RESTRICTIVE TRADE PRACTICES BILL (Hansard, 11 July 1956)

HL Deb 11 July 1956 vol 198 cc941-95 941

§ 8.48 p.m.

§ LORD AMWELL moved, in subsection (1) (e) to leave out all words from "unemployment in" and to insert: the trade or industry to which the agreement relates;

§ The noble Lord said: As the noble and learned Viscount the Lord Chancellor has said, Clause 20 deals with prima facie proof. The question of what the noble Lord, Lord Baillieu, called "impoliteness" is one that I cannot and do not particularly desire to enter into. But there is one matter, first of all, that I should like to point out to the Government in reference to the list of exemptions which form the basis of a plea before the Court—the responsibility of those concerned to prove that they are innocent of any guilt whatever in the matter of these restrictive practices. In this clause we have the words: For the purposes of any proceedings before the Court … a restriction accepted in pursuance of any agreement shall be deemed to be contrary to the public interest unless the court is satisfied of any one or more of the following circumstances; The point I want to be sure of is that those circumstances are in themselves highly restrictive. There are seven of them, but they are not comprehensive; they do not coven the possibilities of what might be argued in favour of exemption, and that is one of the reasons why have put clown this Amendment to insert after 942 the first "in" on page 23 the words "the trade or industry to which the agreement relates".

§ The Lord Chancellor has put the point that it is the level of unemployment that is to be dealt with in this particular subsection of the clause—the general level of unemployment, not the level of unemployment in reference to any particular industry. I should like to ask the Government what they mean in respect of policy there. Do they desire the direction of labour, irrespective of industries and irrespective of the nature of the skilled labour in those industries? Because if they are going to apply it in bits and pieces and shreds and patches, as it stands at present they will be up against the difficulty—a very important point—that you cannot direct labour outside an industry if the labour is skilled. The only labour you can direct outside the industry is unskilled labour. If you direct skilled labour from one industry to another kind of industry, you degrade that labour and make it unskilled. Shop assistants, for instance, cannot go and build liners on Clydebank. A fitter cannot go and make bricks. It is a general degrading and lowering of the standards of labour if you do as the Lord Chancellor suggests it is desirable to do: base the argument entirely upon the question of the general level of unemployment. That is one of the reasons why I think that here you have a restrictive line.

§ I am not going to enter into the argument whether this methyl is desirable or not; we have settled that. But I would prefer that there should be a much wider choice of appeal on this question before the Court. The reason why I have put clown this Amendment is my concern for certain sections of industry and certain large bodies of workers in this country and the question of unemployment and general conditions of industry. It has to be realised that, though it is all very well to talk of restrictive practices, some restrictive practices are necessary to the stability of an industry.

§ Probably many Members of your Lordships' House will be surprised to know that the largest industry in this country is the distributive industry. I call it an industry because from the point of view of trade union stricture it is an industry, although there might be some 943 quibble on the point. In the advertising world, for example, it is an accepted fact that it costs five times as much to sell a standard commodity as it costs to make it. I knew that when I was a copy-writer in an agency. I knew that a packet of soap which would cost 10d. could be made ex factory for 2d.; so that the great bulk of the retail cost of the staple article is the cost of distribution. That is the price we pay for the highly machine-organised system under which we live at present.

§ The biggest unions concerned with distributive workers are very much in doubt as to the generalities that are said on this question of restriction. I am opposed to monopolies and to restrictions of this character, and I agree with the main principles stated by the Labour Party and by many noble Lords opposite with regard to their effect upon public welfare. I was in that industry for eleven years at the turn of the century, when conditions, in many ways—I am not thinking particularly of wages but of general conditions—were very bad. For years I worked a twelve-hour day, and when I was sent on relief to other branches I had to work fifteen hours on a Saturday. That was the general condition in most retail trades at that time. Now things have altered, partly, of course, as a result of trade union organisation, but also because intelligent business men and industrialists now realise that it does not pay to keep working people in squalor and under bad conditions. My employer was a very good one. He took the progressive line that he would pioneer some reduction in working hours. He was called to account by some of his rivals and his reply was: "I do not want tired men working for me." That is the background of our social reforms and of the Welfare State which has come into existence. It was realised that it is bad to have diseased, starved, over-worked people in this modern industrial age.

§ If one goes back to "cut-throat" conditions, without any restriction even upon prices in the retail trade, one is going back to the bad days for industry and for the workers in that industry. The trade union concerned is well aware of that fact and is not so inclined to generalise upon this issue as is so often done. For instance, the President of the Union of Shop, Distributive and Allied Workers says: 944 The Union has had fifty years of bitter experience of `eastern bazaar' conditions in the distributive trades—low wages, sweated conditions—and we shall fight any attempt to make the present free-for-all scramble even worse. I am not arguing in favour of monopoly. The monopoly question as such hardly enters into the question of certain restrictions that affect retail prices. I am not arguing that there should be no control of those restrictions, no interference with people who are "on the make" and who want to use every means of making money at the expense of other people. At the same time—and here we get to the inefficiency. I think, of this clause—I do not think that paragraphs (a) to (g) are discriminatory enough; I do not think that they are comprehensive enough. We must safeguard the stability of industry—any industry. Therefore, talk about "the general level of unemployment," and about industry in general, does not really meet the case.

§ Take the textile industry in this country. The people in that industry are very much concerned about the results of cheap labour in Japan which is on the verge of ruining the textile industry. It is an urgent problem, and to meet it the people in that industry want some form of protection. The executive committee of the Union of Shop, Distributive and Allied Workers has announced that it does not believe unrestricted competition is a solution of the problem. It believes that the trading instability which would follow would seriously endanger shop workers' living standards without any material advantage to the public. And I believe they are right there. And this feeling is not confined to the distributing trades. Various other trade organisations such as the Machine Calico Printers, the National Union of Dyers, the Bleachers and Textile Workers, the Amalgamated Weavers' Association, and the Amalgamated Association of Operative Spinners and Twiners, all representing the textile industry in this country, are at one in this. And there are others. They are all concerned about this matter.

§ What I want to put to the Government is not general propaganda. I should like an answer to the question I have already put: what is the policy of the Government in respect of the direction of labour if they talk about the general level of unemployment and not about the question of unemployment in regard to particular 945 industries. If they adhere to this idea concerning the general level of unemployment they run the risk of reducing the standard of craftsmanship, of making skilled men unskilled men for certain purposes. That is the reason why I have put down this Amendment, which I am told particularly fits the case. I think that the real basis of trouble about this clause is that it proposes a negative method. I am not arguing about the merits as they have been outlined so far, but there is here a negative method which cannot be comprehensive because there must be hundreds of cases which cannot be met by this particular series of paragraphs.

§ I do not want it to be thought that I am opposing the desire of the Government and the Opposition to protect prices and to protect the consumer, because I believe in a consumer economy just as the Co-operative Movement does. The Cooperative Movement is a consumer economy and not a producer economy.

§ VISCOUNT ALEXANDER OF HILLSBOROUGH
It is both.

§ LORD AMWELL
In the early days of the movement it was a consumer economy. The nearer we get to the zero price the nearer we get to production for use; and this idea of artificial standards, wage-grabbing, and all the rest of it is not fundamental to Socialists. I ask Lord Alexander of Hillsborough to consider it from the point of view that here you have represented in principle, voluntary cooperation upon the basis of a consumer economy. In that respect I agree that we ought to be careful about the power of certain sections to exploit the consumer. But while we are doing that, let us consider the vast question of possible unemployment and of going back to those terrible conditions of life in some industries, particularly in the industry of which I have some knowledge and to which I referred. There we have a definite opposition to the idea of putting the case of mere prices drastically and without careful consideration, when there has been such a scramble in the past. Members of that industry do not want to go back to such a situation. I hope that I have made my points clear, and I should like a reply to one or two of them. I beg to move.

946

§ Amendment moved— Page 19, line 23, leave out from ("in") to the end of line 25 and insert ("he trade or industry to which the agreement relates").—(Lord Amwell.)

LORD SALTOUN
Before the noble Lord replies to the sympathetic speech of the noble Lord, Lord Amwell, I should like to ask one question. On what he has said I should have thought that he would move his Amendment as an addition, and not as a substitute for the words "in an area," et cetera. There seems to me to be two problems: the problem of the trade or industry concerned and the problem of the area, especially in these days when so many people have bought their own houses. I should have thought that what he wants should be an alternative to an area and not a substitution. I only ask for information.

§ LORD AMWELL
I have put it in that form advisedly because I do not think that as the provision stands in the measure it is workable. It is a matter of shreds and patches and bits and pieces. It cannot be done in that way. We must try to take into account the interests and structure of the industry. As the noble and learned Viscount the Lord Chancellor put the point this afternoon, this idea of generalising from the standpoint of unemployment will lead to tremendous trouble with regard to direction of labour.

§ LORD BARNBY
I would appear inconsistent if I did not rise to support this Amendment, particularly as it is one which I hope will give the appearance of an absence of partisanship. I realise that the noble Lord now in charge of the Bill would probably not like to give any undertaking about this matter to-night. But, while remembering the eloquent appeal which the noble and learned Viscount made in requesting my noble friend Lord Baillieu to withdraw his Amendment, in which he emphasised, in reply to my question, the value of this clause in surmounting the difficulties which I ventured to suggest might occur, I would support this Amendment. The noble Lord, Lord Amwell, has put the case with great clarity and I am sure that, coming from hint on the Benches opposite, it has much more effect than it could possibly have had if it had come from anyone else. But it gives me an opportunity of again emphasising the point the noble Viscount the Leader of the Opposition 947 brought home this afternoon—namely, the all-over considerations of the Bill as regards the economic policy of the country.
I seek again to make the point, on the suggested malpractices of price rings, to which the noble Viscount referred this afternoon and which brought out almost hysteria. There are many who feel that in the indictment which has been levelled against industry too much emphasis is put on price rings for the sale of articles. The net which has now been spread, to my mind, causes concern, in that it may go too far in dealing with the matter on which the noble Lord who moved this Amendment laid such emphasis: that, in defence of employment in many industries, there must be agreements with regard to prices for conversion—that is to say, converting prices for specified commercial processes—and that, if those agreements are removed, it would cause serious dislocation in the industry. Because this Amendment has been moved in this way, it offers to me an opportunity of emphasising what has caused concern in many directions in industry. Emphasis is always put on price rings with regard to the sale price of commodities—a matter which is widely divorced from the arrangements which come under all the proposals of Clause 20, as the noble Lord, Lord Baillieu emphasised. That emphasis on one phase of the whole procedure might lead to neglect of possible dangers which arise under those angles to which the noble Lord who moved this Amendment has just referred.

§ VISCOUNT ALEXANDER OF HILLSBOROUGH
Before the noble Lord replies, I would say that I am always glad to hear opinions expressed from all quarters of the Committee on an issue like this. But I must say I feel that the intention of the Government in this matter is fully covered by the subsection as it stands. I can see no possible reason for making an addition. I admire the ingenuity of my noble friend Lord Amwell in putting down the Amendment so as to have something upon which to make his speech. That is all right. I appreciate absolutely the main principle that he advances with regard to the need for protection of standards of labour in many of our industries. But if he selects the distributive industry, then I shall have 948 to appeal to the noble Viscount, Lord Woolton, for a little support.
I have been a member of the U.S.D.A.W. for many years, certainly not less than a quarter of a century—although I am now only a member (as I am over age) by subscribing to the funeral benefit fund. The fact is that if some of the bigger departmental stores, and one or two of the multiple stores, had not pressed for Government legislation to set up their boards, the whole of the distributive industry in this country would still be a highly sweated industry; and if it were not for the trade union membership, which was secured first in the co-operative stores, secondly, in the departmental stores, and thirdly, in the modern expanding multiple stores, there would be a very small percentage of trade unionism in the industry. Even with those modern additions under efficient distribution. I doubt whether to-day more than 20 to 25 per cent. of the whole of the retail distributive employees are in a trade union. Therefore, I see no real point in trying to make an Amendment of this kind which does not alter the intention of the subsection at all. My difficulty is to get rid of discrimination against those who are organising to bring the biggest benefit to the consumers—discrimination for no reason at all except to maintain a high rate of profit for the least efficient.

