REGISTRATION OF RESTRICTIVE TRADING AGREEMENTS ORDER, 1957

HL Deb 11 December 1957 vol 206 cc1024-34

2.44 p.m.

THE MINISTER WITHOUT PORTFOLIO (LORD MANCROFT)

My Lords, the purpose of this Order is to call up for registration all restrictive trading agreements not covered by the first Order which your Lordships considered and approved some twelve months ago. Your Lordships may recall that the first Order required the registration of agreements on prices or collective discrimination, and that details of such agreements had to be supplied to the Registrar of Restrictive Trading Agreements by the end of February. 1957. We now propose to provide for the registration of other classes of agreement, the most important of which are agreements that affect the quantity or type of goods to be produced or agreements that provide for the sharing of markets or areas between different suppliers. In so far as such arrangements form part and parcel of price or discriminatory agreements they should have already been furnished to the Registrar under the first Order, but in so far as they are separate they will have to be furnished by March 31, 1958. provided, of course, that your Lordships approve the Order.

The reasons why we are now proposing to complete the task of registration are twofold. In the first place, our experience under the first Order has shown that the imminence of registration provides the incentive to industry for a careful examination of the need for agreements. The Registrar has informed the Board of Trade that the conclusion he draws from art examination of agreements already registered is that apart from the outright cancellation, about one-third of the continuing agreements were substantially amended in consequence of the provisions of the Act requiring registration. Our first objective, therefore, is to provide the occasion for careful re-examination of such agreements as industry has not yet considered. Secondly, the staff engaged on registration of agreements supplied under the first Order will be becoming available, and it is therefore sensible to allow them to turn their hands to the task of registering the remaining classes of agreement. Your Lordships may wish to be assured that this new registration will not interfere with the preparation of cases to be brought before the Restrictive Practices Court; in fact, the Registrar's office is so organised and divided that the submission of further agreements for registratration will in no way affect the preparation of these cases. I hope that, with that explanation, your Lordships will see fit to approve the Order. I beg to move.

Moved, That the Registration of Restrictive Trading Agreements Order, 1957, be approved.—(Lord Mancroft.)

2.47 p.m.

LORD LUCAS OF CHILWORTH

My Lords, may I receive your Lordships' indulgence, and especially that of my noble friend Lord Ogmore who is later moving a most important Motion, to address some comments upon the importance of the operation of the Restrictive Trade Practices Act, part of which calls for the Order for which the noble Lord, Lord Mancroft, has asked your Lordships' agreement this afternoon. I beg to take up a little of your Lordships' time on this matter in view of its great importance to British economy at the present time. With your Lordships' permission, I will quote what the Chancellor of the Exchequer said, as reported in The Times of Monday, December 2: Now was the time for firms to abandon restrictive practices without waiting for the rulings of the trade practice's court. This is not the moment for rings designed to keep prices up or restrictive practices designed to prevent them coming down. I plead to British industry for more, not less, competition. If any firm can lower their prices it is their patriotic duty to do so and do so quickly. Don't wait for the slowest or weakest firms in the ring. Get on with it. It is later than you think. Last night the Prime Minister on the radio underlined "It is later than you think."

During the passage of the Restrictive Trade Practices Bill your Lordships were told by my noble Leader, Lord Alexander of Hillsborough, and by me, who bore the burden of the Opposition, that your Lordships and the Government were going about this the wrong way. We said that before this Restrictive 'Trade Practices Act and the machinery set up by it could have any impact upon the lives and the economy of the British people years would elapse. We said that you should outlaw all restrictive practices, and let those who wanted them justify them in the national interest, instead of allowing them to carry on and for those who wanted to practise them to prove that they were not against the national interest—a vastly different procedure.

The truth of what we had to say is now coming into operation. It must be causing the Government—and my sympathies are with them—many sleepless nights, because for three years we nave had a fall in world commodity prices, and the prices to the British housewife for the essentials of life have gone up. During the last twelve months, according to charts I have here, and which have appeared in the Press—namely, the Financial Times—wholesale prices have dropped 6 per cent., and retail prices have gone up 3 per cent. At this time of the year the housewife is at the mercy of what I call "the parasites' paradise." The prices are going up. Do you wonder why you are faced with wage claims? The only machinery we have is the Restrictive Trade Practices Act. The machinery is creaking so badly that it has almost come to a standstill. I am not criticising those who are operating it. We are to blame for not having had the foresight—and I know the noble and learned Viscount on the Woolsack is far too old a campaigner and far too good a sportsman to expect me not to chide him for some of the things he said then.

