HL Deb 26 June 1951 vol 172 cc304-13

2.49 p.m.

LORD SHEPHERD

moved, That the Monopolies and Restrictive Practices (Dental Goods) Order, 1951, reported from the Special Orders Committee on Wednesday, the 13th instant, be approved. The noble Lord said: My Lords, I feel that I ought to make a brief statement by way of explanation of this Order, but, as I understand that there is fairly general agreement as to its adoption, I will do little more than give that explanation. The terms of reference given to the Commission on appointment were to discover whether there were any restrictive practices involved in the industry, and whether those practices operated against the public interest. On the first of the two points they found that a group of companies controlled by the Amalgamated Dental Company, Limited, supplied, either by wholesale or retail, over 40 per cent. of the total United Kingdom supplies. They found also that 90 per cent. of the total United Kingdom supplies come from member firms of the Association of Dental Manufacturers and Traders, who so conducted their affairs as to restrict competition.

On the second point there were four main conclusions. First: certain restrictive agreements of the Amalgamated Dental Company concerning the sale of burs might operate against the public interest. In case your Lordships do not understand the meaning of the term "burs," I had better explain that it means drills—the kind of drills that are used from time to time when one sits in the dentist's chair. Second: the prices of porcelain teeth (in the distribution of which the Amalgamated Dental group have a substantial monopoly) were too high and should be reduced. Third: the restrictive rules and regulations of the Association of Dental Manufacturers and Traders were criticised and the extent to which many of them might be expected to operate against the public interest was indicated. Fourth: in particular, the Commission found that almost every practice which operates or may be expected to operate against the public interest rests for its enforcement upon "exclusive dealing" and "collective boycotting."

The Commission made three recommendations. Two of these recommendations were really recommendations to the trade while the third was a recommendation to the Minister, and therefore that is the only one which requires an Order. They recommended that the A.D. group, which is the main group, should itself reduce the prices of porcelain teeth and should reconsider its arrangements for the distribution of dental burs in the light of their Report. They recommended that the Association of Dental Manufacturers and Trades should itself review its rules, regulations and policy. As regards action with statutory force, they recommended that the practices of "exclusive dealing" and "collective boycott" should be prohibited in the dental trade. The only point of the three recommendations needing attention, therefore, is the last, and that is contained in the Order now before your Lordships' House.

Article 3 of the Order renders unlawful the making or carrying out of agreements providing for the withholding of dental goods or of orders for dental goods from persons; or for providing persons with supplies or giving orders only on terms and conditions less favourable than those in the case of other persons, where (a) the intended or likely effect is to limit the number of persons carrying on business in the United Kingdom as suppliers of dental goods, or (b) where the agreement provides for the maintenance of retail prices. Article 3 (6) makes it unlawful to procure the making or carrying out of an agreement so rendered unlawful. Article 4 makes it unlawful to procure the boycotting of suppliers of dental goods on the ground that they have sold goods by retail in the United Kingdom at less than the fixed prices.

The effect of Article 5 is to secure that resale price maintenance operated by an individual vendor shall not be unlawful. Your Lordships will see, therefore, that it is only when these things are done collusively by the trade in part or as a whole that they become unlawful. Certain practices, however, as I have just said, can be employed by individual traders, such as the maintenance of their own end prices. There is only one further point which I need mention, and that relates to the Law Courts in which cases may be tried. These cases will not be brought before the criminal courts; they will all be dealt with in the civil courts. That direction is provided under Section 11 of the Act itself and, therefore, governs this Order. I beg to move that the Order be approved.

Moved, That the Monopolies and Restrictive Practices (Dental Goods) Order, 1951, reported from the Special Orders Committee on Wednesday, the 13th instant be approved.—(Lord Shepherd.)

2.55 p.m.

LORD TEYNHAM

My Lords, I have listened carefully to what has been said by the noble Lord who has introduced this Order, and I am glad that he has done so in more moderate terms than was thought fit in another place by one of His Majesty's Ministers. I need hardly point out to your Lordships that this Order is of considerable importance, not so much because it affects this particular industry but because it is the first Order of its kind based on the Report on the Monopolies and Restrictive Practices Commission; and no doubt it will be the basis for other Orders to follow, covering other industries. For that reason, I think this Order should be looked at very carefully indeed.

