RESALE PRICES BILL (Hansard, 9 July 1964)

§ THE MINISTER OF STATE, BOARD OF TRADE (LORD DRUMALBYN)
My Lords, on behalf of my noble and learned friend the Lord Chancellor, I beg to move that this Bill be now read a third time. We have had a series of searching debates on the Bill, and I am grateful to your Lordships for the care with which it has been examined and for the help that has been given to us with it. In those circumstances I do not think that you would wish the Bill to pass without some comment.
The purpose of the Bill, as your Lordships will know, is to reintroduce price competition into the process of distribution, where it has ceased to exist through resale price maintenance, except where it would be demonstrably to the detriment of the public to do so. It is difficult for anyone to quarrel with this objective in principle. Naturally, there are those who would like to establish that in their particular case it will be to the detriment of the public as well as to themselves to abandon resale price maintenance; and, of course, it will be open to them to try to establish it through the Restrictive Practices Court. 1095 The Government believe that in those cases where suppliers, or their trade associations, fail to establish that the cessation of resale price maintenance would be to the detriment of the public, it will generally be found that neither the suppliers nor retailers will find that it is to their detriment either. It does not make sense for dealers to be treated as if they were working on a fixed commission, whether expressed as a percentage or in pounds, shillings and pence. They are independent traders, in competition for custom, one with another, and it is right and proper that in the vast majority of cases that competition should be in price as well as in service.
At the Committee stage of the Bill anxiety was expressed that the Bill might prove to be too sweeping; that it might interfere with normal trading more than was necessary to restore price competition in distribution. The Government were, I think, able to satisfy your Lordships in Committee that that was not so; and, in particular, that where a supplier would not in any case have supplied a dealer, whether the dealer had sold below a certain price, or was likely to do so, or not, he would have a good defence if the dealer brought an action against him for withholding supplies.
My Lords, the main part of the discussion on this Bill has centred on three aspects of the Bill; on the definition of "withholding supplies;" on the possibility of evasion—that is, of finding loopholes; and on the so-called "gateways", the criteria by which the Court will judge whether, in a particular class of goods, resale price maintenance is to the public detriment. In all these matters I believe that we have got the provisions about right. We shall have to see how they work out in practice, and if improvements are shown to be needed, there need be no surprise at that. In particular, I am aware that the Federation of British Industries thought that an extra gateway would have been desirable to enable suppliers to try to convince the Court that in their particular case the abandonment of resale price maintenance would affect exports. My noble and learned friend the Lord Chancellor and I stated the reasons why we believe that such a gate- 1096 way is neither necessary nor appropriate; but, of course, this is a matter of vital interest which will be very carefully watched.
This Bill, naturally, is not going to produce spectacular results over night.

SEVERAL NOBLE LORDS
Hear, hear!

§ LORD DRUMALBYN
We think that results will be apparent fairly soon, but it will be clearly some time before the results in all sectors of distribution become effective. All the more reason for starting now. We do not think it would have been right not to permit applications for exemptions to be thoroughly examined, and it is impossible to have both thorough examination and speedy change. Nevertheless, the Bill is an indication to the public as a whole of the Government's determination to see that Britain is up to date. Out-dated attitudes and techniques must go. Adaptability is the quality we must have, if changing needs are to be matched by up-to-date methods.
I think that with every year that passes the enactment of this Bill will inject a little more of this quality into our distributive trades, some of which already possess it; while others, admirable as they may be in many respects, could perhaps do with this reminder that their function is to give the public the best possible service at the lowest possible price. I beg to move.

