HL Deb 12 July 1956 vol 198 cc1001-29

Order of the Day for the House to be again in Committee read.

Moved, That the House do now resolve itself into Committee.—(The Lord Chancellor.)

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD TERRINGTON in the Chair]

Clause 24:

Individual enforcement by legal proceedings of conditions as to resale price;;

24.—(1) Where goods are sold by a supplier subject to a condition as to the price at which those goods may be resold, either generally or by or to a specified class or person, that condition may, subject to the provisions of this section, be enforced by the supplier against any person not party to the sale who subsequently acquires the goods with notice of the condition as if he had been party thereto.

(2) A condition shall not be enforceable by virtue of this section—

  1. (a) in respect of the resale of arty goods by a person who acquires those goods otherwise than for the purpose of resale in the course of business or by any person who acquires them, whether immediately or not, from such a person;
  2. (b) in respect of the resale of any goods pursuant to an order of any court, or by way of execution or distress, or by any person who acquires them, whether immediately or not, after such resale.

(3) Nothing in this section shall be construed as enabling any person to enforce a condition imposed in pursuance of any restriction which is declared by art order of the Restrictive Practices Court for the time being in force under Part I of this Act to be contrary to the public interest.

(4) If in any proceedings it is proved that goods sold by the plaintiff have been resold by the defendant in breach of a condition which is enforceable against him by virtue of this section, the court may, if it thinks fit, grant an injunction restraining the defendant from reselling in breach of any such condition any goods already sold or thereafter to be sold by the plaintiff, whether of the same description as the goods proved to have been resold as aforesaid or of any other description.

2.18 p.m.

LORD LUCAS OF CHILWORTH moved, in subsection (1), after the first word "the" to insert "maximum". The noble Lord said: We now come to the clause which many of us think is by far the most important in the content of the Bill. Indeed, it is the one clause which affects vitally the economic lives of the mass of the people of this country—the general consumers. It deals with the individual enforcement of resale price maintenance, and resale price maintenance is practically confined to those consumer goods which are distributed to the common consumers of this country. You cannot have an individual price maintenance scheme for battleships or steam engines but you can for the necessities of life. We feel that this clause is important because in it, in our view, the Government violate the fundamental principle upon which this Bill is based, and that is the breaking down of the rigidity of the pattern of commodity distribution in this country which has been encrusted over the years with various restrictive practices. The Government made a gesture in the previous clause and did away with the collective boycott. But in our view they have now returned and set up a far worse condition—one that will make discrimination more than ever a potent force and which will operate to the detriment of the one principle which every Government spokesman has repeatedly underlined: to allow efficiency of distribution to find its way into the cost of consumer goods.

What are the Government doing through the whole of this clause? The clause violates the principle which has been repeatedly stated by the Lloyd-Jacobs Committee as well as the Monopolies Commission, that nothing should impede the ability of the retailer to test out better, more efficient and cheaper methods of distribution of goods. It gives the individual supplier the power to say that that shall not be done. We say that that is wrong. The Government have doubled back on their tracks. What I think has influenced the Government and the Lloyd-Jacobs Committee—in my view, wrongly—in recommending that the manufacturer should be able to price maintain his own goods, is the "loss-leader." May I explain to those noble Lords who are not acquainted with the "loss-leader" that it is an article which is sold at a loss to attract custom for other articles of trade. That is about the most simple explanation I can give. The best "loss-leader" I have ever come across was a hot cross bun. Stores used to give twelve hot cross buns away during the week before Easter for every half-crown spent in the store. I challenge anybody to tell me a branded article displayed as a "loss-leader" that has affected to any degree the sales of the overall manufacture of that article.

Look at the result of all this. It is going to lead to the negation of everything the Government want. It will prevent the efficient distribution unit from passing on the result of its efficiency to the general public. It will inflate prices, as price maintenance must always do, because any margin that is fixed between the cost of production and the price to the consumer must always be fixed so as to give a profitable margin to the least efficient unit. When you prevent the most efficient unit, which generally has no desire to go in for price-cutting or anything like that, from being able to pass on the results of its efficiency, you nullify all you have done in this Bill to unlock the rigid pattern which retail distribution has been forced to assume.

The second principle which the Government have nullified is equity in distribution. They are regarding production as the only thing that matters and have lost sight of distribution. They take the view that prices and the efficiency with which prices are maintained are the concern solely of the manufacturer. I want to make a personal appeal to the noble and learned Viscount the Lord Chancellor, because he is a just man, and in his capacity as head of the Judiciary I am certain that he does not wish to connive at the system contained in this clause, which lacks equity. In simple language, this is what it is. The producer of an article can bind every retail outlet to the price it should charge for the article. In other words, the price will run with the goods. But there is nothing here to make the producer of the goods conform to the same principle. The producer can fix the price and take into court any retailer or distributor who does not honour that price, but he is given a free hand to sell the same article at any price he likes and to compete without let or hindrance with every retail outlet. Is that equity?

We have seen the pattern of retail distribution change over the years. To-day we do not know who owns the retail outlets for the majority of articles. There are plenty of cases where the producer of an article is the owner of 50, 60 or 80 per cent. of the retail outlets. You cannot judge the shop by the name over the top of it. Is it likely that the producer is going to take into court his own retail outlet for a breach of his own agreement? So what is going to happen is that the only victim of this system will be the independent small and medium-sized shopkeeper. Is that what the Government want? What redress has the shopkeeper? This system of supposed individual price maintenance can be used for the most vicious of practices—that is, the strangling of independent competition against the big combines. That is how the big combines were built up, by forcing uneconomic circumstances on the people they wanted to buy out. Do the Government want that? What equity is there here? Are the Government going to set up a vicious system that will stifle all individual enterprise if against that of the big monopolies? If the Government want to widen the sphere of competition, I suggest that they widen it in a field that is fair and not expect fairness when the hands of the retail outlets are tied behind their backs by having to withstand the price-cutting competition of their own suppliers. That is what will happen under this clause.

