§ 2.50 p.m.
§ Order of the Day for the Second Reading read.
§ THE LORD CHANCELLOR (VISCOUNT KILMUIR)
My Lords, this Bill marks an important development in legislation in this country dealing with restrictions on competition in industry. It establishes a system of registration for the broad range of restrictive trade agreements in this country and for their judicial examination by a specially constituted Court. This measure can trace its origin to the White Paper on Employment Policy which was issued in May, 1944, by the Coalition Government. After pointing out that there had been a growing tendency towards combines and agreements which were restrictive on trade, the White Paper said that the Government would take appropriate action to check practices which may bring advantages to sectional producing interests, but which work to the detriment of the country as a whole.
The first step to implement this policy was the Labour Government's Monopolies and Restrictive Practices (Inquiry and Control) Act, 1948. Under that Act, the Monopolies and Restrictive Practices Commission was set up, and within a few years it produced reports on a number of industries which had been referred to it by the Board of Trade. These reports revealed that certain practices of discriminatory trading, such as exclusive dealing and the operation of boycotts, were common features in the industries concerned. The Government, therefore, in 1952, asked the Commission to report on this group of practices as a whole. The Report of the Commission was published in June, 1955, under the title, Collective Discrimination, and that Report was debated in this House on July 27, 1955. I do not intend to traverse again all the ground that I then covered, in giving the opinion of Her Majesty's Government on the Report, as I am to-day primarily concerned with the merits of this Bill.
I would remind your Lordships that the view of the Commission as a whole was that some action in regard to this class of restrictive practice was desirable, but that the members of the Commission were divided in their view as to what kind of action this should be. The 10 Government decided to bring in legislation dealing with restrictive trade practices generally, and not just with those which had been dealt with by the Report of the Commission; and they announced that this legislation would require the registration of restrictive practices and would provide for their examination by a tribunal. In addition, the measure would include special provisions relating to resale price maintenance. As my right honourable friend the President of the Board of Trade said in another place, the legislation would be based on the principle that it would be for the parties to a restrictive agreement to show that it did not operate against the public interest.
The Bill which is now before the House gives effect to the policy which Her Majesty's Government announced last summer. The most significant decision that we have taken since then is that the tribunal should be a judicial and not an administrative one. This is, perhaps, a feature of the Bill which will be of some interest to your Lordships. If I may sun manse the provisions of the Bill quite shortly, they cover, first, public registration of a wide range of restrictive practices; secondly, a judicial solution through a Court with the status of a High Court; thirdly, the laying down of criteria so that a justiciable issue is evolved. Then, fourthly, the onus is fairly and squarely placed on industry to bring itself within the exceptions set out in the Bill. Fifthly, there is a ban on the collective enforcement of resale price maintenance and a new method of enforcing individual price maintenance. Lastly, there is a reconstitution of the Monopolies Commission to deal with single-firm monopolies and the export trade.
Part I of the Bill deals with the procedure for registration and the judicial investigation of restrictive trading agreements, but, for clarity, I will deal with it under four headings: first, the appointment of the Registrar and the establishment of the Restrictive Practices Court; secondly, the kinds of agreement subject to registration; thirdly, the machinery of registration; and fourthly, the judicial investigation of registered agreements, including what has been termed "the justiciable issue" and the alternative to that course. The first five 11 clauses of the Bill deal with the appointment of the Registrar and of the members of the Restrictive Practices Court. The Registrar will be appointed by the Crown, on the recommendation of the Prime Minister, and not by a Minister of the Crown. Very considerable thought has been given to the office of Registrar and the decision of Her Majesty's Government that he shall not be responsible to any departmental Minister arises from their firm conviction that the treatment of individual restrictive trading agreements should be removed, so far as possible, from the political controversy to which executive decisions and actions are inevitably subject.
There has been some criticism that the Registrar's activities will be removed from Parliamentary scrutiny and that he will thus enjoy an inappropriate degree of irresponsibility. I think this criticism is unfounded. In fact, Parliamentary control by Questions and consequential Answers can be exercised over the functions of the Registrar. My noble friend Lord Mancroft can give details of that if any of your Lordships so requires. Moreover, a provision is included in the Bill which states specifically that the Registrar may, through the Treasury Solicitor, consult the Law Officers of the Crown on any appropriate matter of doubt or difficulty arising in the execution of his duties. His duties are to maintain a register of restrictive trading agreements and to take proceedings in respect of them before the Restrictive Practices Court. It is laid down in Clause 22 that in proceedings before the Court the Registrar shall be represented by counsel nominated by the appropriate Law Officer, It should be noted that the Registrar will not have discretion as regards agreements which he takes before the Court. In the first place, all agreements on the register must come before the Court without such a provision the judicial nature of the whole scheme would be undermined. Secondly, the Board of Trade may give, the Registrar directions as to the order in which agreements shall be brought before the Court.
The Restrictive Practices Court will be a mixed one of High Court Judges and laymen. It is this innovation in our present judicial system that has aroused considerable interest. It is not altogether 12 without precedent, since the Railway and Canal Commission consisted of Judges and lay members. It is true that that Commission operated in a much more specialised field than that with which the Restrictive Practices Court will deal. I will say more of this when I get to Clause 20, which is the core of the Bill, since it sets out the criteria which are to guide the Court in their judgments on restrictive arrangements. The Court will consist of five High Court Judges and a maximum of ten lay members, and may sit in five divisions. We consider that this makes adequate provision for dealing with the work which will come before the Court. But, as a safeguard, power is included in the Bill, by Order subject to Affirmative Resolutions of both Houses, to increase the number of members of the Court. The Court will be a court of record and of equal status with the High Court. The lay members will be appointed by Her Majesty, on the recommendation of the Lord Chancellor. I would emphasise here that the highest importance is attached to the quality of these lay members. The Bill provides that they must have "knowledge of or experience in industry, commerce, or public affairs," which would give them the necessary background to enable them to make an informed judgment upon restrictive agreements.
I pass to the agreements which are within the scope of the Bill. Clauses 6 and 7 of the Bill describe the kinds of agreements which will be subject to registration and then to examination by the Restrictive Practices Court. The objective here is that, on the one hand, all kinds of agreements which restrict free competitive trading in goods should be within the scope of this part of the Bill, but that, on the other hand, ordinary commercial enterprise should not be impeded by the provisions of the Bill. It will be noted that only agreements relating to goods are concerned. Restrictive practice in the service and transport industries are not touched. Nor are restrictive labour practices. As regards restrictive labour practices, the Government would not regard the procedure laid down in the Bill as an appropriate one. As regards transport and services, the problem is not really of the magnitude of that in relation to trading in goods.
The scheme of Clauses 6 and 7 is that Clause 6 describes, in broad outline, the 13 kinds of agreement which will be subject to registration, while Clause 7 selects particular kinds of agreements from within this broad field and exempts them from the scope of the Bill. Subject to these exemptions—with which I will deal in a moment—the kinds of agreements which are to be registered are all those to which two or more traders in the United Kingdom are a party, and under which there are restrictions as to prices, trading conditions, output, quality and the persons or places with which trading is carried on. The agreements need not be formal ones in order to come within the scope of the Bill. Informal arrangements which are not expressly binding on the parties—or which may even be expressly not binding on them—but which have the effect of restricting the prices, et cetera, of goods, are brought within the Bill. Agreements made by trade associations, either as such or on the part of their members, are also within the Bill.
Clause 7, as I said, deals with exemptions, and the kinds of agreements which are exempt are set out in detail in that clause. One group consists of agreements which fall within the provisions of some other Statute and, therefore, either have specific Parliamentary approval or are subject to statutory safeguards against abuse of the public interest, as in the case of patents. Your Lordships will appreciate that exemption of this type of agreement is necessary in order to avoid the possibility of a clash of jurisdiction between the Restrictive Practices Court and other statutory authorities. Another group exempted consists of agreements the primary objective of which is to further efficient commerce in goods. In these cases the restrictions accepted by the parties serve to promote progress in methods of distribution and in industrial development, rather than to restrict competition. Examples are: some common kinds of contract for supply which are dealt with in subsection (4) of Clause 7 (for instance, sole and exclusive agency contracts) and agreements for the exchange of "know-how", which are dealt with in subsection (6).
Similarly, supply agreements are exempted under subsection (3), if they merely implement the conditions of a master agreement between the parties, provided that this master agreement has 14 been registered. In these cases, the issues can best be argued before the Court on the master agreement, and it is unnecessary for the subsidiary agreement to he subject to the machinery of registration and examination by the court. Subsection (9) removes from the scope of Part I of the Bill agreements in which all the restrictions relate exclusively to the supply of goods outside the United Kingdom market. In those cases where the goods never come to this country at all, the agreements are clearly not within the scope of the Bill at all. Agreements exclusively affecting exports from this country, however, come within Clause 29 of the Bill, under which particulars must be furnished to the Board of Trade, who may refer the matter to the Monopolies Commission.
I should like to emphasise that in all the cases in which exemptions are made from the Bill, the limits of exemption are closely defined. For example, in the case of "know-how" agreements there must be only two parties to the agreement. In all cases, an agreement will not be exempt simply because it contains some provision dealing with an exempted restriction. If there are other restrictions, the agreement will not be exempt.
VISCOUNT ALEXANDER OF HILLS-BOROUGH
My Lords, we are no doubt having a very fine legal exposition of the Bill, but I should like to know a little more in detail now and then. Could we have some explanation as to what form of agreement is likely to come under Clause 7 (2), as relating to a scheme certified by the Board of Trade under the Income Tax Act?
§ THE LORD CHANCELLOR
These, my Lords, are special schemes; indeed, at an earlier stage we put them into Clause 20 in order that they might fork a matter of exclusion. But these particular schemes are dealt with by the Income Tax Act. At a later stage, I will give some illustrations to the noble Viscount. I have considered these cases very carefully. I think he will find that they have no sinister exclusive effect but will protect something which everyone who wishes the schemes to be successful would desire to be excepted. I think I have covered all the other provisions in Clause 7, but I should like just to say a word on two further points. They 15 are closely defined, and when their significance is considered I do not think that anyone can suggest that these exemptions either have the intention or will have the effect of loosening the framework of the Bill. However, I shall be pleased to go into them in detail at the appropriate stage.
I do not propose to deal in detail with the provisions regarding the maintenance of the register and the methods of enforcement, but I should like to draw your Lordships' attention to the main features. Again, if there are any points which the noble Viscount the Leader of the Opposition or any other noble Lord would like to raise, I shall be glad to go into them more fully. The classes of agreement which are to be registered will be specified in orders made by the Board of Trade and subject to Affirmative Resolutions in both Houses of Parliament. All agreements will be subject to these registration orders and the Board of Trade will not be able to exempt any from this liability. The register will be open to public inspection unless the Board of Trade, for reasons which are narrowly defined in the Bill, directs that in particular cases agreements should be filed in a special section which will not be open to the public. We attach considerable importance to the register. We believe that the public must be given an opportunity to see for itself what are the range and contents of restrictive trading agreements in this country.
Clause 11 deals with the only cases in which the principle of examination by the Court of all agreements can be modified. The clause gives the Board of Trade power, upon the representation of the Registrar, to order the removal from the register of particulars of agreements of no substantial economic significance. This provision is desirable in order that the Registrar and the Court should not be unnecessarily burdened with agreements the effect of which on trade in this country is of no account. The enforcement of the provisions of registration has two aspects. First, the Registrar may serve a notice on the parties to an agreement which he has reason to believe should be registered, but which has not been, requiring them to furnish particulars. It this notice is not complied with, provision is made in the Bill for moderate 16 penalties. Secondly, under Clause 17, as an addition to this procedure, or as an alternative to it, the Registrar may ask the High Court to order that particulars be furnished and, if necessary (and I ask your Lordships to note this), to ban the agreement in the same terms as the Restrictive Practices Court may ban agreements which they have found to be contrary to the public interest. The agreement may not be reinstated until the Restrictive Practices Court have applied to it the tests set out in Clause 20, and in any case the agreement cannot be reinstated until after a lapse of two years. So that there is serious procedure against those who try to evade registration.
There has been some criticism that these provisions of enforcement are not adequate, and I want to face it. I ask your Lordships to consider this point. As I stated during the debate we had last July, the odour of criminality should not attach to proceedings under this legislation. I think that that is accepted by all parties. The Government do not accept the view that these provisions are ineffective to ensure that the registration requirements are generally observed. If the Registrar believes that an agreement exists, and is able to produce some evidence to this effect, there are adequate provisions for the punishment of persistent defaulters. If there is not sufficient evidence of the existence of an agreement, there is provision in Clause 14 for the High Court to examine on oath. But in the continued absence of evidence, stricter enforcement provisions would not help.
I now come to Clauses 19 to 22, which deal with the work of the Restrictive Practices Court. Initially, agreements are brought before the Court only by the Registrar, except where the parties apply for the lifting of a ban which has been placed on their agreement by the High Court as the result of default in registration. When the agreement conies before the Court, a restriction accepted in pursuance of any agreement will be deemed to be contrary to the public interest unless the Court is satisfied of any one or more of the circumstances set out in paragraphs (a) to (g) of subsection (1) of Clause 20 and, in addition, that the restriction is not unreasonable, having regard to the balance between those circumstances and any detriment to the 17 public at large resulting from, or likely to result from, its operation.
The obligation on the parties to an agreement to show that it is within one of these exceptions has been objected to on the ground that it is against the tradition of British law that people should be regarded as guilty before they have proved themselves innocent. This is an entirely false analogy. This is not a criminal matter. What the parties to the agreement will have to do here is to show, in the first place, that the restriction comes within certain exceptions, which the Bill defines, to the general principle laid down by Parliament that restraint of competition is prima facie against the public interest. I submit that all reasonable grounds of pleading are covered by paragraphs (a) to (g). They mean that a restriction must confer some specific—I repeat, specific—benefit, or prevent some specific—again I repeat, specific—harm. A specific benefit would be, for example, the promotion of the interests of consumers to the development of better techniques by cooperative research. A specific harm would be the prevention of abuse of economic power by a dominating buyer or seller, or the adverse effects on export trade or on the general level—I emphasise "general level"—of unemployment in an area.
If the Court is satisfied that a restriction fulfils one of these conditions, the parties to the agreement must then show that this is not outweighed by any detriment to the public at large. May I give your Lordships an example? It might be that it could be shown that lower quality goods would result from the removal of a restriction, but if quality were achieved only by maintaining a tight control over entry into the trade, the Court would have to consider whether, on balance, the restriction was reasonable. The Court makes a declaration of its findings, and if it decides that the restrictions in question are against the public interest it may make an order prohibiting the parties to the agreement from giving effect to these restrictions or from making any other agreement to the like effect. This order can be rescinded only under Clause 21, which gives the Court power to review its previous decisions, provided that the parties have been able to provide prima facie evidence that there is a 18 material change in the circumstances compared with those prevailing when the Court took its original decision.
It has been argued that the issues raised in the proceedings before the Court will be economic and social ones which are not suitable for determination by a judicial tribunal. A difficulty is felt that under the Bill the Government are placing on the Court a task which will take judges outside the ordinary held of judicial activity and involve them in applying economic and value judgments in which they are not trailed. I am most anxious to make it clear that I have given careful consideration to this point and I have come to the conclusion that the questions at issue are not inappropriate for judicial determination within the framework laid down in he Bill.
I would remind the House that the courts have in the past interested the selves in the effect of monopoly in the public interest. For example, that great master of the Common Law, Lord Justice Bowen (as he then was) said in the Maxim Nordenfelt case that he could conceive of cases in which a restraint of trade might, as between the parties, he reasonable but ye: might tend directly to injure the public, and that such might be the case if it was calculated to create a pernicious monopoly in articles for English use. The House of Lords did not dissent from that view of Lord Bowen. Lord Parker, in the Adelaide Steamship case, accepted this conception of a pernicious monopoly as one calculated to enhance prices to an unreasonable extent.
The courts, and the great judges to whom I have referred, approached this subject on the basis of the Common Law. But, as your Lordships will appreciate, and as I have already emphasised, the issue is not left at large in this Bill. Clause 20 defines closely the conditions which the Court is to take into account, and does not leave it to the Court to determine the economic and commercial policy of the country. The Court has to decide the specific questions which paragraphs (a) to (g) in what I call the tailpiece of subsectior. (1) of Clause 20 lay down carefully and exactly. The Government do not deny that some element of economic judgment w11 be demanded of the Court, and that is way it will be a mixed one, and the expertise 19 and experience of practical affairs of the lay members will contribute to its judgments.
