§ Order for Second Reading read.
§ 3.49 p.m.
§ The President of the Board of Trade (Mr. Douglas Jay)
I beg to move, That the Bill be now read a Second time.
This is a short Bill. It does not attempt to do everything, even in the field of monopolies and mergers. It sets out to do what is most urgent and most necessary in the belief that we should not postpone doing anything until we can do everything. The truth is that 13 years" government by the party opposite have left so many things undone which ought to have been done that the whole catalogue cannot be made good even in the most fertile parliamentary Session yet known. Therefore, the Bill omits some of the proposals in the previous Government"s White Paper of last spring, not because they are undesirable, but because they are less urgent, and includes certain others which are more urgent but which the previous Government had not the courage to swallow.
The Bill is also one part of the comprehensive programme for streamlining and modernising British industry, which is crucial to the economic survival of this country, and which the Government are determined to launch. If we are to retain, as I believe we must, a large sector of private enterprise in the mixed economy of this country, competition is essential as one safeguard of the efficiency and progressiveness of that private sector.
The Bill is conceived in the belief, which I think is common to all parties, that neither monopolies nor mergers are always bad. Sometimes they are and sometimes they are not. This truth was admirably expressed in that classical document, which wears well with time, the White Paper on Employment Policy, of May, 1944—a bipartisan, perhaps I should say a tripartisan document— [HON. MEMBERS: "Where are the Liberals?"] Whether they are here or not, it was a tripartisan policy—which said that, althougharrangements or combines do not necessarily operate against the public inerest",neverthelessthe power to do so is there".1208 In many instances, greater size and further amalgamation may be desirable in the public interest; and the Government may be justified in actually promoting amalgamations of that kind. One possible example is the steel industry. What we need, however, is a test by which the public interest can be judged, and an accepted instrument by which that judgment can be made effective.
That has been the basic principle of the legislation proposed by all political parties since 1945. But three valid criticisms have been made of the working of our present dual system of a Monopolies Commission, on the one hand, and a Restrictive Practices Court, on the other. The first is that it has all been too slow. The Monopolies Commission has not been able to work simultaneously on more than a very small number of inquiries; and each enquiry has tended to take years rather than months. The watchdogs have barked, or prepared to bark, but meanwhile the monopolies have gone marching on.
The Tory Government, in 1956, embedded, as one would have expected, in policies of stagnation and decay, reduced the size of the Monopolies Commission and condemned it to operate in one group at a time instead of a number simultaneously. That is one reason why for the last seven or eight years the engines of reform in this field have ground so slowly. The responsibility for these delays, must not rest on the devoted members of the Monopolies Commission, but on the previous Government which, by the 1956 Act, curtailed its powers and slowed down its ability to act.
Secondly, even when the Commission did its best to report and recommend drastic measures, the Government did not possess strong enough powers to carry its recommendations into force. Thirdly, when confronted with mergers likely to establish new monopolies, previous Governments have had no power at all to do anything except wait until the monopoly has been scrambled and then hold a belated inquiry to decide whether, long after the marriage had been consummated, something should be done to undo what had been done. When confronted with the proposed I.C.I.— Courtauld merger, three years ago, the then President of the Board of Trade appeared before the House to be somewhat timid and irresolute. To do him 1209 credit, even if he had known what he wanted to do, he had no power to do it.
The present Government, therefore, propose to put an end to all this irresolution and impotence. By the Bill, we shall, first of all, enlarge again the size of the Monopolies Commission. The maximum number of members will be raised again to 25 instead of the present 10; up to three deputy chairmen may be again appointed; and the Commission will be given the power to do its work in groups. The appointment of members will be more flexible, so that past members can be reappointed and a retiring member can stay on until work on an inquiry already begun is rounded off. I believe that we are most likely to get greater speed if we thus enable the Commission to work with more than one panel simultaneously.
Apart from the chairman, the Commission is made up, and always has been of part-time members—not unlike the House of Commons—with their own interests in business, trade unions, economics, the law, and so on. Unless we are prepared to depart from this, and appoint full-time professionals, we cannot get greater speed without greater numbers. One serious cause of delay up to now has been the slowness of individual industries and firms in answering the inquiries of the Commission, and the unwillingness of the Commission to incur charges of unfairness by hustling firms too insistently. Therefore, if we are to get on quickly, larger numbers and simultaneous inquiries seem much the best solution.
But I should like to emphasise the value which we attach to the services of busy people in business and the professions who devote their time to this public work and to express our gratitude to them. [HON. MEMBERS: "Hear, hear."] We propose to give the enlarged Commission plenty of work. Where a firm is really dominant in an important industry, controlling perhaps over half the market, l think that an investigation should usually be made whether or not there have been complaints of monopoly abuse. One of the bad effects of having too small a Commission up to now has been the reluctance of the Board of Trade to make further references to it 1210 which might have overloaded the work of the Commission.
We also intend to ensure that complaints of specific monopoly abuse as opposed to entire monopolies are investigated by the Commission except where we are satisfied that there is nothing serious in the complaint.
Next, we propose to give the Government adequate power to carry out recommendations of the Commission when they are made. I have always felt that it is discouraging to the Commission, and, indeed, to the public, if Governments are either unwilling or too cowardly to adopt the Commission"s recommendations, and, in general, I am sure that Ministers ought to do so, although it is certainly right that the final decision should rest with a Minister responsible to this House.
The Bill therefore confers on the Government, subject to parliamentary control, new and important powers to be used after a report from the Commission, including, in the last resort, power to undo a monopoly and power to require the publication of price lists by a firm and to prohibit departure from published price lists.
Clause 3 also confers on the Government a new power of price control. In the past, on occasions, the Commission, in its reports, has commented on prices and profits, but neither the Commission nor the Government has had power to do anything about it except by persuasion.
When the original Monopolies Act, 1948, was passed there were general price control powers in existence, and these could be used to enforce a Monopolies Commission report. The previous Government, rather typically, abolished the price control powers, but left the Commission with the ability to recommend the use of powers which, in fact, no longer existed.
We are, therefore, ensuring that not merely shall the Commission have a voice, but that the Government shall have teeth as well. This, incidentally, will not merely restrain monopoly and restrictive practices in industry which have tended over the years to fossilise our competitive power, but will reinforce the present Government"s basic policy of calling a halt to the competitive scramble of prices 1211 and incomes. The existence of price control powers should greatly enhance the Government"s power to act in this field by persuasion, which is much the best way, and, therefore, our chance of success in restraining an excessive increase in money incomes and prices.
We are also, in the Bill, extending the scope for inquiry by the Commission to the supply of services as well as of goods —and, indeed, why not? There is no real economic distinction between goods and services, and restrictive practices in either can be equally injurious to the national interest and to the new export drive.
The 1948 Act provides at present for inquiry into only a very limited class of services—processing done on commission. Clause 2 of the Bill extends this to cover all types of services, and not merely commercial services as the previous Government"s White Paper of a year ago proposed. Services rendered by workers under contracts of service are excluded. That is not because restrictive practices in this sphere are necessarily immune to criticism—in my view, far from it—but because they cannot be covered by this sort of legislation, as has been recognised in all our legislation on monopolies and restrictive practices since the war. Also excluded are services which have statutory authority under other Acts of Parliament, since, clearly, Parliament would not wish to authorise a monopoly situation under one Act and then prohibit it under another.
Apart from those qualifications. however, I think that it is right that both professional and commercial services should be included within the scope of the Bill, though that does not, of course, mean that the Government have any present intention of rushing in to question the arrangements of the learned professions. What the Bill does is to give the Government power to refer such commercial or professional practices to the Commission wherever this seems to be desirable and to use the powers contained in both the 1948 Act and the present Bill to restrain any practices which the Commission condemns.
§ Mr. J. T. Price (Westhoughton)
Before my right hon. Friend leaves that point, in interpreting the intention of 1212 the Clause at a later stage will he pay particular attention to the effect on prices of cost accountancy and the very high fees which automatically are loaded in to inflated prices?
§ Mr. Jay
I do not doubt that that is one of the considerations which we shall take into account, but it is not necessarily the only one. I note, however, what my hon. Friend has said.
Here, the Bill follows the 1948 pattern in making not only actual monopoly as defined subject to investigation by a commission, but also collective arrangements or agreements of a restrictive kind. It was only after the Monopolies Commission had reported in 1954 on restrictive agreements in the case of goods that Parliament set up the Restrictive Practices Court to give verdicts on them. In the case of services, we are still at the first stage of inquiry by the Commission and have not yet reached the possible stage of judicial procedure.
Next, the Bill makes a determined attack on the question of mergers and takeovers. Over these, the Government have hitherto had no power to do anything, except sit back until they had perhaps arrived at the monopoly stage as defined and then wonder whether the stable door should be closed after the horse had disappeared. The previous Government, after many years of cogitation, proposed that, provided that the horse had thus disappeared, the stable door could be bolted; that is to say, that mergers could be inquired into after the event.
We are being bolder than that, and this is one respect in which the Bill sharply departs from the White Paper of a year ago. We are making the audacious suggestion that in certain cases a merger might be held up while a reasonably quick investigation into it is held by the now enlarged Commission. Unless we do this, I doubt whether any control of mergers can be real. We are, of course, not proposing for one moment to ban or even delay all mergers, but merely to have the power to subject them to the test of the public interest, and to delay where necessary, and prohibit them where both the Board of Trade and this House are convinced that they would be against the public interest.
Many mergers, as I have said, will be positively in the national interest and can 1213 probably be reasonably easily seen to be so. Others, however, might tend, or, indeed, even be deliberately designed, to curtail competition, which, in the last resort, is the only real justification of private enterprise. The practical problem, I think we should all agree, is to sift the one sort of merger from the other.
