HC Deb 12 May 1964 vol 695 cc363-70
Mr. Jay

I beg to move Amendment No. 17, in page 4, line 5, at the end to insert: For the purposes of this section goods shall be deemed to be used as loss leaders where they are sold by a dealer at a price less than the cost at which they were supplied to him plus two per cent. if he is a wholesaler or five per cent. if he is a dealer other than a wholesaler. The Amendment relates to the definition of what, for the purposes of the Bill, is referred to as a loss leader. In our view it would help in the laudable aim of simplifying the procedure and making it easier for the Court and the judges concerned to reach the decision that they are required to reach.

When the Bill was first introduced the Minister defined a loss leader as the sale of goods at or below the cost of purchase by the retailer or the supplier. It was pointed out to him that that was really a quite inadequate definition, because a retailer might sell slightly above the cost at which he had bought the goods but nevertheless make considerable losses. The right hon. Gentleman therefore substantially amended the Bill in Commit- tee and inserted as a definition of a loss leader, a reference to the motive of the retailer. Subsection (2) now reads: The reference in this section to the use of goods as loss leaders is a reference to a resale of the goods effected by the dealer, not for the purpose of making a profit on the sale of those goods, but for the purpose of attracting to the establishment at which the goods are sold customers likely to purchase other goods or otherwise for the purpose of advertising the business of the dealer If the Amendment were accepted the right hon. Gentleman's subsection would remain but, in addition, there would be a simple arithmetical test which could be applied at least in some cases, thereby making the whole argument less vague and ambiguous, and shortening it. We suggest that where the goods were sold at not more than 5 per cent. above the cost in the case of a retailer and 2 per cent. in the case of a wholesaler it should be presumed without further argument that the goods were being used as a loss leader. It would not be necessary in that case to argue what were the motives of the retailer, or what they might have been.

I would have thought that the Amendment, put forward in addition to the right hon. Gentleman's criterion and not instead of it—leaving the main criterion of motive—would short-circuit a great deal of argument where it was possible to do so. I should have thought it an improvement. I cannot see what good reason there is for not having this simple solution of the problem where it is practicable and retaining the right hon. Gentleman's motive for other cases where this arithmetical test would not apply. I hope the right hon. Gentleman may accept the help that we are offering him in order to improve the Bill.

Mr. Heath

The Amendment proposed by the right hon. Member for Battersea, North (Mr. Jay) of a loss leader is a recasting from the Amendment which he moved during the Committee stage discussions as an Amendment to my Amendment which recast this is the form of what is known as the Canadian approach. On that occasion it was rejected by the Committee, but we did discuss the possibility of having two criteria concerned with this point. As the right hon. Gentleman rightly said, the recasting of this Clause during the Committee stage discussions has established as a test of motive that loss leader selling has taken place if the dealer has sold not in order to make a profit but for advertising or to attract customers.

One of the grounds which I put before the Committee as being one on which we abandoned the original approach for this approach was in order to give greater flexibility and avoid some of the difficulties which the rigid approach was bound to create. The right hon. Gentleman is still suggesting that we should try to combine the two approaches in one context. There is a particular difference in the recasting of this Amendment. The original Amendment, as moved during the Committee stage discussions, would have had the effect that it would have been presumed that loss leader selling had taken place in any case where a dealer sold goods at a price below the price quoted or a fixed price to which a certain percentage had been added. It was 2 per cent. in the case of a wholesaler or 5 per cent. for dealers other than wholesalers.

In the original form this presumption would have been capable of rebuttal. As recast in the present Amendment it goes further and says that such a sale must in all circumstances be regarded by the court as a loss leader sale; so that in a way it has become even more rigid than in the original form of the Amendment to which I took exception when it was put forward in the new context and rephrasing of the Clause as a whole. So I do not think that it would be possible for me to advise the House to accept this as an addition to the criteria for loss leadering.

The definition originally in the Bill was a definition on cost. This is one which adds an arbitrary margin to the definition solely in terms of the price actually paid. There are, of course, difficulties about this. No margin is applicable to all trades and all dealers. It has to be an arbitrary margin if the right hon. Gentleman is proposing to add one. Secondly, any definition of this kind cuts particularly harshly in respect of small traders who do not benefit from the most favourable buying terms, because in their case the mark-up percentage is added to the higher price and therefore the difference between them and the larger dealer with a larger discount becomes even greater. This was one of the fundamental reasons why we felt that the original Clause in the Bill had a great weakness.

Mr. Jay

If that criterion were put in in addition to the criterion of the right hon. Gentleman, surely that would add a little too much.

Mr. Heath

With respect, I do not think that is the case, particularly in the form it is recast in which it is bound to be taken as a criterion of loss leadering and is not open to rebuttal at all. It removes the element of flexibility that we have been able to bring into the Clause as recast and approved during the Committee proceedings. I therefore suggest that we should still rely on Clause 3 as it is recast, and should not try to combine the two forms of criteria of loss leadering—the form in the Bill now and the one we had originally. I advise the House not to accept the Amendment.