I should like your Lordships for a moment to look at the alternative procedure of an administrative tribunal which could not be final. With such a system, responsibility would lie with a Minister, and ultimately with Parliament, for decisions on the action to be taken in each individual case. Not only would this be an extremely slow procedure (your Lordships with experience can imagine the time it would take, not only for the Minister to master the facts of each particular case, but for Members of your Lordships' House and another place to master them, if there was going to be a debate; it is no exaggeration—in fact it is an understatement—to say that it would be an extremely slow procedure) but also it would mean that each decision was liable to political considerations and that finality would be difficult to achieve. The Government regard it as highly undesirable that questions affecting the way in which business is carried on in particular industries should be settled in an atmosphere of Parliamentary controversy. It is for this reason that, after much consideration, we have decided on the procedure proposed in the Bill.
In our last debate I gave at length my reasons for believing that the procedure suggested by the majority of the Monopolies Commission would be less speedy than ours, and I need not repeat them to-day. But I would ask the House to notice that in Clause 22 (2) (c) we have made provision for enabling the Court to determine in a summary way any case in which the provisions of the agreement in question are substantially similar to those considered in any previous case.
Part II of the Bill is concerned with retail price maintenance. Again this is a very controversial matter. Strong and sincere views are held as to its importance to the manufacturer, the shopkeeper and the consumer; and equally strong is the denunciation of the methods adopted to enforce it and the rigidity which it introduces into the distributive system. It has been the subject of a number of official inquiries, notably the Lloyd-Jacob Report in 1949. The Government believe that the time is now 20 appropriate to deal with this subject on a broad basis. They therefore propose to make the collective enforcement of resale prices unlawful, but, at the same time, to strengthen the means available to individual manufacturers to enforce their own—but only their own—resale prices. Collective enforcement is dealt with in Clause 23, which makes unlawful the two main methods used to enforce conditions as to resale prices—namely, collective boycott and collective discrimination. May I give your Lordships the effect? This will not only put an end to private courts and stop lists used in connection with resale price maintenance, and lessen the power over individual traders which the system of collective enforcement now places in the hands of trade associations, but also it will lead to greater flexibility in the distributive trades. I believe that it should result in a greater scope for experimenting in new and more efficient methods of distribution—for example, self-service.
At the same time, the Government recognise that it is important to protect the individual manufacturer against abuses—for example, the misuse of his branded goods as "loss leaders". I cannot think that anyone could seriously object to that. In Clause 24 it is provided that a supplier can enforce his resale price conditions by legal proceedings. As a result, he will now be able to undertake proceedings, not only against those with whom he has a direct contract but also against any dealer who can be shown to have acquired goods with notice of the condition. That is often described as "making the price condition run with the goods".
Part III of the Bill deals with the future role of the Monopolies Commission and contains provisions for amending the Monopolies Acts of 1948 and 1953. Before I deal with the more important of these provisions I should like to pay a warm tribute—and I am sure I do so on behalf of all your Lordships—to the Chairman of the Monopolies Commission, Sir David Cairns, and the other members of the Commission for the work which they have done. This has made possible this new step in dealing with restrictive trading practices which we are debating to-day.
The principles which have governed the Government's policy in this part of the 21 Bill are twofold. In the first place, the method of operation of the Monopolies Commission is more suited to certain aspects of restriction of competition than is that of the Restrictive Practices Court, so that under the provisions of the Bill the Commission are deprived of responsibility in the case of those restrictive agreements which are registrable under Part I. All other kinds of restrictive practices remain within their jurisdiction as laid down in the Act of 1948. This means that in practice its main work in the future will be concerned with monopolies of scale—that is, single monopolies within the size laid down in the Act of 1948—and with agreements relating exclusively to exports from the United Kingdom. In the second place, there must be no duplication of work and of judgments as between the Restrictive Practices Court and the Monopolies Commission, and the Bill makes provision accordingly.
The provisions in the Bill which I have been describing to your Lordships present a coherent scheme for dealing with restrictive trade practices. Under this Bill restrictions on competition will he exposed to public scrutiny and to judicial examination and decision. It is right that that should he so. The essence of the free competitive system, in which the Government believe, is that individual enterprise should be given full scope and should not be under restraints imposed by agreements with competing interests, unless it can be shown that this is in the interests, not only of the parties to the agreement but of the country as a whole. I beg to move.
§ Moved, That the Bill be now read 2a.— (The Lord Chancellor.)
§ 3.32 p.m.
§ LORD LUCAS OF CHILWORTH
My Lords, your Lordships will have gathered, front the careful and expansive exposition of the Bill from the noble and learned Viscount the Lord Chancellor, that it is very intricate and takes a lot of understanding. We on this side of the House do not quarrel with the Government at all upon the end which they have in view—that is, to free British trade from the restrictions and discriminations which have grown up to a rampant force in British industry this last fifty years. But there are various points in the Bill upon which we shall quarrel with the Government 22 upon the method proposed, and I ask the Lord Chancellor straight away—and I know I do not ask in vain—that he will believe that we are as sincere in our expressions of view as I know he is in his.
Right front the outset there was a difficult choice: should the Government, when they reviewed the findings of the Monopolies Commission on collective discrimination, take the view of the majority of the Monopolies Commission, and make illegal straight away all those restrictive practices in the six categories which the Monopolies Commission found to be against the public interest. and allow appeals, by a court or tribunal, against that outlawing; or should they require the registration of all these practices which the Monopolies Commission had found to be against the public interest, plus others, and then outlaw those which a court found to be against the public interest? That was the choice of method—and I think I have put it fairly—facing the Government. The Government chose the latter course. Were they wise? I do not suppose that that argument will ever he settled. I do not suppose that there are many of your Lordships in this House today who will live to see the day when everything that is desirable in this huge field of discrimination and restrictive practices is ever cleared up. Therefore, I do not propose to rehash that argument. I think it would be more profitable it I directed my attention to the Bill and how to make it work on the lines which the Government have suggested.
Clause 1 deals with the appointment of a Registrar who is to keep all the registrations of these restrictive practices. I must confess that the explanation which the noble and learned Viscount gave as to the appointment of this superman confused me more than enough. Your Lordships will see, as the noble and learned Viscount said, that the appointment is to be made by Her Majesty The Queen. When I read that, it immediately raised the thought: is that being dote in order to take away the authority of Parliament to question the actions of this individual? Because I know of no one in industry or trade who is going to be more powerful than this Registrar. He will be the public prosecutor—the director of prosecution. As a matter of fact, he has been likened to the Director of Prosecutions in this Bill. If he is not to be questioned, is Parliament allowing the 23 economic policy of this country to go out of its grasp? The noble and learned Viscount, if I heard him correctly said, "Oh, yes; it will be possible, by Question and Answer in Parliament, to raise questions as to the procedure, the Registrar's actions, the pace of his work, how he is doing it, and everything that is proper to ask." I therefore assume that, as Her Majesty will appoint this individual—and I take it that Her Majesty would not think of appointing anybody unless consultation took place, I suppose with the Prime Minister—the Prime Minister, in another place, and the Leader of your Lordships' House here, would answer any questions which any Member likes to put with regard to the conduct of this individual.
§ THE LORD CHANCELLOR
Would the noble Lord allow me? I did not give the point in detail, because I thought it would come more conveniently in reply. But as it is troubling the noble Lord, I think he ought to know it at once. I did say, "appointed by the Crown on the recommendation of the Prime Minister." That means that the Prime Minister must answer questions as to the suitability of the appointment and, should that sad occasion ever arise, as to the suitability of his dismissal. So far as his "housekeeping" is concerned, the Prime Minister is the First Lord of the Treasury, but on the matter of "housekeeping" that would be answered by a Treasury Minister. The noble Lord will remember that there is a provision for the Board of Trade to give directions as to the order in which cases should be called out. If that point arises, the President of the Board of Trade would answer that, because it is his responsibility under the Bill. The final position is that the Registrar is entitled to make certain regulations with regard to registration, the keeping of the register and so on. There again, that is a Board of Trade matter, as appears in the clause. I am sorry to keep the noble Lord, but the regulations are subject to Negative Resolution. If a Prayer is raised, the Minister from the Board of Trade will answer to the Prayer. I am sorry to interrupt the noble Lord, but I wanted to clear up the point. I blame myself for not making it clearer.
§ LORD LUCAS OF CH1LWORTH
I am grateful to the noble and learned Viscount, because it is an important point. I am happy to know that anyone in your Lordships' House can cross-examine the Government, or the appropriate Minister in the Government—in this House it is always "the Government"— upon, as the noble and learned Viscount has put it, the "housekeeping" of this individual.
Then we come to Clauses 2, 3, 4 and 5 which establish the Court. Again, there was the choice of the noble and learned Viscount. Here is a Court to decide upon all these agreements. Perhaps the noble Lord will tell your Lordships whether it is so, but I understand there may be called in for registration nearly 1,000 agreements. This is the court that will decide upon them. If your Lordships will look at Clause 20, to which the noble and learned Viscount has drawn your Lordships' attention, you will see that it says, in plain words, that the agreements that are called for registration, which the Registrar will choose for registration and which he very likely, under the direction of the Board of Trade, will put before the Court, are prima facie against the public interest unless they satisfy the requirements of paragraphs (a) to (g).
The argument, of course, is: should this be a judicial court or should it be an administrative court, as the noble and learned Viscount has said? There was a distinguished predecessor of the noble and learned Viscount who was a "rather susceptible Chancellor." He used to sing a song that went like this:The Law is the true embodimentOf everything that's excellent.I know that the noble and learned Viscount on the Woolsack will not feel affronted if I say that there are some of us who do not hold quite the same opinion. Look at what these "three wise men" have to do. They are one judge and two lay judges; and the two lay judges can overrule the judge on questions of fact but not on questions of law. They have to decide all these questions as to whether these hundreds of agreements dealing with the whole ramifications of British industry are in the public interest. They have to decide the economic and political questions which arise naturally out of all the ramifications of these various price rings, 25 agreements and restrictive trade practices. I feel certain that the noble and learned Viscount will agree that there can be two opinions as to whether these are justiciable issues. Are we introducing a new practice into the law of this country? I do not know where these laymen are to be found, unless, looking back over the history of industry, the noble and learned Viscount who will be responsible for the appointment takes some credence of the fact that a reformed poacher makes the best gamekeeper. But these men will have to be very wise and responsible, because no Case Law exists at the present time on this subject.
The noble Lord who is to reply to this debate may give me grounds for not holding such a strong view as I hold now, but I am afraid that in the course of years it will be these courts which will dictate the economic policy of this country and be superior to Government. It may be right, but I should have preferred an administrative tribunal. Admittedly, the noble and learned Viscount is correct as regards the time factor; but look at the time factor here. Clauses 2, 3, 4 and 5—in point of fact, the whole Bill —will be a lawyer's paradise. I know that to say that is heresy in your Lordships' House; but from the word "Go" anybody connected with one of these restrictive practices can appeal against registration. He can appeal right through the whole case, and that appeal against registration goes to the High Court. The appeal against the decision of the Restrictive Practices Court can go to the High Court on questions of law but not on questions of fact, and eventually can come to your Lordships' House.
§ LORD LUCAS OF CHILWORTH
To the Court of Appeal. Then cannot it come to your Lordships' House? Why not? If the noble and learned Viscount the Lord Chancellor really believes that some of these economic and political questions are justiciable issues, are they going to be turned into legal issues? In the Court of Appeal there are no lay judges. I was rather hoping that at some future date some of these issues might be decided in your Lordships' House in its Judicial capacity, and we could all join in. I ask the House to consider the point whether it is in the 26 eventual public interest that these courts should cover these very wide agreements and issues and have such tremendous power.
I come now to Clause 6, which is the next clause that worries me. Clause 6 describes those agreements to which Part I applies and which will have to be tackled. At some time or another, I should like the noble Lord, Lord Mancroft, to answer this question. I can only take it that the Board of Trade will give directions to the Registrar that he is to bring these cases before this Court in batches—not as single, individual agreements, because if it were clone in that way, it would take years and years. Can the noble Lord tell me, on behalf of the Government, when he thinks that we shall see the first outlawing of the worst of these practices under Clause 6?
We come next to Clause 7, which deals with excepted agreements. I am rather disappointed that the Government have not brought under Clause 6 a class of agreements which is not exempted under Clause 7—what one might call sole agency and exclusive agreements. I know the reason and I think I sympathise: there are so many that they would clutter up this Court for ever and a day. But at some time this question will have to be tackled. Let us learn from America. Some of these exclusive agreements in America—do not forget that many of them stern from the operation of the Sherman Act—have had some dire consequences. One has to ask oneself: is it right, is it in the public interest, that the economic life and death of a number of people engaged in the distributive trades should he at the mercy of one monopoly or one individual? I shall come back to this point, but in regard to public interest I fail to see the difference between a monopoly operated by a hundred different producers and a monopoly operated by one prod Jeer covering practically 100 per cent. of that production.
My Lords, I do not wish to reopen the question of oil companies and petrol filling stations in this country. But do not forget that these sole agency and exclusive agreements can be prejudicial to the economic policy of the Government. What is happening in this country at the present time? Instead of having one filling station operating ten petrol pumps 27 with ten different brands, you have ten stations each with its particular brand of petrol. If anybody cares to tell me that that is in the interests of the country at the present moment, then I do not believe him. Now we are faced with another large competitor. Owing to the "Trinidad deal", as I think it is called, the refinery capacity of this country will be largely increased and an outlet will have to be found for that increase. I cannot imagine that the Texas Oil Company will not join in the "gold rush" and dot around another lot of petrol stations. That may be a question for the future, but to-day it is a big problem and it is accentuated—if I may anticipate what I am going to say a little later—by the failure of the Government in Clause 24 to face up to real issues. Clause 8 sets the timetable. I hope that the noble Lord who is to reply will give us some idea of the timetable, of the priorities, and as to when we can expect the first fruits from the legislation which may become law quite shortly.
I come now to what I consider to be perhaps the most important part of this Bill, the part that will affect the public most in the shortest space of time, and that is the question of the enforcement of resale prices. Under Clause 23 there is a collective enforcement, and here I find myself wholly in support of the Government. As I have previously told your Lordships, I have lived all my life with this problem, and there was a time when the resale price maintenance and the collective enforcement of resale maintenance was economically necessary. There was a time when it did not matter to those engaged in industry and distribution what low wages they paid and what bad condition of employment they imposed so long as they could undercut the price of their competitors. But that day has gone, and there is hardly a trade or industry in this country where the workers are not protected by agreements as to conditions of labour and wages. The position had got to such a state that it became farcical.
I want to draw to your Lordships' attention the fact that just after the Report of the Monopolies Commission in regard to collective discrimination was published, there was issued a Report from the Monopolies Commission on the supply and export of pneumatic tyres. That was the first Report ever produced 28 by the Monopolies Commission which really got to the heart of the problem of resale price maintenance. If ever anything knocked the last nail into the coffin of resale price maintenance it was that Report on the supply and export of pneumatic tyres. I am going to quote some of the things it says because I want to illustrate to your Lordships the viciousness that had crept into the collective enforcement of resale price maintenance. Perhaps I had better qualify that—I will not say it was "vicious"; I will say "unseemly" or use a milder expression than "vicious".
I want to quote what they have to say regarding the activities of a certain firm in the tyre trade in this country which held not a monopoly position but a near-monopoly position. I am not going to give the name of this firm because I do not want it to be thought for one moment that I am making an attack upon one firm—I am not; I am making an attack upon the practice which grew up and which defeated the whole ends which collective resale price maintenance really set out to achieve. I quote from paragraph 415 at page 88 of this Report of the Monopolies Commission. It says that this firm acquired the controlling interest in various tyre distributing concerns, and it continues in this way:This was not done openly, because it might have embarrassed the company in dealing with its other retail outlets,This policy of secret acquisition and control, of distributive outlets has been pursued consistently ever since 1927.Then it goes on to say in paragraph 417—I will not read the names of the concerns that it took over or acquired—that the groups had been able, with the producer's financeto expand substantially by the acquisition of subsidiary companies and by the opening up of numerous branches, so that the whole of England, Wales, Scotland and Northern Ireland is now covered with a network of sales outletsunder this particular producer's control.