One of the principal things which is militating against any improvement is Section 25 of the Restrictive Trade Practices Act, which allows individual price maintainance over a wide field of commodities essential for the British housewife, as I said in a letter to The Times the other day; and public money is used to keep prices up. That was pointed out with consistency all the way through the passage of this Bill. The branded article, which is given a blessing by Section 25 of the Act, is one of the chief causes why the cost of living and the retail prices go up, while wholesale prices and cost of production go down. I wish to ask what the Government intend to do about it. It is no good the Chancellor of the Exchequer or the Prime Minister exhorting people to bring prices down when, by their own actions, they are encouraging them to put them up. Do not forget that it was the Chancellor of the Exchequer who, when the Restrictive Trade Practices Bill went through your Lordships' House, was its sponsor as the President of the Board of Trade.

This is, in my view, a most serious matter. I have lived with the problem all my industrial life, and I can claim to know something about it. It will be ten years before sufficient cases are brought before the Restrictive Trade Practices Court—which has not yet met, although the Act has been in operation for twelve months—and before they have circumvented the knavish tricks of the abundance of clever lawyers who are now driving coaches and horses—or perhaps in my case I should say motor cars—through the Act. Already the courts have had cases which have put quite a number of difficulties in the way. I have an abundance of evidence. I have the evidence of the Birmingham steel-ring price quotation. I have here a letter published in the Manchester Guardian. from a manufacturer of a proprietary article, who wrote to his seller and said: "I am going to put the price up in a month"—as a matter of fact, he was going to put up the price on December 16, and it is just about that date now—"stock up now and get an extra profit." This kind of thing will not be stopped by overloading a machine which is at the present time creaking.

I want to ask the noble Lord, Lord Mancroft, whether these agreements which will have to be registered will be available as Parliamentary Papers. There was a good article in The Times some time ago. One can pay a shilling and go to Chancery Lane, to the offices of the Restrictive Trade Practices Court, and Spend a profitable day browsing over some of the comic agreements that are to be found in some of the restrictive practices. A friend of mine who paid his shilling stumbled upon one which meant that if your Lordships want to buy six dustbins at a lower price instead of one, the dustbin manufacturer, under an agreement with the Dustbin Manufacturers' Association, has to get dispensation from them before he can lower the price. This Act is the only machine the Government have for breaking price rings and making some impact that may, in the end, bring down the cost of living. The Government have nothing they can use except the Restrictive Trade Practices Act and exhortation.

I wish to ask the noble Lord whether he will do two things. First, I want to ask him whether he will make available information in the form of a Parliamentary Paper, so that your Lordships can see the morass which is clogging this machine. As I say, cases have not started to come before the court. When are they going to come? Will the nature of the restrictive practices which have already been instituted be published as a Parliamentary Paper? I know that here I am pushing at an open door, but I should have thought that one of the greatest advantages of being a Minister Without Portfolio was that he could "raise merry hell" in every Government Department and was not restricted to doing it in one. Will be consult with his right honourable friend the President of the Board of Trade and see whether we have not had sufficient experience to improve this Restrictive Trade Practices Act by amendment, and whether the time has not arrived to reconsider the whole state of the machinery which it sets up and which enables prices to be raised and the courts of this country to be used for the purpose of imposing sanctions upon the very action which the Chancellor of the Exchequer now pleads so wholeheartedly for the trade to take; that is, to bring prices down?

If the noble Lord will do that, I think we may be able to make some impact. There were 1,500 agreements registered under the first Order your Lordships passed. That was nearly twelve months ago, and the registrations had to be completed by February. I do not know whether the noble Lord can tell me—I do not suppose he can—how many he anticipates will be the result of this present Order. I was always told that one of the most useless observations to make in this world was, "I told you so," but it is one that we on this Front Bench could make to-day; we told the Government this would happen. If they had accepted our advice, the British public might to-day be paying retail prices more in line with the wholesale prices, instead of enhanced prices over which the Government have no control whatsoever.