There is one way of getting what I think the Government want, and that is by the adoption of this Amendment. It does not take us all the way, but it does take us this far: that if we allow price enforcement of only maximum prices it protects the public from exploitation. If we do not allow the fixation of minimum price, we open the door for that which every Committee that has sat upon this problem has advocated—that is, the experiment that must go on in this country to lower prices by more efficient methods. But the Government by this clause have ruled that out. Self-service, larger turnovers and smaller returns, all these things are eliminated by this clause, not at the instigation of any national policy, but at the instigation of individual producers.

My final word is this. The noble Lord, Lord Jessel, made last night, as I thought, an admirable but despairing effort to put some equity into this matter. I hope the noble Lord did not mind my throwing cold water upon it. The only reason I did so was because I could not see how it would work. The noble Lord, Lord Saltoun, drew attention to this great problem on Second Reading. Are the Government going to institute one of the most vicious systems that can be imagined by allowing, as has been proved in the past on all too many occasions, efficient distribution to suffer the competition and the growing power of the big combine, which not only manufactures but distributes as well? It will be a sad day for this country when we fail to see some independent names over the shop-fronts of the shops in the country; and this is the right way to obliterate them.

I want to make an appeal to the noble and learned Viscount, the Lord Chancellor. I want him to take this clause back and have another look at it, and to have consultations with those of us who feel strongly about this matter. I think some strong speeches will be made from this side of the House upon this discrimination, which the Bill purports to stop but which, when you get to this clause, it perpetuates and increases. I want the noble and learned Viscount to take it back and look at it, so that, instead of fighting across the Floor of this Committee, we can come to some sensible arrangement which will do what I believe the Government want to do. Why they have been sidetracked into this alley, I cannot understand. Those are my two vital criticisms: that the whole concept of the Government's policy has been thrown overboard; and that this sets up a position in distribution in this country where the last vestige of equity has gone. I beg to move.

Amendment moved— Page 23, line 5, after ("the") insert ("maximum").—(Lord Lucas of Chilworth.)

2.35 p.m.


The noble Lord, Lord Lucas of Chilworth, as I think he will agree, has gone slightly beyond the Amendment which he is moving and has dealt with the whole principle of this clause. Therefore, he will not take it amiss if, with your Lordships' approval, I follow him into the wider field. The Government view of this part of the problem is that the prohibition of collective enforcement of resale price maintenance and the strengthening of the individual manufacturer's powers of enforcement present a balanced approach to the problem of resale price maintenance. I have read debates in another place in which there has been long and continual controversy as to how far the Reports—and I refer especially to the Lloyd-Jacob Report—condemn retail price maintenance, as such, and I am not going into that problem to-day.

I want your Lordships to consider this balance which we are now putting before the Committee. The noble Lord, Lord Lucas of Chilworth, has attacked it on two grounds. First, that it interferes with the efficient organisation of the distributive trades; and secondly, that it is inequitable. I should like to follow the noble Lord on those lines. Why should it make distribution less efficient to strengthen the powers of individual manufacturers in this respect? One must lock at it from the point of view of the manufacturers, as well as of the other people concerned. Their claim is, first, that they can embark with greater assurance on mass production and on sales programmes; and secondly, that they can build up proper servicing Facilities if they know that a reasonably stable distributive system is available to deal with their products. Despite what the noble Lord, Lord Lucas of Chilworth, has said, I am quite unable to see why it is unreasonable to provide manufacturers with some protection against the disruption and distribution which "loss-leading" may cause.

Now I turn to the question of equity. The noble Lord, Lord Lucas of Chilworth, has appealed to my sense of justice, and I should never answer that with a debating point. From the point of view of equity, and of the old Latin phrase, if I may translate it, of what is fair and good, this clause affects only the retailer who takes the goods with notice of the conditions.


Hear, Hear!


I welcome the support from the noble Viscount which his applause gives me. If a retailer takes the goods with knowledge of the conditions, then he has exercised his choice; he has decided to take the goods and he knows of the conditions. He could have refused to take the goods. I do not know why the Party opposite should be so anxious to support someone who takes the goods on one basis with the intention of selling them on an entirely contrary one.


We have never said that.


That is what is implicit in the attack on this clause.



It is exactly so, and it is the answer to the point of the noble Lord, Lord Lucas of Chilworth, on equity. The noble Viscount will have to develop another approach to this matter, because that was implicit in the approach which the noble Lord has just put so eloquently before the Committee. That is the point. Why is it equitable to protect someone who has chosen, as I say, to take the goods with knowledge of the conditions? I do not think noble Lords opposite have appreciated this point.


The point I made was that all these goods are sold under an agreement. The producer of the article binds the seller to the price at which he will sell, but the producer, who can compete with the person he has bound, does not bind himself. Therefore, he ties the seller's hands behind his back. The man has signed an agreement and he does not want to perjure himself by breaking it. He has to stand by and see the competition of his own supplier, because there is not a mutual binding on the supplier as there is on the retailer.


With great respect, the noble Lord has got it—I will not say entirely wrong, because I have too much respect for his view—but entirely differently from my understanding. Let us take it in two stages. The manufacturer makes an agreement with his wholesaler; it may be in the form that the retail price, the end price, will, say, be 5s., subject to a discount of 5 per cent. But the first agreement exists between the manufacturer and his wholesaler. That is an enforceable agreement at the moment, and nothing that anyone has suggested, as I understand the Amendments, will affect that agreement. After what came from the Benches opposite on the sanctity of agreements a fortnight ago, I cannot think anyone would suggest that that agreement should be interfered with.

So we get to the wholesaler. At the moment, the point is that the wholesaler has taken it on my hypothesis; he has bought the goods on the basis that there will be an end price of so much. The retailer to whom he sells knows that that is the condition on which the goods have been sold, and that is the basis of my argument. Unless he knows the conditions, these provisions do not affect him at all. The point which we have to decide is whether it is right and good, whether it is equitable, that someone who takes goods with that knowledge should be allowed to break the condition with impunity—so far as the person who has imposed the condition is concerned.

