HC Deb 17 May 1973 vol 856 cc1788-96

7.15 p.m.

Mr. Arthur Davidson

I beg to move Amendment No. 38, in page 16, line 38, leave out '£400' and insert: '£750 or to a term of imprisonment not exceeding six months'.

Mr. Deputy Speaker (Sir Robert Grant-Ferris)

With this amendment it will be convenient to take the following amendments:

No. 46, in Clause 46, page 32, line 19, leave out '£400' and insert '£750'.

No. 47, in page 32, line 25, leave out '£400' and insert: '£750 or to a term of imprisonment not exceeding six months'. No. 66, in Clause 84, page 63, line 11, leave out '£400' and insert: '£750 or to a term of imprisonment not exceeding six months'.

Mr. Davidson

The purpose of the amendment is to increase the penalties or fines imposed by a magistrates' court for offences under the Bill from £400 to £750, and to enable the magistrates' court to impose a term of imprisonment.

I understand that the penalty clauses in the Bill are largely based upon penalty clauses in other consumer legislation. They follow closely the penalty clauses in the Trade Descriptions Act and the Unsolicited Goods and Services Act. The Trade Descriptions Act was passed in 1968, since when there has been a high rate of inflation. If the price of other things has gone up, it could be argued that fines also should go up, but that is not an argument upon which I base my case.

The Minister might agree that the time has come to look at all the penalties in consumer protection legislation to see whether they are adequate in today's climate of opinion. As the Minister will be the first to agree, times have changed since 1968. The public are much more aware of and take much more seriously abuses by large firms against the public interest.

Many of the firms which will offend against the legislation will be firms with large resources, many will be operating deliberately misleading practices which were intended from the beginning to be misleading. They will be firms that have been milking the public for a long time.

The offences under the Bill are of a particularly wilful and undoubtedly criminal kind. They include the making of false statements to the Director General who is investigating a possible monopoly situation, the wilful destruction of documents required by the Monopolies Commission and contravention of orders made after a report by the advisory committee. Does the Minister feel that a maximum fine of £400—or indeed a fine of any sort—is sufficient to deter such firms from committing these acts?

Firms with large resources may think that £400 is a cheap investment to make to enable them to carry on practices which have brought and will bring much greater profits. The threat of a possible prison sentence imposed by a magistrates' court would act as a much firmer deterrent.

It is essential that the public should feel that the penalties under the Bill are adequate to deal with the abuses. I receive many letters asking what is the use of fining a firm which has put out a false brochure and milked the public when the profits of that firm are so immense. When I was concerned with the Unsolicited Goods and Services Bill and the Inertia Selling Bill I was criticised for not including a penal clause providing for imprisonment. I was told that the real criminal would not be caught—the firm which deliberately set out on a fraudulent path and which thought it could buy its way out of trouble.

In Committee the Minister promised to look at the penalty clauses and to consider whether the penalties were adequate. I do not intend to press the amendment to a vote. It is a probing amendment designed to test the Minister's views and to find out whether he feels it is right, in today's climate, with consumerism much stronger than it was in 1968, to base the penalty clauses largely upon the Trade Descriptions Act.

Mr. Greville Janner (Leicester, North-West)

I support what my hon. Friend the Member for Accrington (Mr. Arthur Davidson) said. It is important for a magistrates' court, if it sees fit, to have power to impose a penalty which will matter to the people who come before it. Where a company has been involved in unfair trading on a vast scale and has been making enormous profits from it, for the court only to have available a penalty of £400 in the present state of the value of that sum is pathetic. It is a fleabite for a firm of any substance and insufficient to make a firm jump into line with fair consumer practice.

7.30 p.m.

Let me give one example. In the past the House has debated the problems of double pricing, and apparently the Government have taken the view that this practice does not come within the scope of the Trade Descriptions Act. Therefore, presumably it is the sort of practice which the Government envisages being dealt with by this Bill.

The effect of double pricing is universal. It is used in the sale of beds and other items produced in vast quantities in which the manufacturers put out a series of spurious price lists, beginning with spurious manufacturers' price lists setting out prices at which the manufacturer does not sell the goods to the retailer. He sells them for less. There is then a false and fraudulent price list supplied by the manufacturer to the retailer with "recommended" prices far above those at which the goods will be sold, this being to the knowledge of the manufacturer.

We have all seen in shop windows signs saying "Recommended price £50—our price £30". The whole system is set up as a delicate bait to the buyer. Although the price may be fair, the whole system is one to which presumably this legislation is meant to apply.