§ LORD MANCROFT
I was going to begin my remarks by apologising to the noble Lord, Lord Amwell, for the fact that the dinner adjournment occurred at such a time that his Amendment was separated from that of the noble Lord, Lord Grantchester, with which it was closely allied, thereby necessitating his staying two hours longer. But I will not apologise now, because it has enabled us, by the greater time at our disposal, to have an interesting debate— "far reaching" I think is the technical term to describe a debate which does not stick wholly to the Amendment before us.
May I remind your Lordships of the real effect of the noble Lord's Amendment? What it would do would be to apply a test of unemployment in the trade or industry operating the agreement, and not a test of the level of unemployment generally in an area, or areas taken together, in which a substantial proportion of the trade or industry concerned is situated. Let us think for a moment what 949 that would mean. It would mean that the parties to a restriction could plead that its removal would involve the loss of jobs for workers in a particular industry, even if other employment were readily available. I am afraid If cannot agree with the idea that a prescriptive right to work in a particular industry should be recognised in this way. If we were to accept the noble Lord's Amendment, the result might be that high-cost, inefficient plants were maintained in operation. This would, I am certain the noble Lord would agree, not be in the long-term interest of any section of the community. Economic progress, I hope your Lordships will also agree, demands mobility of resources, including labour.
I am afraid that it is for these reasons —and they are fundamental reasons—that I cannot accept the Amendment. But I will do this for the noble Lord, if it will be of any use to him. He has ranged far wider than his Amendment and raised several interesting points, such as craftsmanship and degradation of labour, with which none of us can be anything but in wholehearted agreement. If he will allow me—I did not have the chance to follow the whole of his arguments on every point—I will look at it again, and if there is any point of substance upon which we can help him or set his mind at rest, I will see whether it can be done. I am afraid I cannot accept his Amendment, which goes to a fundamental point of this clause of the Bill.

§ LORD AMWELL
In view of what the Minister has said, I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ LORD GRANTCHESTER moved, in subsection (1) (f), to leave out the final word "or" and to insert: provided that the restriction has not caused or would not be likely to be the direct cause of an increase in the price in the United Kingdom of the goods concerned; or". The noble Lord said: There is nothing more irritating or unfair to those who buy in the home market than that they should he penalised for the benefit of a foreign buyer. This Amendment is designed to prevent a restriction from having that effect. More than that, no restriction should, I contend, be used to make a consumer here subsidise exports. To do so provokes retaliation and provokes the worst kind of trade war. It might also 950 bring an exporter in conflict with the laws I of some Commonwealth countries, and so sow discord in the Commonwealth. For these reasons, I beg to move the Amendment.

§ Amendment moved— Page 19, line 33, leave out ("or") and insert the said new words.—(Lord Grantchester.)

§ 9.20 p.m.

§ LORD MCCORQUODALE OF NEWTON
I hope that the Government will not accept this Amendment. It seems to me that at this time, of all times, in our economic history, when our very life depends upon the export industry, anything like this, which is a direct threat to our exports, would be most lamentable. Under the clause as it stands, the Court have to weigh the advantage to the export business against any disadvantage that the home market may feel in the way of higher prices. Therefore the safeguard is there. But to say that possible slight increases in home prices are more important than the necessity to get export orders against foreign competitors would be, it seems to me, disastrous at the present time. All our energies should be turned to exporting more, and it may well he that in the export market we may not be able to get such a high price as in the home market; and the home market may have to carry some of our export trade. That is in the shape of the export trade generally. Anybody who has been engaged in that trade knows that that is often the case. If that is banned, what is left of our export trade may go altogether. I cannot think of anything more disastrous.

LORD SALTOUN
I agree with the noble Lord, Lord McCorquodale of Newton, and f should like to add one point. An individual firm may be placed in a position of great advantage over a group of its rivals.

§ LORD MANCROFT
I am afraid it is not a very happy Amendment. What it does is this. It would lot allow the parties to an agreement to justify a restriction under paragraph (f) on the grounds that it contributed to the export business of the United Kingdom, unless they could show that the restriction has not been, or would not he likely to be, the direct cause of an increase in the home prices of 951 the goods concerned. The noble Lord, Lord McCorquodale of Newton, has put his finger on the difficulty at once: the effect of the Amendment would be to leave the Court no room for exercising their judgment on a matter which should, in fact, be an important factor in forming their opinion as to whether or not a restriction is against the public interest. If the removal of a restriction did result in a rise in price in the United Kingdom, this might, in some circumstances, be a desirable result; in other circumstances, the contrary might be the case. For instance, I have seen it argued in the case of goods in short supply that supplies for export markets have been reduced because sales on the home market have been encouraged by prices which have been kept artificially low through restrictive arrangements. The Court must look at each case on its merits. I have some sympathy with the difficulty which the noble Lord has in mind, but I am afraid that the cure which he has put forward might be a great deal worse. We cannot possibly accept this Amendment.

§ LORD GRANTCHESTER
I should like to thank the noble Lord. I am quite satisfied, because I have drawn attention to the topsy-turvy state of affairs, not only in this country but in many others, where home-produced goods are sold to the citizens of a country at higher prices than they are to people overseas. Nothing more topsy-turvy in trade could be imagined. I beg leave to withdraw my Amendment.

§ Amendment, by leave, withdrawn.

§ LORD GRIDLEY moved, in subsection (1), at the end of paragraph (g) to insert: "or (h) that the removal of the restriction would be likely to have a serious and persistent adverse effect on the carrying out of technical education, research, and development in the industry concerned, The noble Lord said: In moving this Amendment dealing with technical education, research and development, I suppose it is quite unnecessary to emphasise what is so widely known and frequently discussed, written and spoken upon—that is, the growing shortage in this country of an adequate supply of technologists, craftsmen and other men of that kind for the research and design tasks which face us.

952

§ Since the period between the two world wars and during the inter-war period when trade was in such a severe slump, as has been said already, arrangements were made between various firms who tried to deal with what was a hopeless situation. An enormous advance has been made in the engineering industries from that time until now. How has that advance been secured? It has been secured by increasing annual expenditure on research, in an endeavour to train men from the universities, technical colleges, schools and so on. Noble Lords will remember the days when apprentices paid to be taught—they were indentured apprentices. To-day these young fellows are receiving handsome salaries. They are being provided by the works with trade schools and hostels, and managers from various works' departments go to lecture to them. In that way, industries are trying to get hold of the type of men they want as craftsmen.

§ I used to go to Cambridge years ago to select engineering students who had just passed their mechanical science tripos. With difficulty I used to get twelve to twenty of these young undergraduates to come into the works for two years' training. During those two years training they received the handsome salary, which was really more like pocket money (but they were happy to get it) of 35s. a week. To-day, such men are getting no less than £500 or £600 a year, the demand for them being so enormous and the supply forthcoming so utterly inadequate. This is troubling the universities and such technical colleges as Loughborough; it is troubling the grammar schools, who want to spend more money on improving their laboratories and providing themselves with engineering equipment. Therefore, it is absolutely vital that universities should be allowed and encouraged to spend even greater sums in the years ahead than is the case at the present time.

§ I believe it is true to say that in the electrical industry something like £12 million a year is now being collectively spent on research and development and technical education. Our educational establishments to-day are not turning out more than about one-twelfth of the corresponding output of technologists and scientists in Russia. They are far ahead of us. The result is that we shall have to take increasingly serious notice of 953 Russian competition in the very near future, unless we make the most strenuous efforts not to lose the ground we have already gained. Therefore, when paragraphs (a) to (g) of subsection (1) of this clause are under consideration, I want to ensure that firms who spend large sums annually on research and development, on design work and so on, may be listened to when they claim that part of their expenditure should be treated as a proper working expense and must be covered in the price which is to be charged to the consumer or customer.

§ If one spends £40,000 in a year one does not charge the whole of that expenditure in one year. If you improve your product or develop something new, the invariable practice is to spread that expenditure over a period of years which will see out the life of that new product and until you have to substitute something even more up-to-date in its place. But if industry is to make the same progress in the next twenty years as it has done in the past twenty years, we must be allowed to spend whatever is necessary on research and development and technical education. For those reasons I beg to move this additional paragraph.

§ Amendment proposed— Page 19, line 41, at end insert the said paragraph.—(Lord Gridley.)

§ LORD LUCAS OF CHILWORTH
I have listened to the noble Lord's argument. Would he tell me what the restrictive practice is the removal of which would hinder what the noble Lord wants to achieve? Surely his argument should be addressed to the income tax authorities, not a Restrictive Practices Court. His Amendment starts: That the removal of the restriction would be likely to have a serious and persistent adverse effect on. … what the noble Lord desires. What restrictive practice has he in mind?

§ LORD GRIDLEY
It is what we fear about the future, not about the past. We have been allowed to carry this expenditure as a working expense, but, as the noble Lord no doubt knows from his experience in business, one is not infrequently asked to quote a price which is subject to investigation. My experience is that when tenders are subject to investigation, questions are raised when certain items for research and development work are included in the cost as to whether that 954 is a fair charge to include in the overhead charges.

§ LORD LUCAS OF CHILWORTH
That, surely, has nothing to do with the Restrictive Practices Court. I cannot see what the restrictive practice can be. Surely the noble Lord is arguing before the wrong tribunal.

LORD SALTOUN
May I say something on that very subject and support what my noble friend said? I expect noble Lords opposite know quite as much as I do about the Wakefield experiment— I do not mean the prison experiment, but the industrial experiment. All the engineering firms in that city combined together in an arrangement with the technical college, and they all agreed that on certain terms they should send their apprentices at certain times to this college. The result of it was that when these lads were nineteen or twenty they were earning as much as a man of twenty-six in comparable industries elsewhere. Suppose a firm had not acceded with the others to this scheme and stood out independently; I can see that the other firms in Wakefield might very well adopt what would be a restrictive practice with regard to that rebellious firm, and in that case I think it is quite, possible that the case would come before the Court on that very subject.
I should like to say in general that I feel that this clause of exceptions is too rigid as it stands, and. I agree entirely with what my noble friend Lord Rochdale and the noble Lord, Lord Amwell, said about it. No Government can be omniscient, and there must be an infinite variety of eases which ought to be considered as exceptions. That is one reason why I supported the Amendment of my noble friend Lord Baillieu a few moments ago, and that is why I very seriously hope this Amendment will be accepted by Her Majesty's Government.