Noble Lords opposite may say that another method would give them better distribution. I argued that point. But I do not think that they can say that it would be equitable. It is one of the first basic things, that equity always means that the person who appeals to equity must come with clean hands and not take advantage of his own wrong. This case rests on the hypothesis that a man has knowledge of the conditions, and is going to break them. That is the first point. It might be said, and it might be implicit in the noble Lord's argument, that he may be put in a difficulty because he could not get supplies from anywhere else. That is one possibility. Now there are two answers to that. Of course, as soon as two manufacturers are involved and if, either explicitly or implicitly, they are working together, then you get a registrable agreement under subsection (3) of Clause 6—the noble Lord will be aware that we discussed that subsection yesterday. It does not need what we call a "cocked hat agreement," but the two acting together may put them in danger of all the matters that I mentioned yesterday about the sanctions of registration.

The noble Lord might put to me—and I am trying to answer the point broadly—that there might be a monopolist who applies the conditions. If that is what the fear is, of course the old Act will still apply, as I said, to scale monopolies. May I remind noble Lords that the figure referred to in the Act of 1948 applies to a substantial part of the United Kingdom; and if my memory is right, it has been applied to a substantial part of my native land, Scotland. That is important, because it shows that the basis of the Act for which both noble Lords were responsible—it was their Government who brought it in—is one which goes a great way in that it affects any scale monopolist, not only in the country as a whole, but in a part of it. That is the answer that Her Majesty's Government seek to the suggestion, which I took as implicit in the laughter of the noble Viscount, that there might be compulsion in the matter.

I am anxiously looking forward to the answer of the noble Viscount on this question of equity, and I hope that he will show us not only his general point but, as I said, how he applies his weighty words about sanctity of contract to those who bought houses in bombed areas about which we heard from his colleagues a fortnight ago. I regard this as a simple matter of someone who knows very well the conditions on which he takes the goods then breaks them.

The noble Lord, Lord Lucas of Chilworth, asked me how I squared this with my general views, which I think he does me the honour of believing I hold sincerely. On this part of the Bill I took the problem as a double one of giving some measure of stability in distribution from the manufacturers' point of view for the reasons that I mentioned, without causing stagnation or denying the public the benefits of new or cheaper methods. The abolition of collective enforcement, and the rigidities and inflexibilities which went with it, are admittedly a big step. The noble Lord will appreciate that this clause is limited, as it stands, to one supplier. He cannot act on behalf of other suppliers, and it can affect only the people who take from him. Therefore, I do not see that that is going to cause the rigidity and inflexibility which is feared. We have got rid of the collective enforcement, which was bad for reasons that I need not go into now, and I believe that we have struck the happy medium. The way of the person who pursues the happy medium is never happy; it is only the medium that is happy and not the person who pursues it. But that rather fortifies me in the rightness of our attitude and causes me no doubt.

2.50 p.m.


It has always been the case that if you try to face both ways at once you find it very difficult. That is what the Government seem to have been forced to do: to gamble as to who would be most likely to be most pleased by their action. That is facing both ways.


Or, to put it another way, moderation in all things, so long as it is not carried to excess.


That is why, I suppose, this new form of constitutional law for enforcement is put in this Bill. That is a most extraordinary interpretation of "moderation". I say, briefly, that I have been trying all through yesterday to assist the Government, to make progress with the Bill. It is getting very late, but I must answer the noble and learned Viscount in regard to what he says on equity. We from this side in regard to these matters have never desired to interfere with the sanctity of contract. We are perfectly well aware that the purchaser of goods who is subject to a price maintenance agreement knows the conditions if he takes the goods and, if so, he ought to observe them. But we say that the price maintenance agreement should never be made—that is where we differ—because it is discriminating against those who trade upon a different basis from that on which the producer desires to trade. That is the whole point.

There is no reason, when you have calculated your costs, labour, overheads, et cetera, and the margin of service you require for all other purposes, why you should not fix a maximum price and then permit those people who are efficient to sell to the benefit of the consumer, having satisfied all the demands that the manufacturer can make in regard to the financial side. That is our case. I hope we can divide upon it straight away.


I respectfully agree that we can divide upon it straight away. The noble Lord, Lord Lucas of Chilworth, knows that I am always anxious to have consultation as far as possible. I agree that noble Lords opposite have been most helpful and reasonable in the Bill, but here we come to a point of conflict, and I respectfully agree that it can be resolved only in the Division Lobby.

On Question, Whether the said Amendment shall be agreed to?

Their Lordships divided:—

Contents, 21; Not-Contents, 62.

Jowitt, E. Burden, L. Milner of Leeds, L.
Listowel, E. Grantchester, L. Pethick-Lawrence, L.
Lucan, E. [Teller.] Greenhill, L. Rea, L.
Henderson, L. Silkin, L.
Alexander of Hillsborough, V. Kenswood, L. Sinha, L.
Stansgate, V. Lucas of Chilworth, L. Williams, L.
Thurso, V. Mathers, L. [Teller.] Wilmot of Selmeston, L
Winster, L.
Kilmuir, V. (L. Chancellor.) Munster, E. Congleton, L.
Onslow, E. [Teller.] Croft, L.
Salisbury, M. (L. President.) St. Aldwyn, E. Digby, L.
Selkirk, E. Dovercourt, L.
Buccleuch and Queensberry, D. Winterton, E. Ebbisham, L.
Portland, D. Ennisdale, L.
Bridgeman, V. Fairfax of Cameron, L.
Aberdeen and Temair, M. Colville of Culross, V. Glentanar, L.
Cholmondeley, M. Goschen, V. Gridley, L.
Lothian, M. Portman, V. Hacking, L.
Reading, M. Stonehaven, V. Hawke, L.
Willingdon, M. Jessel, L.
Amherst of Hackney, L. Leconfield, L.
Albemarle, E. Baillieu, L. Lloyd, L.
Beauchamp, E. Balfour of Inchrye, L. Mancroft, L.
Bessborough, E. Barnby, L. McCorquodale of Newton, L
Buckinghamshire, E. Bennett of Edgbaston, L. Monk Bretton, L.
Coventry, E. Birdwood, L. Saltoun, L.
Elgin and Kincardine, E. Brassey of Apethorpe, L. Sandford, L.
Fortescue, E. [Teller.] Broughshane, L. Strathclyde, L.
Gosford, E. Chesham, L. Teynham, L.
Home, E. Coleraine, L. Westwood, L.
Howe, E. Conesford, L.

