Clause 1

HC Deb 27 June 1968 vol 767 cc901-10

EXEMPTION FROM REGISTRATION OF CERTAIN AGREEMENTS OF NATIONAL IMPORTANCE

The Minister of State, Board of Trade (Mr. Edmund Dell)

I beg to move Amendment No. 1, in page 1, leave out line 19 and insert: substantial importance to the national economy". Those hon. Members who served on the Standing Committee will recall that, in responding to an Opposition Amendment to line 19, I said I was prepared to consider whether we should not substitute for the words "national importance" some other phrase. I suggested that perhaps the phrase "of substantial importance to the national economy" would be appropriate. I explained that we should be looking for words which would be restrictive in the sense of limiting the availability of exemption but which would also indicate the sort of case we have in mind. On consideration, I have concluded that the words substantial importance to the national economy would be appropriate.

Mr. A. G. F. Hall-Davis (Morecambe and Lonsdale)

We had a lengthy discussion on this point in Committee and I am glad that the hon. Gentleman has brought forward an Amendment so close to the terms of what were the second thoughts of the Opposition in Committee. We do not quarrel with his choice of words as opposed to those we suggested. The main argument for the Amendment is that it makes clear that it will be possible for operations on a somewhat smaller scale than the vast, grandiose "prestige projects"—what we described in Committee as products of the fertile mind of the Minister of Technology— which would receive exemption under Clause 1.

This is important not because we wish to see the Clause widely used. It was made clear in Committee that there is a considerable measure of agreement that it will be used infrequently and for very specific undertakings for which a strong case has been made for exceptional treatment. Having written an escape hatch into the Bill, it was important that it should be available to enterprises of less than the vastest scale. It was suggested that the Clause as drafted would restrict its operation to enterprises on a very large scale. The words substantial importance to the national economy are a little less grandiose than the reference to "national importance".

I welcome the new wording in another respect. It gives the Government the opportunity to make smaller mistakes instead of large ones, to which it would have been confined under the original wording. It is important that they should have every opportunity to confine their interventions to minor activities, where the damage they do will be of a comparatively minor nature. I hope that when the queue of applicants presents itself at the Board of Trade for exemption orders under the Clause, Ministers will bear in mind one of the elementary rules of commercial judgment—that there is always another avenue in which to invest one's money, almost certainly as profitably.

Mr. Speaker

Order. We cannot debate the Clause. We are substituting some words for some other words. That is what we are talking about.

Mr. Hall-Davis

I accept your reminder, Mr. Speaker, and I would merely add that it is quite likely that the smaller projects will be every bit as worth examining as the large ones, and Ministers should be prepared to look over a long period for possible small but worthwhile projects and not feel compelled always to operate the Clause just because they feel something should be done to justify it.

Amendment agreed to.

7.45 p.m.

Mr. Dell

I beg to move Amendment No. 2, in page 2, line 5, at end insert: and in considering the national interest for the purposes of paragraph (e) of this subsection the Board shall take into account any effects which an agreement is likely to have on persons not parties thereto as purchasers, consumers or users of any relevant goods'. In Committee, the Opposition put down an Amendment designed to ensure that, in considering proposed agreements for exemption under Clause 1, the Board of Trade should take into account the interests of consumers. I was unable to accept the Amendment as drafted but I accepted it in principle and agreed to consider whether an appropriate Government Amendment indicating the importance of consumer interests could be tabled on Report. Amendment No. 2 is designed to ensure that, in considering the national interest, the Board must take into account the interests of purchasers, consumers or users who are not party to the agreement.

Perhaps I should add that the Board of Trade would have had regard to the consumer interest in considering the national interest even had this Amendment not been put down. However, the Amendment makes this duty explicit and I hope, therefore, that it will be acceptable to the House.

Mr. David Crouch (Canterbury)

I am glad to see this Amendment. But it seems strange that it has taken so long for such a provision to get into the Bill. The Bill has not had a rough passage. It has had a fairly generous welcome by the Opposition and we have been constructive in our observations. But it has taken a long time to get the consumer interest and consumer protection point written in. The main objective of the Clause is to seek to serve projects of substantial importance to the national economy. The idea … is to promote efficiency in a trade or industry, or to create or improve productive capacity in an industry; One of the criteria is that the object cannot be achieved or achieved within a reasonable time except by means of an agreement. Now we have this last proviso of the consumer interest, which means that it must also be taken into account along with the other matters concerned. The consumer interest has a proper place in the consideration of restrictive trade practices.

I said in Committee that I viewed the whole subject of restrictive trade practices from the background of industry as well as the background of the House in which I have some specialised interest in consumer matters and consumer protection. In Committee, the Minister of State made the point of the importance which the Board of Trade attached to giving industry an opportunity to make itself efficient and competitive. I referred to the importance of giving opportunities to make industry competitive in not only the home market, but the international market. When each industry attempts to make itself competitive in a world economy, consumer interests may well be forgotten. I hope, therefore, that the addition of this Amendment will ensure that that is not so.