Question put, That those words be there inserted in the Bill:—

The House divided: Ayes 118, Noes 183.

Division No. 93 AYES [10.30 p.m.
Ainsley, William Hannan, William Redhead, E. C.
Allen, Scholefield (Crewe) Harper, Joseph Rees, Merlyn (Leeds, S.)
Barnett, Guy Hayman, F. H. Roberts, Albert (Normanton)
Beaney, Alan Holman, Percy Robertson, John (Paisley)
Blackburn, F. Holt, Arthur Rodgers, W. T. (Stockton)
Blyton, William Hooson, H. E. Short, Edward
Bowden, Rt. Hn. H. W. (Leics, S. W.) Houghton, Douglas Silkin, John
Bowen, Roderic (Cardigan) Howell, Denis (Small Heath) Silverman, Julius (Aston)
Braddock, Mrs. E. M. Howie, W. Skeffington, Arthur
Bradley, Tom Hoy, James H. Slater, Mrs. Harriet (Stoke, N.)
Broughton, Dr. A. D. D. Hughes, Cledwyn (Anglesey) Slater, Joseph (Sedgefield)
Butler, Herbert (Hackney, C.) Hughes, Hector (Aberdeen, N.) Small, William
Carmichael, Nell Hynd, John (Attercliffe) Smith, Ellis (Stoke, S.)
Craddock, George (Bradford, S.) Irvine, A. J. (Edge Hill) Sorensen, R. W.
Crossman, R. H. S. Irving, Sydney (Dartford) Spriggs, Leslie
Cullen, Mrs. Alice Janner, Sir Barnett Stewart, Michael (Fulham)
Dalyell, Tam Jay, Rt. Hon. Douglas Stonehouse, John
Darling, George Jones, Elwyn (West Ham, S.) Stones, William
Davies, G. Elfed (Rhondda, E.) Jones, J. Idwal (Wrexham) Swain, Thomas
Davies, Ifor (Gower) Jones, T. W. (Merioneth) Swingler, Stephen
Dempsey, James Kenyon, Clifford Taylor, Bernard (Mansfield)
Diamond, John Lawson, George Thomas, Iorwerth (Rhondda, W.)
Dodds, Norman McBride, N. Thompson, Dr. Alan (Dunfermline)
Duffy, A. E. P. (Colne Valley) MacColl, James Thomson, G. M. (Dundee, E.)
Edwards, Rt. Hon. Ness (Caerphilly) MacDermot, Niall Wainwright, Edwin
Evans, Albert McInnes, James Watkins, Tudor
Fernyhough, E. MacPherson, Malcolm Weitzman, David
Finch, Harold Mapp, Charles Wells, William (Walsall, N.)
Fitch, Alan Mayhew, Christopher White, Mrs Eirene
Fletcher, Eric Mellish, R. J. Wilkins, W. A.
Foley, Maurice Mitchison, G. R. Willey, Frederick
Foot, Michael (Ebbw Vale) Neal, Harold Willis, E. G. (Edinburgh, E.)
Fraser, Thomas (Hamilton) Noel-Baker, Rt. Hn. Philip (Derby, S.) Wilson, Rt. Hon. Harold (Huyton)
Galpern, Sir Myer Oram, A. E. Winterbottom, R. E.
George, Lady Megan Lloyd (Crmrthn) Owen, Will Woodburn, Rt. Hon. A.
Ginsburg, David Padley, W. E. Woof, Robert
Gordon Walker, Rt. Hon. P. C. Pavitt, Laurence Yates, Victor (Ladywood)
Gourlay, Harry Pentland, Norman
Grey, Charles Popplewell, Ernest TELLERS FOR THE AYES:
Griffiths, David (Rother Valley) Price, J. T. (Westhoughton) Mr. Charles A. Howell and
Probert, Arthur Mr. McCann.
Anderson, D. C. Dance, James Heath, Rt. Hon. Edward
Awdry, Daniel (Chippenham) Deedes, Rt. Hon. W. F. Henderson, John (Cathcart)
Barlow, Sir John Donaldson, Cmdr. C. E. M. Hendry, Forbes
Barter, John Doughty, Charles Hiley, Joseph
Bell, Ronald du Cann, Edward Hill, Mrs. Eveline (Wythenshawe)
Bennett, F. M. (Torquay) Eden, Sir John Hill, J. E. B. (S. Norfolk)
Biffen, John Elliot, Capt. Walter (Carshalton) Hobson, Rt. Hon. Sir John
Bingham, R. M. Elliott, R. W. (Newc'tle-upon-Tyne, N.) Hocking, Philip N.
Birch, Rt. Hon. Nigel Emery, Peter Holland, Philip
Bishop, Sir Patrick Errington, Sir Eric Hornsby-Smith, Rt. Hon. Dame P.
