PROVISIONS RELATING TO THE DIRECTOR GENERAL OF FAIR TRADING (Hansard, 21 June 1977)

§ Mr. Richard Wainwright

I beg to move Amendment No. 80, in page 23, line 39, at end insert: '(5) On a date no earlier than 31st July 1978, the Secretary of State may by order provide for the amalgamation of the Price Commission with the Monopolies and Mergers Commission, but no order shall be made in pursuance of this subsection unless a draft of the order has been approved by a resolution of each House of Parliament'. The substantive words in the amendment are that the Secretary of State may 1571 by order provide for the amalgamation of the Price Commission with the Monopolies and Mergers Commission. It would have been our wish to state that the Secretary of State "shall" amalgamate the two bodies but, as the House is aware, the present state of the law under the Fair Trading Act 1973 makes that legally impossible at present.

My plea throughout my speech will be that these statutory impediments to the amalgamation shall be removed as soon as possible with a view to clearing them out of the way and, of course, also to make other inquiries in the light of experience which may be necessary to pave the way for this amalgamation. That is a principle which I hope is supported by all sides of the House, not least because the amalgamation of the two bodies would serve to reduce the problems of bureaucracy and would make the whole set-up a great deal clearer to the baffled British commercial public. But that is only an incidental benefit.

The whole thrust of our purpose in urging this amalgamation is that Britain will have a powerful vehicle for a clear, positive and dynamic competition policy to run throughout commerce, industry and the professions. This will have three major weapons at its disposal. The first is powers and procedures for investigation, with due safeguards so that wherever monopoly, oligopoly, stagnation and restrictive practices occur, there will be the power for investigation. If the case is made out that there would have to be substantial and extremely sophisticated powers that some countries have already for removing monopoly elements or oligopolistic elements judged to be harmful, this would be at the very heart and main purpose of the new body.

But we have to be realistic and understand that curing profiteering, inefficiency, stagnation and restrictive practices in an anti-monopoly policy takes time. To establish the nature of the monopolistic situation and then to set upon a restructuring to get rid of it will not yield the necessary fruits for which the public is looking in a great hurry. So, in the meantime, it is necessary to have the immediate medicines available in the form of price controls and other checks of the monopoly practices. These are the three weapons—investigation, restructuring, and intermediate price checks and controls.

1572 8.0 p.m.

The reason for wanting this vehicle is that we Liberals are among the many people of all parties who believe strongly in the operation of a market economy in many sectors of industrial life, though not in all, and in the importance of competition. But we recognise that, to get back to something approaching a reasonably practical degree of competition, there has to be an element of control which should be openly and democratically operated and subject to proper safeguards.

It was Sir William Beveridge, later Lord Beveridge, who, when sitting on these Benches, made it clear that if we were to pursue a policy of aiming at full employment, there would have to be not only control on pay but permanent controls operating against monopolistic practices. Since then, I am glad to say that a great deal has been learned throughout the developed world about ways of controlling monopolistic practices without the crude and violent methods of the early American anti-trust laws, which are not an example that we want to commend to the House.

The procedure would have to be very much more adapted to all the ramifications of modern industry and commerce. But essential to getting this done is the need to pave the way for the amalgamation of these two bodies. Therefore, at the end of this sunny afternoon, when Yorkshire is riding high at the top of the cricket championship table, what I seek from the Secretary of State, who attaches as great an importance as I do to these matters, is not a holus-bolus acceptance of this amendment but a real assurance that work will start at an early date on investigating the present legal impediments to combining these bodies and, equally important, to examining the possibilities for restructuring the Fair Trading Act so that a modernised and more dynamic Monopolies Commission can eventually take unto itself the Price Commission and we can have this powerful combined vehicle to establish a positive competition policy.

§ Mr. Hattersley

Without wanting to diminish the importance of the four or five amendments remaining for discussion, it must be said that it is a coincidence, though not an insignificant one, 1573 that the main debates on Report began with a discussion of the future policy, the institutions and the powers, and ends with what I hope will be a major though brief discussion of basically the same subjects. Unfortunately, I was unable to take part in the first debate. Therefore, I welcome the opportunity to clarify my own position in debating this amendment.

One of the reasons why it was necessary for the Government to vote against an amendment which might superficially appear to have had some similarity—Amendment No. 1—was, I fear, the confusion existing between the powers and the institutions embodied in this legislation. The hon. Member for Colne Valley (Mr. Wainwright) was specific in his reference occasionally to powers and occasionally to institutions, but he differentiated clearly between the two, and I shall try to do the same.

I must make it clear that I accept the principles of what the hon. Member for Colne Valley described. To a large extent, I accept the philosophy on which they are based. The hon. Gentleman talked about the market economy. I am a supporter and a defender of a mixed economy. In that mixed economy, competition has an important part to play in improving the efficiency of the private sector and in improving the efficiency of part of the public sector where it is appropriate to organise public ownership in terms other than the great nationalised boards carrying out the duties of public utilities for the country.