A company which has been selling beds by this process for a number of years by the thousand will have made profits which stretch probably into hundreds of thousands of pounds because of this system of unfair trading. In these circumstances, the magistrates' court should at least have the power, if it so wishes, to impose a penalty which hurts just a little. I appreciate that bad publicity would be some sort of deterrent. On the other hand, I hope that the Minister will consider the possibility of extending the powers of the magistrates' court so that when matters come before it it will have the power to impose a penalty which would hurt the company and also those who run the company. In such a case one may reasonably hope that the penalty would act as such a deterrent that there would be no need to take the company to court.

The object of the Bill is not to strike at those who commit unfair practices and to bring them before the courts, but to encourage them not to commit those practices. At the moment the threats issued by the Government are on the lines of bringing prosecutions if there is evidence of double pricing. But that has not happened, and therefore the Bill should work admirably in this respect. Let the penalties be such that the people concerned in these matters will care about what is being done. We do not want to bring people to court, we do not want to fine them or imprison them. We want them to stop cheating the public, deceiving the buyer, and if that is done the legislation will work very well with the minimum use of the courts' powers. I suggest that the courts should have sufficient power, even at magistrates' court level, to provide penalties which will hurt and which will matter.

Mr. Millan

I support the points made by my hon. Friend the Member for Accrington (Mr. Arthur Davidson) and my hon. and learned Friend the Member for Leicester, North-West (Mr. Greville Janner). There is concern about penalties in a number of spheres, particularly since with inflation fines soon get out of date. There is some justification for flexibility to allow penalties to be increased to take account of inflation as time passes. This may give rise to certain difficulties. I do not know how far we should encourage Ministers to increase penalties by statutory order, but there is a tendency to put penalties into Bills which follow penalties laid down in previous legislation enacted a number of years earlier. Therefore, in money terms those penalties are out of date.

My prejudice in a matter of this kind when we are dealing with businesses, and not necessarily small businesses, is for there to be quite substantial penalties in the legislation and if in any particular case there is no need for the magistrates' court or other court to impose anything like the maximum penalty, there is no doubt that the maximum penalty should be imposed but in appropriate cases the penalty certainly should be available.

We are dealing in these amendments not only with the matters contained in Part II of the Bill but with the monopoly provisions in Part IV related to Clause 46 and, later in the Bill, to Clause 84. Clause 46 deals with a situation where a suspected monopolist refuses to give information which the Director General has required from him to determine whether a monopoly situation exists and whether the matter should be referred to the Monopolies Commission.

In this situation the sums of money involved may be very substantial. There is a considerable vested interest on the part of the monopolist in seeking to delay an investigation as long as he can. The La Roche case is very much in our minds at present and there have been complaints because the Monopolies Commission has had difficulty in extracting information from that company. There were particular difficulties because La Roche is not a British company. The withholding of information or refusal to give it may considerably delay reference to the commission and preparation of the commission's report, and the sums of money involved potentially may amount to many millions of pounds. Therefore, in those circumstances a penalty of £400 is quite derisory, as indeed is the penalty of £750 suggested in the amendment. Therefore, I welcome the part of the amendment which proposes a term of imprisonment. In this kind of situation in the public interest we want the Government and the Director General to have sanctions which count.

Clause 46 deals with the information and Clause 84 relates to monopoly or merger investigations. But the difficulty is much more likely to arise in a monopoly investigation rather than in a matter involving a merger, and it dear with people who deliberately frustrate the commission in carrying out its work either by not attending to give evidence as they are required to do or by refusing or neglecting to supply the necessary documentation.

Sir G. Howe

It looks as though the two amendments to which the hon. Gentleman speaks in terms of Clauses 46 and 84 make no variation in relation to the provision which deals with a refusal or wilful neglect to furnish information, which is left as a summary offence with the maximum fine of £400. They vary the provisions which deal with the crime of furnishing false information. In respect of the furnishing of false information in both Clause 46 and Clause 84, there is an alternative to proceed to trial on indictment with an unlimited fine. Therefore, the hon. Gentleman is speaking to an amendment with a more narrowly defined scope.

Mr. Millan

The technicalities of the amendment are basically the responsibility of my hon. Friend the Member for Accrington (Mr. Arthur Davidson). If he has made the distinctions which the Minister has just indicated, I prefer to leave him to deal with them. In any case, that does not substantially alter what I am saying.