What happened? I speak from personal knowledge when I say that these concerns were the biggest price-cutters in this particular trade. So here was a producer with a substantial outlet of retail sales, subscribing to collective price maintenance which could never be brought into operation against the retail outlets they controlled. This went on until there 29 was about £1¾ million invested. The Report says:The investment has always been profitable, the gross yield having varied from the lowest figure of 7.7 per cent. in 1952 to 43 per cent. in 1951.The investment stood at £1,757,904 in 1952. While they were subscribing to resale price maintenance, it was noted that, in recent years they hadpaid certain confidential allowances to a small number of tyre distributors,over and above what they were allowing to everybody else. Yet the price-investigating organisation during this period was pillorying and chasing small traders round Stockport and Bournemouth because they were in breach of price maintenance agreements. I feel certain that any right-thinking person would say that that is bad and discriminating in an under-cover way and is not a practice that we should allow to be carried on.
The tragic part is that this is the only Report that has ever been produced to this country on this practice. But this firm were not alone in carrying on the practice: it goes on rampantly right through every section of trade and industry in this country. I am delighted to think that at last Her Majesty's Government have taken action, because price-cutting is profitable only when there are a sufficient number of honest people in trade who will not perjure themselves by signing an agreement which they do not intend to honour. Everybody trading in branded goods has to sign an agreement with the producer of these goods saying he will honour the price maintenance clauses in the, agreement and will not sell those goods at a higher or lower price. Here you have a concern with nearly 50 per cent. of the distribution under their control and without any chance of one of those people ever coming before the court of justice that used to operate upon these matters.
I should like to ask the noble Lord who is to reply a question. Clause 23 (3) says: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.I understand that to mean that an interconnected body corporate can be an amalgamation of half a dozen firms, and 30 that they can operate a collective price maintenance or collective resale price maintenance agreement among themselves. I can understand these people being taken out of Clause 7, where, in subsection (1), the same thing applies, and where, among excepted agreements, is mentioned:any agreement to which the only parties are inter-connected bodies corporate or individuals carrying on business in partnership with each other.May I again give an illustration from the motor industry? The British Motor Corporation have several firms under their control—Austin, Morris, Riley, M.G., Morris Commercial and so on. I take it that that would be a body corporate. They can operate a price-maintenance scheme. Why? I can understand Her Majesty's Government saying. under Clause 7, that an arrangement between the companies which I have mentioned, such as that their engines should be made at one factory, their back axles at another, and their gear boxes at another, is not in restraint of trade, or discriminatory; but I cannot understand why the Government say the same thing under Clause 20. There may be a simple explanation, and perhaps the noble. Lord will give it to me when he replies.
I now come to Clause 24 where we join issue with Her Majesty's Government very strongly. We say quite frankly that we cannot distinguish the anti-social difference between collective price maintenance and individual price maintenance. With the set-up in British industry at it has developed to-day and the aggregation of power in the production world, discrimination practised by a single producer can be as harmful as discrimination practised under a collective scheme. I have only to cite the Monopolies Commission, who, in their Report, made no distinction between collective and individual price maintenance. In the Report on the tyre industry, from which I have just quoted, they say, quite frankly, that they come to the conclusion that:It appears to us that in the circumstances of this industry, with which alone we arc here concerned, the only way to ensure a reasonable degree of price competition in sales to the public is to abolish the maintenance of retail prices, whether it be individual or collective.The personnel on that Commission was practically the same as that on the Monopolies Commission which produced the Report I have mentioned. On the 31 Committee stage we shall seek to have this clause altered. The noble and learned Viscount who sits on the Woolsack really made the case. What does price maintenance mean? It prevents efficient trading; it prevents efficient sources of distribution from experimenting with new and better methods of distribution to the public.
Might I ask the noble and learned Viscount this question? What is the difference between a trader charging for delivery of his goods to the house of a customer, and a customer being charged a reduced price for the goods if that customer will go to the shop and collect them? What is the difference? One is allowed; the other is not. I believe I am right in saying that the Bill—at least this is what I understand—is going to apply to newspapers. Once when I stayed at a country hotel I was charged for having The Times delivered to me. Was that a breach of individual price maintenance? I believe that the only sanction in the newspaper world applies if a newsagent cuts the price. What is the difference between the newsagent charging me less for my paper if I go to a railway station and collect it than is charged if it is delivered to my house?
And then look at the overpowering discrimination in the Bill. I touch upon this point with some trepidation, seeing that I have sitting on my left a noble Viscount who is the great master of the subject. Look at the discrimination against co-operative societies, who really do practice the charging of low prices to their members. Just consider this point. It is a hundred years since nine individuals started the Co-operative Movement in Rochdale. I suppose the membership—my noble friend will correct me if I am wrong—is now somewhere in the region of 10 million or 11 million.
§ LORD LUCAS OF CHILWORTH
Eleven and a half million—I am obliged to my noble friend for the figure. That is the membership which has been built up in a hundred years. The Co-operative Wholesale Society of this country has not built up its great position by making and selling shoddy goods. Yet it has returned to member-customers in price reductions, 32 over the last fifty years, I suppose on an average something like 8 per cent. or 9 per cent. of the amount of their purchases. Why has it been able to do that? Because of the inordinately high cost of independent distribution. I am going to suggest that if you are studying the public interests—and that is all I am concerned with—you cannot do away with collective price maintenance and retain individual price maintenance. What you can do is this. You can study the public interest by saying: "Yes, the producer may protect the maximum price of his product, but he must not bring sanctions against anyone who, by his efficiency, can sell that product to the public more cheaply". In the present set-up and when there is an accumulation of productive power in a few hands, if the Government are sincere and really want to see better systems of distribution brought about—I would agree with them that the distributive trade is one of the most expensive luxuries we have in this country, and I have operated in it for thirty-five years—they will have to do away with individual price maintenance.
When it comes to the next clause in the Bill, it seems that the Government are now going to give sanctions. That there should be price maintenance in relation to second-hand goods means that you are going to get into a crazy world. I will not deal with the matter now; I will wait till the Committee stage. But that is what the Bill says in Clause 25. Subsection (1) reads:For the purpose of this Part of this Act a condition as to the amount of discount which may be allowed on the resale of any goods, or as to the price which may be paid on the resale of any goods for other goods taken by way of exchange, shall be treated as a condition as to the price at which goods may be resold.There you are getting into the jungle, and you will not see any daylight in that.
So, my Lords, I have come to the end of what I have to say. We shall give the Bill a Second Reading. As I said at the beginning of my speech, we agree with the end which the Government wishes to achieve. But we shall look very carefully at many of the provisions in this measure, and we hope that we shall be able to play our part in making the Bill a better Bill for the good of the only people whom, in my opinion, it should seek to benefit—that is, the consumers in this country.
§ 4.16 p.m.
§ LORD GRANTCHESTER
My Lords, we on these Benches welcome this Bill. Her Majesty's Government have tackled a difficult matter with a good deal of courage. To us, who believe in a free and flexible economy, nothing is more vital than that the field should be kept clear for competitors, and that access to the field of competition should be kept open. Competitors must not be allowed to bar the way to would-be newcomers nor, where they are in the field, to put, either singly or in combination with others, obstructions in the path of those who are weaker. This is necessary not only to secure fair play for competitors generally but because the competitive spirit in man has always made for vitality, for progress and for efficiency, which is reflected in lower costs and cheaper prices. The absence of competition, on the other hand, has always led to inefficiency and slothfulness.
It is axiomatic, therefore, that the maintenance of competition is in the public interest, and restriction contrary to the public interest—I am using the words "public interest" because that is the term used in the Bill. I should very much prefer to be more precise and to say "the interests of consumers". Public interest is often a matter of balance, and it is just this question of balance and its determination that is bedevilling this Bill. Can restrictions ever benefit the consumer? In a simple society the answer would probably be unquestionably, "No". But our modern economy is very complex and highly technical, and it involves much costly equipment. Her Majesty's Government have come to the conclusion that in this situation it may be possible to make a case for certain practices which in isolation are undesirable. We are inclined to doubt this, but we are not prepared to challenge the right to prove that our doubts are misconceived, provided that the onus of proof and the cost of proof are placed upon the appellant, and provided that what is required to be proved is clearly laid down in this Bill.
Her Majesty's Government have gone a long way to satisfy these provisos, but there are certain clauses in the Bill which we consider unsatisfactory and to which I should like to draw your Lordships' attention. These clauses, when the Bill 34 is considered in Committee, we shall seek to amend. The first of these Amendments will be designed to make clear that "public interest" means the interest; of consumers as consumers. We consider that consumers, either singly or through an association, and also competing firms, should be allowed, if they wish, to present evidence in any judicial investigation on the question of consumer interest. Secondly, we are concerned that the exemption allowed in Clause 7 (i), mentioned by the noble Lord, Lord Lucas of Chilworth, should not be used to defeat the purposes of the Bill. Without some qualification, mergers or the promotion of subsidiary companies might prevent a desirable investigation.
Thirdly, we think that Clause 24, to which the noble Lord also referred, is unnecessary. This clause deals with the subject matter of contracts between supplier and distributor. Breaches of such contracts can surely be dealt with under the normal procedure of the courts. Fourthly, we shall seek to amend Clause 20, because we consider it, as drafted, inimicable to the maintenance of flexibility in the economy. This is the main purpose of the Bill, and we believe it to be quite impracticable to interpret the clause as drafted. The unavoidability of changes in employment when changes are inevitable in a particular industry has been emphasised over and over again recently by Her Majesty's Government, and to ask a court to interpret "reasonableness" and to adjudicate upon "balance", as suggested in the last paragraph of Clause 20 (1) is, in my view, altogether vague. Then, we are doubtful about the desirability of reducing the number of the members of the Monopolies Commission, at any rate at an early date, and we should like an assurance that there will be no haste in acting under Clause 26 (6).
In conclusion with the reservations that I have indicated, we welcome this Bill as the firs: part of an attack upon restriction. But we would remind Her Majesty's Government that the second part of the necessary attack upon restrictions—those imposed by organised labour—must not be overlooked. We recognise that in this matter there will be even greater difficulty in being fair than in drafting this Bill. It is so difficult—yet no impartial observer can doubt that it 35 must be faced—that we would urge Her Majesty's Government, immediately this Bill becomes law, to prepare the way by setting up a Royal Commission or other body which could take into account, among other matters, regulations designed to protect the health and safety of workers, matters which noble Lords on the Benches next to us continually raise in justification of restrictive practices. It is clear that it is quite unrealistic to rely upon any effective action in the matter of restrictive practices of organised labour being undertaken by the unions of employees, any more than one can rely upon the associations of employers to take action about the restrictive practices with which this Bill is concerned. I should like to ask whether, during this debate, we could not have an assurance that the second part of the attack on restrictive practices will not be overlooked by Her Majesty's Government.
§ 4.25 p.m.
§ LORD McCORQUODALE OF NEWTON
My Lords, I would crave the indulgence of your Lordships for my first speech in this Chamber. I still have the most vivid recollections of my maiden speech in another place, twenty-five years ago, and I am not at all sure that the present ordeal is not more formidable than was the first. I feel that I should start by declaring my personal interest in the subject matter of this Bill. I am closely connected with the British Employers' Confederation, but I am now speaking entirely on my own behalf and not in any way briefed by or connected with them.
I have spent my working life in a highly competitive industry, that of commercial printing, where I think there are something like 8,000 separate and different firms, with no firm of a larger size than would employ more than 2½ or 3 per cent. of the personnel in the industry. Therefore, I am well aware of the virtues, the obvious virtues, of free competition. It is by free competition that industry in this country has been built up. But equally, and in the past painfully, I have also been aware of the evils of unbridled and "cut-throat" price-cutting. There is not much of this in present circumstances—one would not expect it. But anyone who was engaged in management in the years 1930 and 36 1931 will still have a lively recollection of the difficulties of that time; and I suppose that the majority of the restrictive practices that we are now considering were started about that time. They were started under dire necessity, for they sought to bring some stability for employment and trade in a highly unstable period. They have now outlived their usefulness, however, and should be discarded. I think that we are all agreed about that. In present circumstances—and I emphasise these words—they well may be contrary to the national interest.
So our criterion in this matter must be the national interest at the time; for, as circumstances change, so does the national interest change as well. As the noble Lord, Lord Grantchester, has just been saying, it is the consumer who is chiefly interested in this Bill. But in most cases in this country the consumer and the producer are one and the same man, and it would be foolish if, in our zeal to benefit the consumer, we hurt the same citizen as producer, so that in the end he was worse off than he was before. I think that this Bill is a serious and honest attempt to deal with these questions in a brave and businesslike manner. I use those adjectives of choice. I say that it is honest, in the sense that there has been no pandering to political pressure in the clauses of this Bill. It is a businesslike Bill. It could not have been an easy task for Her Majesty's Government to steer a fair course between all competing interests, and I think that in a large degree this measure succeeds. I, for one, welcome it, though there are some detailed points that I should like to make.
In this, my first speech in your Lordships' House, I would assert that British industry and all those engaged in it can be proud of its integrity and its achievements. If we can improve it still further, by all means let us use our best endeavours to do so. But I, for one, have little sympathy with those who, in ignorance, go round vilifying it and running it down. Abuses are bound to occur in all walks of life, and this applies in industry as well; but we all hope that the detailed and impartial inquiries that the Restrictive Practices Court will make will help to eradicate these abuses without harming industry in general.
I particularly welcome the decision I that the inquiry should be by judicial 37 process and not by administrative action. The appointment of the Registrar, his duties and obligations; the mixed composition of the Court, containing that essential element from the Judges' Bench, will, I believe, inspire confidence in those who may come before it—and inspire confidence to a degree which, without disparagement, I think I may say the Monopolies Commission have never quite been able to attain. In passing, I would say that I think the idea of a mixed Court will be most interesting, and I believe it will be a valuable precedent for other actions in the future. Having set up the judicial Court, and given it wide powers of investigation and evidence, are we going to make the best use of it? I refer, of course, to Clause 20, which is the crux of this Part of the Bill. In the Explanatory Memorandum to the Bill it says:A restriction will be deemed to be contrary to the public interest unless the parties show that one or more of the circumstances described in paragraphs (a) to (g) of Clause 20 (1) exists …I have endeavoured to emphasise that circumstances change, and what may be in the national interest at one time may not be at another. I am told, on good authority, by my friends in industry (I should not like to vouch for this; I cannot myself think of any case), that they can conceive of a position in. which the Court way well have to ban a so-called restrictive agreement under Clause 20, even if it had been conclusively shown that the agreement harmed no one and was, in fact, of great value to those working in that industry. If that is so—and I put it forward only as something that was suggested to me—then surely it is foolish. I am well aware that in setting up a judicial Court we must define our policies; we must make what I believe is called a justiciable issue—I am afraid I am not well versed in these terms. I would, however, urge that an effort be made to see whether some slightly less stringent words can be found. Could not we give the Court some powers to recommend to Parliament, if they so desired, an amplification or modification of the paragraphs of Clause 20 to suit what they deemed to be the circumstances of the national interest at the time, without the necessity for coming back to Parliament, with all the paraphernalia of an amending Act going through all its stages? I feel 38 that it we could get some such provision —I am not skilful enough to work out an Amendment myself—it would he most valuable.
Another point on which I should like to touch is the export trade, which is so vital to this country. It is, of course, highly desirable that in the export field firms in an industry should work closely together so as best to satisfy that market from this country. It is foolish in the extreme for them to go cutting each other's throats it a market of that sort. It is, also, I think, foolish to expose to competitors overseas in an export market all the cards that may be in our hands. Therefore, welcome the note in Clause 7 (9) (a), that the supply of goods by export from the United Kingdom is left out of that clause of the Bill. It comes back in Clause 29, however, and I wonder whether it is really necessary. Dealing with goods that are to he exported ever-seas, is it necessary or wise for agreements to be registered? And why should they have to be registered at the Board of Trade? I should like to ask whether further consideration may not be given to that matter. It is essential that nothing should be done in any way to imperil the export market, or even to give an excuse to traders not to go into that market.
I cannot offer any opinion from experience on the retail price maintenance question, but I have heard arguments on both sides, and I should have thought that, in all the circumstances, the solution arrived at by the Government is the wise one. But in view of the fact that grave anxieties have been raised, I have no doubt that the Board of Trade will keep a close eye on the working cut of this measure, in order to see that, if any of these dire calamities do happen, they can be rectified. In passing, I may say that I agree entirely with the Government that restrictions of output labour would have no proper place in a Bill of this sort; but that does not mean to say that they should not be dealt with.
