RESALE PRICES BILL

HL Deb 09 June 1964 vol 258 cc782-800

2.55 p.m.

Order of the Day for the Second Reading read.

THE LORD CHANCELLOR (LORD DILHORNE)

My Lords, before I say anything about the contents of the Bill which I am asking your Lordships to consider and to approve, I should like to say something about the practice of resale price maintenance in general. The effect and, indeed, the object of it is to ensure that all retailers of the goods which are price maintained should sell them to the public at the same price. It does not matter whether the margin of profit obtained by one retailer, due to various factors, is greater than that obtained by others, the price to the consumer is the same, and this price is fixed, not by the retailers themselves agreeing the price at which they should sell to the public, but by the manufacturer or other supplier of the goods who prescribes the price and can impose it on both willing and unwilling retailers.

I have not been able to find out precisely when this practice first started. By the end of the First World War, it was sufficiently well entrenched to be the subject of an official inquiry. In 1920, a subcommittee of the then Standing Committee on Trusts came to the conclusion that, provided the prices charged were "fair", resale price maintenance was to the advantage of the public.

I know there are those who, with experience of trading conditions between the wars, still regard resale price maintenance as beneficial, and the controversy between those who hold this view and those who equally firmly believe that it is contrary to the public interest has gone on for years. Between the wars, it was, I think, regarded as a defensive mechanism against cut-throat competition. In times of depression it was perhaps natural and to be expected that manufacturers would get together and enter into restrictive argreements about how much they would put on the market and how much they would charge for their products, and that other sections of trade would do likewise. In this way, they sought protection for their industry and to maintain the employment of those engaged therein. And it was, I think, during those years that a great development and extension of resale price maintenance took place—development not only in the variety of goods to which it was applied, but also of the means of enforcing observance of it.

As your Lordships will remember, many trade associations sought to enforce it. The collective power of all the suppliers of a particular product was brought to bear to persuade retailers not to resort to price cutting and to apply sanctions against those who did. If, as a result of a test purchase, it was found that an individual was price cutting, his name would be put on a stop list and no one would dare to supply him. Sometimes provision would be made for the trial of an alleged price cutter before a private trade court: and so, to enforce the practice of resale price maintenance, a system developed outside the law of this country —or rather, I should say, outside the legal system of this country—for the trial before private trade courts of alleged offenders; and the sanction which could be, and was on occasions, imposed was terribly heavy. By placing a man on the stop list and depriving him of the supply of goods to sell, a mortal blow was struck to his livelihood.

In 1931 a Committee on the Restraint of Trade, appointed by the then Lord Chancellor and the President of the Board of Trade, reported: That the imposition of conditions upon retailers and wholesalers regarding the resale prices to be charged is a widespread and growing practice among manufacturers: and that it is common to enforce the conditions where necessary by threat of individual or joint boycott or by actual boycott. The system varies in detail from trade to trade and it seldom affects the whole of a trade, while in many cases it affects only a small part … The system, however, appears to be extending in different branches of trade from time to time. That Committee concluded in 1931 that though the price maintenance system had disadvantages, they were not such as to justify legislation against it.

Nearly twenty years later, the matter was considered by another Committee, the Lloyd Jacob Committee. That Committee emphasised the significant differences between the post-war period and conditions in the 'thirties. Then manufacturers and retailers were meeting with the utmost difficulty in disposing of their goods. In the post-war period the great need has been to use all available resources to the best advantage so as to have the greatest volume of goods for sale abroad at competitive prices. To that end, one of the major objectives of enonomic policy has been and must be to secure the fullest use and best distribution of our resources.

The Lloyd Jacob Committee suggested that in these circumstances many established trade practices and protection devices, however understandable and legitimate their origin and development before the war, would need re-examination. This re-examination, your Lordships will remember, took place. In 1955 the Monopolies Commission issued a Report which analysed the historical development and extent of collective boycotts and other discriminatory trade practices, and the majority concluded that these collective practices were generally injurious to the public interest. This was the Report which formed the basis of the 1956 Restrictive Trade Practices Act. That Act provided for the registration of a wide range of restrictive practices and for their examination before the Restrictive Practices Court.

My Lords, that Act has on the whole worked well, but in the course of time and in the light of experience, certain inadequacies have been revealed. We intend to deal with them. That was made clear in the recent White Paper on Monopolies, Mergers and Restrictive Practices published in March of this year. The operation of that Act has brought about the termination over a wide field of a great many collective restrictive agreements. In some industries firms now compete in price where before they did not do so. There has, I think, been a general loosening up, to the advantage, I believe, both of the industries concerned and of their customers. There is now a greater incentive to efficiency.