I would remind your Lordships that there are two main things—although the noble Lord mentioned three—which the Monopolies Commission have recommended should be made unlawful: first, collective enforcement of prices and, secondly, exclusive dealings. I suggest that we must be very careful to see that this Order does no more than cover those two very special points. It was suggested in another place that, under this Order, it would not be lawful for a manufacturer to contract to sell the whole of his output to a single wholesaler. It may well be that paragraph (3) of Article 3 of the draft Order would enable a court to look at the whole of the surrounding circumstances to see whether the effect of the Order would be to prevent this type of transaction—which, as your Lordships know, is a very common form of business transaction—going through at all. I do not think this point was made at all clear in another place, and it has not been mentioned to-day by the noble Lord who introduced this Order. What would happen if the court gave a ruling, based on this Order, that this type of transaction was unlawful? Clearly, no assurance by a Minister can cover the matter, because it is the judge in court who has to decide what is the position. Perhaps His Majesty's Government will give an assurance that they will introduce an Amendment to make quite sure that the transaction which involves a manufacturer selling the whole of his output to a wholesaler shall be lawful, because a court may have to deal with a test case and may rule otherwise.

In my view, the real trouble is that Article 3 of the Order, in using the word "suppliers," covers two kinds of people—first, the manufacturer who supplies the wholesaler and, secondly, the wholesaler himself who will supply in retail. Consequently, the common agreement by which a manufacturer may agree with a wholesaler to sell him the whole of his products is made illegal, for such an agreement does amount to an agreement on the part of the manufacturer to withhold supplies from others. I think that that is the main point. It should also be remembered that the Report of the Monopolies Commission was not unanimous, and contained, as your Lordships are aware, a Minority Report. What does this Minority Report say? It says: The practices of exclusive dealing and collective boycott are not peculiar to this industry, or exceptional in their character. It is common knowledge that similar practices are carried on in one form or another in other industries; and further, the Commission find that there has not been any very grave abuse. In these circumstances, although the Act makes provision for ad hoc legislation against a single industry, we are of the opinion that it would be wrong to enact ad hoc legislation against this industry, but we would not recommend its exemption from any general legislation. I am sure that noble Lords on both sides of the House are all anxious to carry into effect the recommendations of the Monopolies Commission, which was set up with the approval of all Parties. On the other hand, we do not see why this dental industry should be singled out for ad hoc treatment; it would have been far better to wait until further industries had been examined, when the necessary general legislation to deal with the matter could have been brought forward.

As many of your Lordships are aware, it has been said on many occasions that it is only in the sphere of private industry that the abuse of monopolies is to be found. I suggest that it is quite the contrary, and that the worst kind of monopoly is to be found in the nationalised industries. These industries can raise their prices without any competition; and in a somewhat curious paragraph in the recent White Paper on resale price maintenance the Government give away the whole question of nationalisation and its restrictive price maintenance. In the last six lines of paragraph 13 the White Paper says: A trader who by improved methods achieves the kind of service which the public want at low cost should be imitated to the general benefit of his trade; but the incentive to imitate and then outstrip his improvements does not exist unless, by passing on the benefits of his enterprise in lower prices, he can attract customers away from the less enterprising. Perhaps, at long last, His Majesty's Government have begun to realise that the monopolistic practices of the nationalised industries must also be looked into and examined on behalf of the long-suffering public. I can only hope that the effect of this Order will be that we shall learn some useful lessons as to how the whole problem of industrial monopoly, for both public and private spheres, can be effectively dealt with.

3.3 p.m.

LORD SALTOUN

My Lords, I am very uneasy about this matter and about the general policy of His Majesty's Government concerning it. Members of the Government have not been slow to recall facts of economic history which seem to bear against the Tory Party. Perhaps they will allow me to go back a little into economic history and remind them of one or two things which they seem to have forgotten. From the eighteenth century there has been concern in every section of society in Britain about the practice of large and successful businesses in great cities developing at the expense of the small shopkeeper, opening a shop of a similar kind, underselling, the small tradesman in that particular line and then offering him, the owner of a business, a poorly paid clerk's job in their employment—having extinguished every rival in that town and monopolised that trade.