Numerous small mergers would, of course, be right outside the scope of the Bill. In deciding which we should include, we have adopted again the test from the original monopolies legislation of a control of one-third or more of the supply of any product or service and we have added a further test: the transfer of assets of over £5 million. Wherever either of these conditions prevails, the merger would be within the terms of the Bill although, even so, the Board of Trade would be under no obligation to intervene.
I do not believe that it would have been enough simply to have included mergers which would have created or strengthened an existing monopoly situation as defined. There could be cases where monopoly in this sense is not technically involved, but, nevertheless, the concentration of economic power would be such that the transaction should at least come within the field of public scrutiny.
What, therefore, we propose is this. The Board of Trade, unless it wishes, under the Bill need not take any action whatever in the case of a proposed merger. No doubt a large number of mergers and takeovers will continue to go forward, or else not go forward, in accordance with the business and bargaining processes which determine these matters. But in those cases—probably a minority—where it appeared that a merger or takeover might be both prima facie against the public interest and extremely hard to unscramble after it had been consummated, if that is the right word, the power would exist under the Bill to hold it up while the Commission carried out its inquiry and was required to report within six months, or, in exceptional cases, within nine months.
It has always seemed to me that firms wishing to be merged, or firms threatened with a takeover bid—because human nature, even in this field, can sometimes be red in tooth and claw—would much prefer to have a judgment made before the union was completed rather than 1214 afterwards. The Board of Trade would, nevertheless, also have the power to ask the Commission, if this seemed best, to investigate a merger after the event, which is what the right hon. Member the Member for Bexley (Mr. Heath) proposed. That is not excluded. Power would thus be given under the Bill to do either the one or the other according to circumstances.
I think that we all remember the case of I.C.I. and Courtaulds, three years ago. There are probably many who feel today that the economy is all the stronger and more competitive for the fact that, in the end, in this instance, the marriage did not take place. No doubt that is a matter of opinion, but if it was to have been frustrated not by market forces, but by public judgment, I think that it would have been as much in the interests really of the two protagonists as of everybody else that the ban should have been imposed before and not after the union was consummated.
§ Mr. Edmund Dell (Birkenhead)
In the case of a take-over bid would the reference to the Commission occur before or after the shareholders had been consulted?
§ Mr. Jay
As soon as the proposals were made public it would be in the power of the Board of Trade to make up its mind what action to take. Therefore, it might be the one or the other.
I was going to add that take-over bids by foreign for British firms would, incidentally, also, of course, be covered by these powers which I have been describing.
§ Mr. A. E. Cooper (Ilford, South)
If a public announcement is made that two companies want to get together, and the Board of Trade decides that it wants to intervene, in what period of time would it make its decision? Because there could be a long period of uncertainty while there was dithering in the Board of Trade.
§ Mr. Jay
I am coming in a moment to the point of what the Board of Trade would do if a proposition of that sort were put to it.
I believe that the legal powers embodied in the Bill are sufficiently flexible in that they leave it possible for mergers to go forward in many cases 1215 with no investigation at all, but also provide for investigation either before or after the event as may seem desirable. Even, of course, when the Commission has inquired, and made its report, it will still be possible for the President of the Board of Trade of the day, who, I think, as responsible to this House, must be the final judge, short of Parliament itself, to accept or to reject the Commission"s recommendations, but when action is clearly shown to be necessary Parliament will have the power, by affirmative Order, to prohibit or dissolve a merger found by the Commission to be contrary to the public interest.
Next—and I come to the hon. Gentleman"s question—the House may reasonably ask what criteria the Board of Trade will use in deciding which mergers should be referred to the Commission and which should be left alone. We have given some thought already to this question. Mergers are of very great variety, and I do not propose to attempt to spell out precisely the cases where the public interest might be at risk. One obvious case, I think, is where competition in a vital industry might be markedly reduced. That is why we have provided, as an alternative to the criterion of monopoly, a size of assets test, so that what are called vertical or diversifying mergers could be investigated if the public interest required.
Mergers involving large firms are not, of course, necessarily harmful to the public interest—I should like to make the point—but the power of a giant, especially of two giants united, might be such as to stifle competition, or the empire created might be too large for the most efficient use of resources. In judging all these cases, however, I would propose always to remember what mergers in certain cases can do to achieve greater strength for our economy at home and abroad.
§ Sir John Rodgers (Sevenoaks)
Would the right hon. Gentleman say, for the purpose of clarification, whether the powers he has outlined apply not only to take-over bids covered by the Measure, but also to mergers voluntarily negotiated?
§ Mr. A. Woodburn (Clackmannan and East Stirlingshire)
May I put a question to my right hon. Friend on that? My right hon. Friend will remember that one of the large items which gave rise to a good deal of agitation was big Press take-overs. Would those come under the scheme?
§ Mr. Edward Heath (Bexley)
To return for one moment to the point when the right hon. Gentleman was interrupted by my hon. Friend the Member for Ilford, South (Mr. Cooper), when he said that this applies to mergers, amalgamations, where a foreign firm is involved, would the right hon. Gentleman clarify that the fact that a foreign firm is involved would be the only reason for intervening? There must be other criteria?
§ Mr. Jay
What I was trying to say was that the same criteria will apply in each case, either the creation of a monopoly, as defined, or the size of assets concept. That will apply regardless of whether the firm is foreign or British.
I was going on to say that we have also been asked how the Board of Trade would be prepared to give guidance to firms contemplating a merger and on the likelihood of its being referred to the Commission. We shall always be ready to say whether a proposed merger appears to us to be legally within the field of investigation. Beyond that, I think that I must distinguish merger proposals which are put to us in confidence before they are made public from proposals which are already public when we are consulted. If the proposal is already public and we are asked by someone with a legitimate interest we shall as a general rule be prepared to make known within a reasonable time whether we shall refer the proposed merger to the Commission.
Our intention is that those concerned, that is to say, firms and their shareholders, should as far as possible know where they stand before any offer becomes unconditional. A decision not to refer a proposed merger would, therefore, carry with it an implication that the completed merger might, later, itself not be referred, but the Board of Trade, of course, could not entirely exclude the possibility of the reference of the completed merger in an exceptional case.
1217 The problem is, however, more difficult, I think, when a merger proposal is still at the formative stage and has not been made public. That is a difficulty which we cannot disregard. I myself understand and sympathise with industry"s desire to be able to seek at the stage some sort of negative clearance, as one might call it. So long as the proposal is confidential we should not have enough information to judge whether a reference should be made to the Monopolies Commission. For instance, if a takeover were contemplated we could not obtain information from the firm to be acquired. Even if the merger proposal were one on which the firms involved were in agreement, so long as the proposal remained confidential we still might not know the effects on other firms, such as, for instance, suppliers or customers.
Also, when the merger proposal became public another bidder might, of course, conceivably always emerge and change the whole situation. I think, therefore, that we cannot be dogmatic now about the guidance we should give if we were consulted in confidence before the merger proposal was made public. How far we might, in practice, be able to give informal guidance must depend on the circumstances of the particular case, but we shall, of course, do our best.
Now, my right hon. Friend the Member for Clackmannan and East Stirlingshire (Mr. Woodburn) asked about newspaper mergers, which are very important in this connection and which we have provided for in the Bill. The previous Government"s White Paper ignored this somewhat awkward issue even though the Royal Commission on the Press recommended action. Awkward and prickly as this subject is, I came to the conclusion that even in a short Bill it would be cowardly to evade it altogether. It is no good disguising the fact that Press amalgamations have threatened, and still may threaten, the freedom and variety of the expression of opinion, and, perhaps, even the unbiased presentation of news.
It has always seemed to me, as one who has been a working journalist for over 20 years or so, that this is perhaps the one field where there exists potentially an insidious threat to real democracy in this country. It raises far dif- 1218 ferent and wider issues than the economic consequences of ordinary business mergers, but I think it reasonable to infer from the Report of the Royal Commission on the Press, on the one hand, and, on the other, from the public disquiet at the time, for instance, of the disappearance of the News Chronicle and the Star, the swallowing up of Odhams and the extinction of the Daily Herald, that many people are anxious whether the business forces making for amalgamations in the newspaper world might not one day imperil our liberties, though, thank goodness, there are plenty of discordant voices raised in the Press at the present time which we can all hear.
This has always struck me as a baffling problem, because what neither a Government, nor even Parliament, can do is to compel the Press to be free, nor even, by Parliamentary decision, make a newspaper pay if the public is not willing to buy it. We have, indeed, allowed for this latter eventuality in the Bill by enabling the Board of Trade to give consent in the case of newspaper mergers if the paper in question has no chance of carrying on successfully with its existing resources.
The Royal Commission proposed that a special court should be set up to adjudicate whether a newspaper amalgamation should be allowed to go forward. There are really, I think, only three practical alternatives here if we decide to do anything at all, and none of the three alternatives is very attractive. The first is judgment by some sort of judicial procedure; the second is decision purely by a Minister, who inevitably, or at any rate probably, has political loyalties of some sort; and the third is an inquiry and recommendation to the Government by some sort of administrative tribunal.
I have come to the conclusion that the Royal Commission"s proposal of a judicial procedure is wrong, because really these decisions on freedom, of speech free expression of opinion, and the public interest, are simply not justiciable issues. Secondly, I do not believe that a decision by a political Minister alone would be wholly satisfactory because, however single-minded he might be, he could not always, I think, hope to command general assent on an issue of this kind.