3.1 p.m.

LORD MANCROFT

My Lords, the noble Lord, Lord Lucas of Chilworth, invites me to "raise merry hell" in "a parasites' paradise." This is, as he rightly says, a serious matter, and I should like time to study carefully what he said and see what I. can do to help him. I must say straight away that I foresee difficulty in preparing the documents he requires, which will be a lengthy and complicated business. He complains that the machinery is creaking. It is very complicated machinery. Your Lordships should not overlook the fact that, because of the Parliamentary Recess, the first registration order to which the noble Lord referred could not take effect until November 30 last, and the parties had until February 28 this year to furnish particulars.

Six months after the registration order came into effect, April 15 this year, a Register containing 1.000 agreements was opened. Next day the first direction was issued to the Registrar about cases to be taken before the Court. This was followed by a second direction in September, 1957. The task for the Registrar and for industry is a very heavy one, and it must be done properly. I think one can compare this type of case to the big commercial cases which come before the Courts, and I think the speed is favourable when compared with that type of case. I am sure the Registrar is fully aware, as the Government are, of the point the noble Lord made, of trying to minimise the delay. But equally it would be undesirable that anything slapdash or casual should be done in anything as complicated and important as this is.

The noble Lord referred to his favourite case of Section 25. Having read his interesting letter in The Times, I was not wholly unprepared for it. He made some observations about the speech of my right honourable friend the Chancellor of the Exchequer, which I understood him to feel clashed in some way with the Government's policy. I do not think there is any conflict between the provisions of Section 25 and my right honourable friend's speech. All he was principally doing, in the passage the noble Lord quoted, was to exhort industry to get on with the job of turning out its cupboards. Section 25 represents only one half of the provisions of the Act for dealing with resale price maintenance. The essence of the solution adopted in the Act for dealing with this question of resale price maintenance was to make unlawful the powerful systems of collective enforcement which have become common in many trades, and at the same time to strengthen the ability of individual manufacturers to enforce resale price conditions by legal proceedings.

I would remind your Lordships of what my right honourable friend the Chancellor of the Exchequer said during the Second Reading. He said [OFFICIAL REPORT, Commons, Vol. 549, col. 1939]: I am quite well aware these proposals will be attacked from both flanks. Supporters of resale price maintenance will say that the removal of collective enforcement will lead to the erosion of the whole system.…Opponents of resale price maintenance will claim that the substitution of the public for the private court system represents approval of the very system which they condemn…our proposals…will provide what I judge to be adequate means of dealing with the problem of the loss leader and as an important by-product they will get rid in this large field of both the stop list and the private court.… I claim that these are important and substantial advantages in a field in which no other Government has yet dared to advance at all. My Lords, there is nothing in Section 25 of the Act which obliges individual manufacturers to enforce resale price conditions. It is perfectly open to any manufacturer to say, "I will no longer oblige shopkeepers to resell my goods at not less than a certain price". I will not labour this point, because the noble Lord and I have debated it so often and we shall, no doubt, debate it again. I would ask him to allow me to look again at what he said and consult with the Board of Trade, and also to let me have the figures, or the reference to them. If he will do that I will gladly look into the points.

LORD LUCAS OF CHILWORTH

I thank the noble Lord for his courtesy. But would he reconcile this? The Chancellor of the Exchequer said that it is a trader's patriotic duty to reduce prices. If I am a grocer and I reduce the price of a tin of cocoa, Section 25 of the Restrictive Trades Practices Act gives the manufacturer of that cocoa the right to sue me in the courts, at public expense, and to withhold my supplies and drive me out of business.

LORD MANCROFT

I think the noble Lord is taking the analogy too far.

LORD LUCAS OF CHILWORTH

I am not. It is happening every day.

LORD MANCROFT

I do not want to argue that Section 25 point again, because we have done so so often, and he and I will never convince each other. I would say that it has not a very great deal to do with the Order we want to pass to-day, although the whole principle is involved. In spite of what the noble Lord says about tins of cocoa and dustbins, and the clogging and the morass, I hope that that will not prevent him from allowing this Order to be approved to-day.

