HL Deb 27 November 1956 vol 200 cc551-9

Brought from the Commons; read lª, and to be printed.

REGISTRATION OF RESTRICTIVE TRADING AGREEMENTS ORDER, 1956

2.40 p.m.

THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE FOR THE HOME DEPARTMENT (LORD MANCROFT)

My Lords, I beg to move that the Registration of Restrictive Trading Agreements Order, 1956, a copy of which was laid before this House on November 6, be approved. This Order is of considerable importance. Your Lordships will recall that the Restrictive Trade Practices Act makes the general range of restrictive agreements subject to registration. But registration does not happen automatically. The Act provides that the Board of Trade shall, by Order, appoint the dates on which various classes of agreements are to be registered and the period within which the necessary particulars are to be furnished to the Registrar of Restrictive Trading Agreements. This Order, therefore, the first of its kind, selects certain agreements for registration and prescribes the period of registration. It requires the approval of both Houses of Parliament, and has already been approved in another place.

I should first direct your Lordships' attention to Paragraphs (2) and (3) of Article 1 of the Order. The Act is not concerned only with formal, binding or enforceable agreements; it covers a wide variety of arrangements including agreements which are not enforceable in the courts and even recommendations made by trade associations. The Board could have exercised their powers of selection for registration so as, for example, to cover binding agreements only, but, as they wish to cover informal or less explicit arrangements, it is necessary to say so in the Order. That is why Paragraphs (2) and (3) which for the most part, are substantially repetitions of provisions of the Act, are necessary.

The actual kinds of agreements selected for registration are specified in the six paragraphs of the Schedule to the Order and I think your Lordships will find it helpful if I make a few remarks about this. The Board could have chosen to call up for registration all agreements in particular industries or all agreements affecting particular places, but they have not done so; they have decided to call up for registration agreements which involve certain kinds of restrictions selected from the restrictions specified in Section 6 of the Act. The agreements selected are those which come under the general headings of "price rings" or "collective discrimination" These, I think you will agree, are the most important agreements—those, indeed, which have been so much in the public eye and which form the bulk of the agreements with which the Act is concerned.

Your Lordships will observe that the six paragraphs of the Schedule go in pairs. Paragraphs 1 and 2 relate to agreements on prices (Paragraph 1 dealing with price agreements among buyers, and Paragraph 2 with price agreements among sellers.) Paragraphs 3 and 4 relate to agreements on terms and conditions of sale, while Paragraphs 5 and 6 relate to agreements which are discriminatory as between one trader and another; in each pair there is a distinction between agreements among buyers and agreements among sellers.

I should like to give one or two practical examples of the kinds of agreements which would fall within the scope of the Order. They include agreements of this sort: first, agreements among manufacturers to charge common prices for the goods they sell, either now or in the future, or to put in identical or agreed tenders, a subject which, as your Lordships know, has been a matter of some considerable controversy. Then there are agreements under which manufacturers agree upon standard terms of sale —perhaps on margins or discounts to be allowed to distributors, on the form of guarantee to be given, or on a standard form of contract. Then there are agreements under which a group of manufacturers sell only to dealers on an approved list, or under which dealers agree to buy, or are recommended to buy, from certain manufacturers only. Lastly, there are agreements or recommendations not to supply certain traders—it might be cooperative societies or persons not members of a particular trade association.

Agreements which are not in any case covered by the Act are, naturally, not covered by the Order: the exemptions and so on which are specified in Sections 7 and 8 of the Act apply to this Order. For example, ordinary contracts of sale or long-term supply arrangements or sole agency arrangements are not registrable. The period for registration, which is to begin on the 30th November, 1956, is three months—in other words, particulars of agreements covered by this Order have to be furnished to the Registrar by the 28th February, 1957.

Export agreements which do not contain any provisions affecting the home market are exempted from the registration liability, but Section 31 of the Act provides that particulars of such agreements have to be furnished to the Board of Trade.

It follows, therefore, that since, for example, price agreements which affect the home market are called up for registration by the present Order, particulars of price agreements which affect only the expert market have to be notified to the Board of Trade within the same period. There are provisions in the Act which make it unnecessary for particulars to be furnished of agreements which were in existence when the Order was made but which are dropped before the close of the Registration period. Furthermore, where such an agreement is modified before the Aid of February, it is the modified version of the agreement that is placed on the Register and not the original.