The remedy for that state of affairs was the price-fixing arrangement, which prevented people deliberately going into a locality to undersell the private trader. I very much fear, and so do some others, that this new policy may be a prelude to underselling by business corporations in strict and close alliance with the Socialist Party. That does not seem to some of us to be fair. I do not think that in the past these price-fixing arrangements have materially raised the cost of living. The price of the dentist's bur does not matter much in dentist's work. It is a not very large price, and the tool is used on so many teeth that its cost is widely dispersed. But, of course, these prices have some bearing on the cost of living. If people employed in an industry refused to take any wages that also would have a bearing on the cost of living: it would enable it to be lowered. I very much regret this policy, which I think may have serious effects on social life, and especially on small shopkeepers in various localities.

3.5 p.m.

VISCOUNT SAMUEL

My Lords, I wish to express my complete dissent from the statement just made by the noble Lord, Lord Saltoun. On the contrary, I cordially welcome this Order. For a long time past many of us have been continually denouncing monopolies and restrictive practices; and whenever the question of the economic situation of the nation has been brought up, some of us have seized the opportunity to urge that the cost of living is kept artificially high by restrictive practices, both in manufacturing and in sale and distribution. After many debates, and by general consent on all sides of your Lordships' House, action was taken in 1948 when, with a view to remedying what is undoubtedly a great evil, The Monopolies and Restrictive Practices Act was passed. That Act set up a Commission which was to inquire into particular trades, and to make specific recommendations where abuses were detected. The Commission was duly appointed, and reported by a large majority—I think by six to two—that this particular industry, the one which supplies dentists' materials, was organised in such a way that prices were unduly raised by monopoly practices. That report is now being acted upon, and very properly, by the Government. An Order has accordingly been laid before Parliament to remedy the abuses in these industries. That Order passed through the House of Commons with some criticism, but with general assent and without a Division. Now it has come here.

I was sorry to hear the noble Lord, Lord Teynharm, say that he and his friends thought that this matter should be left until a general policy for industry had been formulated. I entirely disagree. Now that Parliament has at last passed an Act and has, in the first instance, said there should be action with respect to particular trades, and that for the first time the report of the Commission gives the opportunity to the Houses of Parliament to take action, it seems to me lamentable that the noble Lord, speaking from the Front Opposition Bench, should get up and say, in effect, "Not here, and not now." Rather should we rejoice that a beginning has been made. There is no reason at all why this matter should be delayed for a long period until a comprehensive policy, applicable to all trades, is brought into force.

That this particular industry, by its excessive prices, was drawing undue sums from the public, from the dentists' profession, and from the hospitals, is proved by the fact that as soon as the Commission was appointed and began to examine the practices in this particular industry, the company which exercises a practical monopoly voluntarily reduced its prices for porcelain teeth. It was said by the Minister of Health during a debate in the House of Commons that the reduction varied from 5 to 20 per cent. I do not suppose the company is now conducting its business without an adequate profit, and it follows that the profits were too high before by at least from 5 to 20 per cent. And the mere inquiry by a Commission has effected that reduction. How many other industries are similarly making excessive profits at the present time and thereby raising the cost of living? How is it possible to go to the working classes and to the trade unions and say: "You must exercise restraint. Your increases of wages are merely raising the costs of production and bringing the country into a vicious inflationary spiral," when all the world knows that profits, both wholesale and retail, in a great many industries are at the present moment most excessive? Therefore, I rejoice that the Government have taken such speedy and effective action.

As to the question of general policy with regard to monopolies and restrictive practices as a whole, I welcome also the recent pronouncement by the new President of the Board of Trade that he means to take up these questions with vigour and effect. Only recently, there was a debate in your Lordships' House on the economic situation. I ventured to invite your Lordships' attention to various factors, but concentrated on the argument that our main economic troubles, both financial and, to some extent, taxation, and export trade, sprang from the rising cost of living, and that the nation ought to concentrate its mind upon efforts to reduce the cost of living. It is true that the direct effect on the general cost of living of the nation of lowering the prices of electrical drills and artificial teeth is rather small. But indirectly, when this question is seen as a whole—for this is only one example of a large policy—the effect is very large. Indeed, it is a dominating factor in the present economic situation. For these reasons, I rejoice not only that we have this first small instalment, but also that we have a promise from the Government that in many other directions they will pursue the same policy and carry it as far as it can practicably be taken.