I have been trying to work out for myself what might be the effects of this Bill. They are not easy to forecast. There have been some optimistic statements as to a radical effect on the price level of this country. It will, of course, have an effect on some prices, but in the main 39 I do not think it will be large. I am fortified in that view by the final remarks of the Government spokesman on the Third Reading in another place, when he said [OFFICIAL REPORT, Commons, Vol. 554 (No. 170), col. 905]:… I wish … to say that we do not put this Bill forward as a cataclysmic event.…I do not believe that anybody in the industrial part of the world would expect it to be a cataclysmic event. In an expanding and rising market the absence of any stabilising agreements may well mean that prices go higher than they ought to, and I feel that we must be prepared for that. The absence of any agreements on prices may well, in an expanding market, push the price higher than it ought to go; but in a contracting market, the price will fall faster than it would if there were no stabilising agreement between the traders. Therefore, we shall possibly see a wider variation of prices than we have seen in the past, and I hope that, by and large, it will be downwards. In conclusion, I would say: do not let us in industry be deflected from the main task. The main task is to keep our costs reasonable. In the end, prices depend upon costs; and it is, and must be, the endeavour of everyone engaged in industry to keep our costs competitive in the world market. If this Bill helps in any way towards that end, I feel that it is to be welcomed.
§ 4.38 p.m.
§ LORD BAILLIEU
My Lords, it is ever the privilege of a noble Lord who follows anyone making a maiden speech in this House to tender initially the congratulations of your Lordships to that person. May I, therefore, with great pleasure and pride, act in that rôle and say with what pleasure we have listened to the noble Lord, Lord McCorquodale of Newton, to-day. He has had a lifetime of experience in another place; he brings rare qualities to this House, which we appreciate, and, above all, he brings a singular knowledge to the subject matter of this debate. We hope that we may hear him on many occasions in the future.
I think that every speaker, so far, has stressed the great importance of this Bill to industry, to this country and to the future livelihood of our people. While the measure may not be cataclysmic in its effect or its purpose, I feel that if half 40 the expectations which are centred upon the Bill by the Government are realised, it will serve the country well. But as the noble Lord, Lord McCorquodale of Newton, has intimated, we must wait on the event. So far as the position of industry as a whole is concerned, I think I am right in saying that we do not oppose the taking of any steps to regulate restrictive practices. Our concern is solely that each case is dealt with on its merits; that blanket condemnation is avoided; that decisions are arrived at by Judicial process and not through an administrative tribunal advising a Minister responsible to Parliament. We accept the necessity for arming the Government with whatever powers are reasonably needed to protect the public from the wrongful exercise or abuse of power by any section of the community. The noble and learned Viscount the Lord Chancellor has dealt with the main details of the Bill in a thorough-going way. The noble Lord, Lord Lucas of Chilworth, followed him in considerable detail. May I say that I propose, in the course of my remarks, to call your Lordships' attention to a few facts, and to make one or two comments on certain demerits of the Bill, as I see the Bill as it stands to-day, and, incidentally, to refer to certain remarks made by the noble Lord, Lord Lucas of Chilworth, in the course of his speech.
We are a trading nation, dependent upon imported supplies of food and raw material for the feeding of our population and to sustain our industry. We must buy—that is, import—in order to live and to work. We must sell—that is, export—in order to acquire these supplies, and we must do this in a competitive world and at prices the world will pay. If we do not produce enough, and at the right price, then we shall go short of food. of raw material; our economy will slowly run down, and we shall be faced with mounting unemployment and grave social and political difficulties. So we see, inescapably, that the standards and comforts of life, our social and cultural amenities, depend directly on the efficiency, productivity and profitability of British industry, in which, of course, I include the greatest of all—British agriculture.
Measures, therefore, which directly concern British industry, place a grave responsibility on the Government and the Legislature. Irrespective of Party, as we 41 in industry see the position, the Queen's Government must be carried on. This will be possible only if there is a broad understanding between Government and industry, irrespective of the Party which may be in power. That would be impossible if industry were to be shackled by restrictions, surrounded with unjustilied and unworthy suspicions and by legislation and administrative climate inspired by presumptions repugnant to our traditions of tolerance, good humour and common sense.
The other fact to which I would allude is that I am a chairman of a company which is a member of an industry that has been under continuous interrogation by the Monopolies Commission for over three and a half years. Noble Lords will therefore discount my views as they may feel appropriate. I feel, however, that they will wish me to contribute what I may, from such experience as I have, and from the experience of those with whom and for whom I work. There is one thing here which I hope the Legislature in the future will do something to correct; that is, the enormous diversion of time involved in handling and responding to interrogations. We have computed in my company that, between 1952 and 1955, when the Report on tyres to which the noble Lord, Lord Lucas of Chilworth, referred was submitted, dealing with those inquiries absorbed some 10,000 man-hours by the three executive directors and the secretary of my company. Nothing is counted, however, of my own time, nor the time of others running down the line through a big organisation. If we multiply that total by the large number of organisations which have found themselves in a similar position, if we think of the enormous time that has been diverted or concentrated by Government sources, Parliamentary time and so on, we are paying a pretty heavy price to-day for the work that is being done.
I think we all agree that taxation itself is the buttress of high Government expenditure, and that it is also a main element in inflationary pressure. But I wonder how often we have stopped to consider that there is another direct form of taxation falling on our physical resources through legislative and administrative action involving unproductive diversion of the time of those intimately responsible 42 for the affairs of industry. Here is one of those "Unseen Things" to which Frederick Bastiat referred, in those admirable essays of his, And to which, I venture to suggest, we might well address our minds in the future. I submit that we can no more continue to suffer heavy financial burdens than the many exactions on our time which the apparatus of the modern State continues to set upon us. Both make a draft on oar vital resources which we cannot sustain. Both, I suggest, must be subject to check and scrutiny in the public interest, which it is the declared purpose of this Bill to protect.
The third fact to which I would direct your Lordships' attention is that, in looking at this field where the Bill is designed to operate, I know of no case where it has been affirmed that trade associations have acted illegally. Whilst findings have been reached that certain practices are against the public interest, this has sometimes been done by a majority verdict only, and has been stated as a conclusion, so far as I know, not supported with proof or by reason. Nor can I recall, as a fourth fact, where the findings or the Monopolies Commission thus far can be said to have lowered prices, increased efficiency or raised exports. These, after all, will be the practical tests by which posterity will judge the efficacy of this measure. Therefore, whilst we give a welcome to this Bill in the form in which it comes to us, I would enter a caveat against building up excessive expectations for the future. I suggest that in the course of our discussion we should avoid the danger of "missing the wood for the trees," of losing ourselves in the minutiae of the Bill and in the minor contention of mere debating points. Let us constantly bear in mind what should he the central purpose of the Bill and the deeper, longer-term interest of our national life.
Here may I turn aside for a moment to refer to certain remarks of the noble Lord, Lord Lucas of Chilworth, which, with veiled restraint, failed to identify my company with some of the remarks he made? I think it is only right, however, that I should reveal to the House that I am quite conscious of my own identity and of my own company. I would merely make two comments. First, I would remind the House of the reasons recorded in the Report for which Dunlop 43 entered this new distributing field. It reads as follows:Because of this threat to their normal retail outlets, and because of the fear that the pattern of tyre distribution might follow that of the U.S.A., where a high proportion of the retail trade is done by traders under the direct control of the larger manufacturers, Dunlop adopted a new policy of controlled distribution. This involved the acquisition of controlling interests in various tyre distributing concerns. This was not done openly because it might have embarrassed the company in dealing with its other retail outlets.Then, in their Conclusions, the Commission state:The interests of the Dunlop Rubber Co. Ltd. in the distribution field and the methods by which they have been conducted have not tended to restrict competition and are not against the public interest.I have suggested that we might look at the deeper purpose—
§ LORD LUCAS OF CHILWORTH
If the noble Lord has now finished referring to what I said, I did not question the Commission's conclusion, but I did want to question the reason why an advent was made into the distributive field. I dealt only with what I thought, and what was plainly stated in the Report, to be the effect of such advent over the years, with the number of outlets that were then controlled. When the noble Lord says that the Commission came to the conclusion that those activities were not against the public interest, the Report did come down heavily and say that resale price maintenance, both collective and individual, was against the public interest. That was all I was concerned with.
§ LORD BAILLIEU
I do not wish to get away from the main stream of the argument. If the noble Lord can reconcile "coming down heavily against resale price maintenance," with the fact that four distinguished members out of nine did not agree with their majority, then I am with the noble Lord.
I ask, then, what is the deeper purpose of the Bill? Surely, in simple words, it is to bring under control, and if necessary, prohibit, actions or practices which could be demonstrably proved to be prejudicial to the public interest. But it is not only necessary that justice should be done in matters affecting industry; I submit that it should seem to be done. 44 What troubles me is how this can seem to be done when the opening paragraph of the main operative clause, Clause 20, places on industry a presumption which it regards as unfair and inconsistent with what we have understood to be a traditional British legal practice. So far as I have been able to ascertain, there is no provision in any existing Act of Parliament in similar terms. Put in a simple way, it means that a restrictive agreement is to be deemed to be contrary to the public interest unless the Court is satisfied otherwise. In other words, the onus of proving that there is no detriment to the public interest is to be placed upon the parties to the agreement and not upon those representing the public, although it is the latter who will claim that the public have sustained injury.
My own inclination would have been to modify this presumption and to say that a restrictive agreement shall be presumed not to be contrary to the public interest if it can be established to the satisfaction of the Court that the public interest has suffered no damage. I am told that there are reasons why this Amendment cannot conveniently be made. I listened with attention and respect to the particular words of the noble and learned Viscount the Lord Chancellor, but I am still a little mystified. I feel that I am in duty bound to my own constituency, which is concerned with industry, and as representing industry in a fairly wide field, to state categorically, and so that it can remain as a permanent record of dissent, that industry not only regards the presumption that what it has done has been against the public interest as wholly unjustified but strongly denies its truth.
I have little to add. One can well understand that the onus of proof should be placed upon those who wish to indulge in a certain restrictive practice, but surely in can equally well be argued that those who accuse or lay complaints should be required to justify their accusations. It is the implication which flows from this presumption that occasions those who are responsible for the conduct of business affairs so much apprehension that they are not being fairly judged. There seems to be an assumption that many business agreements are in themselves wrong; that when business men get together and discuss prices, this must automatically 45 restrict competition; or that, when agreements are made, a reduction in competition must follow.
All this tends to imply that those who run industry arc least of all able to judge where the public interest lies—although the reconciliation of the public interest with theirs is one of their first concerns—and that others, be they members of the Legislature, the Press or the Civil Service, can do it very much better. I notice that the President of the Board of Trade himself, on the Second Reading of the Bill, said:The parties to an agreement of this character are not the right people to judge whether the practice is or is not against the public interest.This may well be, but it might equally well be said, I suggest, that it is unwise for the Legislature to form a presumption of guilt against the parties to the agreement before the issue is fairly tried. I would therefore strongly urge the Government to look again to see whether it is not possible to construct this measure, which has many virtues and which we are supporting, effectively without the inclusion of these qualifications.
There is a further point of great importance, if I do not weary your Lordships, to which I venture to direct the attention of noble Lords. Industry is a living thing, constantly changing and, in a dynamic society, constantly growing. We are faced with the deeper challenges and the fascinating uncertainties of the Atomic Age. Industry must be free to adapt itself to these changes and to meet these challenges, if it is to continue to serve the country in the future as it has in the past. Co-operation within a framework of competition and a clear appreciation of the public interest is likely to be the pattern of the future. Agreements to this end should be encouraged and not banned or restricted. Industry, by the construction of Clause 20 as it is framed at the moment, could in the light of changing circumstances find itself placed in a straitjacket.
As the Bill is drafted at present, the instructions upon which industry can base its argument are contained, as we know, in paragraphs (a) to (g) of Clause 20 (1). In addition, there is what I might call the "balance of hardship provision", by which the restriction is to be judged in relation to any detriment which it may have caused to the public or to persons 46 not parties to the agreement. It seems to me that these instructions do not go far enough, and that, in addition to the circumstances set out under paragraphs (a) to (g), industry should be entitled to have taken into account by the Court to what extent the restriction for any other reason operates, or is calculated to operate, substantially to the benefit of the public. This would seem to me to be a perfectly justiciable issue—and I am so advised by learned counsel—in that, if it can be shown that any restrictive agreement provides a benefit to the public or to persons not parties to the agreement, that is surely a most relevant consideration for the Court to take into account.
In framing legislation of this kind, we may well miss our objective and lose sight of our central purpose by indulging in excessive refinements. British industry has served this country well throughout the crises of this century, comprising two world wars and phases of acute economic difficulty which have confronted every Party Government in turn. Great difficulties still confront us, which will be solved only by a rare effort of will and sacrifice and a large measure of national unity. I suggest that Parliament and the country would be well advised to place their trust in those who have served them well, and I suggest that we remember, as I have endeavoured to point out earlier, that it is the facts of life to which I have referred, the simple compulsions of existence, that constitute the real urge to efficiency in industry, the real sanction against slackness and anti-social activity, and not (I repeat, not) Acts of Parliament and the most ingenious devices of the Legislature.
§ 5.1 p.m.
§ LORD GRIDLEY
My Lords, in venturing to address you to-day I am conscious of the diffidence which possessed me when I made my maiden speech in the House of Commons some twenty years ago, which diffidence possesses me with greater strength to-day, because I have always understood that the standard of speeches made by your Lordships in this House is at least as high as, if not higher than, those made in any other assembly. But I am sure that I can rely upon the generosity of your Lordships if, in what I now have to say, I fall far below the standards which you yourselves and your predecessors have set.
47 My Lords, my reason for venturing to address you to-day is that for between fifty and sixty years I have been actively engaged in industry, and in particular in the electrical and mechanical manufacturing branch of industry. I have lived through good times, not so good times, and extremely bad times. I have seen four million people, employees in this country, "on the dole," and I do not want us again to be faced with anything approaching that situation. I am a little fearful, for some of the reasons which have been given by the noble Lord, Lord Baillieu, who preceded me, that the effects of this measure, unless wisely and common-sensibly implemented, may affect seriously and adversely the engineering industries of this country, which, after all, play a foremost part in our export trade.
I, as too, will many of your Lordships, painfully remember the period which we in industry went through in the years between the two world wars. As a result of that experience, many employers in industries which were in a critical condition felt it absolutely essential that they should endeavour to get together to see what could be done to rescue the country from its dilemma and save many firms from the bankruptcy which then threatened them. From those discussions arose many of the associations and trade agreements which are the subject of so much criticism at the present time. I can only say, from my own experience, that, in general, the effect of those arrangements has been good rather than bad, so far as the national interest and the interests of customers are concerned.
I well remember—it seems an extraordinary thing to have to refer to to-day —that during the slump which I have mentioned, when we had paid off a great many employees and were threatened with the necessity for discharging more hands, an opportunity arose for my then company to secure a large contract amounting to something in the region of six figures in one of the South American countries. The sales representative out there wrote home to say that competition was so fierce that unless we were prepared to reduce our price by many thousands of pounds, the order would be placed in another country. Well, we felt in the interests of our employees, whom we would rather see working than "on the 48 dole", that we must go to them and explain the position quite clearly and plainly. What we said to them was this: "Within two or three months we may not have work for you, and you may be out for a considerable time. Now here is an opportunity to secure an overseas contract if, but only if, you are prepared to accept a percentage cut in your wages while work on this contract is being carried out. If you will do that, we on our part will cut a substantial proportion off our overhead charges which are included in our costs." Employees were sensible in those times and, without any hesitation, they agreed. The result was that we got this overseas contract which we would never have got in any other way than with the co-operation of management and employees.
On the question of prices in the industry with which I am associated, I do not think it can be argued for one moment that there has been anything detrimental to the national interest, especially when it is an undoubted fact that while a good many firms of the type to which I have referred did enter into a co-operative arrangement together, there were almost as many outside to whom customers could go—they were not members of the Association and they were perfectly free to quote what price they liked. Therefore, the price arrangement was not free from competition, and there were many cases in which one found oneself under-quoted by those who were desperately anxious to get a contract, especially at a time of trade recession. One thing that is not always sufficiently borne in mind is, I think, that more often than not it is better to pay a higher price for an article which is robust, durable and lasting, than to pay a lower price for an article inferior in those respects.
