§ Mr. Heath
I beg to move Amendment No. 20 in page 4, line 38, at end insert:Provided that this subsection shall not apply where the proof that supplies were withheld consists only of evidence of requirements imposed by the supplier in respect of the time at which or the form in which payment was to be made for goods supplied.I put down this Amendment as the result of an undertaking which I gave during the Committee proceedings about the onus of proof in Clause 4(4) of the Bill. The Amendment proposes to limit the operation of that subsection. Clause 4(4) deals with the onus of proof in proceedings for injunction or other relief against a supplier for contravening Clause 2, and what that Clause does is to make it unlawful for a supplier to withhold supplies from or discriminate against a dealer who is selling below the recommended resale price or against a dealer who has threatened to do this.
Clause 4(4) places the onus on the defendant supplier to show that he withheld supplies or discriminated for reasons not connected with resale price maintenance. What the Amendment does is to change this position in one case. This is the case where the supplier has discriminated by requiring the dealer to make payment on terms less favourable than those offered to similar dealers in similar circumstances, and the Amendment says that in this case Clause 4(4) is not to apply and there is to be presumption against the supplier. It will be for the plaintiff, whether the Crown or an individual dealer, to show that the alleged discrimination was on the ground that the dealer had sold or had threatened to sell below the recommended resale price.
I think that there are good reasons for distinguishing the case where the supplier is discriminating in terms of payment. We discussed this when dealing with the matter in Committee. There is always the possibility, as some of my hon. Friends pointed out, that the supplier himself may be in financial difficulties and may have to insist on immediate payment. By doing so under the Clause as originally drafted he renders himself vulnerable to an action by the dealer. As the Clause 372 is at present drafted he could not succeed in the proceedings without revealing that he was in financial difficulties and this would put him at a disadvantage. On the other hand, the reason for insisting on early payment could be that he has confidential information to the effect that the dealer himself is near to bankruptcy, and the supplier will be merely protecting his own interests.
As we all know, none of these matters can be disclosed and yet the supplier would be faced with the threat of proceedings, and it is quite possible that he would find it difficult to prove that his real reason was the dealer's financial position. So that in either of these cases, though for different reasons, the supplier would not risk proceedings, as the onus of proof would be on him, because of his own position or the difficulty of proving the position of the dealer, so he would have no alternative but to offer the normal credit terms to the dealer.
I think that these two examples show that the terms of payment are different from the other terms with which the Clause is concerned, and I think that we are right in distinguishing them, as I gave an undertaking to do in Committee, and changing the onus of proof in such cases. I hope that the House will feel that the form of this Amendment meets the undertaking that I gave to the Committee and I think, therefore, that we are justified in amending the Bill in this respect. I commend the Amendment to the House.
§ Mr. W. Wells
We welcome the Amendment as being an improvement to the Bill, but, we must confess, with somewhat modified rapture. In the first place, we consider that there are a number of similar cases such as the one we have recently discussed in relation to new business which are, broadly speaking, analogous with these requirements as to payment, and for these reasons we think that the Amendment should have been cast in a somewhat wider form.
We have an objection, not going to the root of the Amendment but on a matter of form of some little importance. We think that it would have been clearer and more convincing to deal with this type of Amendment as an Amendment to Clause 2 rather than as an Amendment to Clause 4. In other words, it 373 would have been better to provide that withholding in these circumstances would not be unlawful, as we were seeking to do for a somewhat different purpose in our Amendment No. 15, rather than dealing with this simply as a question of proof.
However, having made those observations, I think this is a great improvement in the Bill and we welcome it as such.
§ Mr. Peter Emery
There is one small matter which I think is causing some concern. While I entirely welcome this as being a major step forward and a general improvement with no alteration in the overall basis of the Bill, I should like to ask one question. Suppose that a supplier, because of his own judgment, cut off supplies in the belief that financial hardship was expected, and suppose that a case was then brought against him either by the Crown or, indeed, by the trader. Would it be sufficient as a defence for the supplier to be able to say, "This is purely my business judgment"?
At the moment, if somebody wishes to alter the terms of credit which may be outstanding, or to change from credit to a cash transaction, this is a matter of business judgment on which he cannot be questioned. If he cuts off supplies and a case is brought against him—I realise this is an extreme case, but it is a possibility—is it enough for him to say in his defence, "This is my business judgment"? It may be based on inside information or on information which he would not want to reveal, or perhaps would not be able to reveal, in court. The only defence would then be, "This is a judgment which I made in my normal business operations, and this must be my defence." I should very much like an answer to this small but specific point.
§ Mr. M. Foot
I think this Amendment is an improvement, but I would like the right hon. Gentleman to clear up one point which has mystified me.
Reference has been made to whether the Bill in any form at all could apply to newsagents and to the sale of newspapers. When I referred to this matter in a debate at the end of the Committee proceedings, the right hon. Gentleman dismissed what I said by suggesting that there could not be any application to 374 newspapers because newspapers are not covered by resale price maintenance and that, therefore, if resale price maintenance were abolished, it would not make any difference. I said that I had mentioned the matter only because the right hon. Gentleman himself had raised the question precisely when we were discussing this Clause, to subsection (4) of which this Amendment applies.