In my more pretentious moments, one claim that I have made for the power to investigate in this Bill is that it helps to define one rule by which the mixed economy should run. It makes the mixed economy more socially acceptable and, to some extent, therefore, protects it. I agree with the hon. Member for Colne Valley about that.

We are equally in agreement that the powers to investigate should be permanent and, within the terms of the Bill, will be permanent. The confusion which arose when other hon. Members talked about the same subject when we discussed the first amendment was that it was never clear whether they accepted the existence of the principal power in this Bill to 1574 investigate a price increase and, if it appeared socially unacceptable, to freeze that price.

As regards the institution, there is little difference between the hon. Member for Colne Valley, the hon. Member for Gloucester (Mrs. Oppenheim) and me. What we could not get from the hon. Lady today—and I do not propose to ask her again in other than a rhetorical sense now—was any explanation whether she agreed with the existence of the power. I believe that the power to investigate and freeze must be permanent.

But this is what I have to say about the institutions, and again it is very similar to what the hon. Member for Colne Valley said. Clearly, in the short term, in the year beginning on 1st August, the power to investigate and to freeze is and should be part of our policy designed to limit inflation. It is related to margin control and runs for a single year. There is a limit on its life, which must come to an end on the last day of July 1978. That is the initial phase of the policy. After that, increasingly, the powers to investigate specific price increases and occasionally to freeze them will become part of our competition policy.

The intellectual case for that is overwhelming. When we talk about "unreasonable prices", more often than not they are unreasonable because they are operated in a less than competitive situation. Therefore, the combination of the two is absolute and right.

Sooner or later—and I must tell the hon. Member for Colne Valley that it is more likely to be later than sooner, and I shall try to define "later", though not very precisely—the case for having all the anti-monopoly powers in a single institution will necessarily take on the characteristics of any of the present agencies. I do not regard the Monopolies and Mergers Commission as being the senior. I do not regard the Price Commission as being the senior. There are a number of powers of equal importance which should be amalgamated, and perhaps amalgamated into something like the Swedish Prices and Monopolies Court, if that is not to make too contentious a point.

Clearly, the institutions have a third feature—the Office of Fair Trading. It is not an institution in the sense in which 1575 the two Commissions are. In one sense, it is an agent of the Government, and in one sense, it is the arm of one of the institutions. To put all those together under a single roof is a complicated but highly desirable process in the long term.

Working on the principles which the hon. Member for Colne Valley described, I hope that we shall work towards that. It would be foolish of me to make promises which cannot be kept. I do not think that that will be done in the next year of this Parliament. It may not be done in the life of this Parliament—in the next two or two and a half years. But we should move towards it so that eventually there is a single body which has the power to prevent mergers when they are socially undesirable, the power to break up monopolies when they are similarly found to be against the public interest, the power to take action against agreements for restraint of trade, and the power to attack what the hon. Member for Colne Valley rightly called the symptom of that condition, which is unreasonable price increases.

I want to assure the hon. Member for Colne Valley that we do more than support the principle which he described. I recall that when, rather eloquently, he spoke about this, some Opposition Members asked him what assurance he had that we would move towards what he described. I can give the hon. Gentleman what I hope is more than half an assurance. First, one of my main tasks in the months ahead is to look at possible reviews of Government competition policy. This will be done in two areas. First, I believe that the policy needs sharpening in all sorts of ways. That is no criticism of the institutions and the people in them who will join me in the exercise of making their work more effective, but a sharpening is necessary.

Secondly, I wish to deal with our obligations within the EEC on competition policy, and operating in those larger markets in one sense alters the economic parameters of competition monopoly.

I give an assurance that in the not-too-distant future I shall report on the progress that we have made on these matters. Anybody who thinks that I am backsliding in that assurance will have a public opportunity to discover whether I shall keep my promise to the hon. Member for Colne Valley.

1576 I hope that the hon. Gentleman will not feel it necessary to pursue the amendment. It contains certain technical deficiencies, but no criticism is intended when I say that. It is a formidable job to try to amalgamate the executives of the Office of Fair Trading, the Price Commission and the Monopolies and Mergers Commission. It needs an Act in itself. There are severe reservations against allowing to Secretaries of State such rights, even with the agreement of the House. Some Secretaries of State like such powers, but those tendencies should be resisted.

I hope that the hon. Gentleman will accept that it is our genuine intention to move along the road he has described, because it is the logical road to take. I have promised to report to the House on how we are moving in these directions. I hope that the hon. Gentleman will agree that that justifies, not simply for technical reasons but as a matter of principle, his seeking to withdraw the amendment. That would be the sensible course and would enable us to continue without the possible difficulties which the carrying of such an amendment would involve.