One thing that in my industry we can never forget is that electricity is really a lethal weapon. Wherever it is used, either industrially or in domestic circumstances, the most careful precautions have to be taken. The material you use, the quality of insulation that is part of the machine, and the wiring of houses—all that has to be of the highest quality in order that those who work and those who live in their homes can feel that they are entirely free from all accidents with this invaluable adjunct to our comfort and well being. I believe it can 49 be claimed, certainly in the last twenty years during which price agreement has been opera live, that the most amazing progress has been made in the science, technical knowledge and practice in the electrical industry—progress that would never have been possible without the cooperation to which I have referred. That being so, I venture to claim that the arrangements under which our business has been carried on cannot be said to have been against the national interest, but for it.
Now to-day we have the birth of two new industries, electronics and nuclear power, the vast potentialities of which have yet to be explored. Those new industries, like another which had very small beginnings—the radio industry—are going to be to a very large extent in partnership with the electrical industry. We must therefore be extremely careful not to do anything to impair the value of the co-operative methods which hitherto we have thought it wise to carry on, because unless we make progress in development, technical advances and production of products of the highest materials, we shall fall behind our competitors. That we must on no account do, because in the industries to which I have referred there are wide opportunities for increasing our exports and there Is now in our hands a chance whose loss we shall bitterly rue unless we grasp it with both hands; for there is no doubt at all that in each quarter we are feeling the increasing competition of other countries.
There is one thing which none of us should ever forget: in every home, great or small, it is industry which supports us all. Therefore we should be extremely careful to do nothing in this Bill which is likely to hamper our progress in the future. For that reason I hope it may be possible, even though it may be difficult, to find some method to secure that some provision is made in this Bill, before it finally reaches the Statute Book, to provide for a revision of its terms and conditions should economic circumstances worsen and a considerable amount of unemployment unfortunately and unhappily arise. It would then become an urgent matter to re-examine whether some of the restrictions that have been imposed by the courts could not be released and industry allowed to resume 50 their arrangements to the benefit of their employees and in the national interest. My Lords, it only remains for me to thank your Lordships for the courtesy and patience with which you have listened to me. It may be that I shall in future take the advice of a former Speaker in another place who used to say:Rather make Members wonder why you do not speak than wonder why you do.
§ 5.16 p.m.
My Lords, if I were to attempt to offer the ordinary words of congratulation to a speaker so greatly and so long experienced in public affairs and in public speaking as the noble Lord who has just sat down, I should feel that perhaps I was guilty of some little presumption. What I can truly do is to express or. behalf of every noble Lord in the House, wherever he sits, our rejoicing that the noble Lord, Lord Gridley, has seen fit to break his long silence and enrich our debate this afternoon, and to express the hope that, now that he has done so, he will not follow his own advice but will contribute his wisdom to our discussions frequently in the future.
Those in industry who asked me to speak on this matter to-day told me that, for their part, they did not in the least oppose the Bill: they were quite prepared to welcome it and to do their level best to see that it worked. I submit that, if that is so, a complicated and, in some ways, rather nebulous measure such as this requires the wholehearted co-operation of industry to make it work. It will therefore be wise of Her Majesty's Government to consider very carefully such suggestions as are put forward for their consideration. I will put forward one suggestion immediately: I very much hope that Her Majesty's Government will consider carefully the date on which this Bill is to be brought into operation. There is so much work to be done before the Bill can be set on its legs and the machine put into working order that to bring it into operation too hastily after it is passed would be a mistake. After all, in a measure of this kind the most important thing is to get the co-operation of the best people. If one does not get the co-operation of the best people then the worst people will 51 very readily find a way of making the Act work for them.
The second observation I wish to make on the Bill is to ask a question. So far as I can understand the Bill, the only condition that "runs with the goods" is the price. Have Her Majesty's Government considered that aspect (though I am sure they have); if so, what is their reason for not allowing other conditions to run with the price? I will rive a case which is known to us all. The motor manufacturing industry often makes conditions that dealers should pay a certain standard of wages, maintain certain necessary equipment and have a staff of a certain degree of competence. All these conditions are for the interest of the public, and I am told that questions of this kind are raised in the trade courts just as frequently as, if not more frequently than, questions of price fixing, so it seems to me that the public interest would be served by letting this condition run with the goods.
§ LORD LUCAS OF CHILWORTH
Did I understand the noble Lord to suggest that the trade courts, which will be outlawed under the collective price maintenance clause of this Bill, to-day seek to exercise any jurisdiction over wages paid to employees or conditions of employment in the motor trade? I can assure the noble Lord that that is entirely wrong. They have no interest whatsoever except in the question: has the price been cut or has it not?
While I accept that as the noble Lord's opinion, I have to say that my instructions differ. There is a difference between us. We cannot resolve it here; it is for Her Majesty's Government to resolve it.
The last point I have to make is one which seems to me rather important in connection with what the noble Lord, Lord Lucas of Chilworth, has just referred to—that is, price fixing. Hitherto, both suppliers and dealers have protected their price agreements by means of the stop lists and their trade associations. The right to do this is taken away by this Bill—it is taken away both from suppliers and from dealers. But suppliers have been given a quid pro quo, because, as the term is, the "condition runs with the goods," and they are given a remedy in the courts against 52 retailers who, having acquired a supply with notice of price conditions, take part in resale transactions which do not carry out those conditions. That puts all their goods on a level with other goods that are patented and can be so treated.
Retailers, on the other hand, though they may be far more injured by price-cutting than the suppliers—because, after all, the supplier is selling his goods, even if the retailer cuts his price—are given no compensation of any kind, save appeal to their own supplier in whom alone the right of action rests. The supplier thus appealed to may not be at all willing to take action, especially if the aggrieved retailer is a small concern and it is a big concern that is cutting the price. The supplier will not want to take action against one of his most important customers, however flagrant the breach may be. And he may even be selling through a subordinate of his own. In any case, the effect of this denial to the retailer of his right of action seems to me to put the small man in a very invidious position, because he may well be extinguished altogether by the price-cutting of his larger and more successful rival. It seems to me that that is a point which might well be considered by Her Majesty's Government, and I hope that it will be considered before the next stage of the Bill is reached.
§ 5.24 p.m.
My Lords, this is an important Bill, but I doubt very much if it will achieve every purpose for which it has been designed. Having made that disparaging remark, may I say that I hope your Lordships will have no hestitation in giving the Bill a Second Reading and, ultimately, putting it on the Statute Book. Even if the Bill does not achieve every object for which it is designed, it may have in general a very good effect. I believe that in Sweden, in 1946, there was introduced a comprehensive system for the registration of restrictive agreements and that it had a most useful effect. Within a few years, the result of publicity was that a considerable number of objectionable agreements were cancelled and others were considerably modified. I should not be at all surprised if the same thing happened in this country shortly after this Bill became law. In this connection I am reminded of an Act of Parliament which is within the minds of all 53 of us—namely, the Landlord and Tenant Act, 1927. That Act was well-intentioned but, for reasons which I need not mention now, it was somewhat ineffective in practice. Nevertheless, it has remained and still remains what one might call a legitimate vehicle for illegitimate pressure. I have the feeling that this Bill may have the same effect, and that one may be able to wave it in front of people and tell them what may happen if they do not mend their ways.
As to the Bill itself, it is not usual to comment in any detail upon what has happened in another place, but I have been watching this Bill from the very beginning, and I think your Lordships will agree with me that it has already received a very close analytical examination. So I doubt whether there is very much that your Lordships will wish to do to alter the Bill in your Lordships' House. However, there are a few general comments I should like to make on the Bill. First of all, as to the Restrictive Trade Practices Court. I do not wish to indulge in flattery, but in my view the composition of this Court is excellent. It is to consist partly of High Court Judges and partly of laymen experienced in industry, I cannot imagine a more satisfactory type of tribunal. On the other hand, in my view it would be chaotic—and I use that word advisedly—to place these matters before an administrative tribunal. If these matters were to be placed before an administrative tribunal every one of the decisions of that tribunal might subsequently become a subject of discussion in Parliament. Quite apart from any questions of justice or injustice, I am afraid that there would be no finality in ally of these matters at all.
As to the Registrar, I was rather surprised to hear him described as a "superman" and as a "prosecutor". I may he wrong, but I understand that he fulfils neither of these requirements. I believe that he has two duties under the Bill. The first is to enter restrictive agreements in the Register, and the second is to initiate proceedings before the Restrictive Trade Practices Court.
§ LORD LUCAS OF CHILWORTH
Would the noble Lord forgive me for interrupting? Will not the Registrar have the same function as the Director of Public Prosecutions in another sphere?
I am much obliged to the noble Lord for his intervention. I was just going to carry the matter one step further. I speak under correction, and I want to be corrected if I am wrong, but I understand that the Registrar will have absolutely no interest, either personal or professional, in winning the day before the Restrictive Trade Practices Court. His sole object will be to place all the relevant facts and circumstances before the Court and to ask the Court to decide upon the matter which is before them. If I am wrong upon that point, by all means let me be corrected. As to the machinery relating to registration, I think that the Bill deals with this matter in a very competent way.
With regard to restrictive trade practices themselves, it would he a mistake to think that these are all had or introduced from malicious motives. A large number have been introduced from good motives, and, indeed, may serve a useful purpose, including the interests of the consumer himself. However that may be, under the Bill all these agreements are presumed to be contrary to the public interest, and it is for those upholding the restrictions to bring themselves within one of the paragraphs (a) to (e) of Clause 20 (1) of the Bill. There may appear to be a good number of loopholes through which restrictive agreements may pass. At the same time, if you examine paragraphs (a) to (e), I think you will come to the conclusion that they are all fair and justified. I appreciate that one can criticise the Bill, but I am waiting to hear somebody put something better in its place.
As for resale price maintenance, I think that the Bill reflects the better opinion of the country: that is to say, that collective resale price maintenance is bad and individual resale price maintenance is permitted through the usual channel of Her Majesty's Courts. I am exercised on this point: I believe that the enforcement of individual resale price maintenance might become so colossal as virtually to become a monopoly. If it does become a monopoly, it can he dealt with under the Monopolies Act, 1948, but it has to he a very big monopoly before it comes within tie jurisdiction of the Monopolies Commission. Therefore I hope that Her Majesty's Government will look at this again and, 55 while maintaining the principle of individual resale price maintenance, see whether or not this might assume such enormous proportions as to become a dangerous monopoly. Subject to these few amiable remarks, I hope that the Bill will rapidly become law.
§ 5.32 p.m.
§ LORD BARNBY
My Lords, the proposals in this Bill are such as inescapably to cause perplexity in the minds of all those who try to arrive at a conclusion about the Bill. In the discussion in another place a number of controversial speeches were made. But here we are the better off for the painstaking way in which the noble and learned Viscount who sits on the Woolsack has explained to us in detail where we are at the moment when this Bill reaches your Lordships' House. The speeches that have been made to-day suggest that there is almost as much hope for amendment from this side of the House as there is from the Opposition Benches.
Admittedly, the Bill is the outcome of anxiety about alleged abuses. Doubtless there have been abuses with regard to retail prices, which originated, I suppose, in the wholesale trade, and the noise made in seeking out what should be done rose almost to hysteria. It seems to me that in this Bill there are grounds for two very different approaches: first, regarding resale price maintenance; and secondly, regarding agreements among industrial bodies in their own interests. I believe that most of the concern is about the second point.
The Government are fortunate in having in your Lordships' House a mass of opinion with long experience in industry at their command. There are those who think that the President of the Board of Trade, who is in charge of the Bill, and whose eloquence and forcefulness in debate we admire, is perhaps less inclined to take the advice obtainable in industry than he might be. We are glad to think that in this House the noble Lord, Lord Mancroft, who is to deal with the details of the Bill, in addition to his successes at the Bar has had the advantage of a commercial experience which enables him to realise the implications of much about which there is complaint. The speeches made to-day have covered the most important angles of the second of these 56 points, the agreements between trades. We have heard two impressive speeches, from the noble Lords, Lord McCorquodale of Newton, and Lord Baillieu. The first speaks with the advantage of a practical commercial experience added to his Parliamentary experience. The noble Lord, Lord Baillieu, in addition to bringing a rich experience of all industrial questions, has the advantage of being a past President of the Federation of British Industries and therefore is in a position to speak with exceptional authority. We are grateful to them for their clarity of expression on the particular points which are worrying industry. I do not think there is any need for me to supplement what they have said, but I hope sincerely that the Government will be prepared to accept an Amendment to Clause 20 of the character suggested by the noble Lord, Lord McCorquodale of Newton, and supported so clearly by the noble Lord, Lord Baillieu.
May I proceed to give a few practical experiences, as one who, like other noble Lords, has been from early boyhood in business, wrestling with the complications and details of industry? I pick on a point made by the noble Lord, Lord Gridley. He rightly asked: what would be the position of industry under the proposals of this Bill as it stands were there to be a repetition of anything like what occurred in the 'thirties? I have vividly in mind the unemployed who, by the end of 1931, formed a high percentage of the insured population. At that time steps were taken to bring about what was called "rationalisation" with the sympathy and assistance of the Government. Action was taken to eliminate redundant plant and to get price agreements, purely for the purpose of helping employment and improving the solvency of industry. The noble Lord, Lord Baillieu, laid stress on that point: that profits must be made in industry if research and the replacement of plant is going to be possible. There are the two spectacular examples of the Shipbuilders Employers' Federation, who have a redundancy scheme, thanks to the unselfishness of Sir James Lithgow, who sacrificed one of the best and newest plants in the country to the cotton industry, which resulted in the setting up of the Lancashire Cotton Corporation with the full complicity, as well as the sympathy, of the Government. Without 57 that, where should we have been with regard to employment at that time?
I am going to refer to another point that occurs to one at this time: namely, the emotional urge revealed in the Factories Acts passed in the latter part of the last century and the early part of this century, to correct labour exploitation. Quite rightly, there was concern in the country at the exploitation of female and juvenile labour. What has happened? Excessive curbs were put on industry at that time. Where do we stand to-day as a result? I am glad to see that the noble Lord, Lord Wilmot of Selmeston, has just taken his place; he would no doubt corroborate me if he spoke from the point of view of industry, rather than from his political views. Because of this legislation, industry to-day, in many branches, is hampered in the substitution of the two-shift operation for one. What is the result? We are limping along with antique equipment, because it is not possible to introduce new, up-to-date equipment unless more than one shift is operated. Interest runs twenty-four hours a day, and you cannot work new equipment for only eight hours. The reason why its use is so restricted to-day is the same hysterical, emotional urge arising on humane grounds from alleged, and probably true, abuses that moved people fifty or eighty years ago. I suggest that that is exactly what this Bill proposes. It might pass through this House without the Amendments such as the noble Lord, Lord McCorquodale of Newton, and the noble Lord, Lord Baillieu, have recommended. So it is that one urges with extreme sincerity the hope that these Amendments will be taken into consideration in due course.
I have suggested that we are sometimes carried away by sympathy and emotion, and I am going to say a word about the current prostitution of the word "automation". It is being used as the reason for every kind of redundancy in labour; and because there are these occurrences, the suggestion is that the Government must rush in and take some action. I would respectfully remind the House, as an illustration of this point, that in one industry with which I am familiar, the wool textile industry, within the twelve months of 1951 changes of fashion resulted in the laying off of no fewer 58 than 20,000 operatives. Is there to be the hysterical belief that we must rush into legislation to change something that is caused merely by a momentary change in industry? I was horrified at the thought that the right honourable gentleman who ii now in charge of labour should have suggested that industry must take charge of the result of that sort of occurrence. Can any industry suddenly take charge of 20,000 operatives without going to ruin? It must be a national matter, and not one for industry.
I would add one other point. I spent a large part of my early industrial life in the United States, and I saw at close range the handicaps with which in many ways United States industry worked wider certain phases of the Sherman Anti-trust Law, which was legislation emotionally rushed into, designed to correct certain abuses. The net was thrown much too wide, with the resulting inconveniences to trade, and particularly the export trade, of which we are all aware, and which the noble Lord, Lord McCorquodale of Newton, emphasised. So it is that I hope, with sincerity, based purely on experience of a life spent in the United States and in this country in all the problems that arise in industry, that there will be sympathetic consideration given by the Government when these Amendments are moved, incorporating such things as have been referred to to-day.
§ 5.46 p.m.