§ LORD SILKIN
My Lords, this Bill, as the noble Lord has just told us, deals with the general prohibition of resale price maintenance, with certain exemptions. It has not been a wholly uncontroversial Bill; indeed, in another place the Bill was very nearly defeated as the result of a revolt, not entirely from my own friends but from the friends of the noble Lords opposite; but the Government were saved by a short head.
Tribute has been paid by the noble Lord to the care with which this Bill was considered in this House. I am bound to say that this care had very little result, because very few Amendments were introduced—largely due, I suppose, to the skill and obstinacy of those in charge of the Bill, particularly the noble Lord himself and the noble and 1097 learned Lord, the Lord Chancellor. Moreover, in spite of the fact that it was considered with great care, a great many parts of the Bill are still obscure and, in my view, will lead to great difficulties when the Bill comes to be implemented. It is a great pity that noble Lords opposite found it necessary to resist Amendments which were moved from this side of the House, and from other parts of the House, purely from the point of view of clearing up obscurities, and, in many cases, not necessarily objecting to the principle.
However, the Bill is now before us on Third Reading and we shall certainly not oppose the Third Reading. I suppose, on the whole, one can say that it is better than nothing and that, so far as it goes, it is a beneficial measure. The question is: how far does it go in the direction the Government purport to be pursuing the matter as indicated in the White Paper, Monopolies, Mergers and Restrictive Practices (Cmnd. 2299), published last March? In that White Paper the Government said they were putting forward proposals for further action in the field of monopolies, mergers and restrictive practices and for the general prohibition of resale price maintenance. In paragraph 44 of that Paper they stressed the need for more effective procedures for dealing with practices in restraint of competition; and the purpose of the Bill is supposed to be to increase competition and curtail the abuse of monopoly power in industry. The Government said that new powers are needed for dealing with restrictive practices…in the provision of commercial services". They ended their conclusion by recognising that: Taken together"— that is, including the abolition of resale price maintenance, — these measures will stimulate enterprise and efficiency in all sectors of the economy". My criticism of the Government's policy here is that they have dealt in this Bill with only one aspect of this question, and by no means the most important aspect.
I had intended to raise a debate on the White Paper (I think that it was originally down for discussion yesterday), but unfortunately we were anticipated 1098 in another place, where they had the debate on Monday, and we felt that it would not perhaps be very useful to repeat the discussion here two days later. It is just worth while putting on record that without effective legislation strengthening the law on monopolies, mergers and restrictive practices the Bill before us will not have very great effect. If the experience of the Restrictive Trade Practices Act is any guide, the wholesale applications for exemption which this Bill will almost certainly lead to—I have no information as to the proportion which will apply for exemption, but I should think the majority of industries producing goods subject to existing resale price maintenance will do so—will mean a delay of years before we see the effects of this measure. The noble Lord himself recognised that it will take some time. I think he is really understating the case. It may take years before we see the effect on resale price maintenance, before these gateways, as they are called, are fully dealt with.
The real and major benefit to the community must come from dealing with the other aspects of the Report. The Restrictive Trade Practices Act is largely a dead letter. The operations of inquiry and report are far too slow, in some cases amounting to many years, and in one extreme case, the case of steel, it has taken eight years for the Restrictive Practices Court to deal with the question. And the powers available for dealing with the admitted and recognised evils of monopoly are quite inadequate. The White Paper impliedly accepts both these criticisms, both the long time taken for dealing with matters which come before the Court and the inadequacy of its powers. Further powers are needed also for dealing with mergers and restrictive practices; these are at present very limited and are essential.
It is no part of the policy of my noble friends or myself to say that monopolies and mergers are in all cases necessarily bad or undesirable. There are cases where it is in the public interest that industry should get together and amalgamate and so increase efficiency and bring about economies in production. But the benefits of those amalgamations should flow to the Community as a whole and not to those engaged 1099 in the industry alone. Where monopolies are desirable and ought to take place, or be allowed to continue, or where mergers are permitted, powers should be given to the Government to ensure that the benefits go to the community as a whole. It may be said that the Government have no mandate for dealing with this matter, particularly at the end of a Parliament. I know it was said about some of the measures introduced by the Labour Government. But the Government have thought it wise or desirable to introduce this Resale Prices Bill without any mandate, and even without any reference to it in the Queen's Speech as recently as last November. Therefore, it is not open to them to say that they have no mandate or power to deal with the wider questions which they themselves have dealt with in their own White Paper on monopolies, mergers and restrictive practices. I recognise that I have travelled rather wide in discussing these bigger questions on the Third Reading of this Bill. But they are all interlocking. I think it will be admitted that this measure and the other matters I have dealt with are all part of the policy necessary for dealing with monopolies, and for ensuring the greater efficiency of industry and providing the free competition to which noble Lords opposite are so deeply wedded.
To summarise, I would say that we welcome this Bill but it is a matter of great regret that the Government, who have been aware of the problems for many years, have not dealt with the question in a comprehensive way. They have given us a little but have left out the more important measures, possibly because they felt they could not secure the agreement of their own ranks. Certainly we have not heard the last of these measures, and I can promise noble Lords opposite that this question of monopolies and mergers will be dealt with in the near future.

§ LORD DRUMALBYN
My Lords, I do not think what the noble Lord has said requires any lengthy reply from me. I think it is fair to say we will all agree with him that this is only one item in a general and coherent policy that the Government have in mind. I do not think it would have been possible to introduce 1100 a comprehensive Bill. To deal with even this small part of the policy has obviously taken some time. The provisions of a Bill to implement the White Paper would be dealing with two Acts which together run to something like 60 sections, and very lengthy and complex legislation would be required. I do not think there was any possibility of introducing that legislation in this last Session of Parliament. I would not dissent from a great deal that the noble Lord has said. This is part of a comprehensive policy. We have undertaken to implement the White Paper in the next Session of Parliament and that we propose to do. We are confident we shall have an opportunity of doing so.