I would remind the right hon. Gentleman of what he said in the Committee proceedings on 21st April:The hon. Member for Brightside mentioned, particularly, the sale of newspapers. The system of franchise in newspapers is well known. Everybody knows that certain people have rights in a certain town to sell news papers. It is a well-established position. Anyone who thought of trying to blackmail or to bring any action would think very carefully before proposing action in such a case when the system is well established.This system has been much criticised because new people find it very difficult to obtain a franchise. This is the other aspect of the balance. I should have thought that the Committee agreed that it is not right that a newcomer to the trade should be unable to get supplies from anywhere, because the balance would then be in the wrong direction and the onus would be placed entirely on him. This aspect must be taken into account in the circumstances of subsection (4)."—[OFFICIAL REPORT, 21st April, 1964; Vol. 693, c. 1174.]I think that it was perfectly legitimate for any member of the Committee to draw the deduction from these words by the right hon. Gentleman that in certain circumstances this Bill could affect the sale of newspapers. It could affect the sale in the sense that if certain newsagents in certain areas started to sell below the recommended price and then newspaper proprietors or wholesalers started to withhold supplies on that account, the whole operation of the Bill would be applied to the circumstances. The newspaper proprietors or the wholesalers would have to invoke the operation of this Bill in order to protect themselves. They would think themselves justified in seeking protection.
Therefore, it was legitimate for us to say that the Bill in certain circumstances might apply to the newspaper trade. How is that affected by the Amendment? The right hon. Gentleman told us in Committee that he was trying to preserve the balance and, included in his attempt to preserve it, he was trying to insist that wholesalers or newspaper proprietors would be compelled in cer- 375 tain circumstances to sell to newcomers in the trade.
I am not saying that this is necessarily wrong, but I am saying that it ought to be clear. Certainly it is quite improper—unless the right hon. Gentleman can persuade me differently—for him to suggest that the provisions of the Bill will never apply to the newspaper industry or the newspaper trade. It may be that the newspaper trade will be able to protect its methods of selling only by invoking the provisions of the Bill. Therefore, it must be concerned not only with this Clause and this subsection but with the general provisions and criteria of the Bill as a whole. I hope that the right hon. Gentleman will explain a bit more fully what he meant when he said that in Committee in reply to the hon. Member for Sheffield, Brightside (Mr. Winterbottom).
§ Mr. Graham Page
I am extremely grateful to the Secretary of State for putting down this Amendment in response to an undertaking I pressed him to give in Committee. The Amendment will result in the position that any presumption that a withholding is unlawful will arise if the refusal is the refusal of credit terms.
It may be a little ungracious of me to point out the shortcomings of this Amendment but I think that this should be put on record. Let me take an example. The supplier might say to the dealer "You are undercutting. I think you will ruin yourself doing it. I do not intend to be a creditor in your bankruptcy. If I supply you with goods I want cash." Turning back to an Amendment which was previously discussed and made part of the Bill, a supplier would have to show that his reasons for refusing credit stood alone and were not dependent on the fact that the dealer was undercutting. I do not think that in the sort of example I gave he could say that they stood alone, so in that case there would be a refusal of credit which would be an unlawful withholding. I think that is unfortunate. I would have hoped that an Amendment could have been produced which would have made the refusal of credit withholding which was perfectly justifiable. I appreciate, however, that such an Amendment might have sabotaged my 376 right hon. Friend's Bill too much, and I am thankful for what he has given.
§ Mr. Heath
Perhaps I may deal with the points which have been raised. The question of my hon. Friend the Member for Reading (Mr. Peter Emery) was whether the supplier would be able to say that he acted on his business judgment alone. The position, surely, is that when the discrimination consists of insisting upon a cash payment or less favourable credit terms, the onus will always be on the dealer or the Crown to show that the discrimination is on the ground of the dealer selling below the recommended price.
Clearly, if the onus is on the dealer to show this point, my hon. Friend's question does not arise. If he considers this, my hon. Friend will realise that with the change of onus, the dealer has to show that the supplier had withheld on the grounds that the dealer was selling below the recommended price. He has to prove this point. Therefore, my hon. Friend's question does not arise. If the ground was the financial instability of the dealer, the dealer himself could not discharge the onus of proof. In either case, therefore, my hon. Friend's question is dealt with by changing the onus and the point about the supplier saying that it is his business judgment alone does not arise.
In reply to the hon. Member for Ebbw Vale (Mr. M. Foot), I am sorry if there has been misunderstanding, but I do not think that the difference between us is very great. It arose, probably, because the hon. Member for Sheffield, Brightside (Mr. Winterbottom) was discussing newspapers and whether suppliers would be forced to supply particular people. I said that one of the grounds which, we had suggested, could be put forward was that a supplier had sufficient dealers or had a fixed number in a certain town and did not wish to increase their number. I emphasised that with newspapers, with which there is a well-established franchise system, we had, perhaps, a prominent example in which it could be shown that the system of dealers was arranged, fixed and flourishing and that, therefore, there should not be any difficulty about showing this.
I went on to the separate point that a newcomer to the trade should not be prevented from getting supplies only on 377 grounds of selling below the recommended price, a question which the House has discussed on an earlier Amendment tonight and which I need not cover again. I am sorry that there has been misunderstanding, but I do not think that there was any difference of substance on the point with which we were dealing.
I am grateful to my hon. Friend the Member for Crosby (Mr. Graham Page) for the views he has expressed. I recognise the point which he has made, but I am grateful that he realises that we did not want to change the Bill in that respect and that we have tried to meet the point by the Amendment.
The hon. and learned Member for Walsall, North (Mr. W. Wells) dealt with the question of putting this provision in Clause 2. He appreciates, I think, the reasons why we wanted to change the onus under Clause 4 rather than exclude it as a ground under Clause 2. I am grateful that, although he would have liked us to do it in another way, the hon. and learned Member recognises the importance of the change which we are making.
§ Amendment agreed to.