My Lords. I feel a great sense of responsibility as, I believe, the last Back Bench speaker in this debate, which has reached such a high level. I cannot claim the experience of industry and business that has illumined almost every one of the speeches of noble Lords who have taken part in the debate so far, other than, perhaps, the Lord Chancellor, who suffers from a similar handicap to myself. But I think I can claim to be probably the only Member of your Lordships' Eloise who has actually advised professionally on the meaning of some of the more obscure phrases in this Bill, prior to its becoming law; and I think I must be the only Member of either House who has composed a textbook on the subject of the Bill in anticipation of its becoming an Act. I am tempted, therefore, to pass one or two reflections upon its general policy and conception.
59 I do not mind confessing that I started with a good deal of prejudice against the Bill. To begin with, like two or three other noble Lords from industry who have already spoken, including my noble friend below me, whose maiden speech we all so much enjoyed, I reached manhood in an age of slump and depression, under the constant reproach of somewhere between 1 million and 2 million unemployed. It was in that period that most of the restrictions that we are discussing arose, whether restrictions on the part of industry or business, or restrictions on the part of trade unions. I am not so clear in my own mind—I was not, at any rate, to begin with—that those restrictions were as evil in a time of slump as, manifestly, they are in a time of boom. I confess that I still have some mental reservations as to whether this legislation, or any other legislation designed with a similar effect, will withstand a long period of slump. I certainly hope that it will never be put to that test, because I think one of the happiest features of the political life of our country since I can remember taking an active interest in it has been the disappearance of the constant threat of unemployment which used to overspread Parliamentary debates year after year in the years before the war. But I doubt whether legislation which is clearly a product of a period of boom would, in fact, stand the test of a period of slump and I doubt whether it ought to. However, let us hope that it is never put to the test.
Secondly, I do not share a general prejudice against business simply when it is big. I have never been able to understand that prejudice. My own view is very much that of Mr. Lilienthal, with all his experience of the Tennessee Valley Authority and the Atomic Energy Commission in the United States, when he said, in a recent book:As a further consequence of this refusal to give honest recognition to the actual benefits of Big Business—to the individual and to the country—under the new conditions of today, the basic governmental business policies and the everyday enforcement of the antitrust laws"—he was, of course, referring to the Sherman Act of the United States, and not to any legislation here—are still based largely upon prejudice created by abuses long since corrected, upon an anti- 60 quarian's portrait of another America, not the America of the mid-twentieth century. The legal antagonism to size as such causes a profligate waste and distraction of the energies of management and technical talent of business. It substitutes, in business councils, the supercaution, not to say timidity, of the lawyer for the enterprise and boldness of a business manager and technical expert. It bogs down the Federal courts with endless and unmanageable litigation to the detriment of all other litigants. Because much of our public policy towards Big Business and its expression in interminable anti-trust lawsuits and Congressional investigations is so obviously fruitless and barren, it thereby undermines respect for Government among conscientious citizens.That was written after over fifty years of experience of the Sherman Act in the United States.
I am happy to think that the legislation now proposed here avoids many of the difficulties created by the anti-trust legislation of the United States, and that we may be said to have profited by experience. But I think we should be cautious in attacking business simply because it is big, and in attacking agreements between businessmen when they are small in order to get some of the advantages to themselves which would normally enure only for the advantage of those who operate large concerns.
Having said that, I have been driven to the conclusion, despite my natural prejudice, that this Bill does provide a viable, imaginative and adequate set of proposals. There were a number of different and difficult choices—rather more complicated choices than the noble Lord, Lord Lucas of Chilworth, seemed to imagine—before the Government when they began to legislate. Of course, there is the possibility of an administrative solution. There is the weapon of complete prohibition, with or without criminal sanctions. There is the system of registration with or without judicial investigation. I think that not enough has been made of the fact that, by and large, the Government have selected as their policy a judicious admixture of all the solutions. The administrative solution, contrary to what was suggested by the noble Lord, Lord Lucas of Chilworth—although I think the suggestion was unintentional—is not altogether ignored by the Government in their policy. The administrative solution exists in the Monopolies Commission, and the Monopolies Commission, although limited in its functions, still continues under the terms proposed in the present Bill.
61 For instance, if I may say so again, in respect to one of the arguments advanced by the noble Lord, Lord Lucas of Chilworth, the Monopolies Commission will continue to investigate where monopoly conditions under Sections 3, 4 and 5 of the Act of 1948 apply—sole agency agreements which do not come within the proper terms of the present Bill. It will also investigate individual price maintenance where monopoly conditions prevail in such a way that a certain business is able to build up a single firm monopoly within the extended meaning of the provisions of the 1948 legislation. Therefore, the administrative solution is given a place in the Government's policy. For reasons which I will advance, I am glad that it is not given a bigger place, but it has been given a place. I hope that the Monopolies Commissicn—to whose work I wish to pay my own tribute—will continue to play a real part in the scheme proposed by the Government.
Secondly, the weapon of absolute prohibition has been given a place in the Government's scheme. Again I am glad that it has not been given a bigger place, but it has been given a place in the absolute prohibition of certain methods of collective resale price maintenance. I would say, in passing, that collective resale price maintenance, as such, is not prohibited, although Clause 23 prohibits the stop list, the collective boycott, the imposition of a penalty, the domestic court and similar methods of enforcement. A direct agreement would, I think, be only within Part I of the Act and not within Part II—though in that I may be wrong. That being so, the Government have, quite correctly, in my belief, imposed the limited absolute prohibition. But they have not gone further, and they have also been correct in abstaining from direct criminal sanctions. The prohibition is enforced by an injunction at the suit of the Crown, and possibly by an action for damages for breach of statutory duty at the suit of a fellow subject. Those, it seems to me, are adequate and reasonable penalties for what is, after all, not a criminal offence and should not be made one.
Lastly, the Government have, as the main plank, in reference to restrictive practices but not in relation to monopoly, adopted the method first of registration and then of judicial investigation. Here I must part company from the noble 62 Lord, Lord Lucas of Chilworth. I know that I am prejudiced. Not only am I a lawyer and the son of a lawyer, but there has been a member of my family in the legal profession ever since my great grandfather joined the Calcutta Bar in about 1812. I am proud of my own profession and my forbears in this matter. I know that we have our defects, and I know that we are not popular, but we have certain prejudices which are not altogether contrary to the public interest in this matter. In protecting the rights of the citizen it is judicial investigation alone which is a guarantee of justice. We saw an example of that only the other day when bureaucracy ran mad in relation to personal liberties. The open and public discussion of justiciable issues is the only way, or one of the essential methods, of protecting private liberty in this country. In this particular field of legislation, there can be no doubt at all that we arc invading a whole new department of private liberties of contract. Therefore for that reason, I should have regarded judicial investigation as absolutely essential.
§ LORD LUCAS OF CHILWORTH
I am sure all your Lordships are grateful for the learned dissertation which the noble and learned Viscount has given us, because a great many of us have not thought our last thoughts on this matter. Would the noble Viscount tell us, if he is in favour of a judicial tribunal, why he supports, or whether he would support, the proposals for two lay judges? I cannot think of any other name for these people, because they are not assessors. Why not a wholly judicial Court? Why bring in laymen who can override a judicial member of the Court on questions of fact?
§ VISCOUNT HAILSHAM
I think the answer will appear shortly from what I have to say, because this is a special kind of justiciable: issue. The essential features of a judicial tribunal appear to me to be these: first of all, that there should be public discussion; secondly, that there should be reasons given for every judgment; and, thirdly, that there should be objective criteria of what is or is not possible under the Act, as it will be. It is the trained advocate, as well as the trained lawyer, who has an essential part in an effective judicial system. People are not always articulate in this world 63 when their rights are attacked. Those of us who have served in the capacity of an advocate know only too well that our duty is not so much, often enough, to put forward bad arguments to support a wrong conclusion, but to bring out of one's own client the inarticulate things which, if he had been properly trained and were emotionally detached from the issue, he would be only too glad to say for himself. That is what British justice means.
It is true, of course, that lawyers do not always make good judges of fact—I confess it with shame, but it is true. In one sphere of the law we have a number of lay members of tribunals. Has the noble Lord, Lord Lucas of Chilworth, not heard of a jury? They are there for the precise reason that lay members of a tribunal are often necessary in this country to explore questions of fact about which the trained lawyer may not be the best possible tribunal. They are presided over by a lawyer. They would undoubtedly be unsuitable members for the present kind of tribunal. This is a novel kind of tribunal, but I think we must not be above experimenting in judicial matters when we are exploring new judicial principles, so long as we do not abandon the essentials of justice; and that is exactly what it appears to me that these proposals do not do.
They provide, in my judgment at least, a method whereby those whose rights, or what have hitherto been their rights, are being invaded can be sure of having their case dispassionately argued. I certainly hope that the Government will stick to their judicial solution of these problems. I do not think it will take long to solve the problems which the Court has to solve. I do not think it will take as long as would an administrative tribunal. Once industry begins to know what is and what is not permissible, it will not have to go to Court and bring the agreements to an end, if similar agreements have been decided against by the tribunal or if they are advised by competent counsel that the agreements would require registration.
I do not think, therefore, that one could possibly say in advance that the judicial solution is an unsuitable one. I will say, with great regret and sympathy, to some of my noble friends in industry that I am rather afraid that the price they will have to pay for a judicial solution is that they 64 must accept the burden of proof. I believe that is, in fact, the price which should be exacted of them. It is not one which I personally like to exact, but I think it is one without which the whole judicial machine might prove, in practice, unworkable. One stresses the proposition that, in order to submit something to a court of law there must be a justiciable issue: that is to say, there must be some objective criteria which can form the subject of a judicial direction as to what the tribunal of fact has to decide.
The noble Lord, Lord Baillieu, in his eloquent and admirable speech, suggested amendments which would entitle the Court not to decide against an agreement which it considered not to be against the public interest. But it would be to deprive the Court of its objective criteria if an exception were made which allowed the Court to make this decision entirely for itself. Different people may have different conceptions of what the public interest may be. At different times the public interest may differ, and lawyers on the whole tend to be guided by precedent. So what was in the public interest in 1931 is certainly not in the public interest in 1956. Therefore I think it is right that the Government should have laid down a series of exceptions within which the agreement must come in order that it may acquire immunity from condemnation under Clause 20 of the Bill. On the whole, that seems to me to be reasonable. There is a great precedent for it.
§ LORD BARNBY
What was obviously to the interest of the workers, in the way of employment, in 1931, would necessarily be against their interest to-day, if I correctly understood the noble Viscount.
§ VISCOUNT HAILSHAM
I do not think it necessarily would, but I think different criteria would apply. At present, the public interest demands the greatest possible expansion of exports and production to reduce prices. In 1931 the great need was to protect employment so far as possible in a world of decreasing prices and deflation. Although I cannot claim the noble Lord's experience, I should have thought that the kind of agreement which imposed restrictions in 1931 in the interests of employment was not necessarily the best kind of agreement in 1956 to boost exports. However, that is something in which I fear I am rather exceeding my own individual knowledge. 65 Assuming that one is right in saying that an objective criterion is necessary, it does not seem to be unreasonable to say that an agreement, in order to secure immunity, must establish that it comes within one or two defined exceptions, one of which is, of course, the protection of employment.
I myself feel that any attempt to introduce an Amendment which would leave it open to the court to decide without an objective criterion of what is or what is not to the public advantage would ultimately destroy the whole judicial solution upon which the Government have placed their hopes. So, although I should like to see a solution by which industry was eased in this matter, I should be rather surprised if the Government proved particularly malleable in this matter. I feel I have trespassed on your Lordships' time for too long.
§ A NOBLE LORD: No; please go on.
§ VISCOUNT HAILSHAM
I should like to say a word by way of tribute, if I am within the Rules of Order—and I think I am—to the Minister who has initiated this legislation. He is an old personal friend of mine. I feel that in many ways he has had a hard road to tread in his period of office in the Government at the present time. He has come in for a great deal of criticism, sometimes unjust. He has, in fact, pursued this particular matter with singular determination and courage. It was he who introduced the amending legislation in 1953 which made the Monopolies Commission an even more effective instrument. It was he who made the Section 15 reference which is really the genesis of this Bill; and it has been he who has devised the ingenious solution which, if legislation is desirable, merits the greatest measure of support in this Bill.
Therefore, I should like to mention this and praise him for his determination and vision in the matter. The test of this Bill in the last resort, or at any rate, in the immediate future, will be its ability to expand the production of this country and to provide a progressive and dynamic industry. If it curbs or inhibits industry in any way, as some noble Lords fear, then the Bill will have failed. I hope and believe that it will not have that effect. With that in mind, I must 66 confess that I shall give my wholehearted support to its Second Reading.
§ 6.8 p.m.
§ VISCOUNT ALEXANDER OF HILLSBOROUGH
My Lords, last July I addressed your Lordships at some considerable length, and perhaps, as some may have thought, rather emotionally, upon the main issue as it affects my outlook on this Bill. I had hopes, from the calm and conciliatory kind of answer that the noble and learned Viscount on the Woolsack made on that occasion that we might have got something nearer to what I desired in this particular Bill. However, I understand that, while I was thinking the matter over in my own room, two maiden speeches were delivered in your Lordships' House, and both came from old friends of mine. One was from the noble Lord, Lord Gridley, who was an old colleague in another place and whose connection with a great deal of valuable work for the equipment of the Royal Navy, as well as other State institutions, during the last war will never be forgotten by me. I hope we shall have the advantage of hearing him often in your Lordships' House. The noble Lord, Lord McCorquodale of Newton, was another old friend of mine in another place. One often finds, in Parliamentary life, that we choose people for our unofficial friends in spite of their political views, because we know them to be personally jolly good fellows. I was very glad to hear from my colleagues what a very good maiden speech he made. I hope we shall often have the advantage of listening to his wisdom.
As in last July, so again to-day I must declare an interest in approaching your Lordships on this Bill—not to-day, perhaps, such a direct interest as some of your Lordships have in particular industries. Nevertheless, a very sweet sort of incense remains to me of my long years in connection with the Co-operative movement and its history in fighting for social justice through people co-operating to do things for themselves, rather than letting the State do them for them. That is something which has always been an inspiration to me as well as to many thousands, and now even millions, of others. For the last ninety-odd years we have had to fight in different stages against being put on the stop list, even back in the 'fifties of the nineteenth century; 67 and in regard to all kinds of discriminating practices against development, we have at least been successful in bringing the matter to its present stage. The noble Viscount, Lord Hailsham, in his remarkably interesting speech just now, seemed to think that this legislation stemmed from a period of boom, and he seemed to be wondering whether it would be able to stand up in periods of slump. He will perhaps bear with me if I say that this Bill has at least come near the Statute Book, certainly bringing some amendments to the law and benefit to the general community—I can concede that at once—but it is almost the first major measure of its kind in the whole of those ninety years of struggle by the Co-operative Movement.
If I may say so, the Co-operative Movement, which was based on the early resolutions and ideas of the Rochdale pioneers, under which it must accept into its membership any member of the community, whatever his race, creed, political views or anything else, would probably have been as neutral in the political world as, largely, it was in its inception, if it had not been for organised opposition in discriminatory and restrictive practices which steadily developed and came to a head in the course of the First World War. The Co-operative Movement, then in its neutral position, fought solidly for three years against open discrimination, not interfered with by the Coalition Government, because the allegations of injustices that were being levelled against the Co-operative Movement seemed to fall upon deaf ears. It was only then that a great Liberal director of the Co-operative Wholesale Society, the late Sir Thomas Allen. took the step of calling a special congress in Swansea, saying that if they could not get justice from the Government their only remaining right was to appeal to Cœsar—that is, to the people. Since then, because we have had to engage in political action, we have sometimes had the finger of scorn pointed at us by people who agree with the views often expressed from the opposite Benches.
The Bill which we are now discussing has emerged only because of the decision of the Labour Government to pass the original Act, I think in 1948, under which the Monopolies Commission was set up. The Commission have reported on a 68 number of individual matters, but I think there are about sixteen matters still to be dealt with; and apparently, under this Bill, most of them will be wiped out by the emasculation of the Commission. In their Report which was published last year, the Commission made it clear that the majority view was distinctly against these restrictive and discriminatory practices.