Resolved in the negative, and Amendment disagreed to accordingly.

3.1 p.m.


I want to move this Amendment quite shortly—it is connected with the following Amendment. What we are arguing in these Amendments is this. Clause 24 gives powers for enforcing these restrictive practices, and the purpose of the Amendment is to prevent discrimination by suppliers against any particular person or class of persons and, from our point of view especially, the co-operative societies. We shall have to argue this point mainly upon Amendment No. 54 but, as I have been asked to move this Amendment, I do so formally.

Amendment moved— Page 23, line 6, leave out ("either").—(Viscount Alexander of Hillsborough.)


Accepting the spirit of the way the noble Viscount has dealt with this Amendment, may I deal with it shortly and reserve the main points to when we come to Amendment No. 54. I think the first difficulty is that the Amendments would probably not, in practice, affect the ability of individual manufacturers to prescribe resale prices for particular classes of trader and to enforce such resale prices against dealers with notice of the condition, but Clause 24 is drafted so as to make it quite clear that it is not intended to interfere with the common practice of establishing separate resale prices appropriate to, say, the wholesale and retail levels. It must be remembered, however, that the implementation of any decision by a manufacturer not to supply a particular class of trader, or to supply only on certain adverse terms, would usually be done by the manufacturer himself or by his main wholesalers. It is unlikely that retailers would play an important part.

In so far as a manufacturer's agreements with main dealers or wholesalers are concerned, such agreements are not affected by Clause 24 because they would constitute a direct contract between the manufacturer and a wholesaler. If such contract provides that the wholesaler is not to supply, say, co-operative societies, except under certain (it may be adverse) conditions, the manufacturer could, as the law stands now, sue the wholesaler. Clause 24 does not affect the position in any way, for it is irrelevant to direct contracts. Clause 24 relates to the bringing of proceedings against retailers not in direct contract with the manufacturer. Therefore, I think there are objections to these Amendments. Perhaps the noble Viscount will consider them. I have put them as shortly as I can, but I wanted him to have what was in my mind.

On Question, Amendment negatived.

3.6 p.m.

VISCOUNT ALEXANDER OF HILLS-BOROUGH moved, after subsection (3) to insert: (4) The granting by a society registered under the Industrial and Provident Societies Acts, 1893 to 1954 of any discount, rebate or dividend to its members payable at Intervals of not less than a quarter of a year in respect of amounts paid or payable by or to them on account of their transactions with the society shall not be treated as a breach of a condition as to the price at which any goods acquired by the society may be resold; and no proceedings under this section shall be taken by a supplier of goods against such a society solely on the grounds that the granting of discount, rebate or dividend by the society in the circumstances hereinbefore mentioned is a breach of a condition as to the price at which the goods may be resold.

The noble Viscount said: I have explained, during the debate on the Report of the Monopolies Commission, on the Second Reading of the Bill, and also on some of the Amendments we have already dealt with in Committee, the basic principle which is sought to be obtained by this Amendment. This is the most important Amendment concerning those people who are suffering, in the main, from this continuous and expanding discrimination. The members of the industrial and the provident societies regard this as their most important case. The Government have decided, for what reason I have never yet been able to fathom, that, whilst taking steps against the continuance of collective price agreements, they will allow individuals to continue to exercise their restrictive practices against (a) traders and (b) consumers—because they both go together—and to alter the law in such a way that in these cases there is to be statutory authority for every individual to be able to enforce his conditions in a court of law. That seems to me to be making it quite certain that the Government do not wish to assist co-operative consumers in this country in any sense beyond the new collective agreements in order to prevent discrimination against the interests of the consumer.

The Government have had this point under consideration. They have had the case four times in the Report of the Monopolies Commission, where your Lordships will find reference to the case of the co-operative societies. There are 11½ million members of the Co-operative Movement in this country and the Government have taken a deliberate decision not to adopt the Majority Report of the Monopolies Commission, and to set up a new statutory basis for the enforcement of these discriminations in a court of law. Let it be clearly understood that that is the case we are putting against the Bill. I do not think that in all my experience—apart, perhaps, from the rather extraordinary way in which the late Mr. Neville Chamberlain set up the Norman Raeburn Committee on Taxation—I have ever heard of such a deliberate act as this against the consumer. And when the matter is raised in another place, what is the main answer of the President of the Board of Trade? His answer is, "We are not making any change." Yet the Government are, in fact, giving the power to enforce in a court of law the discrimination that we now complain of. I think that is treating this matter in a way which is an insult to the 11½ million organised consumers in the Co-operative Movement. That is the way the Government treat their case.

I am going to say right away that if it works satisfactorily, and is not affected by steps taken by manufacturers or discriminators to escape the effects of Part I of the Bill, then the decision on collective agreements should be beneficial. But from what has been said already in this debate we have seen that all kinds of attempts will be made to escape the consequences of Part I of the Bill by arranging for individual process to be instituted. With that individual process instituted on separate commodities and things of that kind, and even without a firm agreement—merely by passing information—there will be all the dire consequences to the co-operative consumers that I have been complaining about for so long.

It may be said that I am exaggerating what is likely to happen. There is on the Marshalled List an Amendment by the noble Lord, Lord Dovercourt, which sets down exactly what I have been fearing would happen. I have said that agreements would be put into force which would not be by way of a document; it is often done by passing information. Lord Dovercourt's Amendment proposes that such agreements shall be exempted from the effects of this clause. I have great respect for the noble Lord, Lord Dover-court, personally. I have known him a great many years and liked him, both in another place and here, but he is one of the most important representatives of the kinds of manufacture which are included in the longest-standing discriminators—that is the Proprietary Articles Traders' Association. Here is all that I have feared on behalf of my Movement put on the Paper by the noble Lord, Lord Dovercourt.