1219 That really leaves us with inquiry and recommendation by some sort of administrative tribunal, if that is the right phrase, and, since the Monopolies Commission is, in any case, to be expanded and given power to adjudicate on other sorts of mergers, it seems to me that it is the best instrument that we are likely to have for this purpose. Even so, since the issues raised by newspaper mergers are so different from the normal takeover bid, I believe that it is right that we should recruit a special panel of individuals for this purpose who could be added to the Commission for this particular form of inquiry. I hope that the House will agree that rather than do nothing at all on this front it would be better to try this experiment and see whether, after a period of such trial, Parliament believes that this is the best way of preserving the genuine freedom and variety in the Press which I am sure we all value.
We are also proposing one other departure in the Bill which was not foreshadowed in the previous Government"s White Paper. In Clause 4—we are always interested in Clause 4, in Bills or anywhere else—we are empowering the Board of Trade, on the basis of a Monopolies Commission"s report, to use the relevant powers which are in the Bill anway to prevent any breach of, or conflict with, a treaty. We propose this because it has emerged in recent months that the Restrictive Practice Article of the Stockholm Convention, which set up E.F.T.A., laid obligations on the British Government which they had no effective legal power of carrying out. This, incidentally, is another example of where the previous Government entered into treaty obligations which they had no practical powers to fulfil. We are here remedying this rather unfortunate sin of omission.
One E.F.T.A. Government have represented to us that a British exporting firm was following price practices in their country which they considered to be in conflict with the Stockholm Convention on Restrictive Practices. We have, therefore, thought it right not merely to take powers to enable us to comply more effectively with the E.F.T.A. Convention obligations, but to widen the powers, subject to negative Resolutions by the House, so that we can act wherever any treaty 1220 obligation requires us to do so, because in principle this is not a point which is exclusive to the E.F.T.A. Treaty.
Although this is a short Bill—and I commend it to the House as such—it contains quite a lot of meat. I hope, however, that in view of the history of these matters, and the previous Government"s White Paper, which overlaps the Bill to quite a considerable extent, but not to the whole extent, the House will approve it as a further step forward towards the stimulation of a more competitive and more self-reliant industry in this country.
§ Mr. Heath
The right hon. Gentleman has twice said that this is a short Bill in which he is giving priority to the things which he regards as most urgent. He mentioned that he has excluded an amendment to the 1956 Act to block loopholes which have been found in dealing with restrictive practices. Is the right hon. Gentleman arguing that the action he is taking to deal with the occasional Press merger is more important for the economy than blocking loopholes in the 1956 Restrictive Practices Act?
§ Mr. Jay
Yes, I am. The loopholes mentioned by the right hon. Gentleman are of some importance, but they are only part of a very large structure of restrictive practices legislation. Although, ideally, if we had nothing else to legislate about this is one of the things which I should like to put right, when we consider the whole field, I do not believe that this is one of the first priorities in the present situation, but I assure the right hon. Gentleman that, in principle, I agree that that is one of the loopholes that we should like to block.
I hope that the House will recognise that the powers contained in the Bill are not the only step that we are taking along the road to stimulating greater competitive power in industry. There are many others, which some hon. Members will know to their cost from many laborious hours spent in Committee upstairs, but I believe that this is one essential step, on the main purpose of which I hope most of us in the House can reach agreement, towards the rejuvenation of the economic vitality and resilience of industry. I believe that we have great industrial and economic resources in Britain, 1221 and that what is needed now in this House and outside is the will to liberate and mobilise these to the full.
§ 4.29 p.m.
§ Mr. Anthony Barber (Altrincham and Sale)
Owing to my enforced absence from the House for a few months, this is the first real opportunity that I have had of congratulating the right hon. Gentleman on the high office which he now holds.
I am sure that I express the view of right hon. and hon. Members on both sides of the House when I thank him for the clear exposition of the Bill, which is not lacking in complexity and detail. I know from my experience of attempting to expound the provisions of four Finance Bills that it is not easy to be lucid, brief, and informative, and, at the same time, accurate. I am only sorry that, until a moment ago, there was not a Liberal Member in the House to listen to at any rate the beginning of this very important debate.
Whatever the President of the Board of Trade may say, in an attempt to claim all the credit for the Bill, he knows, of course—just as well as anybody else who has followed these matters over the past few years—that the theme of the Bill is that which was set out in the Conservative Government"s White Paper in March last year, although, in certain very important respects—as my right hon. Friend has just pointed out—the Bill fails to implement proposals which we would have implemented, had we been in office now, for curbing restrictive trade practices. In other resepects, the Bill has adopted different principles from those which were advocated last year.
Before I come to that I want very briefly to refer to the history of these matters and to express some general observations about what I believe should be our attitude to monopolies and mergers. Despite what the right hon. Gentleman said, generally speaking—though we have had our differences—there has been a fairly broad bipartisan approach to the actual legislation dealing with monopolies and restrictive practices. But while there may have been a broad approach on the actual legislation, it is apparent from statements made in recent years by those who now occupy important 1222 positions in Her Majesty"s Government, that there is all the difference in the world between their attitude to concentration of industry and that of my hon. and right hon. Friends.
When the Labour Government introduced the Monopolies and Restrictive Practices Bill in 1948, they were closely following—I am sure that the hon. Gentleman will agree—the Conservative Industrial Charter which had been published the year before. Since that Act was passed, successive Conservative Governments have proceeded pragmatically in the light of experience, and so we had the Monopolies and Restrictive Practices Commission Act of 1953 and the Restrictive Trade Practices Act of 1956, and then, in March last year, the White Paper which forms the basis of this Bill.
While the present Government have put their own gloss on that White Paper, and propose some alterations of considerable significance, I am sure that the right hon. Gentleman will be the first to agree that when he arrived at the Board of Trade he found that much of the preliminary work for the Bill had been completed. Even so, it has taken the right hon. Gentleman over four months to produce the Bill. So much for what the right hon. Gentleman called, "A fertile Parliamentary Session".
I make no complaint whatever about this delay and I think that the right hon. Gentleman was probably right to take his time. I mention it only because my right hon. Friend the Member for Bexley (Mr. Heath) was severely criticised last year by some hon. Gentlemen opposite for not introducing legislation on monopolies and mergers at the same time as he dealt with resale price maintenance. I am sure that he was right, as the right hon. Gentleman has been, not to rush this legislation, which, whatever measure of agreement there may be, is of the utmost importance, because of its consequences for the efficiency of British industry and so for our competitiveness and our standard of living.
This brings me to the basic question of our approach to the current trend of increased concentration in industry. Hitherto, the legislation dealing with these matters has not involved any presumption that monopoly or size are, in themselves, undesirable. Indeed, while 1223 a monopoly situation may be exploited contrary to the national interest—the White Paper and the Bill, in their different ways, are directed to remedying such a situation—the general advantages of larger industrial units must be apparent to any objective observer, whether these larger industrial units come as a result of mergers or whether they come from the internal organic growth of individual companies and combines.
It is, therefore, essential that, in our legislation and in the way in which it is applied, nothing should be done to inhibit or to deter desirable mergers. Indeed, they are essential, if we are to make the most effective use of our resources and get the additional exports which the right hon. Gentleman talked about.
In the first place, many companies which have been taken over in recent years were not fully employing their assets and were not giving an adequate return to their shareholders, which is basic to the capitalist system. Whatever right hon. and hon. Gentlemen opposite may say, this is the system which has been responsible for the great surge in prosperity over the past 15 years or so.
Secondly, a large proportion of the most progressive British companies have been created through mergers. One thinks of I.C.I. and the British Motor Corporation, and there are many others which I could mention.
Thirdly, concentration of industry often leads to economies of scale which would otherwise be impossible, to the capacity to employ more efficient management, and to finance a high level of research, as well as to the development of sophisticated marketing techniques and a more effective sales organisation.
After the lip service paid by the Prime Minister to science and technology, I hope that he will at least agree that, other things being equal, it is often the case that the larger the concern the more likely it is to attract the best scientific and technological brains.
§ Mr. Peter Shore (Stepney)
Is the right hon. Member aware that the drift of his argument is precisely the same as has been advanced in the case for public 1224 ownership of steel, that is, to bring together a very large number of firms so that we can enjoy the optimum use of a large single enterprise?
§ Mr. Barber
I shall refer very briefly in a few minutes to nationalisation of steel, but if only the hon. Member for Stepney (Mr. Shore) would press his right hon. Friends, particularly the Prime Minister, to get on and produce their Bill, we would have a good opportunity to debate it. At least they should produce a White Paper.
As I was saying, all this concentration of industry is of crucial importance not only to the immediate balance of payments problem with which we are faced; it will become even more important as our foreign competitors speed up the rationalisation of their own industries. As I am sure the whole House would agree, already concentration of industry is more pronounced in the United States, in Western Germany and in France than it is in this country. It is not without significance that, only last Wednesday, the French Council of Ministers announced changes in their taxation system with the avowed objective of stimulating new mergers. In the United States, where there is certainly a stringent approach to restriotionism, the 500 largest manufacturing companies and the 50 largest merchandising companies between them took over 3,700 smaller firms from 1950 to 1961.
In this country, in a laudable effort to encourage the smaller United Kingdom companies to export more, it is sometimes said in criticism that only 70 companies are alone responsible for 35 percent. of British exports. Whatever other conclusions one might draw from these figures, they certainly illustrate the magnitude of the contribution to the balance of payments made by the larger industrial units.
I have dwelt at some length on the advantages of the concentration of industry for two reasons: first because, in discussing a Bill designed to deal with developments against the public interest, it is appropriate at this stage to look at the other side of the coin; secondly, I have said what I have because we must concern ourselves not only with the bare provisions of the Bill, but with the way in which the Government intend to apply them.