The provisions of the 1956 Act, to which I have referred, are those contained in Part I. Part II deals with resale price maintenance. The Act distinguishes between the collective enforcement of resale price maintenance and the individual freedom of a manufacturer, if he wishes to, to specify and enforce the price of his branded goods. As my right honourable friend the then President of the Board of Trade said when moving the Second Reading of this Bill: A system which could be simply a device to protect the manufacturer of branded goods against the use of his goods in loss leading has degenerated into a system where great areas of trade are frozen into a fixed pattern of price and profit margins. That Act made collective enforcement unlawful. It put an end to the stop lists and the private courts: they were the features most criticised at that time, and many sought to defend them by saying that without them resale price maintenance could not be operated. It was thought then that it would be going too far to prevent a manufacturer from stipulating in his contracts the price at which his goods were to be sold. There were then, as there are now, great fears as to the damage that might be done by "loss leading". It was also thought that if it was right that the manufacturer should be able by contract to fix the retail price of his goods, it should be made possible for him to control and fix the price of sale by those who were not in contract with him. These were the reasons for Section 25 of that Act. Such a right was already available to the owner of a patent or registered design.

But things have not worked out as many thought they would. Despite the abolition of collective enforcement, stop lists and private courts, resale price maintenance continues over an extensive field. The most recent estimate is that it covers about 45 per cent. of consumer expenditure on goods—a higher proportion than before the war. There are still wide areas of trade in which price maintenance is imposed by virtually all suppliers, and the result—I want to emphasise this—is just the same as if all the retailers of those products had agreed together as to the prices they would charge. If retailers had made an agreement to that effect, they would have had to register it under the 1956 Act—and have had to defend it before the Restrictive Practices Court. If I were to seek to state the purpose of this Bill in one sentence, I would say that its object is to close this loophole—to bring within the purview of the Restrictive Practices Court the fixing of common retail prices by manufacturers and suppliers for their own goods in the same way as the fixing of prices by agreement between themselves by retailers or manufacturers comes within the purview of that Court.

My Lords, in our approach to this question we do not seek to be dogmatic. We did not assert in the 1956 Bill that all restrictive agreements were injurious to the public interest. That Act provided that if the Court was satisfied of certain matters, certain agreements could be allowed to continue. Our approach is similar now. We have come to the conclusion, in the light of experience since 1956, that in general resale price maintenance is not in the public interest, for by its imposition of rigidity it subtracts from the competitive vigour and efficiency of the economy. I know there are people who sincerely hold the contrary view. This Bill makes it possible for those who believe this in relation to certain goods to make out their case before the Restrictive Practices Court, and if it is shown that the continuance of resale price maintenance is in relation to certain goods in the public interest, then those goods can continue to be price maintained.

Having said this by way of a somewhat long introduction, may I now turn to the provisions of the Bill? Clause 1 makes void any term or condition of a contract or any agreement between a supplier and a dealer which purports to establish, or provide for the establishment of, minimum prices to be charged on the resale of the goods in the United Kingdom and makes it unlawful to include any such term in a contract or agreement. This is the general prohibition, and where it applies the fixing of minimum prices for resale will be put an end to. This prohibition applies to patented articles and articles made by a patented process as it does to other goods.

If suppliers of particular goods wish to continue resale price maintenance in relation to those goods, they must, not later than four months after the commencement of the Act, register those goods with the Registrar of the Restrictive Practices Court. Trade associations with such suppliers as members may also register the goods. This procedure of registration is provided for by Clause 6 and is something with which industry is already familiar as a result of the 1956 Act. Once the goods are registered, resale price maintenance can go on with these goods until they have been the subject of a decision by the Court. It will be the Registrar's responsibility to group the goods on the register into classes for the purpose of making references to the Restrictive Practices Court. This is clearly necessary. Resale price maintenance is the individual practice of many separate manufacturers, and no doubt many different suppliers will register. But we want the Court to examine and deal with resale price maintenance in relation to classes of goods and not particular manufacturers' brands. The Bill provides for suppliers who may feel they have been prejudiced by the Registrar's grouping to apply to the Court. There is also provision for the Board of Trade to direct the Registrar as to the order in which he is to refer classes of goods to the Court.

Now may I turn to Clause 5? Clause 5 deals with the grounds on which the Court may grant exemption from the general prohibition of resale price maintenance. Broadly speaking, it follows the pattern of the similar provision in the Restrictive Trade Practices Act in setting out a number of criteria on the basis of which exemption may be granted. We are dealing in this Bill with the single, well-known practice of resale price maintenance, and not, as in 1956, with the whole range of restrictive agreements about which we did not then know a great deal. It is therefore possible to be precise and specific about the cases in which exemption may be granted.