Are the Government going to accept that Amendment? We should like to have an answer upon that. Certainly it seems to me to be quite unreasonable, in face of all the evidence, that this widespread setting up of conditions of sale should prevent the consumer from getting the benefit of all that the retailer can do for him by organisation and by increased sales efficiency, although, when the retailer buys at the price and sells at the fixed price over the counter, he will have provided for everything a manufacturer or wholesaler can ask for.

He has met all his costs; he has met all his material; he has met all his labour; and the margin of profit he has fixed for his commodity has been met. After all that, the manufacturers have the impudence to say, "You must not ask us what we do with our profit, but we have the right to ask you what you do with your profit"—and the Government are going to allow that to be supported. That is a most amazing situation for a Government who talk about free competition, starting in 1950 with the great campaign for reducing the cost of living and for "setting the people free." In spite of that, the Government, by this Bill, are going to strengthen the means by which the individuals who are still guilty of discriminatory practices can enforce these things upon the consumer.

I could have argued much longer, but I want to meet the wishes and needs of the Committee upon this Bill in general. I know that the Committee want to adjourn from this Business at a certain specific hour, otherwise, I should have stated a much longer case. But I can say at once to the Government that you will have never done a day's work which is more likely to be harmful to yourselves in the end, when you consider the cosmopolitan nature of the membership of this great Co-operative Movement, expanding every day; and you will not escape the results of what appears to them to be, and I am certain in my own mind is, an act of great injustice. I beg to move.

Amendment moved— Page 23, line 26, at end insert the said subsection.—(Viscount Alexander of Hillsborough.)


May I first of all say, with regard to the Amendment of my noble friend Lord Dovercourt, that I once rashly said, when asked what I was going to do with a subsequent Amendment, that it was not my intention to accept it. That provoked a debate of an hour. I would say, however, that as at present advised, and subject of course of what my noble friend says, I am not disposed to accept the Amendment. I am disposed to put to your Lordships an explanation of the various forms of agreement which I think will clarify the position. I cannot say more, because otherwise I should be discourteous to the noble Lord.

With regard to the noble Viscount's Amendment, its purpose, as I understand it, is to make it clear that a deferred dividend paid by the co-operative societies shall not be treated as infringements of resale price conditions in connection with proceedings under Clause 24. That seems to appear from the words "no proceedings under this section" which appear in the Amendment. The Amendment would not, of course, prevent an individual manufacturer from requiring by contract that no dividend shall be paid on the sales of his goods, but I want, in courtesy to the noble Viscount, to deal with the general point.

I know that it is contended by many that the co-operative dividend is no more than the distribution of profit, and that no individual manufacturer has the right to interfere with this. I admit that there is force in that argument. On the other hand, it does ignore the fact that in many respects the dividend is indistinguishable from a reduction in prices, and it may appear in that light not only to the manufacturer but also to the shopper. I would remind the noble Viscount that the Lloyd-Jacob Committee drew no clear distinction between the genuine immediate discounts and deferred dividends. Indeed, they recommended that manufacturers should not interfere with either, although the solution they proposed was not legislation but consultation. The point am making is that they grouped the two things together.


We should be most happy, if the Government would accept the principle of my Amendment, for all those who are selling to pursue the same form of distribution of surpluses.


I rather suspected the noble Viscount would take that view. The Government recognise the sincerity of those who seek to distinguish, as many have done—I am not saying that in derogration of what the noble Viscount says now—the co-operative dividends from other dividends and discount schemes, and to distinguish all deferred dividend schemes from immediate discount schemes. But after anxious consideration the Government have decided that the right course is to leave the decision to the individual manufacturer—I repeat, individual—and not themselves to make judgments of particular discount or dividend schemes. They see no sufficient case for exempting the co-operative societies from the provisions of the Bill, and therefore they cannot accept the Amendment.

I should like to put this point. If suppliers were prohibited from preventing the co-operative societies from paying a dividend in respect of their goods, it is perhaps not certain that this would always work to the benefit of the societies. It might well be that, rather than countenance payment of dividends in respect of

their goods, individual manufacturers might prefer not to supply the societies at all. The Bill will, of course, make no difference to those suppliers who do not object to payment of dividend; there is nothing in it to discourage them from going on supplying as before. Indeed, if anything (and this is the point I wanted the noble Viscount to consider), the reverse is true, because manufacturers in particular trades tend to adopt common policies in matters of supplying the societies and, in the future, an agreed policy not to supply the co-operative societies will have to be justified before the Restrictive Practices Court. To that extent, and it is an important one, the Bill helps the co-operative societies.


Unless any other noble Lord wishes to speak, we may as well proceed right away to a Division. If one quotes the Lloyd-Jacob Committee, there is any amount of evidence in its Report—paragraphs 96, 101, 102 and 114. Every one of them comes down in favour of our position in this Amendment. It seems to me most extraordinary that Her Majesty's Government, who are seeking—I hope quite genuinely—to reduce the cost of living, are to retain fixed in the hands of the manufacturer, the wholesaler and the retailer, a process by which those price advantages are kept from the consumer. I hope that we shall return to this point, under Parliamentary conditions better for a really good debate, on the Report stage. Out of courtesy to the Committee, and deference to engagements which noble Lords have for the rest of the day, I should like to call a Division now.

On Question, Whether the Amendment shall be agreed to?

Their Lordships divided:—

Contents, 23; Not-Contents, 58.

