§ ANTI-COMPETITIVE PRACTICES
§ Mr. Campbell-Savours
I beg to move amendment No. 4, in page 2, line 26 at end insert'or the use of land in the United Kingdom or any part of it for the purposes of carrying on a business'.This is an interesting amendment. Its objective is to strengthen the powers of the Director General of Fair Trading to intervene where restrictions on the use of land have the effect of restricting, distorting or preventing competition.
In Committee I drew a number of documents to the attention of the members of the Committee. Those documents stem from a number of years during which I was somewhat fascinated by this area of clear abuse.
I attended many trade exhibitions before I came to the House and it was a matter for discussion—not only amongst exhibitors but also amongst those who went with the intention of buying—that exhibitors were often not in a position to supply goods to retail customers because covenants were built into their leases which prevented them from selling and marketing certain products.
The leases of retailers were so framed that if the retailer tried to sell certain products the landlord would intervene, perhaps through the courts, to prevent him from doing so. The effect of such leases is to create what I would call a type of privileged commercial tenancy. I could equally describe it as a protective commercial tenancy. Competition is restricted, certainly in the shopping precincts where most of these leases are held. Such covenants also have the effect of ensuring a narrow choice of goods, because they restrict, within given shopping precincts, the number of retailers able to market certain products.
§ Mr. F. A. Burden (Gillingham)
The area about which the hon. Member for Workington (Mr. Campbell-Savours) is talking is a comparatively restricted one. Usually, such a restriction is applied by a landlord who has a number of shops and, by agreement, he allows each shop to sell certain commodities. If other shops start to sell those commodities, the whole system breaks down and often those shops 334 get into trouble. But the aim of the landlord is to introduce a variety of shops and ensure their prosperity.
§ Mr. Campbell-Savours
I thank the hon. Gentleman for his comments. Indeed, he is correct. That may in part be the motive. But another product of taking such action is the distortion of trade. One is able to ensure higher profits for the retailer inasmuch as his trade is protected, and higher profits in a precinct invariably mean higher rentals. In Committee, I drew attention to a company which tripled the rents of its leases in a precinct. It was able to do so because of the regressive restrictions on the sale of certain products in that precinct.
The clause has the effect of preventing small retailers from diversifying in the range of goods that they are able to sell. I suggest that that is a restriction on the ability of many small retailers to expand their business.
I should like the House to consider what I have just said in the light of an article which will perhaps amuse the right hon. Lady. In Woman magazine on 5 January—the right hon. Lady may recall talking to the journalist and she may thank my wife for drawing it to my attention—regarding competition policy, the right hon. Lady said:One of our top priorities must be to get price rises down by creating more free and open competition between goods, services and shops. Competition means choice—the more we consumers can pick and choose, the more manufacturers and shopkeepers will have to fight for our custom. That's why our Competition Bill to do away with restrictions on fairer, open trading will be so significant for the next decade and beyond.The objective of the right hon. Lady and her right hon. Friends is to open competition between goods, services and shops. Therefore, I should have thought that the right hon. Lady and her right hon. Friends would welcome the amendment inasmuch as it helps the Director-General of Fair Trading by adding to or creating the powers necessary to ensure that he can intervene.
In Committee I quoted four examples. It would be wrong of me to detain the House by quoting them again, but I cannot resist the opportunity of drawing one—a very fine example—to the attention not only of Parliament but of people outside because it makes my argument.
335 This lease exists in Marylebone High Street in the heart of London. It is typical of much of the property in older precincts and High Streets where individual landlords have managed to buy up the majority of property. The restrictive covenant in the lease provides:That no trade or business other than that next hereinafter mentioned or any manufacture whatsoever shall be carried on or suffered to be carried on upon the demised premises or any part thereof but that the demised premises shall be kept used and occupied as a retail licensed grocery and provision store and for no other purpose And without prejudice to the generality of the words and for no other purpose' the Tenant shall not permit or suffer to be used or exercised in or upon the demised premises the trade business or calling of a Butcher Purveyor of Meat Slaughter man Fishmonger Tallow Chandler Metter of Tallow Soap maker tobacco pipe maker or burner Smith Sugar Baker Fellmonger Dyer Distiller Farrier Blacksmith Common Brewer Coppersmith Working Brazier Pewterer Tin plate or Iron plate Worker Cooper Tripe Boiler Tripe Seller Fried Fish Shop Coal shed keeper or Vender of Coals Marine Store Dealer Rag or Fat Merchant Beater of Flax Auctioneer Tavern Keeper Vender of Malt liquor Coffee House Keeper Nursing Home Keeper Laundry Keeper Railway Parcel Booking Office Manufacturer of or Dealer in Motors or hirer out or keeper of Motors Massage Manicure or other Medical or Surgical or quasi-medical or quasi-surgical establishment Brothel or Bagnio keeper or any of them or any noisy or offensive trade or business whatsoever".I shall stop at that point.