THE EARL OF WOOLTON
It seems to me that my noble friend Lord Gridley has put forward a dangerous situation here. All those who are engaged in industry—I am thinking of my past rather than my present—are anxious to get the highest quality of staff that is Possible. That is indeed true—and I speak as Chancellor of one of the universities. I find that, instead of people coining, as the noble Lord used to, and engaging young people at 955 30s. a week when they have taken their examinations, they are now coming to them in their second year, long before they have taken their examinations, and offering them highly paid positions when they have completed their university training. It is all to the good. It shows that industry is endeavouring to recruit more and more skilled labour from which, in the end, we shall get more efficient management.
But what is the purpose of efficient management? It is, surely, that in the end we shall increase productivity and reduce the cost of productivity, and I wonder whether the Amendment of the noble Lord might not have a serious and persistent adverse effect on the carrying out of technical education, research and development. I cannot believe that it is necessary that there should be such relief as that for which he has asked. I believe that the noble Lord, Lord Lucas of Chilworth, was right and that on the whole these remarks should be addressed to inspectors of taxes. That is the proper place at which to secure that such relief is given. I should very much regret to find myself not in the same Lobby as the noble Lord, Lord Gridley. That would be something quite extraordinary.

§ 9.37 p.m.

§ LORD MANCROFT
I must confess that I was a little puzzled and unhappy when I saw this Amendment on the Order Paper—puzzled because I could not understand what the noble Lord, Lord Gridley, was driving at, and unhappy because if ever I found myself, during the many years over which I have had the pleasure of knowing him, at a difference with the noble Lord, he has invariably been right and I wrong. But I am happy to have been supported tonight by such a powerful, if unusual, coalition as that of the noble Lord, Lord Lucas of Chilworth, and my noble friend Lord Woolton, whose appearance in this debate is so welcome to all of us. I really think this is a matter for the tax authorities rather than for a Restrictive Practices Court.
May we look for a moment at what the Amendment tries to do? It adds a new ground of pleading to those from paragraphs (a) to (g) with which we are now familiar. Paragraph (b) of the subsection already makes adequate 956 provision for agreements based on research and development. This paragraph is intended to cover cases where the restriction confers a clear benefit which otherwise would not be available to them or to the consumers of the goods in question. Thus it might possibly be argued that common research activities were facilitated by restriction of competition in prices or output, since the manufacturers concerned would, in those circumstances, be more ready to pool their contributions to technical advance.
I find it very difficult to see how technical education can be affected by restrictive arrangements about the supply of goods. I really cannot accept as a ground of pleading the suggestion that without the profits or financial stability accruing from agreements firms could not afford to finance technical education in their industry. I need not say how strongly I support the view put forward by the noble Lord, Lord Gridley and my noble friend Lord Woolton, on the grounds of further advanced technical education. I need not remind my noble friend that Her Majesty's Government have recently launched a programme of expansion of technical education on a national scale. With all that, and with all that has been said by other noble Lords on this subject, I wholeheartedly agree; but, unless I am even stupider than usual, I cannot see how the noble Lord's Amendment could further the admirable cause which he and all of us have at heart.

§ LORD GRIDLEY
Perhaps I did not make my position quite as clear as I might have done. I am a little nervous over the fact that no one can know exactly how this Court will operate, or to what kind of criticism our arrangements may be subjected. I want, if possible, to secure some words which will enable us, with complete justification and Parliamentary sanction, to say that in charges that we have to make to our customers it is right and proper to include in the costs expenditure which in the national interests, it is necessary we should lay out on research, technical education and development. If, however, the Government view is that this Amendment is not necessary, I beg leave to withdraw it.

§ Amendment, by leave, withdrawn.

957

§ LORD McCORQUODALE OF NEWTON moved, in subsection (1) at the end of paragraph (g) to insert: or (h) that the restriction for any other reason operates and is calculated to operate substantially to the benefit of the public,". The noble Lord said: On Second Reading I ventured to offer a few observations upon the scope of this clause, and I made the suggestion that I thought it had been too narrowly drawn. We have set up a most elaborate and expensive Court, and we are taking the time, and drawing on the experience, of several of Her. Majesty's Judges. Yet it seems to me that we shall not be making full use of this most admirable and expensive Court, owing to the very narrow limits within which it is to be allowed discretion.

§ I ventured to suggest on Second Reading that a situation might arise when the Court had before it a restriction which it well knew was in the public interest hut which it would still have to condemn as not being in the public interest because it did not happen to fall exactly within one of these paragraphs (a) to (g). If that should be the case it seemed to me to be foolish and not in the best interests either of trade or of the operation of this Court, which we should all wish to see operating most successfully. Therefore, I have tried to find some words which would give the Court more discretion to use its judgment as to what was in the interests of, and "to the benefit of," the public.

§ I realise that the words which I am suggesting are wide. The Government spokesman may say—possibly with some justification—that they are too wide. In that case, I would ask for the assistance of the Government in drawing up something which would enable the Court to use its own discretion more freely. Otherwise, I am quite convinced that within a very short time Parliament will be asked to amend the law to give the Court some further discretion, or to put new and appropriate provisions in the Bill. It seems to me that that would be a very elaborate and disagreeable way of achieving this end. It might mean opening up the whole Bill again—which I do not think any of us would want—simply to ensure that the best use is made of this Court. For those reasons, I move the Amendment. In moving it, I say to the 958 Government that if they can think of any better way of giving the Court that discretion which it should have, without undue laxity, without letting in abuses, I hope they will lose no time in doing so. I beg to move.

§ Amendment moved— Page 19, line 14, at end insert the said words, —(Lord McCorquodale of Newton.)

§ LORD MANCROFT
This Amendment adds yet another new ground of pleading to those set out in paragraphs (a) to (g) of this subsection. The effect of my noble friend's Amendment would be that any argument could be put forward to the Court in favour of a restrictive arrangement. I sympathise with what the noble Lord wants to do. I agree that it would be undesirable to have to come back to Parliament at odd intervals to increase the scope of the Bill, but I think that that is most unlikely; in fact, I believe the Bill provides specifically against it. I am afraid that I shall have to tell the noble Lord that I cannot accept his Amendment, as I rather think he suspects himself, chiefly because it is far too wide, and specifically on these two grounds.
In the first place, the tests set out in paragraphs (a) to (g) are those which, in the Government's view, cover adequately the circumstances which can be argued in favour of a restrictive arrangement. They mean that it must he shown that the restriction confers a clear and specific benefit or prevents a specific harm. That is where the noble Lord and I part company, because the Government's intention is to keep this as specific as possible, while the noble Lord wants to go a good deal farther afield. Secondly, the addition of the words proposed in the Amendment would mean that the whole issue set out in subsection (1) would become simply one of whether or not a restrictive agreement was in the public interest. I submit to the noble Lord that the tests set out in paragraphs (a) to (g) would then become merely illustrative and not definitive. Frankly, it is not the policy of the Government to place the issue at large before the Court in this way. We think it is unfair to those concerned that they should not know what is in the Government's mind and what will be in the Court's mind. I am afraid that the noble Lord's Amendment would put both issues far too widely and spread far too much doubt.

959

§ LORD BARNBY
The language which the noble Lord, Lord Mancroft, employed seemed to show that he was not inclined to give any consideration to this Amendment, but I would urge him to try before Report stage to find something, if not the moderate words of my noble friend Lord McCorquodale of Newton, which would make possible an additional paragraph which would get over the difficulty. It may well be that something actively to the advantage of the public may not fall within any of the preceding paragraphs. My noble friend suggested that the Court should be allowed to use its own discretion and it is that sentence I should like the noble Lord, Lord Mancroft, to support.

§ LORD BAILLIEU
May I follow my noble friend Lord Barnby with a similar plea? My noble friend Lord McCorquodale of Newton made his submission in words of studied moderation and restraint. I think that there are certain broad questions here which my noble friend Lord Mancroft might have been invited to bear in mind. I should like to remind your Lordships of a phrase used earlier in the debate by the noble Lord, Lord Grantchester, when he referred to the need of preserving flexibility in the economy. I think that for anyone to assume that within the framework of seven short paragraphs it is possible to confine all the circumstances on which the Court is to operate fairly and equitably to industry is unrealistic. If industry is to be treated equitably, some additional paragraph of this flexible character is desirable.
In paragraphs (a) to (g) are set out the circumstances about which the Court has to be satisfied, and then, in the words of the noble and learned Viscount the Lord Chancellor, comes the "tailpiece". We have to go further and satisfy the Court that it is not unreasonable, having regard to the balance between those circumstances and any detriment to the public or to persons not parties to the agreement. If it is permissible to bring in considerations affecting what is any detriment to the public, why, I would ask my noble friend Lord Mancroft, should it not be permissible, even desirable, to bring in considerations affecting the benefit of the public? That would seem to me to be not only a matter of equity but desirable as a working provision in itself. Therefore, I hope that 960 the Government will give further consideration to their attitude on this matter.

§ LORD GRANTCHESTER
As the noble Lord tried to use what I said on another clause in favour of this Amendment, I should like to say that, in my view, this does not import flexibility into the economy, but imports uncertainty into the Bill.

§ LORD LUCAS OF CHILWORTH
Would the noble Lord mind telling us who is to decide what is "calculated to operate substantially to the benefit of the public"? Will it be the Court or the Registrar? The Court starts off on the basis that all these agreements operate against the public interest unless they satisfy those conditions set out. By what standard does the noble Lord contemplate that the Court can decide that an agreement is "calculated to operate substantially to the benefit of the public"? I think it is putting an impossible task upon the Court. I do not know whether the noble Lord can tell me that.

§ LORD McCORQUODALE OF NEWTON
With regard to the comments made by the noble Lord, Lord Lucas of Chilworth, I would say that if he would look at the last sentence at the bottom of page 19, he will see that the Bill demands that the Court shall satisfy itself that the restriction is not unreasonable having regard to the balance between those circumstances and any detriment to the public … If the Court can decide whether something is to the detriment of the public, is it too much to assume that the Court can decide whether it is to the benefit of the public?

§ LORD LUCAS OF CHILWORTH
I should not think so.

§ LORD McCORQUODALE OF NEWTON
Exactly. Therefore, if the Court is quite capable of deciding whether an agreement is to the detriment, it is also capable of deciding whether it is to the benefit. But I would say this to the Government, in all seriousness. I believe in and support this Bill, and I supported it wholeheartedly on Second Reading. But I regard this clause, and its inflexibility, as the one weak element. I have been engaged in business all my life, and I know little or nothing about the law—and what I do know I rather distrust. It seems to me, as a businessman, that this is a lawyers' clause; and lawyers 961 naturally like clarity and inflexibility. But you cannot have that in business. Anyone engaged in business of any sort knows that the problems of to-morrow are not the problems of to-day. We have to meet new problems as they come, unexpected problems that possibly we had -never anticipated. I am sure that in a very few years, whatever Government may be in power will have to come back to Parliament to ask for some extension of the clause. However, I do not wish to press this matter now. I merely wanted to place on record my view on the subject. If the Government would consider it again, I should be grateful, but in the meantime, I beg leave to withdraw the Amendment.

§ LORD MANCROFT
Before the noble Lord withdraws the Amendment, perhaps I can help him in sonic way. He says that he has been in business all his working life, and knows nothing about the law. I have been in the law all my working life, and I know nothing about the law either. But I would assure him that he would require a whole retinue of lawyers to sort out the complications resulting from this Amendment if it were put into the Bill and that would considerably displease the noble Lord, Lord Lucas of Chilworth, whose chief object in this Bill, so far as I can see, is to produce a high rate of unemployment amongst my unfortunate fellow barristers. The difficulty I feel about the matter is this. I realise that my noble friends Lord McCorquodale of Newton. Lord Baillieu and Lord Barnby are all worried about something, 'but I do not 'think they quite know what they are worried about. If I could "skip" to the specific from what it is they are worrying about, I would do my best to help them. The noble Lord, Lord McCorquodale of Newton, suggests that he will withdraw his Amendment. I will certainly look again at what he has said, and we will have consultations. If we can find a specific way of helping him, we will. But I must tell him that the suggestions with which he has backed his Amendment are much too wide, and would lead to quite different things from those he has in mind.