Attlee, E. Douglas of Barloch, L. Milner of Leeds, L.
Jowitt, E. Grantchester, L. Pethick-Lawrerice, L.
Listowel, E. Greenhill, L. Rea, L.
Lucan, E. [Teller.] Henderson, L. Silkin, L.
Kenswood, L. Sinha, L
Alexander of Hillsborough, V. Lawson, L. Williams, L.
Stansgate, V. Lucas of Chilworth, L. Wilmot of Selmeston, L.
Thurso, V. Mathers, L. [Teller.] Winster, L.
Kilmuir, V. (L. Chancellor.) Onslow, E. [Teller.] Coleraine, L.
St. Aldwyn, E. Conesford, L.
Salisbury, M. (L. President.) Selkirk, E. Congleton, L.
Winterton, E. Croft, L.
Buccleuch and Queensbury, D. Dovercourt, L.
Portland, D. Bridgeman, V. Ebbisham, L.
Cilcennin, V. Ennisdale, L.
Aberdeen and Temair, M. Colville of Culross, V. Fairfax of Cameron, L.
Lothian, M. Goschen, V. Glentanar, L.
Reading, M. Portman, V. Hawke, L.
Willingdon, M. Stonehaven, V. Jessel, L.
Leconfield, L.
Albemarle, E. Amherst of Hackney, L. Lloyd, L.
Bessborough, E. Baillieu, L. McCorquodale of Newton, L
Coventry, E. Balfour of Inchrye, L. Mancroft, L.
Elgin and Kincardine, E. Barnby, L. Monk Bretton, L.
Fortescue, E. [Teller.] Bennett of Edgbaston, L. Rathcavan, L.
Gosford, E. Birdwood, L. Saltoun, L.
Haddington, E. Brassey of Apethorpe, L. Sandford, L.
Home, E. Chesham, L. Teynham, L.
Howe, E. Clitheroe, L. Westwood, L.
Munster, E.

Resolved in the negative, and Amendment disagreed to accordingly.

3.29 p.m.

LORD MCCORQUODALE OF NEWTON moved, in subsection (4), after "resold" to insert "or offered for resale". The noble Lord said: Some of my friends in industry have asked me whether I would put this Amendment forward for clarification purposes and in the hope that the Minister would be able to accept it. Its object is to permit the Court to grant an injunction to restrain a threatened breach of condition, and not merely future breaches where an actual breach has already occurred. In the majority of cases a plaintiff cannot obtain an injunction unless he can prove that the goods have already been sold in breach of his condition. He can do so only by means of a test purchase, and in fact he will have to send round a "snooper" to see whether the goods are being sold properly. That is an undesirable practice. If a defendant should advertise items at a cut price the supplier, under the existing clause, would still be powerless to take action until he could prove actual sale at a cut price. Actually, I am told that the advertisement of goods for sale in breach of conditions as to prices would in many cases be far more damaging to the supplier than the actual sale at the unlawful price, because of the much wider publicity. It would seem, therefore, that it would be of great benefit to the suppliers if a threatened offer of resale in breach of conditions as to price could be made subject to High Court injunction as well as the actual sale of the goods. For that reason, I beg to move the Amendment.

Amendment moved— Page 23, line 28, after ("resold") insert ("or offered for resale").—(Lord McCorquodale of Newton.)


The Government feel that there is not a very strong case for the Amendment which my noble friend has moved—for these reasons. In the first place, a dealer who intends to breach resale price conditions will presumably, in general, soon enough actually do so and thus make himself liable to legal proceedings under the clause. In such event—and the noble Lord will appreciate that this is the heavy artillery of the clause—he could be restrained by injunction from reselling any goods of the manufacturer in question in breach of such conditions. Secondly, in a case in which a dealer offers to resell goods in breach of resale price conditions, it is open to the manufacturer to apply for a quia timet injunction, on the ground that he has reason to anticipate that the dealer is about to sell in breach of the conditions. That injunction would apply only to the particular goods in question and not to all the suppliers' goods. The effect of the Amendment would be to lay dealers who offer to resell particular goods in breach of resale price conditions open to injunctions in relation to all the manufacturers' other goods. That is a very heavy steam hammer with which to crack the nut. I would ask my noble friend to consider the point. I have given my reasons, and if he feels, on consideration, that they are not good ones, perhaps he will let me know and put down his views so that I can consider them. I hope that he will not think fit to press this Amendment to-day.


In view of what the noble and learned Viscount has said, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

3.33 p.m.

LORD DOVERCOURT moved to add to the clause: (5) An agreement between persons carrying on business within the United Kingdom in the production or supply of goods or in the application to goods of any process of manufacture shall not be subject to Part I of this Act solely because such an agreement provides for giving information to one of the parties to it or at his request financial or legal assistance for the purpose of enabling him to enforce such a condition as is referred to in subsection (1) of this section.

The noble Lord said: This Amendment was put down in another place by Mr. Pitman, Sir Lionel Heald, Mr. Gresham Cooke, Sir Charles Taylor, Mr. James Lindsay, and Sir Lancelot Joynson-Hicks, but on the Committee stage it was not selected by the Chairman. I am informed that it was not selected because Mr. Derek Walker-Smith, Parliamentary Secretary to the Board of Trade, had written a letter to Mr. Pitman from which the following is an extract: … The Government have decided that collective enforcement is to be prohibited as part of its general policy on resale price maintenance. The other Amendment"— that is, this Amendment— is, we believe, unnecessary. Trade associations may be at liberty to assist manufacturers to use legal facilities for the enforcement of their resale prices, subject to the law relating to maintenance. In this connection, I might draw your attention to Martell and Others v. Consett Iron Co. Ltd., where it was held that 'persons engaged in a particular trade, or, by parity of reasoning, persons engaged in a particular profession or individually possessed of proprietary interests of a particular kind may lawfully form themselves into an association with a view to protecting at the expense of all and if necessary by litigation at the common expense the interests of each in the common field.' Subsequently, before the Report stage in another place, in a further letter to Mr. Pitman, dated June 14. Mr. Derek Walker-Smith wrote that if he and Sir Lionel Heald wanted any Parliamentary discussion on the point with a view to some spelling out of the law, it might be better achieved in the House of Lords. I understand that Mr. Pitman and Sir Lionel Heald agreed with this. It will be realised that these personal letters are not on record in Hansard. I have therefore put down the original Amendment at the request of its sponsors, and I hope to be given Ministerial confirmation that: Trade Associations may be at liberty to assist manufacturers to use legal facilities for the enforcement of their resale prices, subject to the law relating to maintenance. I beg to move.