While leases such as that are in operation, and while they serve as grounds on which landlords can evict tenants, or certainly affect the kind of products they sell, I believe that a grave injustice is being done to much of retail trade, and that there is a great distortion of retail trade.
§ Mr. Burden
If a landlord has a property and he finds certain things offensive, not only to himself but to the public who live close by, has he no right to stop what he considers and what the public around may consider an objectionable trade?
§ Mr. Campbell-Savours
There may be a case for that, but there are planning laws which adequately govern it. I shall turn the question back. Does the hon. Gentleman feel that that is justifiable in a modern lease, where there are no such curious references to curious activities, and where orthodox products are excluded 336 from sale? Surely we can permit that if the objective is free and genuine competition—real competition in the High Street and precincts—whereby people are not restricted from selling reasonable and sensible products.
Of course, there is a quick buck in all this for the small precinct operator who introduces a term of variation. In Committee I drew attention to a particular lease where, in return for the wordsdelete as a retail licensed grocery and provision store. Insert instead for the retail sale of new glass, wood, ceramic, stone marble, plastic giftware",a retailer paid the princely sum of £500 to his landlord because his landlord was unwilling to make a variation. At the end of that variation, he insisted on putting back into the lease for the future the wordsas may be previously approved by the landlord".In other words, it the tenant goes back to the landlord in the future and says that he wants a new variation of the lease, again he will have to pay, subject to the particularly high level of inflation, another £500 for that small variation.
§ Mr. John Fraser
May I pass on the advice that that premium was illegal under the Landlord and Tenant Act 1927?
§ Mr. Campbell-Savours
I always find the remarks of my hon. Friend most helpful. I thank him for his help in Committee.
How widespread is that abuse? I believe that it operates throughout the United Kingdom and that there is hardly a precinct in Britain where such leases do not exist in one form or another.
In Committee I mentioned a number of such leases, one of which the Director General of Fair Trading investigated. Because of the nature of the precinct, he was unable to satisfy me. Those leases exist in a number of major centres. I can give as examples the Arndale centre in the North-West and, to my pretty certain knowledge, the Whit gift centre at Croydon.
In fact, Mr. Deputy Speaker, within a matter of 200 yards from where you are sitting now, a number of these leases are in operation. Hon. Members who use Westminster underground station will be familiar with the parade of shops on 337 Bridge Street. I am told that it is owned by a Government Department. Today, before the debate, I went to see the shopkeepers in the Bridge Street parade and interviewed some of them. Those I interviewed told me that they had similar restrictions in their leases. I said to one of them "Will you do me a favour? Will you telephone your solicitor and ask if I can come round now in a cab, pick up the lease, bring it back and quote it at on Report of the Competition Bill in the House of Commons? "His answer was exactly what I expected; he said "No".
That has been the response, more or less, all the way down the line. People do not want to talk about this area of abuse. The reason why they do not want to talk about it is that invariably they benefit by it. They are the very people to whom I have been referring—the privileged, the protected, commercial tenants. That is what we are trying to change.
But, of course, those people have another interest. If they make too much noise, what will happen when the septennial review of rents on those properties takes place? The landlord will say "You caused me a bit of bother some years ago. This time I shall clobber you a bit more aggressively than I would otherwise." Hon. Members may be amused by that, but much of that kind of activity exists in business today, where there is a fair level of ruthlessness.