Black, Sir Cyril Fell, Anthony Hughes Hallett, Vice-Admiral John
Bossom, Hon. Clive Finlay, Graeme Hughes-Young, Michael
Bourne-Arton, A. Fisher, Nigel Hulbert, Sir Norman
Box, Donald Fletcher-Cooke, Charles Hurd, Sir Anthony
Boyd-Carpenter, Rt. Hon. John Gibson-Watt, David Jackson, John
Braine, Bernard Gilmour, Ian (Norfolk, Central) Johnson, Eric (Blackley)
Brewis, John Gilmour, Sir John (East Fife) Jones, Arthur (Northants, S.)
Brown, Alan (Tottenham) Glover, Sir Douglas Kaberry, Sir Donald
Bryan, Paul Glyn, Dr. Alan (Clapham) Kerans, Cdr. J. S.
Buck, Antony Glyn, Sir Richard (Dorset, N.) Kerr, Sir Hamilton
Campbell, Gordon Gough, Frederick Kershaw, Anthony
Chataway, Christopher Gower, Raymond Kirk, Peter
Chichester-Clark, R. Grant-Ferris, R. Kitson, Timothy
Clark, Henry (Antrim, N.) Green, Alan Lambton, Viscount
Clark, William (Nottingham, S.) Gresham Cooke, R. Langford-Holt, Sir John
Cleaver, Leonard Grosvenor, Lord Robert Leavey, J. A.
Cooke, Robert Gurden, Harold Lewis, Kenneth (Rutland)
Cordeaux, Lt.-Col. J. K. Hamilton, Michael (Wellingborough) Lilley, F. J. P.
Corfield, F. V. Harris, Reader (Heston) Linstead, Sir Hugh
Costain, A. P. Harrison, Col. Sir Harwood (Eye) Litchfield, Capt. John
Coulson, Michael Harvey, John (Walthamstow, E.) Lloyd, Rt. Hon. Selwyn (Wirral)
Crawley, Aldan[...] Harvie Anderson, Miss Longbottom, Charles
Dalkeith, Earl of Hastings, Stephen Longden, Gilbert
Loveys, Walter H. Pickthorn, Sir Kenneth Studholme, Sir Henry
Lucas, Sir Jocelyn Pitt, Dame Edith Summers, Sir Spencer
Lucas-Tooth, Sir Hugh Pounder, Rafton Tapsell, Peter
McAdden, Sir Stephen Price, David (Eastleigh) Taylor, Edwin (Bolton, E.)
MacArthur, Ian Prior, J. M. L. Taylor, Frank (M'ch'st'r, Moss Side)
McLaren, Martin Prior-Palmer, Brig. Sir Guy Temple, John M.
Maclay, Rt. Hon. John Proudfoot, Wilfred Thomas, Sir Leslie (Canterbury)
McMaster, Stanley R. Quennell, Miss J. M. Thompson, Sir Richard (Croydon, S.)
Marten, Neil Ramsden, Rt. Hon. James Tiley, Arthur (Bradford, W.)
Mathew, Robert (Honiton) Rawlinson, Rt. Hon. Sir Peter Tilney, John (Wavertree)
Maude, Angus (Stratford-on-Avon) Redmayne, Rt. Hon. Martin Touche, Rt. Hon. Sir Gordon
Maxwell-Hyslop, R. J. Rees, Hugh (Swansea, W.) Turner, Colin
Maydon, Lt.-Cmdr. S. L. C. Rees-Davies, W. R. (Isle of Thanet) van Straubenzee, W. R.
Mills, Stratton Renton, Rt. Hon. David Vaughan-Morgan, Rt. Hon. Sir John
Miscampbell, Norman Ridley, Hon. Nicholas Walder, David
More, Jasper (Ludlow) Ridsdale, Julian Ward, Dame Irene
Morgan, William Roots, William Webster, David
Neave, Alrey Ropner, Col. Sir Leonard Wells, John (Maidstone)
Nicholls, Sir Harmar Scott-Hopkins, James Whitelaw, William
Noble, Rt. Hon. Michael Seymour, Leslie Williams, Dudley (Exeter)
Orr, Capt. L. P. S. Sharples, Richard Williams, Paul (Sunderland, S.)
Orr-Ewing, Sir Ian (Hendon, North) Shaw, M. Wilson, Geoffrey (Truro)
Osborn, John (Hallam) Smith, Dudley (Br'ntf'd & Chiswick) Wise, A. R.
Page, John (Harrow, West) Spearman, Sir Alexander Wolrige-Gordon, Patrick
Page, Graham (Crosby) Speir, Rupert Woodnutt, Mark
Pannell, Norman (Kirkdale) Stainton, Keith Worsley, Marcus
Partridge, E. Stanley, Hon. Richard
Pearson, Frank (Clitheroe) Stoddart-Scott, Col. Sir Malcolm TELLERS FOR THE NOES:
Peel, John Storey, Sir Samuel Mr. Batsford and Mr. Pym.