Amendment moved— Page 22, line 34, at end insert the said paragraph.—(Lord Dovercourt.)


The noble Lord has indicated the purpose of the Amendment, and, as I promised earlier, I should like to delve into the minds of the noble Lord and, no doubt, of those Members in another place whom he mentioned, on this question of agreements. I take it that the kind of assistance contemplated would be notification of the names of price-cutters to individual manufacturers, so that they can institute legal proceedings accordingly, as well as legal and financial assistance in the bringing of such proceedings. The first question is whether such agreements would be registrable. The answer is that, in general, such agreements would not be registrable, because agreements that relate to the giving of information, et cetera, do not relate to the matters dealt with in paragraphs (a) to (e) of subsection (1) of Clause 6 (for example, prices to be charged for goods, persons to be supplied with goods). To this extent, therefore, the Amendment is unnecessary, and to include it might throw doubt on the meaning of Clause 6.

Agreements of the kind in question would be registrable if the promise of assistance were conditional upon, or the amount of assistance depended upon, agreement between the suppliers to maintain their resale prices. This is because subsection (4) of Clause 6 makes registrable agreements which confer privileges or benefits only upon such parties as comply with conditions as to matters specified in paragraphs (a) to (e) of subsection (1) of Clause 6. The Government's view is that such agreements should not be exempted from liability to registration. They are in the same category as agreements between suppliers to the effect that they will prescribe resale prices for their products. As I have indicated, I cannot accept the Amendment, and I hope that from what I have said it will be clear that trade associations will be able to assist individual manufacturers to enforce their resale price conditions without incurring any liability to registration under Part I of the Bill and—this is important—provided, first, that there is no undertaking, express or implied, by the manufacturers to enforce their prices, and, secondly, that such assistance is permissible under the ordinary law of maintenance. I have tried to set out quite objectively the position as I understand it. What I suggest is that noble Lords in all quarters of the Committee might do me the honour of considering what I have said and, if there is any doubt, either consult with me before Report or raise the matter on Report stage.


So far as our Benches are concerned we should be happy to do so, but I am bound to say that the interpretation which the noble and learned Viscount gives of the position of those who give information seems to me not to be equitable with the action taken with respect to other agreements. Some of the cases I mentioned yesterday do not arise out of a formal agreement; they arise out of an implicit understanding between traders, or groups of traders, and if they give information about price-cutting they will all stand together. In effect, that is taking the position of a registrable agreement. It achieves the same result. I cannot understand why the Government have not made that completely registrable. I am glad to know that the Government are not accepting this Amendment, which obviously emanates from people who might be concerned about the possibility of their present practice being registrable. If they can substitute something like this for it, it will not be registrable.


I would be grateful if the noble Viscount considers especially what I said on subsection (4) of Clause 6, which makes registrable agreements which confer privileges or benefits only upon such parties as comply with conditions. I have tried to be entirely objective, because I thought it would be most helpful if I gave your Lordships my views without argument. I would ask my noble friend Lord Dover-court to consider the same point. I will gladly clear up any other points.


I am grateful to the noble and learned Viscount the Lord Chancellor for what he has said, and I beg leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

3.45 p m

LORD GRANTCHESTER moved to leave out Clause 24. The noble Lord said: With all respect to the noble and learned Viscount the Lord Chancellor, we believe this clause to be unnecessary. In our view, Her Majesty's Government were right in banning collective enforcement, but we object to giving statutory authority for individual enforcement. We are concerned here as between one supplier and one purchaser. No question of duress arises. It should be a matter of principle not to intervene in contracts between a willing seller and a willing buyer, and surely it should be a matter of principle not to do by Statute what can well be done without it.

The terms of these contracts are agreed between the parties and any breaches can be dealt with under the normal procedure of the courts. A breach on either side can be dealt with, for retailers as well as manufacturers may desire to put conditions into a contract. It is true that there is no privity of contract between a supplier and a sub-purchaser, but, in any case, the purchaser has to be made aware of the conditions under which he is purchasing. The purchaser can be held responsible by a contract with his supplier for enforcing the terms of sale to any sub-purchaser. In my view, it is much better to leave this matter to the parties. There is no need for the special provisions of this clause. The Government are only complicating the issue by bringing in this matter by introducing this clause into the Bill. I beg to move.

Amendment moved— Leave out Clause 24.—(Lord Graittchester.)


If it were accepted, this Amendment would deny any additional enforcement facilities to individual manufacturers and would destroy the whole balance of the Government's proposals on resale price maintenance. Therefore, I am afraid that I must regard the Amendment as opposing a fundamental point of the Bill and ask leave to treat it as a wrecking Amendment. The noble Lord will probably remember Rupert Brooke's poem, with the same title as his own, which begins: Stands the church clock at ten to three? The clock does not stand at that time now, and we have business elsewhere, and I hope the noble Lord will acquit me of any discourtesy if I do not argue

Resolved in the negative, and Amendment disagreed accordingly.

Clause 24 agreed to.

Clause 25 [Supplementary provisions]:


My noble friend Lord Lucas of Chilworth has asked me to apologise to the Committee and to say that he does not proposed at this stage to move his Amendment to leave out Clause 25, but that he will want to move it on the Report stage.

Clause 25 agreed to.

the matter again, but ask him to read the powerful arguments adduced by my noble and learned friend yesterday, to which I roust now say "Ditto". If the noble Lord is unwilling to accept his argument, I am afraid that he must carry his reluctance into the Division Lobbies.


I am afraid that there is no alternative but to divide the Committee. I do not think that this clause is necessary and much prefer to leave the parties to rely on their own contracts.

On Question, Whether the said Amendment shall be agreed to?

Their Lordships divided:—

Contents, 16; Not-contents, 46.