§ LORD McCORQUODALE OF NEWTON
I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

962

§ 56 p.m.

§ LORD GRANTCHESTER
The last condition of Clause 21 is an extra condition: it imports an additional condition, and it is a most complicated sentence. I should think it virtually impossible for any Court to do what is required—that is, to determine whether it is reasonable, having regard to the balance between the circumstances that are put forward and any detriment to the public. I am not happy about the Amendment that I suggest, but it is art attempt at some simplification, and I beg to move it simply on that ground.

§ Amendment moved— Page 19, line 43, leave out from beginning to first ("to") in line 44 and insert ("not unreasonably detrimental").—(Lord Grantchester)

§ LORD MANCROFT
I was glad to hear the noble Lord say that he was not quite happy about his Amendment, because that means that he and I are in agreement for the first time this evening. I agree that this is not an easy thing to understand. Let us see what the noble Lord is trying to do. The effect of his Amendment to the tailpiece of subsection (1) would be that the parties to an agreement would have to show that the restriction contained in it was not operated in a manner which was detrimental to the public interest, taking into account the benefits which it has been shown to provide under one or other of paragraphs (a) to (g) of the subsection. In other words, what the noble Lord is saying is this. The parties will have to show that they are not taking a hammer to crack a nut. This would be a considerably less stiff test than that provided in the tailpiece of subsection (1) as it stands. Under this, the parties must show that the benefits which they have proved under paragraphs (a) to (g) are not outweighed by detriment to the public at large. If it were merely a matter of assessing whether the manner in which the restriction is operated is unreasonable, it would be likely that it could be shown in most cases that the methods employed were in fact necessary to ensure that the benefits were really enjoyed. I accept the noble Lord's light strictures, It is not quite apparent at first guise in all its full crystal clarity, but I do not think the noble Lord has done much to alter it.

963

§ LORD GRANTCHESTER
I do not think the noble Lord has quite understood my point. My Amendment would make that sentence read: … and is further satisfied (in any such case) that the restriction is not unreasonably detrimental to the public or to persons … It is certainly a simplification. It may be a little more easy to prove than the wording of the subsection as it stands. I am not sure that it is not impossible to ask the Court to weigh up the balance that the Bill requires.

LORD SALTOUN
Surely, in one way the Lord's Amendment is less satisfactory than the present words. "Unreasonable" here is connected with certain facts that have to be considered. It is not just a general epithet at large.

§ LORD MANCROFT
In the silence of the night I will read the noble Lord's remarks again to make sure I have not misconstrued him in the way he has me. My chief objection is the fact that he considerably reduces the stiffness test, and that is the real reason why I cannot accept his Amendment.

§ LORD GRANTCHESTER
If the sentence can be improved, I am sure the noble Lord will do it. I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ On Question, Whether Clause 20 shall stand part of the Bill?

§ 10.0 p.m.

§ VISCOUNT ALEXANDER OF HILLSBOROUGH
On the Question whether Clause 20 shall stand part of the Bill, I had better utter another warning to the Minister about what he is going to reconsider on this clause before Report stage. After all, the part which the noble Lord, Lord Grantchester, was going to amend really summarises what this clause will do. It will leave the Court to decide what is reasonable and what is unreasonable in that which is already established as detrimental to at least a section of the public. That is the most extraordinary state of affairs. It all stems from the Government's policy, as the Lord Chancellor explained to us to-night, that, instead of taking the extreme course of the Monopolies Commission, they have tried to steer a middle way, a new special way; and all the time they are handing to the Court something which it is impossible for the Court to decide and 964 which, in the first instance, ought to be a policy settled by Parliament. The situation now is that a question of policy, affecting the lives of the people, is to be settled by a Court instead of by Parliament. I beg the noble Lord to be very careful about how far he goes to make the situation even worse than it is already.

LORD SALTOUN
It seems to me that noble Lords opposite are trying to get the best of two worlds. In the first instance, they object to this Bill because they would have liked to see the Majority Report of the Monopolies Commission put in hand. Then they oppose any Amendment that is moved from this side in the hopes of making industry accept this Bill to make it work better. While my opinion has no authority, I rather differ from the Lord Chancellor on this. I regard twenty-one to twenty-four months hence with great apprehension. If anything does go wrong, the Party of noble Lords opposite will be able to say that they opposed this Bill all the time, and they will be able to prevent its being amended as may be necessary at the time. That is not quite fair.

§ LORD McCORQUODALE OF NEWTON
Perhaps I may add one word. We have attached the utmost importance to the general concept, in determining whether or not a restriction operates for or against the public; whether, on balance, the agreement is beneficial to the public or otherwise. We feel that the clause as drawn gives a reasonable chance for that to be determined. If your Lordships accept the Amendment of the noble Lord, Lord Grantchester, you will wipe out from the clause any possibility of determining what is the balance of consideration. We should certainly regret that action.

§ LORD MANCROFT
Perhaps I can say a word or two that will put some body's mind at rest—not that of the noble Viscount, Lord Alexander of Hillsborough, because I am certain that dark suspicion will lurk in his mind, however much I try to put it at rest. This is what we are trying to do. Having satisfied one or other of the tests in paragraphs (a) to (g), the parties must prove that the detriment to the public does not outweigh the benefits which have thus 965 been established. Apart from the question of detriment to purchasers, consumers or users, or to actual or potential competitors, there is no guidance as to what matters should be taken into account in assessing the effect of the restrictions on public interest. In fact, in assessing whether the restriction is or is not unreasonable, broad considerations will be relevant—for example, whether the effect of the restriction on the efficiency of industry and trade or on new enterprise is a bad one. That is why the issue is to be judged by a mixed Court. The judgment as to whether a restriction is unreasonable is largely an economic one, and the knowledge and experience of the lay members will assist the Court in arriving at a sensible conclusion in the light of the evidence put before it.

§ VISCOUNT ALEXANDER OF HILLSBOROUGH
Is it intended to see that the consumer is represented on the Court?

§ LORD MANCROFT
I should think that every member of the Court will be a consumer in his own right.

§ VISCOUNT ALEXANDER OF HILLSBOROUGH
That is not a fair answer.

§ Clause 20, as amended, agreed to.

§ Clause 21 agreed to.

§ Clause 22 [Rules of procedure and representation of Registrar]:

§ 10.6 p.m.

§ LORD MANCROFT moved, in subsection (2), after paragraph (b) to insert: (c) for regulating the evidence which may be required or admitted in any proceedings fore the Court; The noble Lord said: The effect of this Amendment is to enable my noble and learned friend the Lord Chancellor to make rules regulating the evidence which may be required or admitted in any proceedings before the Court. The intention of the Amendment is to facilitate the proceedings of the Court and the conduct of cases by the parties to the agreement and the Registrar. Under the normal rules of evidence, neither the parties to an agreement nor the Registrar could put certain data before the Court unless they could testify to them from their own knowledge or produce somebody who could do so. For example, in these circumstances, statistics about international trade could not be quoted before the Court unless 966 the compilers of these statistics were summoned to give evidence about them. Such statistics may be relevant to a number of cases before the Court and it would clearly be very inconvenient and costly if the normal rules of evidence were here applied. Indeed, in some cases, it might be impossible to obtain the necessary supporting evidence, and the work of the Court would therefore be hampered. This Amendment will allow my noble and learned friend to make rules which would permit these kinds of data to be quoted in the proceedings before the Court. I am sure the Committee will agree that this is a helpful Amendment. I beg to move.

§ Amendment moved— Page 20, line 44, at end insert the said new paragraph.—(Lord Mancroft.)

§ LORD JESSEL moved, as an Amendment to the Amendment, to add to the proposed paragraph (c): and in particular for enabling the Registrar to produce before the Court such witnesses or other evidence as may be available to show that any restriction upon which a declaration of the Court is sought under section nineteen is in fact contrary to the public interest; The noble Lord said: I had hoped that the Lord Chancellor, in whose name the main Amendment stands, would state that the rules which he is about to make under this clause would require the Registrar to produce before the Court any evidence that the restriction in question does, in fact, offend against the public interest. As I see it, the Lord Chancellor's Amendment does not require the Registrar to produce such evidence. I feel that the parties before the Court should be in a position to say, "You have not produced the evidence and the case is not proved against us." That would be the position in an ordinary court of law. We have heard previously a great deal about the status of the Court: that it is equal to the High Court; that barristers will have to appear before it. Yet for some reason the normal rules of evidence are not to be enforced. I hope the Lord Chancellor will reconsider this matter because I think it is unsatisfactory. I beg to move.

§ Amendment to Amendment moved— Line 2 of the Amendment, at end insert the said words.—(Lord Jessel.)

967

§ VISCOUNT ALEXANDER OF HILLSBOROUGH
I have much more sympathy with the noble Lord, Lord Jessel, on this Amendment than on one or two of the others he has moved to-night. I must say that these powers of the Lord Chancellor to make rules so sweeping as to be able to control what evidence is given before the Court seem to me rather extraordinary. In general, I have not been at all in favour of this procedure in the Bill. I wanted the procedure of the Monopolies Commission. If the Court is going to be asked to decide on all these matters—a task which is really a matter of Parliamentary policy—then it ought not to be so restricted in rules of evidence as not to be able to have real evidence from both sides. I learned with some distress this evening that, so far as one can see, under the Bill, people who make a complaint about an agreement and may not get that agreement registered, cannot go to Court, and have a case stated for a registration to be made. They can complain to the President of the Board of Trade; they can approach the Registrar. But if they are turned down they have no legal remedy anywhere, although this Bill professes to do away with some of the evils of restrictive trade practices.
Here we have just the bald Amendment put in, the Amendment moved by the noble Lord, Lord Mancroft, for regulating the evidence which may be required or admitted in any proceedings before the court. What sort of regulations? Are regulations to be made for every case before the Court, or are these regulations to be general? Are they regulations that will fit every kind of case? It is very curious wording. I do not understand what is really intended, and I should like to know. Certainly if it is going to be maintained in these words I think there is a great deal to be said for the further Amendment of the noble Lord, Lord Jessel, that if somebody is objecting to the registration of an agreement because it is detrimental to the public in the eyes of the Registrar and others there ought to be proper evidence from the side which laid the original charge in order that it may be properly heard. I should imagine that the same kind of thing would be desired by those who have been turned down by the Registrar in relation to a 968 harmful agreement that ought clearly to be registered but which he has rejected.

§ LORD MANCROFT
There is some misunderstanding. My noble friend Lord Jessel has tied an enormous tin can onto the tail of my poor little Amendment. My Amendment No. 43 is quite trivial, to help procedure and rules of evidence. It goes to no fundamental principles at all. There is nothing there, I can assure the noble Viscount opposite, to which he can take exception. But to the Amendment to the Amendment, I, with respect to the noble Lord, Lord Jessel, shall have to take exception. My Amendment No. 43 is simply designed to facilitate the proceedings before the court. Lord Jessel's Amendment to the Amendment is not, as it implies, merely an extension of my Amendment: it would make a radical change in the principles underlying the Bill. The effect of Lord Jessel's Amendment to the Amendment is that the obligation would be placed on the Registrar to produce witnesses or other evidence to show that restrictions are contrary to the public interest. Thus it would contradict the proposals in Clause 20 that it is for the parties to discharge the onus of proof. Now we are back on an old battlefield.

§ VISCOUNT ALEXANDER OF HILLSBOROUGH
Which parties? Who are the parties in the Court, apart from those who have had their collective agreement registered? Is it only the Registrar?