I should like to turn now to a matter with which I did not deal in any detail in Committee. I am worried about the circumstances in which there is a large supermarket in the precinct and that supermarket, by way of its connection with a property company, is able, through its holding company, to buy up the whole of that precinct and then interfere—because that is what it is—in the operation of the leases of the other tenants in that precinct. That is a clear abuse and a very clear attempt by a supermarket—or whatever retailer it may be—to distort trade. There is some evidence that companies, recognising the problems of acute and strong competition within given retail areas, are endeavouring, through associated companies, to buy what in effect is a right, a licence, to distribute certain products within those given areas.
I hope that the Director General of Fair Trading will make every effort, within the limited resources about which 338 I commented on new clause 7, to establish whether this is going on. If it is going on, I hope that he will refer it to the right hon. Lady, so that she and her right hon. Friend the Secretary of State can bring forward the subsequent legislation that we have all been promised during the debates on the Bill.
I am not altogether sure that the Government have the will to introduce the kind of legislation into this area that I should like to see. I draw my view from the statement of the Under-Secretary of State for Trade, who said:I believe that it would be incredibly difficult to split in a reasonable manner the sector which was for accommodation and that which was for business leases. We shall certainly look at the matter again. The most pressing area is to see whether we can do something about caravans rather than business leases."—[Official Report, Standing Committee B, 20 November 1979; c. 364.]The area that I have mentioned is of vital importance. It is of national importance and it is generally regarded as an abuse by much of the British retail trade. It is certainly an abuse within the terms of the competition policy that is before the House, and I appeal to the Government to step in and take action as a matter of urgency.
§ Mr. Tebbit
We are all indebted to the hon. Member for Workington (Mr. Campbell-Savours) for a little light relief in the remarkable list of things that lessees may not do in some parts of the country. I had thought that one could start a tailor's shop in the area. It must be good news to some nearby residents that there is someone on hand, other than law enforcement and planning agencies, to prevent some of the uses given in the list. I am not sure that many of us would want to live next door to a massage parlour or to several other potential uses that have been ruled out. However, in a way I wish that my right hon. Friend the Minister was replying to the debate.
§ Mr. Tebbit
I am glad that the hon. Member for Norwood (Mr. Fraser) and I are in agreement about something. My right hon. Friend shops in Marylebone High Street, so that is her local shopping area.
§ Mr. Tebbit
Harrods is within a reasonable taxi drive of Marylebone 339 High Street. Whatever the leases say, I am told that there are no fewer than four grocers and three butchers within a small shopping area. Clearly, it is not that effective in restraining competition. A number of other agencies seek to limit competition in such a way.
The hon. Member for Workington may be familiar with the fact that it is the policy of new town development corporations to limit competition in shopping precincts in order to be given better service to those living in the area. He will also be familiar with the way in which new towns will often reserve a site in their High Street for a supermarket or for a particular type of shop. Presumably, that might be held to be a restraint on competition, but it is commonly indulged in and has a good deal of merit. In theory, perhaps the new town development corporation should leave the site open, bat the advantage of having a major chain store in a shopping centre—particularly a developing centre—is of benefit to all concerned.
However, I do not dismiss all that the hon. Member for Workington said. There are areas that might be investigated. The Director General can look at the conditions in a particular shopping precinct, and I think that that is right. I stand by what I said earlier, in Committee, namely, that one of the more pressing areas for action was that of protection for those who live on caravan sites. I had therefore expected to return to that point.
I should like to tell the House what we have been doing since the end of the Committee stage. I confirm that it is our intention to table an amendment that will bring within the scope of the anti-competitive practice provisions relating to the supply of a site for a holiday caravan and provisions for certain types of car parking facilities. That will please my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark). As the hon. Member for Norwood will know from his experience, it is an area full of difficulties. We have not, therefore, been able to table an appropriate amendment this evening, but we hope to do so when the Bill is discussed in another place.
I realise that it may be held that I have not said a great deal more tonight 340 than I did in Committee. However, I assure the House that we have made a good deal of progress in dealing with the problems of caravan sites and car parking. Although problems remain to be resolved, we hope to be able to do that in time to table an amendment in another place. As hon. Members will be aware, a number of their Lordships have taken an interest in those two problems—
§ It being Ten o'clock, the debate stood adjourned.