Mr. Hall-Davis

Again I welcome the fact that the Amendment is very close to the spirit, if not to the exact letter, of an Amendment which the Opposition moved in Committee. I also reinforce what my hon. Friend the Member for Canterbury (Mr. Crouch) has just said, that, despite the Minister of State's statement that the Board of Trade would take consumer interests into account, in view of the explicit terms in which consumer interests were written into the 1956 legislation— and our Amendment closely followed that wording—it is extraordinary that we should have had to raise the issue before the Board of Trade was able to feel that, on balance, the consumer interest was not something which should be left to its implicit judgment, but was something to be stated explicitly in the Bill as an interest to which regard should be paid when considering whether to make an Order under Clause 1.

In our view, this is a key Amendment, because it puts into the Bill in a way which cannot be overlooked or ignored a vital element which was lacking in the original Bill, the element of specific protection of the consumer. Reading the Amendment, it occurs to me that there is still one element of the composite factors of the economy which is still lacking and that is producers of any activity in respect of which an order may be made.

Mr. Deputy Speaker (Mr. Sydney Irving)

Order. The hon. Gentleman is now straying from the Amendment.

Mr. Hall-Davis

I hesitate to resist your judgment in any way, Mr. Deputy Speaker, but the Amendment relates specifically to the interests of persons not parties thereto as purchasers, consumers or users of any relevant goods".

Mr. Deputy Speaker

Order. The hon. Gentleman is perfectly correct, but I understood him to refer to producers, who are not in one of those three categories.

Mr. Hall-Davis

I was seeking to draw attention to the fact that the dog did not bark in the night.

There was another element which the Minister of State mentioned in Committee and to which the President of the Board of Trade referred on Second Reading. It was said that there might be a danger of a conflict of jurisdiction between the Board of Trade and the Restrictive Practices Court if an Amendment on the lines which we moved in Committee were introduced. I am glad that the Minister of State has felt able to introduce this Amendment without in any way causing such a conflict of jurisdiction.

It is clear that there is no danger of such a conflict in operating the Amendment, because the Board of Trade will have overriding jurisdiction, because if it appears to the Board of Trade that the conditions set out in subsection (2) apply, it may by Order approve the agreement. Admittedly, this is a subjective judgment, but it is an overriding power. I am glad that what appeared to be an unnecessary impediment to introducing a much needed Amendment has now been put on one side. It seemed extraordinary that an element fundamental to the whole of the underlying thinking to the Bill should have been omitted from the conditions for the granting of an Order. I am extremely glad that it has now been inserted. This is an action of some significance. I think that we shall see this operating in future despite the Minister of State's statement that this would have been the Board of Trade's attitude with or without the Amendment.

Amendment agreed to.

Mr. Dell

I beg to move Amendment No. 4 in page 2, line 23, at end insert: 'but no order revoking an order under this section approving an agreement shall be made by the Board by virtue of paragraph (a) or (b) of this subsection unless the Board have given to each of the parties at least twenty-eight days' notice of their intention to revoke the order'. Hon. Members who served on the Standing Committee will recall that an Amendment was moved to require the Board of Trade to give statutory notice of its intention to revoke an exemption Order made under Clause 1. For a number of reasons, I was unable to accept the Amendment as tabled, but I agreed to consider putting down a Government Amendment on Report designed to give effect to as much of Opposition Amendment as the Government was prepared to accept.

The purpose of the Amendment is to honour the undertaking which I gave to the Committee. Its effect is to require the Board of Trade to give one month's notice of revocation of an Order under Clause 1, except when the grounds for revoking the Order are that the Board becomes aware of circumstances which, if it had known them at the material time, would have led the Board to refuse to approve the agreement. The Amendment is linked with Amendment No. 8 which provides that when a trade association is involved notice need be given only to the association and not to each of its members.

In Committee I was asked to consider whether a period of one month was appropriate and to have any necessary consultations to establish that. I have, therefore, consulted both the Confederation of British Industry and the Association of British Chambers of Commerce about the length of notice of revocation. Both have asked for a period of notice of three months. It has been suggested to me that a period of three months is necessary to enable the parties to represent to the Board that the agreement should not be revoked.

I consider, however, that a period of three months is too long, for the following reasons. This Amendment will give parties to an exempted agreement at least one month's notice of revocation; they will then have a further period of one month from the date of the revoking order, as provided by Clause 6(1)(b), in which to register the relevant agreement. Even if the Registrar should decide to refer the agreement to the court at once, a period of several months will then elapse before the parties have to take any active steps to defend their agreement before the Restrictive Practices Court. I consider that these periods taken together will give the parties ample time to make up their minds whether to defend their agreement and, if they have decided not to defend it, either to determine it, or remove its restrictions. As the exemption Order will have been revoked, because—and I stress this—the object of the agreement is not being achieved, or because it is being used for purposes other than that for which it was approved, that additional delay is undesirable.