§ LORD MANCROFT
I am talking about onus of proof. This is quite a different matter from the purely procedural points of the previous Amendment, which do not go to the root of the Bill, the fundamental point the noble Lord was arguing with my noble and learned friend. I must ask the noble Lord, Lord Jessel, to withdraw this Amendment. It is quite a fundamental one on which I can give him no hope at all.

LORD SALTOUN
May I ask a question about the procedure? Will the parties be able to compel the attendance of witnesses or will that not be possible?

§ LORD MANCROFT
The normal rules of procedure will prevail in the Court exactly as in a division of the High Court. The rules of subpoena will be there.

969

LORD SALTOUN
In many cases I cannot tell witnesses; I can only ask them to come. This is a very important matter: will the parties be able to compel witnesses?

§ LORD MANCROFT
I will check this point. I do not want to give your Lordships bad law, but as far as I understood it, the normal rules of procedure regarding evidence will prevail as in a division of the High Court.

LORD SALTOUN
That is what I want to know. I do not know what they are. I am a Scotsman.

§ VISCOUNT ALEXANDER OF HILLSBOROUGH
If the rules in High Court procedure are generally to apply, what is the meaning of this special Amendment? This becomes statutory, whatever set of rules is made by the Lord Chancellor. There is no amendment of that afterwards. The noble Lord has not yet answered the question whether different rules of evidence are to be issued for different cases.

§ LORD MANCROFT
Under the normal rules of evidence neither the parties to the agreement nor the Registrar can bring certain data before the Court unless they can testify to them from their own knowledge or can produce somebody who can do so. That is the current practice. That being so, in this case statistics would not be able to be quoted in Court about international trade. Those might be very important. That could not be done unless the compilers of the statistics were summoned to give evidence about them. That would be the present rule without the Amendment and would be very expensive and inconvenient. It is not a fundamental point. It is purely procedural, to help the Court and everybody concerned to come to a conclusion.

§ VISCOUNT ALEXANDER OF HILLSBOROUGH
I have myself had to handle any number of these tribunal inquiries over the last twenty-five years, and if it is a question of handling statistics what the noble Lord says might suit me very well, if I were submitting them; but the other side, who were being taken by Government Statute into the realm of High Court procedure, would want something whereby they could effectively handle their reply to my statistics. If special rules are to be made to alter the 970 basis after High Court procedure has been adopted, one does not know where we are going.

§ LORD CONESFORD
I should have thought some comfort was to be derived under this clause from the provisions of subsection (3) which shows that it will not be entirely beyond Parliamentary control. These are not rules which will be made and which Parliament will not see before they come into force. On the contrary, Parliament will see them. I feel quite certain that the intention behind these words is perfectly reasonable and should not cause alarm. I was wondering whether the word "regulating" in the Amendment was precisely what was wanted. I feel certain it is that word which has alarmed some noble Lords, and not the explanation which was given by the Minister. I am sure, from what the Minister has said, that what he wishes to achieve by these words is a perfectly proper purpose; but at first sight the words "for regulating the evidence" are a little alarming. Therefore, though I believe subsection (3) of the original clause makes it fairly certain that no improper use is proposed to be made of this Amendment, perhaps the Minister might look again a little carefully at the wording.

§ LORD MANCROFT
Speaking as one who loathes being regulated in any shape or form, I will certainly take the advice of my noble friend Lord Conesford. Advice coming from that quarter on wording in the drafting of a Bill is always very useful. The noble Lord is quite right about these rules. They are designed purely to facilitate the work of the parties before the courts and to make their life easier. There is nothing dark or villainous about their purpose. As the noble Lord, Lord Conesford, points out they will come before Parliament. But I will certainly look carefully again at that clause to see that nothing has crept in which might worry the noble Lord in any way at all; and I will look, too, at the word "regulate" to see whether we can find something a little more chastening in its place.

§ LORD JESSEL
I am grateful for the support of the noble Viscount the Leader of the Opposition, which was quite unexpected. When the noble Lord, Lord Mancroft, talks about regulations which 971 are going to facilitate the work of the Court, I would say that they are regulations which are going to facilitate the work chiefly of the Registrar. If the onus of proof is on one of the parties to an agreement, surely the evidence produced by the Registrar will be evidence in rebuttal of the contention of one of the parties to the agreement. That is the evidence I am worried about and the evidence which I think should be produced in what I would call a normal way. But I am not going to press this Amendment. Lord Mancroft has said that he will look into it, and on that undertaking I beg leave to withdraw the Amendment.

§ LORD MANCROFT
Before the Committee gives permission for the Amendment to be withdrawn, may I say that I do not want Lord Jessel to be under any misunderstanding. I will look into the points which the noble Viscount, Lord Alexander, raised and that on drafting and purity of language raised by the noble Lord, Lord Conesford. I do not want Lord Jessel to think I am giving any undertaking which would suggest that I can accept his Amendment in any way at all. I am afraid that I could not possibly do that.

§ Amendment to the Amendment, by leave, withdrawn.

§ On Question, Amendment agreed to.

§ 10.22 p.m.

§ LORD MANCROFT moved, in subsection (1) to add to paragraph (d) "or any other unreasonable conduct on his part". The noble Lord said: As paragraph (d) of subsection (2) of this clause stands at present, it enables the Lord Chancellor to make rules for enabling the Restrictive Practices Court to order the payment by a party of costs in respect of proceedings in which he is guilty of unreasonable delay, or in respect of any improper, vexatious, prolix or unnecessary proceedings. The proceedings of the Court could, however, be held up by a party who did not unreasonably delay what constitutes technically, a "proceeding"—for example, he might deliberately and unreasonably neglect to deal with a request from the Registrar to submit or produce documents. The rules should be enabled to deal with such delaying or improper, vexatious actions or omissions, even 972 though they are not technically "proceedings" as such. This Amendment covers the point by empowering the Lord Chancellor to make rules enabling the Court to award costs against a party who is guilty of "any other unreasonable conduct." I beg to move.

§ Amendment moved— Page 21, line 12, at end insert, the said words.—(Lord Mancroft.)

§ On Question, Amendment agreed to.

§ Clause 22, as amended, agreed to.

§ Clause 23:

§ Prohibition of agreements for collective enforcement of conditions as to resale prices

§ 23.—(1) Subject to the provisions of this section, it shall be unlawful for any two or more persons carrying on business in the United Kingdom as suppliers of any goods to make or carry out any agreement or arrangement by which they undertake— (b) to refuse to supply goods for delivery in the United Kingdom to such dealers except on terms and conditions which are less favourable than those applicable in the case of other dealers carrying on business in similar circumstances; or any agreement or arrangement authorising the recovery of penalties (however described) by or on behalf of the parties to the agreement from dealers who resell or have resold goods in breach of any such condition as is described in paragraph (a) of this subsection, or the conduct of any domestic proceedings in connection therewith.

§ (2) Subject to the provisions of this section, it shall be unlawful for any two or more persons carrying on business in the United Kingdom as dealers in any goods to make or carry out any agreement or arrangement by which they undertake—

(a) to withhold orders for supplies of goods for delivery in the United Kingdom from suppliers (whether party to the agreement or arrangement or not) who supply or have supplied goods otherwise than subject to such a condition as aforesaid or who refrain or have refrained from taking steps to ensure compliance with such conditions in respect of goods supplied by them; or
(b) to discriminate in their handling of goods against goods supplied by such suppliers or any agreement or arrangement authorising the recovery of penalties (however described) by or on behalf of the parties to the agreement or arrangement from such suppliers, or the conduct of any domestic proceedings in connection therewith.

§ (3) The foregoing provisions of this section shall not apply to an agreement or arrangement to which the only parties are two or more inter-connected bodies corporate, or two or more individuals carrying on business in partnership with each other.

973

§ VISCOUNT ALEXANDER OF HILLSBOROUGH moved, in subsection (1) (b), after "favourable" to insert "to such dealers or their customers". The noble Viscount said: The clause upon which we are now opening a discussion is intended, of course, to prohibit collective resale price maintenance and makes it unlawful for any two or more persons carrying on business as dealers in, or suppliers of, any goods to enforce certain arrangements in connection with the supply of those goods. Societies of which I have ahead spoken to your Lordships, which are registered under the Industrial and Provident Societies Act, are faced with a great deal of difficulty in this matter, especially on account of such organisations as Electric and Musical Industries, Limited, or the Proprietary Articles Traders' Association, of which the noble Lord, Lord Dovercourt, knows, and similar bodies of that kind. Two different practices are followed. In some cases they refuse to supply by operating a boycott; in others they insist that the deferred discount or dividend which is issued, say, every six months or twelve months on balance of the distribution of surpluses, shou1d be added beforehand to the cost of the article, above the market price which is charged elsewhere. I move this Amendment in order to draw attention to the disadvantage in which our societies are placed in this regard and to ask the Government's intention in this matter.

§ May I say that while I speak with considerable emphasis in respect of industrial and co-operative societies, which are very large bodies, in all these matters I am equally concerned about protecting any other bodies who may operate on the same basis in the distribution of their surpluses. In just the same way I should like justice to be brought to them. It is not by any means uncommon today to find in trade those who copy, and copy very well, some of the aspects of co-operative practice. We find Brooke Bond's Dividend Tea advertised all over the country, for example. They give a direct rebate and a deferred rebate, so far as I know, and there are numerous other organisations who distribute surpluses to their members or to their customers in ways that have previously not been to the liking of the people who have these restrictive agreements. I am anxious for 974 these words to be put in, and I should like some statement from the Government on the matter.

§ Amendment moved— Page 21, line 35, after ("favourable") insert ("to such dealers or their customers")—(Viscount Alexander of Hillsborough.)

§ LORD MANCROFT
Clause 23 makes it unlawful for suppliers to agree or arrange to supply or offer to supply their goods to price-cutting dealers on terms less favourable than the terms on which they supply or offer to supply non-price-cutting dealers carrying on business in similar circumstances. The Amendment which the noble Viscount has moved introduces the concept of terms which are less favourable to the customers of tae dealers. What the noble Viscount has primarily in mind is the co-operative dividend, about which he has spoken with such warmth and feeling. I have sortie difficulty in crossing swords with him on this matter, because he has spent a lifetime in a movement which I know only as a customer, though, I may add, as a satisfied customer. It is contended that those manufacturers who either object to the payment of dividend in respect of their goods or who insist, if the dividend is paid, that the price be correspondingly increased, are treating the customers of co-operative societies unfavourably. I think that the Amendment is designed to prevent manufacturers from agreeing among themselves to make such stipulations.
I cannot help feeling, that the Amendment confuses the resale price conditions with methods of enforcement. Clause 23 of the Bill is not concerned with what resale price conditions should be enforced. It does not affect the present position, which is that, just as a manufacturer can object to an immediate reduction in price, an the ground that it is an infringement of resale price conditions, so he can object to payment of a deferred discount or dividend. Even if it were agreed that the co-operative dividend should be made the subject of some special provision, the Amendment would not achieve this. It would not oblige manufacturers to look at the cooperative dividend in a specially favourable light. All it would do would be to prevent manufacturers from agreeing to treat different systems of discounts or dividends in different ways. For example, at the present time private traders (but 975 not co-operative societies) are prevented from paying deferred dividends on tobacco goods. The effect of the Amendment would be to oblige the tobacco manufacturers either to allow private traders to pay dividends on their goods or to stop the co-operative societies from doing so.
The Government recognise, of course, that agreements to regard payment of dividends as an infringement of resale price conditions particularly concern co-operative societies and the basis of their method of trading, but such agreements have nothing to do with enforcement with which Part II is concerned. Part II is directed against the sort of agreement which manufacturers might make aimed at co-operative societies who ignore a condition as to dividend or offsetting the price. To meet that sort of contingency, the manufacturers might well agree among themselves not to supply the societies at all (which would be unlawful under paragraph (a) of subsection 1 of Clause 23) or to supply them only at a smaller wholesale discount than is allowed to other dealers (which would be unlawful under paragraph (b) of subsection 1 of Clause 23).
It is not the Government's intention to make it unlawful for manufacturers to agree among themselves that each of them would individually impose a condition that co-operative societies shall not allow a dividend on the manufacturer's pricemaintained goods or shall offset the amount of dividend, if they grant it, by an appropriate increase in price. It is the Government's intention that this should be a registrable agreement and that the parties to such agreements should be required to justify them before the Restrictive Practices Court. That is how the Government face this situation. I know that I shall never carry the noble Viscount, Lord Alexander of Hillsborough, with me, but I hope that I have at least made the intentions of the Government clear to him.