Attlee, E. Boyd-Orr, L. Mathers, L.
Jowitt, E. Burden, L. Milner of Leeds, L.
Lucan, E. [Teller.] Grantchester, L. [Teller.] Pethick-Lawrence, L.
Greenhill, L. Rea, L.
Alexander of Hillsborough, V. Henderson, L. Sinha, L.
Lawson, L. Williams, L.
Kilmuir, V. (L. Chancellor.) Onslow, E. [Teller.] Croft, L.
St. Aldwyn, E. Dovercourt, L.
Buccleuch and Queensberry, D. Selkirk, E. Fairfax of Cameron, L.
Portland, D. Glentanar, L.
Colville of Culross, V. Hawke, L.
Aberdeen and Temair, M. Furness, V. Jessel, L.
Lothian, M. Goschen, V. Lloyd, L.
Reading, M. Stonehaven, V. McCorquodale of Newton, L
Willingdon, M. Mancroft, L.
Amherst of Hackney, L. Monk Bretton, L.
Coventry, E. Baden-Powell, L. Saltoun, L.
Elgin and Kincardine, E. Bennett of Edgbaston, L. Sandford, L.
Fortescue, E. [Teller.] Brassey of Apethorpe, L. Strang, L
Gosford, E. Chesham, L. Strathclyde, L.
Haddington, E. Clitheroe, L. Teynham, L.
Howe, E. Coleraine, L. Thurlow, L.
Munster, E. Congleton, L. Westwood, L.

LORD MANCROFT moved, after Clause 25 to insert the following new clause:

Commencement of Part II

"This Part of this Act shall come into force on the expiration of the period of three months beginning with the date of the passing of this Act."

The noble Lord said: Before I speak on this Amendment, may I say a word about the procedure on the Bill? It was agreed that we should adjourn at this time, but as the noble Lord, Lord Lucas of Chilworth, has decided not to move the Amendment referred to by the noble Earl, Lord Lucan, and, I understand, the other Amendment down in his name, No. 63, we are rid of the really controversial Amendments, and it might be convenient if we were to go straight on and finish off the the Bill as quickly as we can.

This new clause is to allow manufacturers who have hitherto relied upon collective resale price maintenance a short period in which to adjust their contracts and conditions of sale to take account of the prohibition, in Clause 23, of collective enforcement and of the additional powers, in Clause 24, for individual enforcement of resale price conditions. The Government recognise that manufacturers may require a breathing space in which to make adjustments. On the assumption that the Bill becomes law at the end of July, the effect of the new clause would be to bring Part II of the Bill into operation at the end of October. As your Lordships will see from Amendments Nos. 61 and 66, we propose that the rest of the Bill, with one qualification, shall come into force immediately on enactment. This Amendment seems to be reasonable, and I beg to move.

Amendment moved— After Clause 25, insert the said new clause.—(Lord Mancroft.)

On Question, Amendment agreed to.

Clause 26:

Reconstitution of Monopolies Commission

(6) This section shall come into force on such date as may be appointed by order made by the Board of Trade by statutory instrument.

LORD GRANTCHESTER moved to add to subsection (6): but not before the expiration of the period of one year beginning with the date of the passing of this Act. The noble Lord said: No one would wish to keep the membership of any Commission unnecessarily large for the work they have to do, but surely it is not desirable to slow down their necessary work. The new procedure will take time, and this Amendment is designed to make sure that no hasty action will be taken to slow down the attack upon restriction along any part of the front. That the membership of the Commission should not be reduced for one year seems to be a reasonable precaution. I beg to move.

Amendment moved— Page 25, line 13, at end insert the said words.—(Lord Grantchester.)


I think I can put the noble Lord's mind at rest on this point. The intention of the Government is to reconstitute the Commission within a short time of the passing of this Bill. The object of delaying reconstitution at all is to enable the Commission to complete certain reports which are already, as the noble Lord knows, at an advanced stage. I think that to retain the Commission in reserve would hardly be the way in which to get the new judicial procedure off to a good start. The Government, as the Bill clearly shows, have decided against an administrative procedure. To keep an administrative tribunal as a sort of long-stop to the Restrictive Practices Court would not, I think, inspire confidence in the new system set up by the Bill, and would introduce a most undesirable element of uncertainty into the whole treatment of restrictive practices. If the new procedure is not a success, then Parliament will have to reconsider the whole question. The solution is not to keep an over-staffed Commission in the background. The Government take the view that the reconstituted Commission, with a maximum number of ten members, will be adequate for the more limited but important work with which they will be concerned. I hope that that explanation satisfies the noble Lord, Lord Grantchester, and that he will withdraw the Amendment.


I really put down the Amendment with the object of getting this explanation. I beg leave to withdraw it.

Amendment, by leave, withdrawn.

Clause 26 agreed to.

Clause 27 [Future scope of references to Monopolies Commission]:


This Amendment makes it clear that the Monopolies Commission, in reporting on a reference made after the commencement of this Bill as an Act, may not make a "public interest" judgment on any agreement which comes within the scope of Part I of the Bill. The purpose of this is to avoid any possibility of a conflict between the Commission and the Restrictive Practices Court. I am told that it is doubtful whether the Monopolies Act, 1948, allows the Board of Trade to frame references in such a way as to impose this limitation, and it is necessary, therefore, to make provision for it in this Bill. The Amendment does not preclude the Commission from discussing the effect of participation by a monopoly in a restrictive agreement. I think the words "as such" make this clear. I beg to move.

Amendment moved— Page 25, line 21, at end insert ("and the Commission shall not be required in pursuance of any such reference to report whether any such agreement to which the parties concerned are party operates or may be expected to operate as such against the public interest.").—(Lord Mancroft.)


It is a pity that we are in a hurry to finish the Committee stage, due to other arrangements. I feel that there ought to be a debate on this Amendment, to find out just what the functions of the Monopolies Commission will be when they are reorganised. This is perhaps a necessary limitation upon the Part of the Act in regard to which they will be able to operate. Perhaps we had better come back to this matter on the Report stage. We will let it go now, and deal with it in more detail on the Report stage.


That is quite agreeable to me. On the Report stage I shall be happy to explain to noble Lords the duties of the Commission.

On Question, Amendment agreed to.

House resumed.

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