The argument for a longer period of delay based on the desirability of enabling parties to make representations to the Board of Trade seems to be based on a misconception. It is implicit in the concept of paragraphs (a) and (b) of subsection (4) that if the Board of Trade were considering revocation of an order, it would be in close touch with the parties of the agreement to which the Order related. They would have had an opportunity to make representations before a notice of revocation was issued. This would merely be the penultimate step in the formal procedure of revocation.

Perhaps I can draw hon. Members' attention also to the fact that the revocation of an Order does not necessarily imply that the whole of the relevant agreement may have to be determined. All that parties will be concerned about are the restrictions in the agreement which would have made it registrable.

I should like now to turn to another aspect of this matter. Hon. Members will observe that the requirement to give notice of revocation applies only in the circumstances set out in paragraphs (a) and (b) of subsection (4) and not in the circumstances envisaged by lines 21 to 23 on page 2: if the Board become aware of circumstances by reason of which, if known to them at the material time, the agreement would not have been approved". In Committee I indicated that by the use of these words I had in mind particularly deliberate concealment. My attention was drawn to the fact that the words in lines 21–23 were equally applicable to circumstances which were outside the cognizance of the parties which had made their agreements in good faith. I recognise this. However, the power to revoke will mainly be used where there has been deliberate concealment. It will be difficult to provide different procedures for this and for accidental non-disclosure. I can, however, assure the House that it would be exceptional for the Board to use the power contained in lines 21–23 where there had been no deliberate concealment.

8.0 p.m.

Mr. Hall-Davis

We discussed this question at some length in Committee, and I will not reiterate the arguments. When the Minister was seeking to justify the fact that a period of one month's notice was sufficient to give to the parties concerned he said that a period of several months would elapse before an agreement would be brought before a court. Experience may prove that this is the case, but I have no doubt that those who made representations for a longer period of notice felt that it was no guarantee that this would be so.

This would be very largely within the judgment of the Registrar to do with the speed at which he was proceeding, and the complexity of the issues involved. The Government should use this argument sparingly—that because it is likely that administrative procedure will lead to some delay, then this is a reason for not granting a request for a longer period of warning to those who feel that they need that longer period to decide their course of action, or to see that their interests are properly represented before the Restrictive Practices Court.

The administrative aspect of the Bill is very important for the parties to these agreements. The preparation of cases is expensive, and requires the activity of senior members of the undertakings. While, on balance, I believe that the Minister of State is probably justified in his assertion that a month's notice is sufficient, I think, nevertheless, that the grounds on which he justified it, that there would be an administrative hiatus following the revocation of the Order, is an argument to which we should not give too much weight, and which should be used comparatively sparingly.

He has dealt with the question of the trade association in Amendment No. 8. Everyone would feel that the giving of notice to parties to an agreement which has been discussed by the Board of Trade, before it is the subject of an Order is just. The Minister again relied on an undertaking given by him to reassure parties to these agreements that lines 21–23 of the Clause in subsection (4) would not be operated where there had been bona fide ignorance, due to no unreasonable lack of diligence in examining the question by the parties concerned. At this stage we have to accept his comment, that it will be difficult to embody this in the Bill. We are unhappy when this type of protection is given verbally rather than included in legislation, because of drafting difficulties. This approach too must be sparingly used. There is no doubt that the Amendment is a substantial improvement on the Bill as originally drafted.

Amendment agreed to.

Mr. Walter Clegg (North Fylde)

I beg to move Amendment No. 19, in page 2, line 33, at end insert: (6) Any order made under this section may approve an agreement notwithstanding that a similar agreement has already been registered under the Act of 1956. This is in the nature of a probing Amendment, but I hope that it will be unnecessary, because if I have judged correctly a later Amendment, No. 9, will deal with the point that I have in mind. The matter arises out of our proceedings in Committee when the Minister of State was discussing the impact of Clause 1 on different exemptions. One of these was in the building industry where there would be a standard form of contract under the recommendations of the Banwell Committee. Doubts were expressed by the effects of existing orders made, with regard to contracts, in 1962, for the Birmingham group of builders.

My hon. Friend the Member for More-cambe and Lonsdale (Mr. Hall-Davis) expressed concern about this in col. 557. He said: Will there be some machinery for disposing of the orders of the Restrictive Practices Court that are enforced? The Minister replied by saying: We shall have to consider that problem later in the Bill."—[OFFICIAL REPORT, Standing Committee H, 16th May 1968; c. 57.] If I am right, and Amendment 9 takes into account the fears in the building industry that previous decisions of the Court might prevent it from operating fully an exemption granted under Clause 1, I would not take this any further.

Mr. Dell

The hon. Member may rest content. If the point about which he is worried is that of possible conflict of existing Orders of the Court, this is covered by Amendment No. 9. As the hon. Gentleman's Amendment is worded, it would enable the Board of Trade to give exemption for existing registered agreements, which we do not want to do. We want agreements that we are to exempt to be new, made after discussion with us. I would therefore not wish to accept the additional power contained in the hon. Member's Amendment.

Mr. Clegg

I am grateful to the Minister and thank him for making this clear, because the building industry was very worried about this. In view of what he has said about Amendment 9 I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.