1225 I am far from happy about the almost pathological hostility to big business evinced by some members of the present Administration. It is not without significance that when these matters were last debated in the House—this bears out the interruption of the hon. Member for Stepney—many hon. Members concentrated on the virtues of nationalisation. I shall refer to it only briefly. I know that the President of the Board of Trade takes a different view from many members of his party. As he puts it:We must now make it plain…that we do not believe in the extension of the public monopoly to manufacturing industry or distribution".But, of course, if any proposals within the ambit of the Bill are sent to the Board of Trade for consideration, and certainly if they are important proposals in which there is great public interest, the ultimate decision will not rest solely with the right hon. Gentleman the President of the Board of Trade. He is bound to consult his colleagues. We are, therefore, entitled to consider what the reaction is likely to be from those old-hat Socialists in the Cabinet who still wield considerable influence.
Does the right hon. Gentleman, for example, agree with these sentiments:Where major changes of ownership and control in a vital industry are threatened by takeover bid or merger, the State must be free to intervene, either by vetoing a proposed transaction or by stepping in itself and asserting the rights of the community through an extension of public ownership."?That was the policy of the Labour Government not long ago in "Signposts for the Sixties". [HON. MEMBERS: "And still is."] Very well, it still is their policy.
The Prime Minister himself, I recall, has made it clear, as he puts it,When we say "extend public ownership in any industry," we mean take over, nationalise".At least we are becoming a little clearer now that the election is over, but certainly in the General Election and in my by-election there was no mention of nationalisation of this kind.
§ Mr. Barber
No. The difference is that during the election I made my views on the steel industry clear whereas the right hon. Gentleman did not.
§ Mr. Deputy-Speaker (Dr. Horace King)
Order. We have time for only one debate today—and that is not a debate on the nationalisation of steel.
§ Mr. Barber
I will leave the steel industry, but there are other forthright if somewhat naïve views which have been expressed by the Minister of Technology and which are highly relevant to the Bill because they are concerned with the control of industry.
The Minister of Technology said:We…have reaffirmed many times our belief in the basic principle of Socialism, which means ownership and control of industry…we have seen…how the control or a company can affect the whole economy of a big section of our community.He continued:…if we cannot control the motor car industry, we shall never be able to say that we will do this or that or the other…Will the right hon. Gentleman give the House an assurance that the powers in the Bill will not be used to implement the sort of doctrinaire prejudices expressed by his right hon. Friends in the Cabinet?
§ Mr. Barber
If the hon. Member looks at Clause 3 he will see that enormous powers are sought by the Government for dealing with this sort of situation, which has been referred to by several members of the Cabinet. It is, therefore, highly relevant.
§ Mr. Barber
Perhaps I may conclude by quoting someone of whom I am sure most hon. Members opposite will approve—the Secretary of State for Economic Affairs. He said:The Labour Party, comprised of so many points of view anyway, is united in opposition to the capitalist system of society.1227 What worries us on these benches is not the sweet reasonableness of the President of the Board of Trade, who has seen the light, but the prejudices and the stupidity of some of his most powerful colleagues, who might well override the right hon. Gentleman"s views.
In the debate on the White Paper, last July, the Minister of State, who, I understand, is to wind up the debate, said that the Labour Government would deal with the Post Office bulk supply agreements. Now that he and his colleagues have had five months in which to consider these matters, is he yet able to tell us whether he has reached any conclusion or is likely to do so in the near future?
I turn to the details of the Bill. We on this side of the House support the proposal to enlarge the Monopolies Commission to 25 members and to enable several inquiries to be dealt with concurrently. Despite what the right hon. Gentleman said, this is the very proposal which we made last year in the White Paper. I thought that I detected in the right hon. Gentleman"s speech a hint of criticism that it had not been done before, but it was the Conservative Government, in 1953, who increased the number of members to 25, and they were reduced to their present number in 1956 only because of the transfer of work to the new Restrictive Practices Court. With the added work of mergers and services, the decision taken in the Bill is obviously right.
That brings me to the second point on which we are in substantial agreement —the powers sought by the right hon. Gentleman to call for investigations into the provision of services.
§ Mr. Barber
The point which I am making is that the right hon. Gentleman seemed to be suggesting that this was the first time that it had ever been proposed that the number should be raised to 25. I was simply pointing out the history of these matters.
I come to the next point on which there is substantial agreement between 1228 both sides of the House, and that is the proposal to call for investigations into the provision of services. This, again, was proposed in the White Paper last year. The field of services is daily becoming of greater importance to the consumer, and it is right that the Commission should be able to inquire into restrictive practices in this field, too. The right hon. Gentleman has gone further than we proposed in that, as he pointed out, the Bill is not limited to inquiries into commercial services, a limitation which, incidentally, last July the right hon. Gentleman thought was right.
I think that the right hon. Gentleman"s new view is the better one and that he is right in having decided to go further than was originally proposed. But we shall want to hear a little more about how he thinks these new powers will, in practice, be applied in respect of professional services. He told us a little this afternoon, but we shall want to know more, particularly about the likely action in those cases in which there is existing control and discipline in which the Government already have some say.
Again, the Bill deals specifically in Clause 8 with newspaper mergers. I can deal with this very briefly. There are obvious special considerations to be taken into account in Press mergers, and I therefore agree with the proposal to treat them as a special case to be governed by special criteria. In one most important respect the provisions of the Bill differ from the recommendations of the Royal Commission, and in this difference I think that the right hon. Gentleman has made the right decision. I refer to the decision to refer Press mergers to the Monopolies Commission rather than to a specially constituted Press amalgamations court.
I should have preferred the latter type of inquiry, but I can see the very real difficulty of stating the criteria of public interest with sufficient precision to create justiciable issues which would be capable of decision in the light of the evidence. With some hesitation, therefore, I have reached the conclusion that the right hon. Gentleman is right to go for an administrative tribunal, although in this important matter, involving not only the freedom of the Press but also the extent of the variety of opinion and news presentation which is available, we shall have to examine the details of the Bill with the utmost care.
1229 I turn to the proposals for investigating mergers, and here I must take issue with the right hon. Gentleman. The House will realise from what I have said about certain proposals in the Bill—for example, those dealing with services which are not in line with the last Government"s White Paper—that there is no question of the Opposition wishing to adhere slavishly to our previous proposals when we were in office. Furthermore, I recognise that opinion; as to what is the right course and what is practicable not only differ but are sincerely held. I have considered, I hope, all the various suggestions which have been made for dealing with mergers including, in particular, the report of the committee to which the hon. Member for Birkenhead (Mr. Dell) referred, the committee of which Lord Poole was chairman. I have reached the conclusion that the Government are wrong to take powers to hold up a proposed merger while it is being investigated.
The right hon. Gentleman claimed that he was being audacious in taking these additional powers, but the real question to be decided is simply: what is the right action, the right powers, to take? I believe that my right hon. Friend the Member for Bexley was right in the view which he expressed last year that such action could well frustrate desirable mergers. I will explain why.
§ Mr. Barber
First, the proposal in the Bill contemplates that a proposed merger may be held up for six months—or, exceptionally, for nine months—while being investigated and thereafter there is no time limit during which the Government must make an order. It follows, secondly, that during this period it will be quite impossible in some cases for the proposed merger to remain confidential. Thirdly, it is inevitable that during the standstill period, while the investigations are taking place, the share prices of the two companies will often change relative to each other.
Fourthly, during the standstill period there is nothing to prevent a third party, knowing what is afoot, from buying up a proportion of the shares in the market. Fifthly, what is the position of a third organisation, operating in a totally different sphere, which makes an alterna- 1230 tive bid? Since there would then be no question of a monopoly, and provided the assets to be taken over were less than £5 million, the Board of Trade would be powerless to prevent the second bid from going through, although in the national interest the original proposed merger might have been more beneficial.
These are only a few of the obvious objections to the proposal to take power to hold up a proposed merger. I cannot believe that there will not be cases where these possibilities and others will prevent the merging of businesses in circumstances which would be in the national interest. I see no objection to a power to inquire into a proposed merger; and if the merger had not been completed before the inquiry was concluded then it could be prohibited. Again, I am at one with the right hon. Gentleman in that where a recently completed merger would result in a monopoly, or would increase the power of an existing monopoly, the Board of Trade should be empowered to direct the Monopolies Commission to make an inquiry, and it would then be for the Government to take action.
In practice, any company contemplating a merger could consult the Board of Trade, which would then express an opinion; and, in practice, in such cases an inquiry would seldom be necessary. The power which the right hon. Gentleman is seeking to hold up a proposed merger assumes an even greater significance, because it may be exercised not only where a merger would lead to or strengthen a monopoly; it might also be exercised under the Bill where there is no monopoly situation, but merely where the assets to be taken over exceed £5 million. I cannot believe this to be right.
If there is no monopoly situation the exercise of this power connotes a prima facie objection to a merger on the ground of size. Yet, as I said, there is a great deal of evidence to show that the growth of the economy would be helped rather than hindered by more mergers. If it is right that the criteria should not be concerned with a monopoly situation, then surely there might well be mergers involving assets of less than £5 million which, on the right hon. Gentleman"s principles, would warrant investigation.
1231 When one takes into account the cost of preparing evidence and conducting proceedings before the Monopolies Commission—to say nothing of the possibilities of a standstill order—one realises that it must follow that many desirable mergers will be deterred. What is the position if a company adopts the alternative method of gaining de facto control—although not 100 percent. ownership—of another company by buying shares in the market? What powers has the right hon. Gentleman got then, assuming that there is no monopoly situation? I cannot believe that this proposal in the Bill will encourage the more effective use of our resources, which must surely be the aim of the Government.
There are a number of matters which the previous Government had intended to include in the Bill, but which, as I said earlier, I am sorry to see have been omitted. There were various proposals for strengthening the Restrictive Trade Practices Act, 1956. I remember being concerned, on the sidelines, in the discussions which we had last year, when the right hon. Gentleman and his colleagues took the view that they were most important matters which should be dealt with at the earliest possible opportunity. But the right hon. Gentleman has chosen not to deal with them at this opportunity.