It is a pity to have to make long quotations, but may I make just one or two short ones from the Commission's General Conclusions? I take first of all a few lines from paragraph 240, where they say:We have considered whether there may be circumstances in which our conclusion that the practices with which our reference is concerned are generally against the public interest may not hold good. We have not in the course of our inquiry come across any instances in which we were greatly satisfied that such practices were beneficial.When I listened just now to the interruption by the noble Lord, Lord Barnby, that passage was very much in my mind.
Then, if one looks at paragraph 246 of the same General Conclusions, one sees this comment:We believe it follows logically from the conclusion that these practices operate generally against the public interest that they should be generally prohibited.I was glad to hear of the clear dividing up of the action of the Government by the noble Viscount, Lord Hailsham, showing what is the limitation in the Bill upon complete banning. The Commission go on to say:They exist in a large number of trades and, once it is accepted that they are generally harmful to the public interest, it is wrong that they should be permitted to continue because upon examination a few exceptional cases may he found in which they are on balance advantageous.So, clearly, it was in the minds of the Commission that the general practice of restriction in trade justified them in proposing a general ban and leaving to those engaged in such practices the onus of proving that their particular practice was not disadvantageous to the public interest.
Turning to paragraph 247, we find that the Commission say:A general prohibition would give industry clear and unequivocal guidance as to the Government's policy, and would avoid the uncertainty and waste involved in detailed inquiries in each individual case. It would be much more effective than placing any reliance 69 on the voluntary abrogation of harmful agreements which might result from publicity following the registration of agreements.The Government, in their wisdom, have decided dead against that Majority Report of the Monopolies Commission. Nothing done under the original Act is likely to be implemented by anything in the present Bill. The general objective stated by the Labour Government in 1951 was that if there was to be price-fixing it must be the maximum price in the interests of the community and must not be a restriction on the trading community from passing on to their various customers or, in the case of co-operative societies, their members, any advantages in surplus profit which might accrue from modern development, economy and saving in their administration. So far as I can see, there is nothing in this Bill which does anything to make progress towards that most desirable objective.
Instead, there is to be a partial ban—it is an important ban, which I welcome—upon many of the most harmful collective trade agreements which have operated against the public welfare in the past. But whether that ban will be effective in each of those particular practices, we shall have to wait and see, because the fact that the other part of the Government's policy is to allow practices which have already been proved to be to the detriment of the general community to continue, and that it will give individual industrialists or merchants, as the case may be, power to go to a special court to implement their restrictions against the public, raises a query in my mind.
As a layman, I should be delighted to hear from the noble Viscount, Lord Hail-sham, or from the noble and learned Viscount who sits upon the Woolsack, or the Minister who is to reply, whether it will be watertight; whether the ban on collective agreements under the Bill will prevent constituents of trade associations or general amalgamations (perhaps one large amalgamation with vertical control at the top but a whole series of different subsidiaries) from making a separate case for price enforcement on a particular commodity. Many of us with long experience of handling such cases on an individual commodity basis see nothing to prevent that from being done unless we can get inserted in the Bill the kind of general statutory safeguard which 70 was so roundly disposed of by the President of the Board of Trade in another place.
As to the effect upon co-operative societies, I would say, first of all, that they have met it with very gloomy views for the future. With nearly 3,000 delegates at their annual conference this year, they have condemned Her Majesty's Government for their action and are getting their societies all over the country to do their best to work against the implementation of this Bill. I believe they will not be without effect in the future formation of political views on questions of this kind. We have already had something to do with bringing the matter to its present state and we shall hope to do more. At a time when Her Majesty's Government are faced with such enormous economic problems, not the least of which is their fight against mounting inflation, with its development of the constant spiral in prices and the high cost of living, I am Personally concerned as to why Her Majesty's Government should seek to put any brake whatsoever on anything which can result in bringing efficiency in industry and in distribution, to the benefit of the consumer, with a consequent effect on the ultimate cost of living index and as a check against inflation. As soon as prices go up, one must expect that there will be a general communal demand for increased wages to meet the higher prices.
I suppose that the fact that Her Majesty's Government are still concerned about the general economic position is evidenced by the personal appeals which the Prime Minister has been making to different sections of industry in. this country. It looks as if in one or two limited quarters, notably in the nationalised industries, some attempt to peg prices is already being made. If Her Majesty's Government want to be really effective in the long run, their objective must be to improve at all hazards the position of the consumer. That is the real point, and I was very glad that my noble friend Lord Lucas of Chilworth emphasised it in making his opening speech from our side this afternoon. Instead of the feeling that that is the Government's objective being fixed in the mind of 11½ million co-operators in the country to-day, they are feeling exceedingly upset about the failure to imple- 71 ment the promise which has been supported by the succession of events mentioned by the noble and learned Viscount on the Woolsack in his opening speech to-day: first, the action by the Coalition Government for war purposes in 1944; the Act of 1948; the appointment of the Monopolies Commission, and the follow-up in 1953 by the expansion of that Commission—the one you are now going to emasculate—by increasing its numbers. That was done by this Government in 1953 when the Commission were given greater powers to go on with their inquiries. But that has not been achieved and we have to regale co-operative consumers and many other consumers also with this procession of events.
Co-operators are people combining together for self help, an objective which the Party opposite has always so applauded. In 1932 I had to conduct the fight against the proposals of the Government before the Norman Raeburn Committee on Income Tax, and I should like to remind your Lordships that what was then decided, and inflicted, was a considerable blow against the progress of the Co-operative Movement and is not always in accordance with the views expressed, for example, by the Special Commissioners of Inland Revenue. I have a great interest in football clubs, more particularly as National Patron of the Football Supporters' Clubs. There was recently a prosecution by the Inland Revenue authorities for tax upon money raised by a football supporters' club for the benefit of the members of, I believe, the Colchester Football Club. What did the Special Commissioners say after learned counsel for the Inland Revenue had been heard and some learned brother of the noble Viscount, Lord Hailsham, had replied for the other side? That this was a club and that they did not exist for profit; they existed in order to cooperate in an effort for a general community purpose. So the Inland Revenue lost their case, to the great joy of a very large number of football supporters' clubs in this country.
Yet that is a principle, upheld by the Special Commissioners of Inland Revenue, which was, in part at least, denied by the Norman Raeburn Committee against the interests of the cooperative societies, who exist not to make 72 a profit to be passed on to individuals but as a great mutual organisation to secure the lowest possible cost of living by their collective action. I would say to the noble Viscount, Lord Hailsham, that I too have for a great many years made a study of the growth of big business in the United States as well as in this country, and have very often argued from some of the dicta of great professors like Taussig as to what does or does not constitute a monopoly. I would probably agree with quite a part, but not all, of what the noble Viscount said this afternoon. There is no great sin in having a big business. The point is what is done with the great savings which result from a big business. Whether a combination is vertical or horizontal very often affects this question. In a combination which secures all the economies that come from wide and collective buying and a large distribution organisation, this question whether it is for the benefit of the whole community or not depends, at least in degree, on how that combination distributes not merely its goods but such surplus profits as it may make as a result of its collective economy.
Most of these trusts and combines took their lessons from the Co-operative Wholesale Society in the distribution of collective economies. But then they come within the dictum of Professor Taussig, for he says that a trust or combine becomes a monopoly when all these benefits are enhanced and held for the limited number of shareholders in the company system, and not distributed to the general community but used as the basis of large fortunes made on the Stock Exchange. The Co-operative Movement do not have to go to the Stock Exchange for capital it comes out of the savings of the members, as the result of their collective, mutual action—and from almost no other source. There you have big business operating in the interest of the masses, with no ban upon any single member of the community. Any individual can come into the organisation on the ground floor and without premium. And that is the kind of organisation for which we do not seem to be able to get any real sympathy from the Conservative Party. We get it occasionally from noble Lords, such as the noble Viscount, Lord Bledisloe, who has advocated the development of agricultural co-operation which, as he suggests, could 73 do a great deal towards bringing to an end the need for heavy Government subsidies.
I do not suppose that the people who have had the duty of considering this Bill have ever considered that matter. Millions of pounds have been distributed by agricultural co-operative societies as the result of their mutual operation together and their getting bonuses back on their business untaxed. That is a very great advantage indeed. But what is to prevent any individual producer or distributor of agricultural machinery from laying down a discrimination now, from coming to this new Court and saying: "I want the power to enforce this"? What sort of action is this Government taking towards dealing with these problems? While it is helping to a certain extent with this limited legislation affecting collective agreements, it is exposing the public to the risk of fresh litigation instituted by means of individual approaches to enforce agreements in a Court against whose decisions there is no appeal except on points of law. Questions as to facts or merits, questions as to whether a matter has been properly argued and adjudicated upon in these special courts, will not be accepted as a basis for an appeal. There must be a point of law.
§ VISCOLTNT HAILSHAM
I think the noble Viscount is rather overlooking the fact that the Restrictive Practices Court has nothing whatever to do with Part II of the Act. The public are not parties to the litigation in the Restrictive Practices Court except in the rather limited sense that the Registrar is.
VISCOUNT ALEXANDER OF HILLS-BOROUGH
All I have to say is that I read the speeches of the Ministers supporting the Bill in another place, and if the noble Viscount, Lord Hailsham, reads what I have said, I think he will not consider that I have used any wrong words or put any words in the wrong place. I think he will find that I have not gone away from what Ministers said in answers which they made to Amendments moved across the Floor in another place.
Unless my experiences in dealing with trade questions of this sort are going to be very different in the future from what they have been over a number of years in the past—
VISCOUNT ALEXANDER OF HILLS-BOROUGH
All I can say is that I am not encouraged by the general trend shown by the Conservatives in the matter of their treatment of the Co-operative Movement in this, country. I have already referred to the Raeburn Committee of 1932, and I would recall also what we have seen in the case of a Copyright Bill. The Government seized on a legal judgment of the High Court, given years after the principal Act had been passed. They found only a little hole in the wording of the Statute, about which the gramophone companies had never complained, but since then an unjust royalty, in my view, has been paid to gramophone record producers. What did this Government do? Instead of amending the original Act, they stuck that judgment into a new Act, and made this unjust practice permanent.
Consider also what is now happening about taxation. The Government have done something that I think is admirable in agreeing that the first £600 invested in the Post Office and certain trustee security banks shall be exempt from income tax. But that does not apply to the co-operative society, the greatest working-class thrift organisation of its kind in the country, an organisation which not only uses its thrift for the development of its business, but holds in the interests of its eleven and a half million members, tens of millions of pounds' worth of Government securities. And what the Government are doing is to switch from the co-operative circle to the other circle a certain class of saving. It will not add to the national saving. As was pointed out in the Midland Bank Quarterly Review a few weeks ago, that is the kind of difficulty that building societies and others are up against.
Coming back to this Bill, we see the almost cavalier fashion in which the interests of eleven and a half million of our fellow-citizens were dealtwith in the earlier stages of this Bill in another place. What sort of view of the Conservative Government do you expect the people to take? Is a restrictive practice against eleven and a half million people to go forward? It is certainly against the public interest that it should. According to the President of the Board of Trade—if I have read correctly what he said in answering an 75 Amendment which was moved to Clause 20—he was not concerned in legislation for or against the co-operative societies; the Bill, he said, must take its course. So we find him much less sympathetic to the Bill than Lord Hailsham, who certainly put his forensic study of the document very strongly and in a way which brought certain aspects of it before us most clearly. We were most grateful to him and I shall look at the Bill, in the light of what he has said, even more carefully than I have already done. One thing that struck me very forcibly was the skill with which he presented to your Lordships the complete necessity for having objective criteria in putting the Bill into operation. What are the objective criteria required, and who produces them? I should like an answer to that. Who produces the objective criteria?
I say again, as I have said before, that the present Government are dealing with this subject as they have dealt with so many other matters: they are dealing with a very great and urgent subject as if they were not quite sure of themselves, and not sure what section of the community they could best please. What they are doing is handing over the job of Parliament (whose job it is to decide what is or is not in the public interest, for Parliament represents the people) to a tribunal, a tribunal of one learned judge and two ordinary laymen, who are to give a judgment which must be final as regards fact, for there will be no appeal on fact, or anything else except points of law.
§ VISCOUNT HAILSHAM
The noble Viscount said that he wanted an answer, and I hope that he will not mind if I try to give him one. What he has said is such a travesty of what the Bill contains that I feel that I cannot keep silent. The objective criteria are laid down in paragraphs (a) to (g) of Clause 20 (1). What the Court has to decide is whether any particular agreement on the evidence comes within those criteria. There is another objective criterion in Clause 20 (1) which the Court has equally to apply to particular agreements and which Parliament has laid down must be applied.
VISCOUNT ALEXANDER OF HILLS-BOROUGH
I understand the noble Viscount. He says that all the circumstances vary so much. But when the 76 Government had a choice why did they not accept the Majority Report of the Royal Commission? They had the chance of accepting the Report of the majority of the Royal Commission that laid down that these practices were contrary to the public interest, though it said that there might be a few cases in which exceptions could be made, and that the best way to deal with the matter was to ban them. We are now going to have a great many short sentences of legal jargon put into a clause, or into the Schedule of the Bill, which the noble and learned Viscount will regard as objective criteria. We are going to have in this Court day after day, and week after week, a whole series of cases, some large, some small, some important, some indifferent; and as successive cases come before it this tribunal will build up a new series of legal rulings by reference which many citizens will not understand at all. I think it is a very "poor show". The noble and learned Viscount who sits on the Woolsack said that he himself had carefully examined the position and that he was satisfied regarding the course which had been taken—I am not using his exact words, but I hope I am not misinterpreting him. I am sorry that he has come to that conclusion, because he, or his successor, is going to be an important functionary in this matter. He is going to have the duty of recommending the Judge, who will be the central legal figure in the Court; and I suppose that, with his ministerial colleagues, he will also be responsible for the appointment of the laymen to serve upon it. I feel quite sure that this Bill will not work well.
In conclusion, I would say this to the Government: I feel most strongly that you can never have something like this, which is done against the co-operative societies, without ultimately having your chickens coming home to roost. You may find the effects of this policy in the actual economic results; you may find the effects of this policy in different political views; and you may find the effects of this policy perhaps in a more unreasonable attitude in regard to legislation in the future. I pray the Government now to reconsider this matter before we come to the Committee and Report stages of the Bill. I do not think that there is any thing very wrong about changing one's mind upon what is going to be 77 effective in defending the common people —it would not be the first time. In the past the Tories have been productive perhaps of more actual Statutes of social reform than any other Party.
§ SEVERAL NOBLE LORDS: Hear, hear!
VISCOUNT ALEXANDER OF HILLS-BOROUGH
But usually because they had resisted for so long and the power of educated opinion had grown so mach outside that they had to give in.
VISCOUNT ALEXANDER OF HILLS-BOROUGH
Certainly—I could prove it if I had time to give a political lecture, which I do not want to do. It reminds me of a great saying of the Rev. Guy Pearce, a great Methodist preacher, which he used when telling his Sunday school teachers what to do. He used to say that they must do what his mother used to do—give them what they like, not too much at a time, and give it to them warm. With this Bill you are following the old policy. You are giving them what they want by giving them the Bill; by banning a limited number of collective agreements, you are giving it to them not too much at a time; and you hope that when the Election comes you will be able to give it to them warm as well. You would do much better if you were to adopt a purely objective policy which is right for the common people and not merely for individual profit-making trade interests. If you were to do that, you would probably carry the majority of the people with you.
§ 6.45 p.m.
§ LORD MANCROFT
My Lords, it is nearly a year since we last debated this complex but interesting subject. On July 27 we had a debate on the whole question of monopolies and covering some of the proposals which appear in the Bill we are discussing this afternoon. Recently I have re-read the debate, as many of your Lordships have also done, and I noted with interest some of the advice given by the noble Lord, Lord Lucas of Chilworth, who spoke with great authority on this matter, after a lifetime of experience. He said that, whatever we did with this Bill, we should not be cowardly: we should make quite certain that it was not an agreed measure. I do not think that anybody could describe this as an agreed measure. 78 Nevertheless, it has received front most of the noble Lords who have spoken this afternoon a remarkably powerful degree, of support for which we on the Government Benches are grateful—indeed a much greater degree of support than we thought we would receive for the measure when we discussed its outline some eleven months ago.