Clause 5 contains five "gateways" under which suppliers will be free to argue that the ending of resale price maintenance would be detrimental to the public as consumers. As your Lordships will see, Clause 5(2) contains the following words: … if it appears to the Court that in default of a system of maintained minimum resale prices applicable to those goods—

1. (a) the quality of the goods available for sale, or the varieties of the goods so available, would be substantially reduced to the detriment of the public as consumers or users of the goods; or
2. (b) the number of establishments in which the goods are sold by retail would be substantially reduced to the detriment of the public as such consumers or users; or
3. (c) the prices at which the goods are sold by retail would in general and in the long run be increased to the detriment of the public as such consumers or users; or
4. (d) the goods would be sold by retail under conditions likely to cause danger to health in consequence of their misuse by the public as such consumers or users; or
5. (e) any necessary services actually provided in connection with or after the sale of the goods by retail would cease to be so provided or would be substantially reduced to the detriment of the public as such consumers or users …"

My Lords, I have drawn your Lordships' attention specifically to the wording of the five "gateways", for that wording does, I think, embody the main contentions of the protagonists of resale price maintenance. If suppliers give notice in relation to particular goods to the Registrar, their claims will be registered, and then the matter will come before the Court. If it appears to the Court that one or more of these things will be the consequence if the system of resale price maintenance is not continued, then the Court must go on to consider whether the detriment to the public flowing from the abolition of resale price maintenance outweighs the detriment to the public flowing from its continuance. If the Court is satisfied that it does outweigh the detriment arising from continuance of the practice, the Court will direct that these goods shall be exempted goods. The effect of that will be that they can continue to be price-maintained by the manufacturer, and Section 25 of the 1956 Act, which, as I have said, enables manufacturers to maintain prices where the goods are sold by those with whom they are not in contract, will continue to apply.

Some may wonder whether the questions that will arise for determination under Clause 5 are suitable for judicial determination. I can assure your Lordships that much consideration has been given to this question. The Restrictive Practices Court is accustomed to dealing with complex economic arguments, and I see no reason to suppose that the Restrictive Practices Court will find it more difficult to deal with the issues arising under Clause 5 than they do with the issues under the Restrictive Trade Practices Act. To enable the Court to undertake the new work that it will have to do under this Bill it will no doubt have to be enlarged, and Clause 9 makes provision for the appointment of additional judges for this purpose.

My Lords, there are one or two other points connected with claims for exemption which I should mention. First, there is the position of retailers and their employees. They have a legitimate interest in the outcome of a case in which manufacturers of the goods they handle seek exemption. Clause 8 ensures that the rules of procedure will provide for retailers and trade unions of distributive workers to be represented before the Court where they have an interest in the proceedings. They will be able not merely to give evidence on the suppliers' case, but to make their independent contribution to it. Secondly, there is the provision for decisions of the Court to be reviewed at any time, on prima facie evidence of a material change in the relevant circumstances.

Thirdly, there is special provision for suppliers whose resale price maintenance has already been an issue in proceedings under the 1946 Act. Any finding of fact in proceedings under that Act will be treated as conclusive in exemption proceedings under the Bill, unless there has been a material change in the relevant circumstances. This will be to the obvious advantage of the suppliers, and will save the time of the Court. I might add that we accept that suppliers who have already been put to expense to defend a collective agreement under the 1956 Act in which resale price maintenance was an issue may reasonably expect to receive their costs in a case for exemption under the Resale Prices Bill, if they are successful and if the issues in the two cases substantially correspond with each other. Clause 8 permits the Court to order the Registrar to pay the suppliers' costs in such circumstances.

Fourthly, there is the provision in Clause 7 for late applications for exemption. Compilation of the register is to be a once-and-for-all exercise. Suppliers who have not registered under Clause 6, and who have therefore had their resale price maintenance arrangements brought to an end, can, under Clause 7, apply to the Court at any later date for leave to make an application for exemption. The Court's leave is to be granted only on prima facie evidence of a case under one of the "gateways" in clause 5. This clause will also permit suppliers of new products to seek exemption.

My Lords, I have dealt, I hope at not undue length, with some of the main features of this important Bill. I have referred to the general prohibition in Clause 1. To make the prohibition effective, it is also necessary to secure that resale price maintenance is not obtained by the withholding of supplies. That is done by Clause 2. Clause 3 makes an exception to Clause 2 where the goods have been used as loss leaders. If the requirements of that clause are satisfied then a supplier can withhold supplies. Clause 4 provides remedies for breach of the restrictions imposed by Clauses 1 and 2.

As your Lordships will see, from Clause 14, the Bill when it becomes an Act, will be brought into force in stages. First there must be regulations for registration, then the exemption provisions will come into force at the end of a month after the date on which the Act is passed, and those who wish to register to seek exemption will have to register not before a month after the passing of the Act and not later than four months after its passing. Clauses 1 and 2, which contain the prohibitions on resale price maintenance, cannot be brought into force until four months after the passing of the Act.