§ VISCOUNT ALEXANDER OF HILLSBOROUGH
I am obliged for the last part of the noble Lord's speech, because I find it so much ahead of the statement by the President of the Board of Trade in answering the debate in another place. What he then said was that the Government were going to make no alteration at all in the law as it now exists. Now 976 the noble Lord kindly tells me that it is intended that in the case of industrial employment societies, or any similar body which deals with its surplus in the manner that we do—it may be co-partnership, or all kinds of things—if they are not given the same treatment as everybody else by suppliers then the agreement not to give those terms will be registrable and will have to be justified before the Court. That is a great step forward. We have not had that clearly stated before. I would ask the noble Lord, Lord Mancroft, to look at the speeches by the President of the Board of Trade on this matter in another place, and I think he will agree with me as to that.
As regards the position on which this particular Amendment has been put down, I am quite willing to accept the view of the noble Lord, although in trying to get my Amendment into the right place as between the numbering of the clauses, as the Bill emerged from the other place, and the discussion on Report in another place, I was helped by members of the staff here to select the right place. Nevertheless, in view of what the noble Lord says, I will withdraw the Amendment, although I may have to raise the matter again on Report or in another part of the Bill later on.

§ Amendment, by leave, withdrawn.

§ LORD JESSEL moved to add to subsection (2): Provided that if it appears to two or more dealers that a supplier who imposes conditions as to price is not enforcing such conditions equitably as between all dealers in his goods such dealers may notwithstanding the provisions of paragraph (a) of this subsection agree to withhold orders for supplies of goods from such supplier and shall register such agreement with the Registrar who shall refer the matter to the Court for consideration under section nineteen of this Act: Provided also that the said agreement shall not be implemented unless and until the Court shall have declared that the said agreement is not contrary to the public interest.

§ The noble Lord said: The object of this Amendment is to protect dealers against unfair enforcement of price maintenance conditions by a supplier. If the Government take the view that individual enforcement of price maintenance should be allowed, then it should operate fairly to all parties concerned.

§ As the clause now stands, I suggest suppliers can favour some dealers at the expense of others. The favoured dealers 977 may be owned, or part-owned, by the supplier, who can, if he so wishes, refrain from enforcing his price maintenance conditions against a particular dealer, while vigorously pursuing them against all the others. He may have his own special reasons for doing this. My contention is that if a supplier enters into a price maintenance condition, he should be required to enforce it all round.

§ Now it is not only manufacturers who are affected by price-cutting, it is usually the dealers who are the first to suffer. This Amendment does not seek to allow any extra illegal sanctions, such as stop lists or private courts. All it tries to do is to give dealers a right to enter into a collective agreement to protect themselves from unfair treatment of the kind I have just mentioned, provided the Court gives its approval. This, I admit, will give a further range of work for the Court, but I am encouraged by the remarks of noble Lord, Lord Mancroft, on the last Amendment that this may be possible. I feel that price maintenance, under the Bill as it now stands, is certainly permissible in theory, but the methods of enforcement allowed will prove quite ineffective and the rights of retailers, especially of the smaller firms, virtually destroyed. It is chiefly on their behalf that I put down this Amendment. I beg to move.

§ Amendment moved— Page 22, line 21, at end insert the said provisos.—(Lord Jessel.)

§ LORD LUCAS OF CHILWORTH
While I think the noble Lord will agree with me that this Amendment has to appear under Clause 23, it really affects Clause 24. Collective price maintenance is dealt with in Clause 23, and individual price maintenance alluded to in Clause 24. The noble Lord, Lord Jessel, wants a variation of collective price maintenance on behalf of dealers instead of suppliers, to curb, if I can put it this way, the actions of the recalcitrant supplier under Clause 24. That is how we get this slight confusion, but it is clear in my mind. This is, if I may use the expression, a watered-down version of the non-signer agreement, which is prevalent in America. In other words, as the noble Lord, Lord Jessel, has said, collective price maintenance is outlawed by Clause 23; then you give an individual manufacturer or supplier the right to protect or maintain and enforce, through the Courts, through an 978 agreement, the maintenance of the prices he puts in that agreement. But, as the noble Lord said, he might not operate that fairly, and also there is nothing to prevent action from being taken in one case and not in another.
If such action is so taken the noble Lord, Lord Jessel, wants collective enforcement of price maintenance by the affected dealers—in other words, he wants the dealers who are so affected by the unfair operation of the producer to be able to combine together and collectively hold supplies. If I thought that was feasible I would support the noble Lord, but frankly I do not think it is. Unless some munificent or beneficent organisation is coming along to provide vast sums of money for one dealer to sue another dealer or for two or three dealers to take concerted action against a manufacturer, I cannot see how it can be done. Under Clause 24, which we may not reach tonight, we shall have to try to find a better method than this of dealing with the matter. I admit it looks very well on paper. It would go only a small way, if it were effective, but I do not think it will be effective. What I am going to do when we get to Clause 24 is to ask the noble Lord, Lord Mancroft, to give serious consideration to this question, because Clause 24 is completely and utterly unworkable. If you try to make it work, you will be dealing a large section of the retail and distributive trade in this country a mortal blow. It cannot be worked equitably; it has not a scrap of equity in it. It has all the viciousness and vice of cut-throat competition of the worst possible kind.
The noble Lord's Amendment really is intended to give to the affected sections, the retail trade, some retaliatory action. If I thought that it would work, I would support it; but I do not think it will work. I would suggest to the noble Lord, Lord Jessel, that we shall have to try to knock more sense into Clause 24, if there is any sense in it now; and if we cannot knock any sense into it, then we shall have to come back to this kind of thing and see whether we can persuade the Government to go further than this with a complete non-signer clause, precisely as is operating in the United States of America in similar circumstances. We shall have to do that. But I am hoping that better counsels will prevail and that the Government will see that the next 979 clause is completely inoperative if there is to be any fairness or sense of equity at all.
I am hoping that the noble Lord, Lord Jessel, will withdraw this Amendment—because I do not suppose for one moment that the noble Lord, Lord Mancroft, will accept it—and see whether we cannot get something done with Clause 24. If we cannot, we must come down to the real non-signer agreement, which operates not only as regards dealer and dealer, but, if the supplier is allowed to bind the retail trade of this country to a legal agreement to maintain prices, also, possibly, against the manufacturer. In all equity, we cannot have an agreement which ties the hands of the retailers behind their backs and lets the concern which is tying their hands behind their backs openly compete with them at cut prices. That is the difficulty the noble Lord is trying to get over here. He will fail. I do not want now to argue upon Clause 24, but I shall argue most strongly upon it when the time comes. So perhaps the noble Lord would withdraw this Amendment, and I can assure him of all my support when it comes to arguing the evils of Clause 24.

§ 10.44 p.m.

§ LORD MANCROFT
Perhaps the noble Lord, Lord Jessel, in due course will withdraw this Amendment—I do not know. If he does withdraw it, I hope he will do so for my reasons and not entirely for the reasons of the noble Lord, Lord Lucas of Chilworth. May I be quite certain that I have followed the noble Lord aright, for I am not quite as familiar as he is with these things? I gather that the non-signer arrangement is an arrangement in America by which, if one dealer accepts the retail price condition, all dealers are bound by it.

§ LORD LUCAS OF CHILWORTH
May I explain to the noble Lord? In America there are two separate suppliers who have dealers who have signed agreements with both of them. If one offends against that agreement by cutting the price to the detriment of the other, and the first one does not enforce the agreement against the second dealer, the one dealer can sue the other dealer. I do not know whether I have been able to describe it accurately. These people are non-signers. If one dealer has to suffer 980 the competition of another dealer and one of the manufacturers will not honour his agreement, one set of people can sue the other set of people. I hope I have explained it sufficiently. If not, I will write it down.

§ LORD MANCROFT
The noble Lord has certainly explained it to me, but whether I have understood it or not is another matter. Let us get back to the comparative simplicity of the Amendment of the noble Lord, Lord Jessel. As we know, subsection (2) of Clause 23 makes it unlawful for dealers to discriminate against suppliers who do not prescribe or enforce resale price conditions. This Amendment would make it possible for dealers who considered that a manufacturer was not enforcing resale price conditions equitably as between dealers to make an agreement to withhold orders from that manufacturer and register the agreement. The Registrar would be required to refer the agreement to the Restrictive Practices Court, and the agreement could not be put into effect unless and until the Court declared that it was not contrary to the public interest.
What I think the noble Lord is getting at is this. His Amendment evidently reflects the fears which I know are widely held, that manufacturers may be willing to bring legal proceedings against small dealers who re-sell in breach of price conditions, but may be reluctant to do so where large or powerful dealers are concerned. The result of this would be that people fear that unless some pressure can be brought to bear on manufacturers, their enforcement arrangements may be haphazard and indeed inequitable. I know that this has been worrying particularly the noble Lord, Lord Saltoun. We have had correspondence about it and I hope that I have been able to put his mind slightly at rest.
I am afraid that the noble Lord, Lord Jessel, must by now have realised that his Amendment is not acceptable. It reflects fears which, while they may not be altogether without foundation, are very frequently exaggerated. It is quite clear that manufacturers go to considerable lengths to create goodwill for themselves and their goods among dealers. For my own part, I must say I find it difficult to believe that manufacturers will throw all this goodwill away by openly treating small dealers in an in- 981 equitable fashion. There are already trades where individual enforcement is extensively practised and where comparatively little use, or no use at all, is made of tight collective arrangements—I think groceries are one and textiles are another. The Government believe that the interests of manufacturers and small dealers are substantially the same in that both are concerned (albeit for somewhat different reasons) to see some reasonable stability in distributors' margins.
That is not to say, of course, that individual manufacturers will lay down such rigid resale price conditions, or interpret them so inflexibly, as have trade associations in the past. Nor is it the Government's intention that they should do so. It may be that some manufacturers, at least, while they will take immediate action against what is called "loss-leading" or similar abuses, will not wish to regard as objectionable deferred dividend schemes or even genuine immediate discount schemes under which dealers pass some of their profit back to the consumer and so reduce prices. This may be thought to be inequitable to dealers who do not wish to make any reduction, but it is difficult to see any grounds for accepting that such reasonable and proper price competition among distributors is contrary to the public interest.
The effect of the Amendment would then be directly contrary to the general intention of Part II of the Bill, which is to introduce more flexibility into the distributive trades. It would enable dealers to bring collective pressure to bear on manufacturers to continue the old rigidities. Moreover, it would appear to have the effect, not only of narrowing the scope of the prohibition of agreements in Part II of the Bill, but of requiring the Registrar to give priority in bringing the class of agreements concerned before the Restrictive Practices Court. So far from agreeing that the Restrictive Practices Court should consider whether these agreements are contrary to the public interest, the Government consider that there is ample ground for prohibiting the enforcement of resale price conditions by means of collective boycott or discrimination whether such methods are employed by manufacturers or by dealers. I hope the 982 noble Lord, Lord Jessel, will see fit to withdraw his Amendment.