I do not see why it has not been possible for the Government to tackle the various ways which have been devised for circumventing the 1956 Act. My hon. Friends and I regret that the right hon. Gentleman has not seen fit to establish a registrar of monopolies, who would be responsible for making investigations into the facts and setting out the questions and issues involved. There is no doubt that his independence would have been recognised by industry and that a practice would have grown up whereby consultations could take place before there was any question of an inquiry by the Commission. I do not believe that the functions of a registrar of monopolies would have held up the proceedings in any way. On the contrary, I think that he would have been able to facilitate them.
There are three further brief questions I will put to the Minister of State. Some 1232 concern has been expressed to me about the operation of Clause 4, which deals with our treaty obligations. I was rather surprised that the right hon. Gentleman dared refer to our treaty obligations. My goodness, if that is what is in his mind in connection with this matter, the 15 percent. surcharge might come off within a matter of weeks. However, these questions in connection with Clause 4 have caused some concern and I am sure that the Minister will be able to assure those who have approached me.
First, how is the operation of the Clause likely to effect industry? What sort of action under it does the right hon. Gentleman contemplate? What sort of situation is it meant to cover which is not already covered by existing legislation and the rest of the Bill? Have there been any complaints from our friends abroad? Because of the open-ended nature of the Clause I hope that the Minister will be able to answer these questions tonight.
My second question concerns an undertaking which was given by a member of the present Cabinet, the Minister of Overseas Development. She promised last year, when we were debating monopolies and mergers, that a Labour Government would introduce amendments to the Resale Prices Act. May we know when to expect these because, as I say, that promise was made in connection with proposals for monopolies and margers?
My final question is this. The President of the Board of Trade said earlier that this was not the only step which the Government were taking to improve the competitiveness of industry. The purpose of the Bill is to strengthen the powers of the Government and to prevent situations and activities in industry which operate against the public interest. The Bill is concerned with the over-concentration of economic power and with practices which restrict competition and lead to unnecessarily high prices. But, of course, the increasing concentration of industry in Britain has been paralleled by the increasing concentration and power of the trade union movement. As with monopolies of production, distribution and services, so with the trade unions; this concentration of power does not necessarily operate against the public interest. Indeed, in some respects quite the reverse.
1233 The fact remains that this is a factor of immense importance. I think that we all recognise that restrictive labour practices can have a crushing effect on consumer prices and on our efforts to become more competitive in world markets. The Government have at last accepted the Conservative proposal to establish an inquiry into trade unions and employers" associations. I understand that the Royal Commission will pay particular attention to the law concerning trade unions. I hope, when we are considering these matters today, that we shall be given an assurance that any abuse of monopoly power by these organisations, together with the whole problem of restrictive labour practices, will be among the subjects to be considered by the Royal Commission.
It is surely right, also, that we should pay full regard to the public interest in this sphere if we are to maximise the efficient use of our resources, which is the avowed aim of the Government and the Opposition alike.
§ 5.0 p.m.
§ Mr. A. E. P. Duffy (Colne Valley)
I should have thought that on this occasion. above all, the right hon. Member for Altrincham and Sale (Mr. Barber) would have hesitated to make the claims he did on behalf of capitalism, because we are discussing a Bill which is intended to deal with the distortions and imperfections of a capitalist system which, according to classical economics, ought not to have happened, or ought not to have taken the form they have done. If the right hon. Gentleman and his colleagues were frank with the House they would agree that that is the reason why legislation has been so long in coming forward.
It is not going too far to say that the whole cause of monopoly legislation was put back by the late Government in the "fifties principally because the then Government did not seem to know which way the economy was evolving, could not make up their mind what was likely to happen, or even make up their mind whether they believed in competition or regarded bigness itself as being the best policy for modern industry, and that efforts to enforce competition should only be at the margin.
1234 I do not suggest that these ideas are exclusive. I only say that we have had to wait for a Labour Government with sufficient courage and initiative—at any rate, at the Board of Trade—to tackle the problem and bring those two ideas together. In particular, we have had to wait for a Government that have a clearer idea of the evolution of our economy than hon. and right hon. Members have had. The right hon. Gentleman was, therefore, not making us feel uncomfortable, even if he thought that he was, when he made those irrelevant references in the middle of his speech to nationalisation, as I hope to show later.
I say at once that the three things required for an effective policy on monopolies and mergers are (1) a Government able to employ relevant criteria as to what constitutes the public interest; (2) a Government will to take strong action when monopolies and mergers are found to be contrary to the public interest, and (3) a Monopolies Commission that can do more work more quickly than has hitherto been the case. I think that, on any fair showing, the Bill promises to do all three, and must, therefore, be welcomed.
As their predecessors promised last year, the present Government propose, in Clauses 1 and 2, to increase the size of the Monopolies Commission, and to extend its investigations to include professional services. I shall be surprised if, during the course of this debate, many hon. Members do not come forward with their own candidates for early treatment under this head, and I myself am especially hopeful that the Commission will take an early opportunity to look at the discount market. In that way it may help monetary policy to recapture some of its lost effectiveness.
The need for this has been quite clear since the Radcliffe Committee reported over six years ago, and what that Committee said has been repeated recently by the Porter Commission in Canada. The Radcliffe Report stated, that a more vigorous use of interest rates would strike at liquidity over a much wider spectrum of financial institutions, whilst the conclusion of the Canadian Royal Commission on Banking last year was that the prime reason why the rival financial institutions have fared so much 1235 better than the banks in periods of tight money lies in the fact that their interest rates are usually far more flexible than those of the banks.
All this does not take us beyond last year"s White Paper, but the Bill breaks some important new ground. It gives the Government the power to apply a "standstill" to take-over bids pending investigation. It seeks to control newspaper mergers of a certain size. And it allows the Monopoly Commission to investigate mergers whether they are likely to lead to monopoly abuses or not, provided that the firms taken over have assets of over £5 million. Until my right hon. Friend the President of the Board of Trade spoke this afternoon I was worried in case mergers would be judged more by the size they brought about than the market dominance they created. I was, therefore, grateful to hear my right hon. Friend"s assurance on that point.
This depends on the use the Government make of their new powers, as does everything else in the Bill. It is important that they should be used against monopoly in all its restrictive forms. Here I am with the right hon. Gentleman opposite that—as, indeed, was said by my right hon. Friend—the powers should not be used against mergers that produce the large industrial groups that Britain needs to compete effectively against increasingly fierce foreign competition. I also agree with the right hon. Gentleman about the Government"s fundamental approach, which is the neutral one.
There is no automatic assumption in the Bill that mergers are against the public interest, and that is fundamentally right. I do not think that the hon. Member for Bournemouth, West (Sir J. Eden) need now show the same sensitivity as he did when we debated this subject on 6th July. We on this side recognise the need for mergers. As I have already said, we can see reasonably clearly the way in which our economy is evolving, and in this respect our attitude is a good deal more consistent than is that of the party opposite. There is a good deal more agreement on this side about mergers and monopolies than there is, for instance, between the right hon. Gentleman and his right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell).
1236 We recognise that the pace of bids and mergers has shown no sign of slackening since our debate on 6th July last, and I think that we shall see 1965 as another active year of bids and mergers in industry. That is due to many reasons. There is the drive for efficiency, about which most of us showed concern just a year ago, new power forms, new techniques of production, automation, excess capacity and diversification of industry as capital seek to spread its risks. Interestingly enough, fear is also a prime factor; even the biggest firms are seemingly being driven inexorably to expand as a condition of survival. Some pundits have argued in the last year or two that the safety zone is considered to be as high as £75 million.
Moreover, industrial needs are changing fast and the size and structure of companies must reflect that change. As my right hon. Friend the President of the Board of Trade also recognises, a merger may offer that opportunity to achieve marked economies of scale in production and distribution, and that better use of resources, so that even if competition is reduced that merger is justifiable. In any event—and here I go beyond what has already been said in the debate—industry is too fragmented if it is to cope with foreign competition, and needs more mergers rather than fewer.
Most of this was conceded in last year"s White Paper, but it watered down the merger proposals to the point at which they were almost certain to be ineffective, whereas if the public interest is to be brought to bear at all it must be done in such a way as to have some chance of being effective. Bringing the public interest to bear upon the action of monopolists should be the principal aim of the Bill.
I therefore regard Clause 3 as the crux of this Measure. That is why I hope that we will debate it seriously, and if I thought that the right hon. Gentleman was not doing so earlier, I hope that he will forgive me, because I was concerned with the Bill rather than with his own remarks, and I welcomed everything that he said subsequently.
The prosecution of the public interest will only be truly effective if the powers invoked in the standstill period, as well as the threat to force firms to divest 1237 themselves of assets, do not, on the one hand, hold back desirable schemes of rationalisation nor, on the other, frustrate a monopolistic merger that promises to produce more good than ill. Because, in many areas of the modern economy, oligopoly is the conformation to be expected—natural or otherwise. I believe that to argue that this is not so is greatly to delude oneself or to refuse to face facts.
The argument that a monopoly position leads to inefficiency and reluctance to innovate, or to exploitation of a captive market, may apply to some situations but not all. Here again, I do not think that the right hon. Member for Altrincham and Sale gave sufficient weight to the extent to which we on this side recognise this. We do recognise that monopolies can produce economies of skill, better facilities for research, and often better management. That is why we have urged the nationalisation of certain groupings of companies. This is why we have regarded nationalisation as the logical combination of certain developments in our economy. Moreover, large industrial giants do at least have the advantages of mass production techniques and great financial resources.