3.13 p.m.

LORD SHEPHERD

My Lords, the noble Viscount, Lord Samuel, in a speech for which I thank him, indicated that one of the organisations in this industry, which is of some importance, has decided to decrease the price of porcelain teeth by from 5 to 20 per cent. It has done that voluntarily. I would add that the restrictive part of the agreements concerning burs has been voluntarily waived by the Amalgamated Dental Company. Further, other firms have indicated that in the matter of prices of plastic teeth and denture materials they will consider the Commission's criticisms and recommendations. Then the Association itself has proceeded to modify its rules. It is surely a little outrageous to suggest that, when the trade itself is doing those valuable things voluntarily at this stage, Parliament should leave free the question of exclusive dealing and collective boycott. Surely, when the trade is doing what it can to help itself we in Parliament should do what we can to help the trade against some of its worst features.

It must not be supposed that this Order is necessarily a condemnation of this particular trade. We agree that the practices which exist in the trade exist everywhere. Therefore, if we are to condemn, we should condemn not in detail but in general. In this trade, as in all other trades, there are good and evil traders. The good traders, as always, will do their utmost to see that a proper job is done for the community. The evil trader will do the reverse. It is part of the work of this Order not merely to protect the public but to protect the good and decent traders from the evils which come to them from the bad trader. In these circumstances, we have found it necessary to introduce this measure in order to accomplish that. It is true that this is the first Order that has been presented to Parliament in this country, but it is surely not news that in 1950 the United States of America had to deal with their own particular dental industry in order to prevent that industry "fleecing" the American public.

We recognise that the persons who signed the Minority Report, which has been referred to to-day, are quite genuine in their feelings, and we have given due consideration to the proposals which they made. Nevertheless, it must be noted that, whilst they signed a Minority Report, they also signed the Majority Report: in other words, they believe that the trade has many unnecessary practices that can be done without, but they want to wait until we deal with other people. When noble Lords remember that the greater part of the product of this industry is being sold to the hospitals and, therefore, to the Government in respect of the medical services, surely it is not for Parliament to neglect the protection of both against the ravages made by the excessive prices charged. Moreover, unless we do something in this direction, we shall find ourselves entering on a prolonged task because, if we have to tackle the industries one by one, and if, further, we are to refrain from doing anything until we have completed the task, some noble Lords who are present to-day will no longer be with us when we have reached the end of the road. We want, if we can, to facilitate and speed up the work, and one way in which we can do that is to give encouragement of this kind to the trades that have yet to be tackled. If those trades can now see what is likely to happen to their own industry, they may think discretion the better part of valour, and may commence to put their own businesses in order, rather than wait for the inquiry instituted by the Government. So, in doing this we are trying to short-circuit the process of delay.

The noble Lord, Lord Teynham, raised a legal point as to whether two men, the one a manufacturer and the other a dealer, could enter into an agreement by which the manufacturer could sell the whole of his product to the dealer. This question was raised in another place, and was replied to there by my right honourable friend the Lord Advocate. He made it crystal clear in his speech that there would be nothing to prevent the manufacturer selling the whole of his product to the dealer, provided that he did it within the terms of this particular Order. My right honourable friend, in quoting the qualifications in Article 3 showed that an arrangement, referred to by the noble Lord, would be quite outside the restrictions mentioned therein. The noble Lord asked for an undertaking but all I, not being a lawyer myself, can say is that when the present Lord Advocate gives a view upon this matter I am prepared to accept his version. Therefore, I can assure the noble Lord that there will be no difficulty in carrying through arrangements such as he has in mind. I am glad that some interest has been shown in this measure, because I think it is realised in the country that Parliament is awake; is prepared to see justice done, and is anxious to help trade and industry to put themselves right. Parliament will then be doing infinite good to the country, and will be bringing nearer the day when its people may look forward to buying a thing knowing that they are giving a fair price and getting good value in return.

On Question, Motion agreed to.