I was dealing with Clause 46. One of the penalties provided for in Amendment No. 47 is that of imprisonment. I am speaking now of the offence dealt with in Clause 46(3). As the right hon. and learned Gentleman has indicated, it is rather more serious than the offence of neglecting to furnish information, for it is the offence of deliberately supplying false information.

I turn to Clause 84. The amendment here deals with the situation in which there is a Monopolies Commission inquiry taking place. There will be a number of duties imposed by Clause 84 on various persons for either attending to give evidence or for producing documentation. With the Roche inquiry very much in our minds the matter of failing to co-operate with the Commission is very relevant. This failure could severely handicap the Commission in its work and may, to a certain extent, frustrate the inquiry as a whole. In these circumstances there should be provision for penalties which, if imposed, would mean real punishment for the persons concerned. The penalties which are proposed by my hon. Friend are very modest, yet they are an improvement on the penalties at present provided in the Bill, and are the least which we ought to have.

Mr. Emery

It is important in considering these amendments that we should be certain about the different ways in which they apply to different types of offences within the scope of the whole Bill. Their basic objective is to increase the fines imposed on summary convictions from £400 to £750. This will be for offences under Clause 23, dealing with the contravention of an order made under the provision of Part II. Clause 46 relates to the refusal to furnish information and the giving of false information to the Director General of Fair Trading in respect of a monopoly situation, and Clause 84 deals with destroying documents or supplying false information to the Commission when it is carrying out an investigation.

It is interesting to note in passing that the Opposition seem to have decided not to table an amendment to increase from £400 to £750 the penalty in Clause 84(5) for refusal to attend a Commission hearing. However, that is not of the greatest importance. The amendment seeks to provide for terms of imprisonment up to six months on summary conviction in the case of Clause 23 offences and for giving false information.

7.45 p.m.

In Committee one hon. Member asked me whether a fine of £400 was a standard amount in legislation for this type of offence. I am not a lawyer, of course, but my information, as I said to the hon. Member for Glasgow, Craigton (Mr. Millan) at the time, was that this was the normal maximum fine for this type of offence. I explained to the Committee that the maximum financial penalty in normal circumstances in magistrates' courts was £400, and that there were many statutes which required persons to provide information of various kinds to competent bodies or officials. In all these cases the failure to provide the required information is punishable on summary conviction by a fine not exceeding £400.

While I should not wish to intervene in what is not my responsibility—sentencing and penalties are of course matters for my right hon. Friend the Home Secretary—it is generally contrary to Government policy to provide for short terms of imprisonment on summary conviction in this type of case. Opposition Members ought to consider that against the general arguments that they have put forward.

I come, then, to the argument of the hon. Member for Accrington (Mr. Arthur Davidson) and of the hon. and learned Member for Leicester, North-West (Mr. Greville Janner) that it is not realistic to impose this kind of fine upon a firm which could make large profits by continuing not to oblige. If it is making large sums, the difference between £750 and £400 will make little alteration. But it should be borne in mind that it would not usually be in a firm's interest to refuse to provide information requested by the Director General or the Monopolies Commission since refusal would inevitably give rise to suspicion that the company had something to hide.

The other evening when we debated the Roche case, I pointed out to the hon. Member for Craigton that it became evident that the company was unwilling to provide information and did not want to have its books inspected. Obviously that created a major element of suspicion.

If summary proceedings are brought against a company and the magistrate takes the view that heavier penalties than those available on summary conviction are appropriate, in more serious cases involving a breach of an order made under Part II it would be open to the magistrate to refer the case to the Crown Court. In such a case the company would be proceeded against on indictment where the penalty could be an unlimited fine, imprisonment or both.

I quite understand the objectives behind the amendment, and in certain ways I sympathise with the desire to make sure that penalties are effective. However, we believe that in the more serious cases we have the power to proceed on indictment and that in the case of summary proceedings we are complying with the normal pattern of the law.

As a parting shot, I might point out that the £400 fine is four times greater than it was in the previous measure dealing with monopolies when the figure was only £100. Clearly the figure has been reviewed in order to bring it up to the standard now considered normal.

Mr. Arthur Davidson

I have followed the hon. Gentleman's argument. As I said in my opening remarks, this is not the kind of amendment that one would press to a vote.

In defence of my drafting, I might point out that it was deliberate on my part. I did not think it appropriate to impose a term of imprisonment merely for refusing to supply information to the Director General. That is quite a different matter from wilfully destroying documents, which is much more culpable and more criminal.

Having listened to the hon. Gentleman, even though I have not been persuaded by his argument, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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