LORD SALTOUN
One of the pleasures of dealing with the noble Lord, Lord Mancroft, is that one always feels that he applies the whole of his mind to one's case and it will be very well considered. I have had some correspondence with him on this matter, as he says, and there are some facts I should like to bring to his notice. They are very largely as the noble Lord, Lord Lucas of Chilworth, has said. I entirely agree with what he said. After all, rival dealers may represent mainly different suppliers; but even where they both represent the same supplier, if one dealer is selling 100 cars a month, in the car trade for example, and another dealer only one or two, you cannot expect the supplier to enforce the agreement against so good a customer for the benefit of a worse customer. Examples are not wanting of this. I think the Monopolies Commission Report on tyres said that one dominant manufacturer wholly owned the major distribution outlets, and that is a very good case in point. I think that was mentioned this afternoon.
Another point made was that it would be unusual to allow people interest in proceedings relating to agreements to which they were not party. That has been allowed. The noble Lord knows, for instance, the right of a seller to enforce a commercial credit in his favour under the contract. There is the right of a widow to sue for a pension which her husband's employers promised to pay under a contract. There is the right of a guest in a house to sue for compensation for a burglary on the policy taken out by his host, and I think there are a good many others. In fact, I believe the Attorney-General on one occasion not very long ago suggested something of the kind. So I hope this matter will be carefully considered before the next stage, to try to get something to remedy the problem.

§ LORD JESSEL
I am most grateful to the noble Lord, Lord Lucas of Chilworth, who has put my case far more clearly than I did. He has an idea that something may be done for these small dealers under the next clause. If he can think of something I, for one, will support him. If is obvious from what the noble Lord, Lord Mancroft, said that I have no chance 983 at all with my Amendment, and therefore I withdraw it in the hope that on the next clause we may be able to do something.

§ Amendment, by leave, withdrawn.

§ LORD LUCAS OF CHILWORTH moved to leave out subsection (3). The noble Lord said: The noble Lord, Lord Mancroft, will remember that I argued half this case before under Clause 7. It relates to the words: shall not apply to an agreement to which the only parties are two or more interconnected bodies corporate— and so on. I said I could understand why this provision was in Clause 7, which dealt with manufacturers, but I could not understand why it was wanted in this clause, which deals with collective enforcement of price maintenance. A body corporate can be a substantial concern. Earlier today I pointed out that Unilever and all the concerns which Unilever control, from Wall's sausages and ice cream to detergents, are all bodies corporate. I take it that as they are excluded from the provisions of this clause, which makes collective boycott and price arrangements illegal, they can run a collective price maintenance scheme of their own. Is that what Her Majesty's Government want? Do they want combines of bodies corporate to be able to operate and enforce resale price maintenance by the collective boycott system, in defiance of the intentions of Her Majesty's Government?

§ I should not have thought this provision was wanted here at all. I can understand why it is in the other clause, which sets out what agreements have to be registered. It would not be a restrictive practice for a huge inter-connected combine of perhaps twenty-five or thirty firms to split up the manufacture of one article in one factory and of another article in another. That is sensible planning and is not at all in restraint of trade. But I cannot understand why this provision is brought in here. They can easily evade the issue by being a body corporate. Why is this provision wanted? There must be some reason which I cannot fathom, for Her Majesty's Government have been so adamant, without any equivocation at all, on this question of the outlawing of the collective boycott. Frankly, I cannot see the sense of this 984 provision, and I should like it to be omitted from the Bill because it may undermine what is, in my view, a sound principle, now that Her Majesty's Government have outlawed the collective boycott which has had a very harmful effect on the trade of this country. I beg to move—

§ Amendment moved— Page 22, line 22, leave out subsection (3).—(Lord Lucas of Chilworth.)

§ LORD BENNETT OF EDGBASTON
I cannot understand what is worrying the noble Lord, Lord Lucas of Chilworth. Does he want every company which has its subsidiaries registered under another name to amalgamate and come under one heading. There are great advantages in being separate, but they are really one concern. I cannot see why the noble Lord should be worried. I know of concerns which run under separate names but which are entirely controlled from one quarter; it is convenient to do it and is very advantageous.

§ LORD LUCAS OF CHILWORTH
That is what I said.

§ LORD BENNETT OF EDGBASTON
It is convenient in different districts to maintain local production and to give young men the opportunity of managing. But the concern is all one, and I cannot understand the noble Lord's worry at all. They are all one, even if, for technical reasons, they run under separate names. It does not affect the issue at all. If it were thought necessary, they could be brought into one company and run as departments.

§ LORD LUCAS OF CHILWORTH
I am afraid that I did not make myself clear. With regard to the ordinary process of running a business I absolutely agree with the noble Lord. I have already said that. The matter is dealt with under Clause 7. If the noble Lord will look at Clause 7 he will see that the selfsame provision is there. I agree that it is a very convenient way to do it. But why do you let them escape from the collective boycott arrangements that you have under Clause 23? This has nothing to do with the argument which Lord Bennett of Edgbaston has put up and with which I absolutely agree. But what is the reason you let them escape? I do not know the reason. It defeats your object to a certain extent. You may 985 have fifty concerns as a body corporate and they can all run a collective boycott. In other words, if you cut the price of someone's soap and they make sausages as well, the supply of sausages can be cut off. That is a collective boycott. That is the thing you are outlawing under Clause 23.

§ LORD CONESFORD
I am afraid that I was not here during the early part of the noble Lord's speech. Has he observed the definition of inter-connected bodies corporate for this purpose in Clause 34 of the Bill? I think that may perhaps answer his point and take away his troubles.

§ LORD MANCROFT
I wish that Lord Lucas of Chilworth would not take such a keen interest in such unpronounceable things. If it is not single abnormal indivisible loads one day, it is interconnected corporate bodies the next. He has asked me to try to explain this to him. I will set about the task. I only hope that I shall be more successful than he was in explaining non-signer arrangements to me.
Subsection (3) of Clause 23 exempts from the prohibition of arrangements for collective enforcement, agreements between inter-connected bodies corporate or between two or more individuals in partnership. The Amendment would bring agreements between inter-connected bodies corporate or between individuals in partnership within the scope of the prohibition. The noble Lord, Lord Lucas of Chilworth, may possibly feel that subsection (3) makes Clause 23 unfair as between small and large firms, in that large trading organisations could take advantage of the exemption to deny individual retailers a very substantial proportion of their supplies. It would not really be sensible, I think, to prohibit the agreements in question when made between inter-connected bodies corporate. Such bodies are in common ownership and are akin to a single firm, although in law they are separate persons. In any case, for purposes of a reference to the Monopolies Commission they are treated as a single firm, and I think it would be wrong to treat them differently for other purposes.
It would, moreover, be misleading to suggest that it would be easy for companies which are at present separate to escape the prohibition by making them- 986 selves into inter-connected bodies corporate. This would involve one company in obtaining control of another, either through the appointment of directors or by acquiring more than half of the equity share capital of the other, and would be a drastic step to take for so limited a purpose. So far as partners are concerned, they are separate legal persons but form a single trading unit and fall to be dealt with in the same manner as the individual trader. The use of the word "individuals" in the subsection means that this exemption from partnership cannot be used by companies to evade the ban on collective enforcement. Those are the reasons why we cannot accept the noble Lord's Amendment and I hope that he will see the force of them.

§ VISCOUNT ALEXANDER OF HILLSBOROUGH
The only important part of the noble Lord's speech was the last sentence: that this ban cannot be imposed upon a corporate body. I must say that I feel the situation much more than the noble Lord thinks I ought to do. Subsection (3) specifically exempts "two or more persons being interconnected bodies corporate" from the general provisions of the first two subsections of the main clause. I think that that is a serious matter. I do not think that the Committee have yet followed what is going to happen. My noble friend Lord Lucas of Chilworth chose to speak about the composition of that great organisation called Unilever, Limited. It is an extraordinary combination of every kind of production, from West African products and margarine to Dutch companies that have to carry the name of Naamloze Vennootschap. I would tell my noble friend that that is an example which I should not choose to make on this clause, because I have no knowledge at the moment of any restrictive practice by Unilever, Limited that is harmful to trade. I do not think that that is a very good illustration of the point.
Let us take those who are connected with the Proprietary Articles Traders' Association—large bodies, some of them incorporated, but with separate sections, in spite of their incorporation, which can easily get out of the first Part of the Bill by proceeding with enforcements separately on individual products through 987 subsidiary companies. At any rate, I shall watch the rest of the Bill closely to see whether this would really be the result of the Bill. To make this clear to the noble Lord's mind, and to give the Committee some reward for what they are doing tonight, if the Government want to keep this provision in the Bill, we shall move that it be kept out.

§ LORD LUCAS OF CHILWORTH
My noble friend has said that I have not given a good illustration. Let me give the Committee a better one. There are about ten manufacturing firms in the motor industry. Five of them are in an inter-connected body corporate, the British Motor Corporation—Morris, Austin, Wolseley, Riley and Morris Commercial. Those five can operate a price maintenance with a collective boycott. If the other five firms combine to do it, they will be outlawed; but because these five are in a body corporate, they can do it. Is that what the noble Lord, Lord Mancroft, wants? If they want to do it, they can run a collective boycott in defiance of this Bill. If a dealer breaches the manufacturer's agreement on any one of these cars, supplies from the other four can be withheld from him. That is a collective boycott. They are an interconnected body corporate, so they are excluded from this price maintenance resale enforcement. The rest who are single entities, cannot combine with the others to enforce the price; but these can. The noble Lord has grasped that, has he?

§ LORD MANCROFT
Yes, I have grasped it.

§ LORD LUCAS OF CHILWORTH
All I ask the noble Lord is: Is that fair? Does he want that? That is the only reason why I have put down this Amendment.

§ LORD BENNETT OF EDGBASTON
The noble Lord has omitted to state the one fact. He says that they are interconnected. They are one company, one capital and one management. They might all be called one and have different models. I cannot see what the difference is, in the noble Lord's mind, between the concern that owns the whole capital and runs the whole business under different 988 departments and the concern which decides to keep different names for particular purposes.

§ VISCOUNT ALEXANDER OF HILLSBOROUGH
I must say, from my examination of a few balance sheets of companies who deal with these matters, that they give separate accounts, as individual companies, for the subsidiaries, and then bring them into what they call a consolidated balance sheet afterwards, I can see no possible reason why the subsidiary companies concerned, if they go in for a boycott, should not be dealt with separately.

§ LORD BENNETT OF EDGBASTON
The Inland Revenue insist on there being one consolidated balance sheet, and on its being treated as one company.

§ LORD LUCAS OF CHILWORTH
I do not think the argument of the noble Lord is valid. What we are doing here is something different from company construction. What the Government are trying to do here is to prevent the collective boycott principle of resale price maintenance. I am only pointing out that the Government's purpose can be defeated, because a body corporate can market seven or eight different things through different companies, different brands, different agreements; but because the shares are all owned by one concern which is an inter-connected body corporate, they can avoid this price restriction. You have only to go to another industry, and the five that may be under one financial holding may comprise the whole of one industry. Is that what the Government want? If it is, all right. But do not let them think they are going to have the collective boycott stopped.