My right honourable friend the President of the Board of Trade has already urged industry carefully to consider its agreements and whether it is necessary to retain them, and I think that there will be a good deal of critical examination of agreements by industry during the coming weeks. I know that, quite apart from the question of whether agreements should be retained, industry is faced with the problems of deciding whether agreements are, in point of fact, registrable. I believe that little doubt or difficulty can arise in the case of many agreements—the agreements on common prices and on approved lists of dealers, and so forth—but I recognise that some agreements may present special problems. Industry has available to it, however, a number of documents which should be of considerable assistance.

The Registrar has published his own "guide", while the Federation of British Industries has prepared a helpful booklet on the Act, and I believe that a revised edition is in course of preparation. There is also an extremely informative work by the present First Lord of the Admiralty. I can only wish that my noble and learned friend had managed to put this work to our hands during the Bill and not afterwards as, of necessity, he had to do. Both the Registrar and industry itself have made real attempts to simplify the task which industry faces in this registration operation. I need hardly remind your Lordships that registration is the basis on which subsequent examination of agreements by the Restrictive Practices Court will take place. That is why the Board of Trade have made this first Order without delay and why the approval of Parliament is being sought as soon as possible. Once the Register is open, it will be possible to select the first cases to be brought before the Court and to put in hand the necessary preparation of cases. I apologise for having gone into this matter in some detail, but I think it is of importance that we should see exactly what the Order proposes to do. I accordingly ask your Lordships to approve the present Order.

Moved, That the Registration of Restrictive Trading Agreements Order, 1956, reported from the Special Orders Committee on Wednesday, the 14th instant, be approved.—(Lord Mancroft.)

2.49 p.m.

LORD LUCAS OF CHILWORTH

My Lords, the noble Lord ended his comments to your Lordships by apologising for speaking at length. I feel I should apologise for inflicting two speeches on your Lordships in one afternoon. As the noble Lord has said, this Order is of extreme importance. This is the first Order to be placed before your Lordships' House in consequence of the passing of the Restrictive Trade Practices Act. Owing to the usual painstaking care which the noble Lord always shows to your Lordships, I think I shall be able to condense my remarks into questions that I should like to ask him, because he has so thoroughly explained the procedure to your Lordships. May I, therefore, ask the noble Lord my first question?

Do I understand, from what he said, that substitute agreements still have to be registered? The noble Lord will know that many thousands—I am literally correct in saying that—of restrictive agreements will be voluntarily jettisoned by those who brought them into being—let me say that to the credit of industry. But they have brought into operation revised agreements which in their view and according to their legal advisers, will conform to the law. They may or may not do so, but these substitute agreements will, I gather, still have to be registered. Is that so? That is the first question I want to ask the noble Lord.

Following upon that, may I ask him what happens to a manufacturing organisation which, for the first time, seeks to introduce an agreement to allow the organisation to take advantage of the provisions in the Bill for individual price maintenance? The organisation never had a collective agreement, but now seeks to have a restrictive agreement as permitted under the section of the Act which deals with individual price maintenance. Does that agreement have to be registered?

Perhaps the most serious question I have to ask the noble Lord—I know that he and the noble and learned Viscount on the Woolsack will be perfectly well aware of this practice—is this. Throughout the years that these restrictive practices have taken such a grip upon British industry, a huge bureaucratic machine has been built up by what I may perhaps inelegantly call the Gestapo or agent provocateur and all those things that we discussed so fully on the stages of the Bill through your Lordships' House. Bureaucrats in Government service are bad bureaucrats in industry, believe me, are worse, and the machine they set up dies hard and with ill grace.

There is plenty of evidence that they are fighting a battle to keep these organisations intact, so that, while the collective enforcement of many of these restrictive practices is now illegal, they are trying to keep these restrictive arrangements—I ask the noble Lord to note the difference between the words "arrangement" and "agreement"—in being. Will anything like that have to be registered? And, if so, what will be the delay involved before such acts are brought before the Court? I understand that after the three months allowed for registration there may well be a further delay of twelve months—even if the arrangement must be registered. What happens in the meantime? Can these practices go on the same as before until the Court has determined whether or not they are restrictive? I do not know whether I have made my point clear, but perhaps I can illustrate it a little better with the last question I want to ask.