This is why there is a great need, which I hope the Bill will meet, to develop some basic criteria for judging whether a merger is in the public interest. We have little choice but to start with the assumption that competition is desirable, because in an uncompetitive market prices and profits are likely to be higher than necessary for the long-run survival of efficient firms. I said this a year ago on resale price maintenance. It still needs to be said again and again. However, there is a very important qualification to be made, because, if the experience of the United States is any guide, we may have to move beyond that point—indeed, in many respects we have already done so—to the assumption that firms cannot be forced to compete and that an environment must be created in which competition is more likely to develop than otherwise. Emphasis at that point must be on the regulation of concentrations of economic power.
In view of what my right hon. Friend the First Secretary of State and Secretary of State for Economic Affairs is doing, 1238 and of all that I believe both sides jointly hope about the direction of overall economic planning, including pooled development programmes and concentrations on long-term economic groupings, judgment of what is in the public interest will have to proceed from further advanced assumptions. I refer to new forms of pressure which tend to put the emphasis on business co-operation and co-ordination rather than reliance on sheer self interest and the invisible hand. Whether the right hon. Member for Altrincham and Sale accepts this argument or not—he need not —he will understand why we take the view we do about nationalisation and perhaps he will respect a little more than he did our attitude towards nationalisation.
We believe that the criteria that we apply to nationalisation, the criteria we apply to competition, and the criteria we apply to what is in the public interest, as they are enshrined in the Bill, must be relevant to a dynamic economic situation that is even more dynamic this year, I have already argued, than it was last year and certainly more dynamic than it was 10 or 20 years ago.
I take it one step further. It may be necessary for a firm to have a virtual monopoly of the home market for a particular product if it is to compete effectively overseas. The work of the little N.E.D.C.s will undoubtedly be of assistance here, for the work of the little N.E.D.C.s will help us to determine what sort of structure is needed in various industries if this desirable competitive position is to be arrived at. I am looking forward to the day when the little N.E.D.C.s come up with some reports which will, in fact, endorse attitudes that we adopted years ago and which will support what my hon. Friend the Member for Stepney (Mr. Shore) presumably had in mind when he put his question to the right hon. Member for Altrincham and Sale. I am sanguine that the little N.E.D.C.s will come up with reports which will make a case for near, if not outright, nationalisation. They will point to the kind of structure which will be needed in various industries if the right competitive position with overseas producers is to be arrived at.
Yet, interestingly enough, this development to which I am looking forward very 1239 hopefully has its dangers. It has dangers of undesirable anti-social collusion. For will not the work of the N.E.D.C.s in bringing businessmen together, both to push exports and to ensure forward planning of capacity, set a premium on information agreements? In the light of this, information agreements are undoubtedly desirable, because ill-informed estimating of future markets by businessmen is not their strongest point. Yet, as we all know, there are desirable and undesirable information agreements and the difficulty remains of distinguishing the one from the other.
The problem does not end even when we can confidently point to the better type of information agreement, because it is impossible to say a priori whether better information will increase or restrict competition. Knowledge of competition costs may encourage efficiency, but it may also enable prices to be set so that business friends are not ruined. Exchange of information on projected capital expenditure may make possible the construction of plants near optimum size, but it will also show other producers when one of their number is increasing his share of the market at their expense and enable them to take action to maintain the status quo.
Yet—I am sorry to have to make this criticism, though it is only a muted one—there is no provision in the Bill for information agreements. Important though it is that the Bill will confer on the Government the power to require the publication of price lists by the firms concerned, or even fix the prices themselves—and I welcome this—this is not enough by itself. An anti-merger policy must be accompanied, in my view, by stronger action against information agreements as well as price-fixing agreements. For differing degrees of market power do exist in almost all industries, and producers have to elaborate marketing strategies instead of accepting their price from a purely competitive market.
Nevertheless, despite this small criticism, my right hon. Friend is to be congratulated on his Bill. Though it is largely an inheritance from the Conservatives, it is clearly more comprehensive and promises to be a much more vigorous Measure than anything the former Government contemplated. Nevertheless, I hope that it is only an interim Measure. I hope that the reason why we have got 1240 this "short" Bill, as my right hon. Friend put it, is because of the congested Parliamentary timetable. Anything that strengthens the Government"s weak powers against undesirable business concentrations and promises to tune up the competitive tone of our economy is becoming more and more imperative.
Yet efficiency is only a relative concept. If the return on invested capital is the essential criterion, all kinds of investment can be justified that are in fact socially irresponsible. So any consideration of public interest must have regard to social as well as economic criteria.
This is my last point. My constituents are not well placed to judge the technical merits of monopolies and mergers, but they can fairly gauge their social implications. There are some interesting developments taking place in my constituency at the moment, developments which I will not go into now in case I, too, should be guilty or irrelevancy. "The wool textile industry, on which so many of my constituents are dependent for their employment, is undergoing a slimming process and is being subjected to larger groupings.
I received a letter only last week from a constituent who is employed by Little-woods Ltd., Grove Mills, Gynn Lane, near Huddersfield, which was acquired by Bradford Dyers" Association in the 1930s, which now, in turn, has just been taken over by Viyella International Ltd. On the face of it, I have no quarrel with that—how could I, in view of what I have said?—but I have a quarrel with the way in which it has gone about it. I have a quarrel with many things that it has done, but principally the compensation which it has offered my constituent. Afer 36 years employment with the firm, he is offered £4 10s. for each year of service.
We hope that there is legislation already in the pipeline—legislation on severance pay—to deal in part with this. I hope that is not the only legislation which will be introduced to deal with this kind of development.
At the Oldham end of my constituency, at the Lees Paper Staining Company, of Springhead, there is great anxiety on the part of management and workers alike about pensions benefits and long-service bonus pay because that company 1241 is subject to a take-over bid by the Reed Paper Group. Interestingly enough, the Lees Paper Staining Company is not a small or isolated firm. It is a member of Wall Paper Manufacturers Ltd. This is a most interesting development. What is equally interesting, and unlike the other case, is that both management and workers are filled with apprehension.
I welcome this Bill, with the small criticism that I have made. I hope that this kind of legislation will be followed by more legislation which will deal with the social implications, and that we shall be as mindful in this House of the social criteria of what is in the public interest as well as with the economic criteria.
§ 5.21 p.m.
§ Sir John Vaughan-Morgan (Reigate)
With much of the speech of the hon. Member for Colne Valley (Mr. Duffy) I agree. Perhaps I can refrain from further comment on his speech, since I do not know about his constituency points, although I know that his constituents expect more electrifying orations than that to which he treated us today.
This is in no way a complaint, but I regret that the President of the Board of Trade is not here at the moment. I wanted to congratulate him myself, not only on attaining his office but on reverting to the ancient and honourable title of President of the Board of Trade. I was never very happy when that ancient office was snuffed out by the heavy and cumbersome title that his predecessor enjoyed. I wanted to say that to the right hon. Gentleman in person; even though I regret that with the advent of the Department of Economic Affairs the Board of Trade is pushed a bit further down the hierarchic scale.
From all the speeches which have been made so far it is quite clear that the Bill is not opposed on Second Reading. I believe that for the first time in many parliamentary days that there is no Government Whip at the door of the Members" Lobby to prevent them leaving, no angel with the flaming word "No" to stop them going about their other business. Certainly, the Bill has a very respectable pedigree. It is largely based on our White Paper, and where it is not based on our White Paper it has taken suggestions from the 1242 Poole Report, to which an hon. Member referred who, apparently, did not realise that four or five of my hon. Friends were members of that Committee. May I say that I agree entirely with the criticism which they and he made.
The Bill has been decorated with some individual and rather idiosyncratic features by the right hon. Gentleman. It is clear what has happened. The right hon. Gentleman has been the "shadow" spokesman in this matter for his party for many years. He has made many utterances in that capacity. Now the shadow has suddenly become substance. He reaches his office and finds the Bill in draft on his table. He says, "This will not do." He tells the assembled officials, "Search through my past speeches. Pick out the relevant bits and amend the Bill accordingly." This accounts for its slightly mottled appearance, which is true blue with pink spots—pale pink, of course, for the right hon. Gentleman is not exactly an extreme Left-winger. No wonder the Bill will need careful examination in Committee.
We are also entitled to ask where the Bill stands in relation to other Government Measures. My right hon. Friend the Member for Altrincham and Sale (Mr. Barker) referred to the Resale Prices Act, which incidentally, the right hon. Gentleman did not support on Second Reading. He claimed then that the Bill was out of time and that this Bill should have been introduced instead. One is entitled to ask: would he have introduced the Resale Prices Bill? I have my doubts. Has he any proposals for amending the Act?
In the debate on 6th July, the right hon. Lady the Member for Blackburn (Mrs. Castle) answered an intervention of mine when I had said:If the hon. Lady thought that the Bill would smash the small shopkeeper, why did she not vote against it?My right hon. Friend the Member for Bexley (Mr. Heath) then added:Does that mean that the hon. Lady will make resale price maintenance lawful again next Session if her right hon. and hon. Friends get back into power?The right hon. Lady then said:We shall introduce far more adequate safeguards on the basis of a survey of the situation and the economic consequences in retail distribution which the Government have never been prepared to undertake."—[OFFICIAL REPORT, 6th July, 1964; Vol. 698, c. 66].1243 I should like to know what the right hon. Gentleman"s intentions are, whether this survey is taking place, when the Report is likely to be issued and whether we are to have legislation later, This has now become important, now that the Resale Prices Act is beginning to bite and become effective. So far as I can see, the only noticeable improvement is that I find my razor blades are considerably cheaper, but I am waiting for future benefits to come. [AN HON. MEMBER:"Whisky?"]. I am afraid I was already stocked up.