3.8 p.m.

VISCOUNT ALEXANDER OF HILLS-BOROUGH

My Lords, I note the last appeal. For the actual administration of the Act it will be necessary to give a passage to this Order. We do not propose to try and hold it up in any way, but the noble Lord, Lord Lucas of Chilworth, has put before your Lordships a statement to-day which will require very careful thought, not only by this House but the other House and the general public. In spite of what the noble Lord, Lord Mancroft, has just said—and he has given fuller information than he gave me yesterday—I am bound to say that if ever there was a case which justified making the procedure in entirely the opposite direction from that which the Government insisted on putting into the Statute, this is it.

The fact is, of course, that it is not so easy on individual commodities as it is in the case of working on a general percentage. The movement in food prices downwards has been too slow in relation to the wholesale prices; nevertheless there has been a reduction in food prices in the last two or three weeks, although the wholesale prices have been in the process of going down for a much longer period than that. In the case of the dry goods trade, the general dry goods, the common supply, there is a much larger number of restrictive agreements in these matters, usually involving branding and packing, than can be found in the other class of trade. There is no doubt, from the returns of cost of living, that starting from the very beginning, with the world commodity prime cost and wholesale cost, there has been a continuous fall in many of these fields for months, yet there is practically no result for the consumer at all. In fact in these commodities the price on the whole has been on the rise.

LORD LUCAS OF CHILWORTH

Three per cent.

VISCOUNT ALEXANDER OF HILLS-BOROUGH

A net rise of 3 per cent., my noble friend tells me. We as a nation have been working this Act for the last twelve months, and nothing at all happens. How different would have been the position if Her Majesty's Government had adopted the other course, and laid down in their Statute that any such collective agreement would be illegal unless those operating it could prove that it was beneficial! That would have been the way to do it. Had Her Majesty's Government done that, they would have found, in consequence, that when there was a rapid movement in prime and wholesale commodity costs, there would have been a much quicker result in reducing the cost of living.

It is ironical that it should be the Chancellor of the Exchequer who feels bound to make the appeal that he is making to-day on patriotic grounds (and I am not complaining about it), for he was the Minister responsible for bringing in the Bill which became this Statute and which is working so very badly to-day. I hope, therefore, that the noble Lord, Lord Mancroft, will direct the attention of the present President of the Board of Trade—and perhaps it might be as well to direct the attention of the Chancellor of the Exchequer also—to what we are saying to-day, and to the fact that it represents a volume of opinion in the country which is perhaps much larger than we are all fully aware of at the present time; and it is much more prevalent in the minds of housewives than of any other section of the community.

Seeing that we have to work the Statute as it is, I feel that if Parliament is to represent and protect the interests of the nation at large, then, in view of the practice which has been introduced under this Act, Parliament ought not to be left without adequate information as to the progress being achieved. I am very glad, therefore, that my noble friend has asked for information, if possible in the nature of Parliamentary Papers to be furnished from time to time. We had a most interesting quotation from something which apparently the Registrar under the Act has reported to the Minister in charge of its administration; but we have seen nothing of that in print.

LORD MANCROFT

My Lords, I beg the noble Viscount's pardon, but the Index to the Register is published in the Board of Trade Journal.

VISCOUNT ALEXANDER OF HILLS-BOROUGH

My Lords, I take it that that is an index of all the agreements which have been registered in the Board of Trade Journal. Perhaps the noble Lord opposite would let us know the dates of the journals in question, so that we can consult them.

LORD MANCROFT

Certainly.

VISCOUNT ALEXANDER OF HILLS-BOROUGH

My Lords, if those could be consulted with ease of reference in the Library of your Lordships' House that would be of great help. Nevertheless, I feel that it is essential, seeing how much criticism is arising in this matter, that Her Majesty's Government should consider how often a general report on the situation is to be made. And I do beg them to take into account the slowness with which this machine is bound to work, in the circumstances in which it has been set up; to reconsider the matter, in view of the urgent need for dealing with the financial situation at large of the nation, end, if necessary, to amend the present law.

On Question, Motion agreed to.