There may be need for amendment here and there. My noble friends, Lord Saltoun and also Lord Barnby, who made such an interesting and courageous speech, asked me whether there was a chance of amending the Bill despite the fact that it had been fully considered in another place. Of course, the fact that it has been considered in another place does not preclude us in any way from amending it if we so think fit; but it was exhaustively considered there and I do not think that there is much ground on which we shall be able to give way. But of course we shall examine everything your Lordships wish to say in Committee with the care it deserves. Certainly in regard to the detailed matters brought up on Clauses 7, 20 and 23, we may possibly have to look at them again carefully. We have the advantage of the assistance in your Lordships' House of a fair number of experts in this field, reinforced by two newcomers, the noble Lords, Lord McCorquodale of Newton and Lord Gridley, to whose maiden speeches we listened to-day with such interest. I am sorry that the noble Viscount, Lord Alexander of Hillsborough, did not have the same pleasure. Both noble Lords bring a great, expert knoweldge in this subject to cur advantage, and we hope that we shall hear them on this and other subjects on many future occasions. Alas! I am not an expert on this matter, and here I bear a slight grudge against my noble friend Lord Hailsham. I did not know that he had written a textbook on the subject. If I had known, I would certainly have purchased a copy and studied it carefully. I confess that I have studied the work he wrote called The Case for Conservatism, and I have been making speeches out of it every Saturday ever since.
The noble Viscount, Lord Alexander of Hillsborough. who has just exploded in such a delightful and interesting way, made the same point to-day as he did on the last occasion—namely. that it is essential that we shall have prime regard 79 to the interests of the consumer. I think that that is what we have done in the Bill. The noble Lord, Lord Grantchester, drew attention to this, as also did the noble Lord, Lord McCorquodale of Newton. It is of prime importance that the consumer's interests should come high in the list of interests to be considered, but not, as the noble Lord, Lord McCorquodale of Newton, pointed out, to the detriment of the producer. We have tried to protect the consumer's interests, but not at the expense of the producer. I was glad to hear the noble Lord, Lord McCorquodale of Newton, emphasise the high standard of business integrity in this country, a point which was also reinforced strongly by the noble Lord, Lord Baillieu. We often hear, both politically and non-politically, casual and careless slurs on big business as if they were clichés—used as a manner of speech. Therefore, I was glad to hear that point put so strongly as it was by my two noble friends.
The noble Lord, Lord Baillieu, raised an important point on Clause 20 which I should like to deal with straight away: that is, the question of the onus of proof, which he elaborated in some detail. As your Lordships now know, the onus is put on the parties to an agreement to satisfy the Restrictive Practices Court that the restrictions accepted under the agreement are not contrary to the public interest. The assumption is that competition is generally desirable and that it is up to the individual to show that in his case the restrictions on competition are justifiable. This does not mean, however, that the parties are to be pronounced guilty before they can prove themselves innocent. Let me emphasise that proceedings under this Bill are not criminal proceedings. The object is to define when it is in the public interest that the freedom of the individual to trade should be limited. It is not unreasonable, I should have thought, that the parties to an agreement which limits their own freedom in this respect, and in so doing limits the choice of other people as to the price they pay for the goods they make, should be asked to show that this is justified. That is the reason for this admittedly controversial decision to place the onus of proof where it now lies.
Let me now turn to the principal criticism levelled by the noble Lord, Lord Lucas of Chilworth, and one or two other 80 noble Lords—namely, the question of the slowness that may be expected to arise from the procedure. The noble Lord is worried that these proceedings will drag on and on; that it will be a long time before the Court gets to the root of any matter; there are so many to be considered, and so on. I do not pretend that we shall get off in a flash, and I feel that it would Abe unwise to try to do so. We do not want to have a rough, hit-and-miss justice. On the other hand, we want to get down to work as quickly as we can. So the Government intend to call up under the first registration order (under Clause 8) the most important classes of restrictive practices; that is, price rings, agreed tendering and collective discrimination. I think your Lordships will agree that these form the greater part of the restrictive trade agreements which exist—and I am afraid I could not begin to estimate their number. The period allowed for registration will be about three months from the making of the order. The order will he made as soon as is practicable after the Bill is enacted —and your Lordships' guess as to when that will be is as good as mine. The operations of the Restrictive Practices Court can be accelerated as time goes on by the provision in Clause 22 for summary determination of cases.
Here I come to a point made by the noble and learned Lord, Lord Meston, and my noble and learned friend Lord Hailsham. They both pointed out that it is more than likely that after a short time cases will start to run according to pattern, and business and those advising business will see which way the Court is deciding in types of cases and will change their conduct and re-establish their affairs accordingly. It may be—this is only a guess—that after a time, when we see whether the Court is running firmly along one line of thought in its decisions, it will be necessary for a minor reform of the law to be made.
§ LORD LUCAS OF CHILWORTH Would the noble Lord make it clear that my understanding is correct
that the enforcement of conditions as to resale price maintenance set out in Clause 23 will come into force immediately on the passing of this Bill—in other words, that those conditions will be outlawed straight away, and will not have to be the subject of an appearance on agreements before the Restrictive Practices Court?
§ LORD MANCROFT
I should like to check that. I understand that Clause 36 (2) covers that point.
I was saying that there might be a possible alternative to meet the difficulty the noble Lord, Lord Lucas of Chilworth, raised in his speech on the subject of speed. The alternative that obviously springs to mind is of a ban on certain classes of restrictive agreements, subject to appeals to a tribunal. It has been suggested that that would be more expeditious than the Government's scheme, if the appeals were limited in number. But I do not think it would be and, in practice, the tribunal would be examining agreements on much the same scale as the Restrictive Practices Court, with the disadvantage that it would not select cases according to their importance. If restrictive agreements were to be banned, subject to appeal, it would not be equitable to impose the ban until the appeal had been heard. That would amount to much 'the same thing as the Government's scheme of letting agreements operate until they have been covered by the Court.
VISCOUNT ALEXANDER OF HILLS-BOROUGH
Would not the noble Lord agree that experience is in the other direction: that is to say, that on the introduction of the original policy of the Government, before the Bill, some progress had begun to be made? As the Commission pointed out, they have come across few cases where the continuation of the restrictive practice could be said to be in the public interest. Surely, the conclusions of the noble Lord are all wrong. If the noble Viscount, Lord Hailsham, is right in saying to industry that perhaps, on the whole, in the future they had better be prepared to accept the burden of proof, that argument, surely, is an argument against what the noble Lord, Lord Mancroft, is now saying.
§ LORD MANCROFT
I do not think it is at all. It is true that when we see the pattern of the Bill working as an Act, various businesses will change their plans in order to fall into line with what is being decided. We still feel that this is probably the quickest way to carry out the wishes of the Government.
§ LORD LUCAS OF CHILWORTHI
I must press the noble Lord on the point I made. I want to know whether the prohibition of agreements for collective enforcement of conditions as to resale comes into operation on the passing of this Bill; and that the resale price agreements do not have to go to the Restrictive Practices Court before they become prohibited. That is the general understanding of the Ministerial pronouncements made up to date.
§ LORD MANCROFT
Let me take the noble Lord to Clause 36 (2), which says:This Act (except subsection (1) of section eight and section 26) shall come into force on the expiration of the period of one month beginning with the date on which it is passed.Clause 8 (4) provides that:The power of the Board of Trade to make orders under this section shall be exercisable by statutory instrument; and an order under this section shall be of no effect until it is approved by Resolution of each. House of Parliament.Clause 26 (6) provides that:This section shall come into force on such date as may be appointed by order made by the Board of Trade by statutory instrument.I think that covers the point.
§ LORD LUCAS OF CHILWORTH
Would the noble Lord answer me the plain and straightforward question: when this Bill comes into force, which is one month after the commencement of the Act, do agreements for collective enforcement as to resale become illegal?
The answer is that it comes under Clause 36 (2). There is no question at all that it is covered by that subsection.
§ LORD LUCAS OF CHILWORTH
If the noble and learned Viscount sit on the Government Front Bench and make a Government pronouncement, I will accept it. But, unfortunately, the only one who can make a Government pronouncement on this is the noble Lord who is replying or the noble and learned Viscount on the Woolsack.
§ LORD MANCROFT
I thought I had made it clear to the noble Lord already. If I have not, I apologise.
§ LORD MANCROFT
It is exactly what I said to the noble Lord just now.
I now turn to an entirely different point that has been causing some uneasiness—namely, the question of the actual constitution of the Court, the lay members and their position in the Court. At the time of our last debate eleven months ago, the Government had an open mind as to what sort of tribunal they would want. But the weight of opinion in your Lordships' House was strongly in favour of a judicial tribunal, which is what we are now proposing. It was very much the weight of opinion in your Lordships' House which influenced my right honourable friend in coming to his final conclusion. I feel that the administrative tribunal would have been a mistake: for one reason, because it would not have commanded the confidence which I am hopeful that this judicial tribunal will command. Some noble Lords have made great play about "a lawyer's paradise"—I believe the noble Lord, Lord Lucas of Chilworth, used those words—and I was delighted, as a member of the same profession, to hear my noble and learned friend Lord Hailsham conduct such a spirited and serious defence of the legal profession, its merits and the assistance which it provides to the community.
§ LORD MANCROFT
That, I think, is putting it a little lower even than the noble Lord, Lord Lucas of Chilworth, need put it. This tribunal will, of course, carry out the functions which my noble and learned friend Lord Hailsham has outlined: it will not be a "lawyers' paradise." I have heard that expression thrown rather vulgarly across the Floor of the House ever since I have been a lawyer. I have heard that expression used at the Bar about the lack of work there. I have never known how those two viewpoints can be reconciled.
What we expect is that nearly all the lay members will be employed full-time in the work of the Court. It may be convenient, however, in the case of Northern 84 Ireland and Scotland, to appoint someone who need spend only part of his time on the work of the Court. He will not, of course, be able to spend the rest of his time in business activities which conflict with his work in the Court. The qualification of, "knowledge of or experience in industry, commerce or public affairs" offers, we think, a sufficiently wide field of choice. It could, for example, include people who have been actively engaged in the administration of trade unions. At the same time, it excludes representation of particular interests like consumers. It would not fulfil the Government's purpose if the lay members were to be merely assessors. The particular kinds of experience and expertise which they can contribute will be important factors in the formation of the Court's judgments.
The lay members cannot outvote a Judge on a point of law—let us get that point established. On other matters, the judgment of the Court will be a single one, delivered by the presiding Judge. The Government do not consider that any useful purpose would be served by the delivery of separate judgments where the members of the Court disagree, since they would not be concerned so much with solving legal questions as with arriving, as so many of your Lordships have pointed out, at a balanced view on the considerations before them—some of them economic and some of them, of course, social. The Government regard as ill-founded the fears that the dignity of the Judge is threatened by the obligation placed upon him to deliver a judgment with which he may disagree.
The next point of importance with which I wish to deal is that raised by the noble Viscount, Lord Alexander of Hillsborough—who, both on the last occasion and to-day, read portions of his own work to us, to our great entertainment and profit—namely, the Cooperative Society dividend. He did it in a most entertaining speech, in which he managed to do something which I did not know even the noble Viscount would do. He managed to bring the Cawardine case into his speech on the co-operative dividend. That is quite an achievement. He naturally feels very strongly about this matter. I hope he is not thinking for one moment that any of us on this side of the House is in any way hostile to his ewe lamb, the Co-operative Movement or anything it stands for.
§ LORD MANCROFT
That is not my view, and I hope I may disabuse him. I will try to answer as best I can—bearing in mind the fine Saturday afternoon speech he made on this subject—and will put to him, as calmly as I can, the facts which Impel the Government to act as they have done with regard to the Co-operative dividend.
Part II of the Bill, as your Lordships know, is not concerned with what constitutes a resale price condition. It does not seek to change anything in that respect. It is concerned only with methods of enforcement. The case for stating in the Bill that the Co-operative dividend is not to be treated as price-cutting has been argued with great vigour by the noble Viscount. The trouble is this. We feel that it would not be possible to stop there. It would be necessary to cover all deferred dividend schemes. As was pointed out by the Lloyd-Jacob Committee, there is an equally strong case for exempting genuine immediate discount schemes. Clause 24, therefore, does not provide an entirely new legal remedy against the societies. They are already liable to legal proceedings for infringement of resale price conditions, where such conditions are embodied in a contract of sale. If it is any encouragement to the noble Viscount, perhaps I might put this point. I think the co-operative societies stand to gain from the Bill in two respects. They will gain in one way because they will no longer be made victims of collective boycott on the grounds that they are price-cutters, and in another way because any organised discrimination against them on other grounds would have to be justified before the Restrictive Practices Court. I do not think the noble Viscount and I will ever come any nearer to each other than this, and I do not propose to waste the time of the House on this rather controversial and emotional subject.
VISCOUNT ALEXANDER OF HILLS-BOROUGH
I think I should inject a little more education into the noble Lord, because I am basing myself on the position taken up by the President of the Board of Trade. The President of the Board of Trade said, in effect, that no clause in the Bill says that dividends should, or should not, count for price- 86 cutting purposes. That agrees with what the noble Lord has just said. It will remain, as it remains now, a matter for the individual supplier to decide. That means that you are saying to the cooperative societies, who have so long been organising and striving against boycott, that they have no cause for action if any individual supplier says, "I will not supply you because you refuse to refrain from giving to your own mutual members a dividend upon the purchase." And I say to the Government you are not doing your duty by the co-operative societies or the public.
§ LORD MANCROFT
I am afraid that nothing I can say will make the noble Viscount believe that we are doing our duty to the co-operative societies, and I do not think much will be derived from going into the matter any further. We forgive the noble Viscount, because we know how strongly he feels, based upon a lifetime of service to the movement.
There is one more point concerned with the duties of the Monopolies Commission to which the noble Viscount, the noble Lord, Lond Grantchester, and one or two other noble Lords referred. The Government believe that the smaller Commission will be adequate to deal with the reduced but important field with which the Commission will be concerned. The Commission will still have jurisdiction over all matters laid down in the Act of 1948, except those agreements which will come within the jurisdiction of the Restrictive Practices Court. This means, I hope, that nothing will slip out between the Commission and the Court. I think your Lordships will agree that it is important to avoid duplication of work between the Commission and the Court. To retain the Commission as a "long stop" to the Court would hardly be the best way to create confidence in the new judicial procedure. On the contrary, it would make for great uncertainty. If the judicial procedures were not a success, Parliament would need to reconsider the whole question. It is no solution to keep an overstaffed Commission lurking around in the background.
I come to the last point upon which most of your Lordships have touched, and with which should like to deal. It is this question of restrictive labour practices. The Bill does not deal with restrictive practices by workers. In the Government's view, there is an essential 87 difference between commodities and the working relationships and conditions of human beings. Legislation appropriate to remedy abuses in one case may not be appropriate in the other. The negotiation of terms and conditions of employment collectively is not, in itself, against the public interest, whereas the presumption underlying this Bill, in the case of restrictive practices between traders is that they are prima facie against the public interest. In any case, the enforcement of judicial decisions would, in general, I feel, be impracticable in the case of restrictive labour practices.
As your Lordships know, appropriate machinery for examining such practices already exists, in the National Joint Advisory Council of the Ministry of Labour. In February last, my right honourable friend the Minister of Labour announced that the Council would once again examine the problem of restrictive labour practices; and in a further announcement in another place on May 1, my right honourable friend said that the National Joint Advisory Council had agreed at a recent meeting Lo draw the attention of the employers and trade unions in individual industries to the urgent need for a new and positive examination of practices which impede the full and efficient use of manpower resources Later in the year the Council is to review the progress which has been made.
I hope I have said enough to convince your Lordships who feel a little uneasy about this Bill that it is based on sound principles. I have taken up an intolerable amount of time, and I have not by any means answered all the different points put to me. I have tried to answer the major ones which have been raised and the main difficulties which have given your Lordships some anxiety. I repeat, as I said before to my noble friend Lord Saltoun, that we will, of course, examine all the suggestions which have been made; and if we can use them to improve the Bill we will most certainly do so. I should like the Bill to work with your Lordships' approval and knowledge, and with the co-operation of everybody. As your Lordships have said, without cooperation and good will, nine-tenths of the value of the Bill will be evaporated. I was very happy to hear my noble friend Lord Hailsham pay a tribute to my right honourable friend the President 88 of the Board of Trade, whose spokesman I have now had the honour to be in your Lordships' House for nearly four years, and whose pertinacity and courage have contributed considerably to this present measure before us. It is a good measure. I do not suggest for one moment that it is not capable of improvement. It is a bold and benevolent measure. I very much hope that your Lordships will be able to accord it a Second Reading.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.