The general issues of the Bill were debated in July. Inevitably, there will be a little repetition of some of the points which were raised then, but I wish to mention two particular points which I then raised and which unfortunately were rejected. First, I refer to the name of the Monopolies Commission. I always thought it was a misnomer, because a 30-percent. share of an industry is not truly a monopoly. That is not the correct word and the name has now become hopelessly inappropriate. If we were to have a correct title in the spirit of the existing Act and of this Bill, it should be "The Monopolies and Mergers and Other Restrictive Practices, particularly of Press Mergers, Commission", which is not really suitable.
It is time to get a better public image of what the Commission is trying to do. We should copy the United States of America and call this the National Trade Commission, because it now has very wide terms of reference for policing trade and industry generally.
The second suggestion which I made on 6th July—and, in many ways, it is the more important—relates to the numbers of members of the Commission. The right hon. Gentleman takes great credit for having restored the numbers to 25. It was raised in 1953 to 25. The right hon. Gentleman has referred to the fact that at that time he criticised the 1956 Act because it reduced the numbers. With all the virtue of hindsight, I think that he was right. It was an error on the part of the Government of the day to reduce the numbers to 10 and this has been pointed out many times. But I think the right hon. Gentleman himself is now falling into the same error that we fell into in 1956.
1244 The right hon. Gentleman is on record as saying on 6th July, 1964:We are, of course, to have a larger Commission again; but it is also to have the job of investigating mergers, and, on balance, I do not see any evidence that the delays of the past are likely to be lessened."—[OFFICIAL REPORT, 6th July, 1964; Vol. 698, c. 56.]That is with a membership of 25. I think that he was right at that time, but he has been proved wrong by what he proposes in the present Bill.
Consider the change in the volume of work since 1953. First of all, there is the immense need to speed up the operations of the Commission. There have also been additions to the work in connection with mergers and services. So I am sorry that the right hon. Gentleman has ignored my proposal of July that the President of the Board of Trade should have powers to add to the membership of the Commission by Statutory Instrument.
It seems particularly odd to me, since in Clause 8, dealing with Press mergers, the right hon. Gentleman is taking exactly these powers. I should like to see this much greater flexibility applied to the Commission"s work as a whole. When I first made this suggestion it was blessed by the present Minister of State for Economic Affairs, it received benevolent approval from the then Minister of State, my right hon. Friend the Member for Taunton (Mr. du Cann) and was criticised only by my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke).
There are other changes which are clearly entirely the handiwork of the President of the Board of Trade. I regret the abolition of the proposed Registrar of Monopolies. This was a very sensible proposal. There is and will always be in industry a lingering suspicion that the Commission cannot and should not act as both prosecutor and judge. I should like to know whether, before removing this proposal, which was put forward in the White Paper, the right hon. Gentleman has consulted industry in any way, whether he consulted the Commission or at least its chairman, or whether he has consulted anyone other than his own past commitments on this point. I hope that it will not be accepted by him that it is wrong merely because it was put forward first from these benches.
1245 The right hon. Gentleman is not a very doctrinaire man in these matters and I should like to think that he is more sensible than that.
I refer also to the power to intervene before a merger takes place, as opposed to the intention in the White Paper. I do not wish to rehash all the arguments. They are fairly evenly balanced, but I think that the proposal in the Bill may inhibit some mergers from taking place. I am sure that this is wrong. I should have thought that the present powers would have been quite sufficient to prevent any company from proceeding too far with a merger if it was made aware, as it could be without these drastic powers, that a merger was likely to be frowned on by the Board of Trade. This seems to me to be bound to create delays, confusion, and uncertainties which will hinder the much-needed process of rationalization in certain industries.
I should like to ask the right hon. Gentleman one or two other rather pertinent questions. He referred to the great takeover battle between I.C.I. and Courtaulds. I hope that he has refreshed his memory with the report of that debate. He pleaded then for an inquiry to take place and he stated again today how desirable it would have been then had the President of the Board of Trade had the powers which he is taking today. I should have thought that this was one of the classic occasions where the ability to prevent a merger beforehand would have had an undesirable result. In the event, the merger did not take place. If an inquiry had been put in hand, what would have happened? We would not have had the information which was suddenly forthcoming from Courtaulds and which was the reason ultimately why the I.C.I. bid was defeated. This is a shining example of why the President of the Board of Trade should not have powers to intervene.
I am sorry that the right hon. Gentleman is not here, because I should have liked to remind him, also, that in that debate both he and I criticised the then President of the Board of Trade very much for his inaction in the matter of the Report on the holding of Imperial Tobacco in Gallaghers. We found ourselves absolutely at one on that occasion. Perhaps the Minister of State will deal 1246 with this point when he winds up the debate. I should like to know whether, when he has powers to do so, the right hon. Gentleman is proposing to review that decision, or, to be absolutely correct, that indecision, because he will now have the power to force the Imperial Tobacco Company to divest itself of its holding in Gallaghers. If he does he will have the warm applause of at least one Member on this side of the House.
I turn, in particular, to Clause 3(3,c) which will need the most careful scrutiny. As it stands it will confer upon the Minister almost unlimited powers to fix prices. There will be no limit in time or extent. I am not saying that some powers on these lines are not right, but there is a danger that unlimited powers to this extent should be used for political purposes. We shall need to scrutinise these very carefully and to define far more closely than is done in the Bill the manner in which these powers stand to be used.
In short, this shows that the Bill will need word by word examination. I can see that there will be some long and very interesting sessions in Standing Committee.
§ 5.36 p.m.
§ Mr. Bernard Floud (Acton)
I find myself in agreement with a number of points made by the right hon. Member for Reigate (Sir J. Vaughan-Morgan). I will not itemise them all, but I am certainly in agreement with him on what may be the somewhat minor point about the name of the Commission. Up to date, the name of the Monopolies Commission has been meaningless to a large proportion of the electorate. We need to find a name which will bring home to people much more clearly what this body will do.
I am particularly glad to have the opportunity of intervening in the debate, because 17 years ago, when the first Monopolies and Restrictive Practices (Inquiry and Control) Act came into force, I was responsible, as a permanent civil servant in the Board of Trade at that time, for some part of the administration of that Act. I played no part in the formulation of the Bill, or in the discussions when it was going through the House. I came fresh to that job when the Act had been passed into law, and, naturally, I was concerned immediately 1247 to try to make myself as knowledgeable as possible about it and about the problems with which it was intended to deal.
I was struck by certain things straight away. First, there was the fact that the Act made no judgment at all on the desirability or undesirability of monopolies or mergers, that is to say, we were not following the American outlook in this matter. Secondly, I was struck by the fact that the Act seemed to me, at any rate, to be rather inadequate in the powers which it possessed but I was assured and was given to understand at that time that it was hoped that persuasion and force of example would achieve all or almost all that was necessary and that it would be only necessary to use positive powers on a comparatively small number of occasions.
The third point with which I was concerned was that it seemed to me, even at that early date, that this would be an exceedingly slow-moving process. It seemed that the referring of individual cases to the Commission, its investigation and report and action might be far too slow to achieve any substantial effect. But, here again, I thought that there were hopes at that time that the power under that Act to make general references to the Commission would be used to a considerable extent and that when one had a number of reports on a number of different industries, all with certain features in common, it would then be the intention to make a general reference to the Commission and action, possibly of a legislative kind, would be and could be taken to deal with practices of a general kind.
A good deal has happened, and a good deal has not happened, during the 17 years since that Act was passed. There have been several items of legislation since that time, culminating in the Bill now before the House. Unquestionably, the general mood not only in the House, but in the country as a whole, has changed from what it was in earlier years. There is now a greater determination on both sides of the House to try to ensure that there is real competition and that, where monopolies exist, they should be judged and action should be taken if it is found that they are failing the public interest.
1248 The new powers granted to the Board of Trade under the Bill will, I think, be welcomed on both sides of the House, because the previous powers were clearly inadequate to deal with the situation. But I was concerned, many years ago, and am still concerned to a considerable extent, as was the right hon. Member for Reigate, about the slow operation of the whole process. If the House will forgive me, I should like to bring to its attention—it may know already—just how slow this process has been since 1948.
There have been 38 references made to the Commission since 1948. Thirty-one of those references were made in the first 10 years, up to 1958, and since then, in the last six years, there have been only five references made at all, one in 1960, one in 1961, two in 1963, and one in 1964. That is how the references have gone, but inevitably, the process of producing reports has lagged sadly behind. Twenty-two reports were produced before 1958. Since that time, there has been one in 1958, one in 1959, two in 1961, and two in 1963.
At present, there are four matters under consideration by the Monopolies Commission on which it is ultimately due to report. One of those was referred to the Commission in 1960. We understand that there may be a report on this within a few months, but it will have taken five years to produce that one report. Two of the references outstanding were made in 1963 and one in 1964. As to when we shall receive the reports on those matters there is no intimation at all.
It must be clear that, alongside this process of legislation over 17 years when only 25 to 30 matters have been dealt with effectively, the general tendency towards monoply and towards mergers has enormously quickened. Many of us who fought, either successfully or unsuccessfully, in the 1959 election will remember how hon. Members opposite were going round the country with lists of the 500 firms which, they said, were threatened by nationalisation if the Labour Party was returned to power. The Labour Party was not returned to power at that time, but, since 1959, about 100 of those 500 firms have, in fact, been gobbled up by other firms.
What steps have been taken over these years to speed up the process of getting 1249 reports and getting action taken? Right hon. and hon. Gentlemen opposite are entitled to take credit for the fact that the 1953 Act increased the size of the Commission from 10 to 25 and enabled it to work in groups. But, as has been said already, they went into reverse in 1956 and removed those powers. The new Bill will restore the size of the Commission and its ability to work in groups, but I entirely agree with the right hon. Member for Reigate when he says that he doubts whether this will be adequate in view of the wider range of the Commission"s duties.
