.
§ Mr. H. Lever
As I have said, I propose to reserve extended discussion of this matter on the Question, That the Clause stand part of the Bill. I fully support the purpose of the Amendment, and I wish merely to say this in reinforcing what has been said.
It is surely utterly repugnant to any sense of normal commercial practice that we should embody in an Act matter which in practice would compel a man to grant credit to another whether he wished to do so or not. This is so outrageous that I trust that the Committee will reject it out of hand. The Amendment only partially cures the abomination of much of this abominable Clause. I hope that the Committee will give a warning to the Government in time. However, I do not want to play party politics, although I am not without enjoyment of them from time to time.
I hope that the Committee will take the opportunity to force this Amendment on the Government, whether they like it or not, so that they may escape further humiliation through outraging their own supporters and many open-minded Members. I will certainly vote for the Amendment if there is a Division.
§ Mr. R. Gresham Cooke (Twickenham)
I support the Amendment, for this reason. A large number of traders are opposed to parts of the Bill because of the obscurity of the Clauses. One point which has been raised with me is whether traders can withhold supplies when a dealer becomes non-creditworthy. There has been so much opposition to the Bill for a large number of reasons that I suggest that it is right for the Government to clear up this point about whether suppliers can withhold goods if they believe that the dealer is not creditworthy, whether or not he is cut pricing them.
§ Mr. S. Silverman
This Amendment, like the last one, raises general questions of principle which I think it would be better to discuss when we deal with the Question, That the Clause stand part of the Bill. I hope that all those who have expressed doubts about the principles behind the Clause and, indeed, about some of the principles behind the Amendments will take up the matter again at that stage when it can be discussed more fully so that we get a clear picture before deciding whether the Clause is a good or bad Clause. I therefore refrain from entering into detailed discussion of the Amendment. However, I should like to put one consideration to the hon. Member for Crosby (Mr. Graham Page) and to those who have supported the Amendment.
Suppose that a supplier has reason to believe that the retailer to whom he has been in the habit of delivering supplies on certain terms is evading a condition, which is, in any case, void by the Bill, to sell them at a certain price. Suppose that he says, "I know a way to stop that. This man always trades with one month's delay in payment and on certain discount terms. I know that if I insist on cash on delivery he will not be able to pay. If he is not able to pay, and if that term is in his contract, I will have effectively stopped his source of supply. He would have effectively stopped his source of supply, but is not that exactly what the Bill sets out to prevent? If the Amendment is accepted in its present form—and I realise that it could be amended—I cannot see how it will not provide a broad highway along which one could drive a 519 very large Rolls Royce through the Bill's main provisions. There is nothing to prevent it.
The hon. Member for Buckinghamshire, South (Mr. Ronald Bell) says, "Of course, you can go to the Restrictive Practices Court". He dealt with the difficulty of satisfying a court about what is in one's mind. All lawyers appreciate the difficulty of doing that, although they also appreciate that there is a variety of circumstances under the law in which one has to do that very thing. If it is difficult to satisfy a court about the state of one's own mind, it is infinitely more difficult to satisfy a court about the state of somebody else's mind.
What the hon. Member for Crosby is seeking to do is to transfer the onus of proof if a condition of cash payment is imposed to make the retailer, or, it may be, the Registrar or somebody else, satisfy the court that it was done for the purpose of evading the Act and because the retailer had been selling at unauthorised prices. How does he prove that and why is that easier or more just to provide than to say, in the case of a retailer, "You used to supply him on credit. You supply everybody else on credit. You have suddenly stopped supplying him on credit. You have insisted upon cash knowing that he does not have cash. It is, or it may be, a fair inference from all those facts that you did it to stop his supplies"? What is wrong with that?
§ Mr. H. Lever
My hon. Friend is wrong in supposing that that is the purport of the Amendment. It does not say, as my hon. Friend supposes, that it would transfer the onus of proof. The Amendment—