§ VISCOUNT BRIDGEMAN
Would the noble Lord agree that the converse is also true, and that if the group, B.M.C. or whatever it was, liquidated all the subsidiary companies and made it one company, the purpose of the noble Lord would be defeated again?

§ LORD LUCAS OF CHILWORTH
Yes. I know how they can get over it. Instead of calling the different models different names, they can call them one name and market them from one company.

989

§ VISCOUNT BRIDGEMAN
The noble Lord should simplify matters by saying that no company should be allowed to market more than one kind of car.

§ LORD GRANTCHESTER
Surely, this clause does not affect any outside party. If the companies make an agreement between themselves, they are only making an agreement which, on balance, has no effect at all.

§ VISCOUNT ALEXANDER OF HILLSBOROUGH
It is to withhold supplies from the company.

§ LORD GRANTCHESTER
That is not this clause, surely. It is an agreement with which only the parties themselves are concerned.

§ LORD LUCAS OF CHILWORTH
I am not going to press this Amendment. I merely want to know the view of the Government. I do not want the Government to suffer under the illusion that they have stopped up all the holes of the collective boycott. They have not. I do not know why they wanted to include this in the clause.

§ LORD MANCROFT
I think it is my turn now. Do not let us quarrel at this time of night. I cannot allow the noble Lord to take out this subsection, because we should have a great muddle, particularly with the Monopolies Commission. The noble Lord stated an extreme, though I think valid, case; but he may be worrying unduly. I should like to look at what he has said and to consult with the experts, because this is a very technical matter. I have nothing like the technical knowledge of this business which the noble Lord has, and I am not pretending—and I hope I was not giving that impression—that this provision is completely foolproof, or that there are not examples which can be thought up to illustrate his case. The noble Lord has done this. But I think the Bill as it stands does achieve what we are setting out to do. The noble Lord's example is an extreme one, which perhaps sounds more important in a speech than it is in actual fact. I will look at the point again, of course, so long as he does not expect me to accept his entire argument.

§ LORD LUCAS OF CHILWORTH
I wanted merely to illustrate my point, and I shall be interested to hear what the 990 noble Lord says. I beg leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ 11.16 p.m.

§ LORD JESSEL moved, after subsection (3) to insert: (4) Subsection (1) of this section shall not apply in relation to any contract for the sale of goods to which not more than two persons are party by virtue only of undertakings by the purchaser in relation to the goods sold and by the vendor in relation to other goods of the same description; and for the purposes of this subsection two or more persons being individuals carrying on business in partnership with each other shall be treated as a single person.

§ The noble Lord said: This Amendment tries to deal with a difficult point of construction which arises on subsection (1) of this clause. I am told that it is probable that a wholesaler must be deemed to be a "supplier", within the meaning of the subsection. This produces the result that where a manufacturer obtains an undertaking from a wholesaler that he (the wholesaler) will not supply a price-cutter, the wholesaler cannot in return get a reciprocal undertaking that he (the manufacturer) will not himself supply the price-cutter or that he will exact a similar undertaking from other wholesalers. Such a reciprocal undertaking by the manufacturer is almost always implied, even if it is not actually stated, when a manufacturer issues a price list giving prices for sale to the public with discounts et cetera for retailers and wholesalers. I think it would be absurd if it were illegal for the reciprocal undertaking to be stated explicitly. The object of this Amendment is to make it clear that this can be done. I beg to move.

§ Amendment moved— Page 22, line 25, at end insert the said subsection.—(Lord Jessel.)

§ LORD MANCROFT
I could not have done that better myself, and I have great pleasure in accepting the noble Lord's Amendment.

§ On Question, Amendment agreed to,

§ LORD LUCAS OF CHILWORTH moved, after subsection (6) to insert: (7) Upon complaint to the court, and its satisfaction, that a person has through the enforcement of the provisions of this section been persistently charging for any goods sums insufficient to meet the cost of producing or distributing those goods and has thereby placed other producers or distributors of like goods 991 at an undue or unfair disadvantage in competing with him as respects the production or distribution of those goods the Crown shall take proceedings for an injunction or other appropriate relief.

§ The noble Lord said: As I understand that this is the last Amendment we are going to deal with tonight, perhaps the noble Lord will accept it. I saw the noble Earl the Chancellor of the Duchy of Lancaster here a short time ago, and I am sorry that he is not in his place now. It was a statement by him on the Road Traffic Bill which tempted me to put down this Amendment. We were then debating an Amendment on the Road Traffic Bill which sought to set up the twelve licensing authorities as a court of business morals. Clause 42 of the new Bill says that A and B licences can be revoked if it is proved before the licensing authorities that there has been, if I may use a colloquial expression, "cutthroat" competition. The noble Earl, Lord Selkirk, who was in charge of the Bill, laid it down quite definitely that it was not the Government's policy to have this "cut-throat" competition, and that that was one of the reasons why they had made it possible for one haulage contractor to be able to bring another haulage contractor before the licensing authority. If persistent price-cutting of rates was proved, the offending hauliers might have their A and B licences revoked.

§ Encouraged by that principle in the Road Traffic Bill, I thought I would test the Government to see whether, having by this Bill prevented resale price maintenance by the use of the collective boycott, so that there might be competition, with the benefit of lowering prices to the public, they would accept here the same principle that they failed to accept in the Road Traffic Bill, that of intensive competition which would mean a lowering of those prices to the public. I have followed precisely the wording of Clause 42 of the Road Traffic Bill, and I cannot see how the Government can say that they have one policy in respect of one commodity and another policy in respect of another commodity. I do not doubt that the noble Lord, Lord Man-croft, will be able to argue that but it does not sound to me very logical. Also, I have put in here a principle which I will elaborate later—not tonight, for it 992 is too late, but tomorrow because, when you have this kind of thing happening, and in defence the smaller members of the industry have to take action, I want the Crown to take action for them. I think I have said enough to explain precisely the object of the Amendment. I beg to move.

§ Amendment moved— Page 22, line 42, at end insert the said subsection.—(Lord Lucas of Chilworth.)

§ LORD MANCROFT
I wish that I could accept this Amendment and send the noble Lord to bed happy but, alas! I cannot. The Amendment contemplates that, despite the provisions of Clause 24 which strengthen powers for individual enforcement, cases may arise in which manufacturers or distributors persistently sell at prices below the cost of production or distribution. Where the Court—I presume the noble Lord means the county court here.

§ LORD LUCAS OF CHILWORTH
No; the Restrictive Practices Court.

§ LORD MANCROFT
The Restrictive Practices Court. Where the Court is satisfied, on complaint, that this is the case, the Crown is required to seek the relief of an injunction or other appropriate remedy. I suppose what the Amendment is really concerned with is persistent "loss-leading". At this late hour, I need not describe in detail "loss-leading".

§ LORD LUCAS OF CHILWORTH
No.

§ LORD MANCROFT
Whether it is that or not, I am afraid the Amendment is not a very attractive one, because the Government consider that the provisions of Clause 24 will be sufficient to enable individual manufacturers to take action against distributors who misuse their brands by using them as "loss-leaders" or any other similar offence. It is clear that manufacturers will, in general, be as concerned as distributors to check "loss-leading", because the natural result if a distributor uses any article in this way is that other distributors in the area abandon any attempt to sell it. I am certain that the noble Lord will agree that this reacts most unfavourably on the manufacturer. I cannot really say—I am sorry to say so, after listening carefully to the noble Lord—that he has made out a case for his Amendment.
993 I am sorry to tell him, also, that there are some substantial objections to it. First, it requires the Court to determine whether certain facts—that is, persistent price-cutting—are consequential upon the application of Clause 23. I honestly think it is difficult to see that the Court could be asked to do this. What would be necessary, in fact, would be to make the Amendment apply to any case in which a distributor sold at a low price, whether the goods in question had up to now been subject to collectively enforced resale price conditions or not. But I suggest that it would be a remarkable innovation to allow general complaints to the courts where selling at low prices occur.
Secondly, a very strong case would need to be made before the Government could accept that the courts should be asked to make precise judgments on the costs of distributing any one product. Nobody could deny that costs vary as between distributors, depending upon the quantities of goods bought and sold, the location of the shop, the amount of service given and the efficiency and enterprise of the dealer in question. It would not be sufficient to presume that a dealer who accepted a significantly smaller percentage profit on one article was necessarily selling that article below the costs of producing and selling it. The Amendment would nevertheless impose on the Court, whenever a complaint was made, the need to make elaborate cost investigations from which no very precise conclusion might emerge. The Simon Committee on the Distribution of Building Materials made a thorough investigation of this subject and stated there is no means of ascertaining how much of a merchant's total costs is reasonably chargeable against a particular class of goods handled". There is one other point on the Amendment: It appears to cover—the noble Lord says, "No"; but it struck me that it did—"loss-leading" by manufacturers—that is to say, the marketing of a line at less than cost. This, however, is outside the scope of Part II of the Bill which is not concerned with the basis on which prices are fixed. The Government's main objection to the Amendment is, however, that it seeks to provide for a situation which is already adequately provided for by Clause 24 upon which we shall do battle tomorrow 994 —namely, by the additional facilities afforded in that clause for the individual enforcement of resale price conditions. I hope the noble Lord will not press his Amendment. I am certain that if he is not satisfied with the views which I have advanced we shall hear more about this on the battlefield tomorrow in regard to Clause 24.

§ LORD LUCAS OF CHILWORTH
I am most grateful to the noble Lord, because he has said what I understood was the Government policy—in other words, that the object of this Bill is to get more competition into trade. The noble Lord really has said that, has he not?—that so long as the Government get more competition into trade if, through that fierce competition, there is undercutting of prices, that is to the ultimate benefit of the consumer; and the commercial interests in any industry must look after themselves. In essence that is what the noble Lord has said, is it not?

§ LORD MANCROFT
Is that what the noble Lord thought I said or what he wanted me to say?

§ LORD LUCAS OF CHILWORTH
That is what the noble Lord did say.

§ LORD MANCROFT
No, I did not.

§ LORD LUCAS OF CHILWORTH
That is what the noble Lord really said. And he said that there are plenty of provisions in Clause 24 to stop that, That is how I understood the Government policy, and that was the only reason why I put down my Amendment to get a declaration of Government policy. I have got two declarations now—one from the noble Lord and one from his noble friend the Chancellor of the Duchy. I will see what the Chancellor of the Duchy says on Tuesday in regard to the pronouncement made by the noble Lord tonight. With those observations, I beg leave to withdraw my Amendment.

§ Amendment, by leave, withdrawn.

§ Clause 23, as amended, agreed to.

§ THE LORD PRESIDENT OF THE COUNCIL (THE MARQUESS OF SALISBURY)
We have had a very successful day and we have made a good deal of progress. I suspect that the noble Viscount, Lord Alexander of Hillsborough, and the noble Lords, Lord 995 Lucas of Chilworth and Lord Mancroft, are ready to "call it a day". Therefore, I suggest that we should carry the Committee stage no further tonight but should adjourn it until tomorrow. I suggest that the House be resumed, which Motion will be moved by my noble friend Lord Mancroft. So far as arrangements for tomorrow are concerned, I propose to say a word about those in adjourning the House.

§ VISCOUNT ALEXANDER OF HILLSBOROUGH
We have had a very good day's work, and one noble Lord who sits on the other side has had the great good fortune to obtain a concession. We on this side have not been so fortunate. However, it has been a most pleasant and happy Committee stage, and I hope that tomorrow we may perhaps finish it off with a little more glory on both sides, by a concession being obtained by the Opposition.

§ House resumed.