I draw attention now not only to the membership of the Commission, but to the question of its staff. Bearing in mind that few of the members of the Corn-mission are full-time, it is inevitable that a very large part of its work will be done before it actually comes before the Commission, that is to say, it will be done by the officials. There were 37 members of the staff of the Commission in 1949. The number had grown to 102 in 1954, and then it was heavily slashed following the Restrictive Trades Practices Act, 1956, and, since that time, there has virtually been a steady reduction in the size of the Commission"s staff down to a figure of only 34 in 1964.
I hope that my hon. Friend will be able to give an assurance not merely that the membership of the Commission itself will be increased to 25, but, also, that it will be given adequate staff to do the job, to service the Commission and to get on with the inquiries. I realise that this is not a question of numbers. It is also a question of ensuring that the Commission is in a position to obtain information quickly. There is no doubt, as the President of the Board of Trade said in his opening speech, that many firms have been extremely slow and extremely reluctant to provide the Commission with information and have used every stalling method possible in the hope that this would delay the outcome of the Commission"s deliberations.
I hope that my hon. Friend will say something also about general references. So far, since 1948, there has been only one report of a general character. This was on the subject of collective discrimination. It was referred to the Commission in 1952 and reported on three years later. It might be said to have led 1250 to the Restrictive Trade Practices Act, 1956 and also to have played some part in the Resale Prices Act of 1964. But that process took 12 years to mature and, if we are to have action on these general practices, which may or may not be against the public interest, we need to speed things up considerably. There was one other reference of a general character made to the Monopolies Commission and that automatically lapsed, or was allowed to lapse, after the passing of the 1956 Act.
If progress is to be made, and made much more rapidly than it has been in the past, if we are to keep pace at all with the processes of merger and monopoly in this country, if we are to have any control over these processes and not merely be lagging behind all the time, then not only must the Commission be adequate in size and be adequately staffed, but action must be taken when necessary, with the powers which it has, and which we now hope to increase—they have been rarely used, on only two occasions in the past—and we must have more general references at the appropriate time, these general references also being acted on as speedily as possible.
There are important new features in the Bill which I welcome. I refer, first, to the inclusion of professional and commercial services. It was clear to those who were intimately concerned with the administration of the first Act that services ought to have been included at the very beginning. I regret that it has taken 17 years for us to bring the question forward now.
I have two other points to raise with reference to newspapers and mergers. I do not propose to say very much on these, but there is one aspect of the newspaper problem to which I must refer and, in so doing, declare some kind of interest myself. I am concerned, and I should like to hear something from my hon. Friend about it, not only about mergers as between newspapers, but about mergers as between newspapers and other media of information.
We are now in a situation where a majority, I think, of the independent television companies have a substantial part of their shares held by newspaper companies. I am not saying that this is necessarily against the public interest. I am saying that this joining together of what 1251 to my mind should be two competitive media of information should be looked into. I would welcome a statement from my hon. Friend that the Government are concerned not purely with newspaper mergers but mergers of newspapers with other media of information. I was very glad to hear from the President of the Board of Trade that, while the Measure applies to mergers, it also covers mergers of a diversifying nature, which seems to me to be absolutely essential.
Finally, it seems to me that whether or not the Measure is a success will depend to a very large extent on the considerations which made previous Acts either a success or a failure—that is, on the determination of the Government in power whether the machinery is to be properly used, whether references are to be made speedily, and, the most important question, whether action is to be taken. I sincerely hope—I have every confidence in my right hon. Friend the President of the Board of Trade—that we shall now see not a witch hunt against monopolies and mergers—that is not what we want at all—but very much more serious attention being paid to the matter than has been the case for many years.
§ 5.52 p.m.
§ Sir John Rodgers (Sevenoaks)
The speeches, including that by the hon. Member for Acton (Mr. Floud), have demonstrated clearly that there is a large consensus that approves of the Government taking powers to strengthen and extend their existing powers to deal with the problems of mergers and monopolies.
I should have liked to be able to congratulate the President of the Board of Trade on the way he introduced the Bill. However, it is always baffling to me why a man who, in his private relationships, is always so magnanimous, always acts in a waspish way when he gets to the Dispatch Box and tries to score petty debating and party points.
The Bill emerges from the White Paper published a year ago by the previous Government. The President of the Board of Trade maintains that the Bill is more "audacious" and introduces measures not mentioned in the White Paper. But even the "audacious 1252 measures" derive in large part from the pamphlet which has been mentioned. I thought that it was a little less than generous to try to score party political points when we are agreed that the Bill is good and do not propose to divide against it.
§ Mr. J. T. Price
I am glad that the hon. Gentleman has made that remark. I do not think that anyone would charge me with making petty remarks of that kind, and I do not intend to, but if we are to look at this as grown-up men we must admit that the right hon. Member who represents me in the House—the right hon. Member for Altrincham and Sale (Mr. Barber), who has recently returned to the House—made petty polemical points. I was prepared to deal with them at an appropriate stage of the debate.
We ought to discourage this kind of thing. There are issues of principle here on which we have sometimes to make party points in the common interest and not be mealy-mouthed about them. Indeed, I would point out that to me the Bill is far short of what it ought to be.
§ Sir J. Rodgers
I am grateful for that intervention, which was almost a speech. I agree that we ought to quarrel about principles, but it is childish to try to claim credit for small points when there is no necessity for it.
One "audacious suggestion" made by the document entitled "Monopoly and the Public Interest" was the bringing into being of a new servant of the Crown called the Registrar of Restrictive Practices. I shall be referring to that later. I hope that when we come to Committee we can reintroduce the idea and that the President of the Board of Trade will give sympathetic consideration to it.
I am glad that throughout the Bill and the debate there has been recognition of the fact that it would be wrong to approach the problem in any spirit which would suggest that mergers—or monopolies for that matter—necessarily operate against the public interest. What we must have in the situation that we are now in is the greatest possible flexibility. It would be equally wrong to pursue an over-rigid policy for trying to control mergers and monopolies. That 1253 would cause far more damage to the economy than just leaving things alone and pursuing a policy of laisser-faire. It requires a very sound balance as to how far we intervene and on what occasion.
Recent events have clearly demonstrated that large-sized units are of great advantage to the economy. In debates in the House over the last few weeks the whole subject of the aviation industry has been brought under the microscope, and there is no doubt that the larger units are required there. It is equally true that even if we had the largest units, even nationalisation, it would still probably be necessary to seek international co-operation in the development of supersonic aircraft. Therefore, we are in a sphere where not only national considerations, but international considerations as well, must be borne in mind. This will prove true not only in the aircraft industry, but in such emerging industries as electronics, computers and telecommunications.
Reference was made by my right hon. Friend the Member for Altrincham and Sale (Mr. Barber) to the advantage that accrued to the motor industry when it amalgamated and formed larger units. For the first time it was able to deal with the aggressive competition from the American giants. In spite of the small number of units now, I am not sure that it would not be still better for the British motor industry if there were even fewer firms. With only two or three firms in an industry, one can get just as much fierce competition in regard to pricing and quality as from a myriad of small competitors. We should not be afraid. In the soap industry, for example, there are only two or three giants, but they compete with ruthless efficiency against one another.
In considering that whole question of mergers and monopolies, we must avoid, on the one hand, trying to introduce legislation which would favour small companies and, at the same time, we must not persecute large companies merely on account of their size.
Most people would agree that since the war this country has suffered in its economy—we are seeing the effects today —not from too much internal competition, but from too little. The danger was 1254 that even the large units in British industry are not too ruthless and aggressive in their determination to score over their competitors, but that both management and organised labour in those firms have become too complacent. This has resulted in a sluggish attitude towards industry and particularly towards exports, and it has led to inefficiency.
There is no doubt to anyone who has studied our economy since the war that the large companies have proved very humane and good employers of labour and conscious of their human and social responsibilities. The trouble very often is that the large companies have pursued policies which make life easier for them. They believe that what is good for management and for organised labour is necessarily good for the customer. Very often this is not so. The customer has been excluded from the consideration of the easy life. The idea that what is good for labour and management is good for the customer contains dangerous fallacies.
This manifests itself in inflated wages and salaries, over-staffing at all levels, expansion of amenities and fringe benefits, and, above all, a resistance to change. Change—sometimes rapid, sometimes gradual—is the one thing which is essential. It often makes them very uncritical and wasteful even of their resources, both of manpower, capital and research facilities. I therefore welcome the Bill, which will do something to put a jerk into the economy.
With the hon. Member for Acton and my right hon. Friend the Member for Reigate (Sir J. Vaughan-Morgan), I am delighted that the Bill seeks to extend the operation of the Monopolies Commission into services. I am certain that, in retailing alone, there are many aspects which should be carefully watched. Many amalgamations are taking place which may or may not—I do not know—operate to the public benefit Quiet mergers of retail chains are being carried out which should be watched. I welcome the proposed extension not only to services, but to professional services as well, although the extension itself must be carefully watched.
I am worried about an extra power given by Clause 3(3,c) which seeks not only to compel publication of price lists, but, without a time limit, gives power 1255 to impose prices. The right hon. Gentleman said he would not exercise these powers very much, but hoped they would work by persuasion. But they are enormous powers and we shall have to debate this aspect very carefully in Committee. Who will decide the prices? At what intervals will they be reviewed? How long will price control continue over a firm? Will it be the continuing responsibility of the Commission to investigate the activities of large scale organisations and to fix prices ad infinitum? Is this a device to help the Secretary of State for Economic Affairs in his prices and incomes policy? How will it operate? It is not spelt out in the Bill. It could lead to abuse and to economic nonsense.