The noble Lord, Lord Mancroft, mentioned co-operative societies. I am sure that the noble Lord, and the noble and learned Viscount on the Woolsack, will remember the discussions we had across the Floor of the House upon the arrangement—no agreement, no written agreement, but an arrangement—that some producers had that they would not supply co-operative societies because passing a dividend on to their members was construed to be a breach of the price maintenance arrangements. I understand from various parts of the country that arrangements are still being made between suppliers that they will not supply co-operative societies with their goods so long as they carry on their practice of rebating their members by dividend. Will an arrangement like that have to be disclosed to the Registrar under this regulation? Does it fall between Paragraphs (1) and (2) of the Schedule? If not, how is it to be brought before the Registrar for registration, and what happens if it is brought before the Registrar and there is some doubt as to whether it is restrictive? What happens in between this time and the time when the case is heard and when it is determined to be, without doubt whatsoever, a restrictive practice?

I hope that I have not asked the noble Lord too many intricate questions, but these are the points upon which we on this side of the House put great moment. The noble Lord does not need me to assure him that we on this side of the House are just as anxious that this Act shall work as it is intended to work as are Her Majesty's Government, and my comments this afternoon have had the object of being entirely helpful.

2.57 p.m.

LORD MANCROFT

My Lords, the noble Lord, Lord Lucas of Chilworth, has raised a number of difficult and important questions. In regard to one of them he was good enough to tell me beforehand what was in his mind. But I hope that he will not think that I am trying to avoid an issue if I put this point to hint. He places me in some difficulty because he is asking me, in effect, in one or two respects, to take the place either of the Registrar or the Court and to give a decision on something that is almost a practical and a specific case. That I am reluctant to do; I should get myself into trouble, and I should probably give the wrong answer. If I got it right, I should be usurping the function of the Registrar. However, let me, if I can—because this is an important matter —give the noble Lord some general indication which may be of some help to him, but undoubtedly will not answer all his specific questions.

The collective arrangements which relate to the persons who may deal in particular products are, as the noble Lord knows, subject to the Act and are made registrable by the Order—that is the purpose of Paragraph 5 of the Schedule. So, if membership of an association is a necessary condition of a trader being allowed to deal in goods, or to receive trade terms, that is an arrangement which is intended to be covered. Furthermore, if membership is conditional upon a trader agreeing to trade in certain ways, or subject to certain conditions, then this would seem to come within the Schedule as being an arrangement conferring privileges upon persons who agree to comply with restrictive conditions. The reference in the Schedule to the Order to "agreements" includes arrangements between traders, aid, therefore, schemes for regulating distribution of goods are always liable to fall within its scope and become subject to registration under the Order.

The noble Lord mentioned resale price maintenance. I understand from him that some manufacturers have appointed trade associations as their agents for notifying that their goods will be supplied subject to resale price and other conditions. Provisions in the constitutions of associations about stop lists and private courts in connection with resale price maintenance have, as the noble Lord knows, been made unlawful by Part II of the Act, and associations can no longer conduct domestic proceedings and maintain stop lists. Whether any such new arrangements would constitute registrable arrangements may be dependent on how far they are founded upon understandings, either express or implied, on the part of the manufacturers in relation to the policy of imposing resale price conditions.

In this connection it is possible that the simultaneous adoption by individuals of clearly similar policies may be some evidence of the existence of an arrangement between them which, if it came within the descriptions set out in the Schedule to the Order, would be subject to registration. As I have said, the noble Lord will appreciate my difficulty: until one sees all the facts of the case he has in mind, it is difficult to give a decision; and I think it would be wrong of me to try to forestall the decision which the Registrar may give.

LORD LUCAS OF CHILWORTH

My Lords, may I ask the noble Lord, Lord Mancroft, a question in this form? If 100 manufacturers appointed the same organisation as their agent and the terms and conditions of the sale of their articles precisely coincided, would that be taken as prima facie a case of an arrangement, even if there was no agreement?

LORD MANCROFT

My Lords, I must say that on the face of it it looks very much like it, does it not?

The noble Lord asked me about individual resale price maintenance agreements between manufacturer and dealer. The individual agreement is not registrable. He also asked me about substitute agreements. Particulars of variations of an agreement must be furnished to the Registrar, even if it not in itself registrable.

I have tried to answer most of the major points raised by the noble Lord. I hope he will not think that am shirking the issue if I do not go more specifically into the extremely important questions he put before the House. I will, however. make certain that my right honourable friend the President of the Board of Trade and the Registrar have a good look at what the noble Lord has said. I believe I have a shrewd idea to which industry the noble Lord is referring, and what association and agreements he has in mind.

On Question, Motion agreed to.