My Lords, I hope that I have now sufficiently explained the main features of this Bill. No doubt a number of points will be raised in the course of the debate to-day and during the Bill's further stages, but to deal with all the minor issues now would necessarily involve my trespasing on your Lordships' indulgence by making a much longer speech than that I have already made. I commend this Bill to your Lordships as a soundly devised and well-thought-out measure dealing with a difficult and controversial subject. I hope that you will give it a Second Reading and will agree that it is a fair measure, giving fair opportunities to those who believe in resale price maintenance for particular goods to obtain exemption for them. I beg to move that the Bill be now read a second time.

Moved, That the Bill be now read 2^a.—(The Lord Chancellor.)

3.24 p.m.

LORD SHEPHERD

My Lords, I am sure I speak for all quarters of the House when I express my appreciation of the manner in which the noble and learned Lord the Lord Chancellor has introduced this Bill. I think for many the Bill will be clearer for the care he has taken in this matter. The last time I took part in a debate with the noble and learned Lord the Lord Chancellor was on the London Government Bill. The subject I remember most vividly was that of the London sewers. I readily agree that the noble and learned Lord the Lord Chancellor had a greater knowledge than I of the London sewers, but I would hasten to add that this was due to his legal experience.

Having spent fifteen years in distributing goods and making provision of credit, I approached this Bill with some feeling of confidence and thought that I might at least be able to bat with some degree of confidence against the Lord Chancellor. But, having read the Bill, I frankly admit now that he still has an advantage because, as was described in another place, this Bill is a lawyers' paradise, and many of its words are imprecise. Therefore, I am very grateful indeed that my noble friends Lord Gardiner and Lord Silkin will be taking part in the debate on the Bill and will no doubt be able to ask a number of searching questions.

I think we should get this Bill into proportion. I do not believe that it is a major piece of reform, and do not believe it will have much more than a marginal effect upon the cost of living. At most, it is one brick out of the wall of restrictive practice. Having said that, I think I shall express the view of noble Lords on this side of the House when I say that we shall give a Second Reading to the Bill, but we shall need to give it anxious consideration on Committee stage. There are many aspects which give concern not only among retailers but also among the general public and the suppliers, and I hope that we shall be given sufficient time not only to consider Amendments but also to prepare them, because any noble Lord who has read the Bill will understand the difficulty of drafting suitable Amendments.

It will be obvious to all that the Government have been in great difficulties over this Bill. They have faced bitter criticism not only in another place but in the Press. Certainly we have seen divisions in the Party opposite and there have been rumoured divisions within the Cabinet; but much of the Government's difficulties are of their own making. The noble and learned Lord the Lord Chancellor, when referring to the 1956 Act, said that a number of instances have come to their attention and therefore action is necessary, and I presume, as he was referring to this bill, that he had in mind the position of individual agreements. In the 1956 Act we not only supported the Government on the abolition of collective agreements and on the question of the principle of restrictive practices, but we shared with them their abhorrence and disgust at some of the actions which were taken within the trade courts. I think the House should remember this, because the noble and learned Lord the Lord Chancellor did not mention it in the course of his speech. This opposition was led then by the noble Lord, Lord Lucas of Chilworth, who pressed to a Division, both in Committee and on Report, an Amendment to delete Section 25 of that Act, which gave respectability to resale price maintenance.

I believe that resale price maintenance held a strong position in the retail trade due to the collective agreements; that it was only within collective agreements that manufacturers could enforce their own agreements. We took the view that, if you abolished collective agreements and did not proceed to make it possible to enforce individual agreements through the courts, much of the resale price maintenance and restrictive practices would have gone in the natural courses of trade.

We now have this Bill. I think it is true that the 1956 Act was weighted against the retailer, and I think the House will have to make up its mind whether this Bill is too much weighted against the supplier. There may have to be a balance struck, and the House must consider between now and the Committee stage whether the right balance has been struck.

In business one always has in mind a contract, and the only contract that is of any worth, in my view as a businessman, is the contract between a willing buyer and a willing seller. I think it can be said regarding this Bill, if my reading of its drafting is right, that we shall have a willing buyer but we may have an unwilling seller. I have a great deal of sympathy with the suggestion that has been made that we should have been content with the repeal of Section 25, and that we should have left it to the free forces of trade to have been a continuing process which would result in the break down of resale price maintenance. But I suppose the Government feel, having made resale price maintenance so secure because of Section 25, that if this legislation was to have any bite certain other matters would have to be put in the Bill. I am not sure whether it would not have been wiser to repeal Section 25 and then look at the matter later.

There is another point, of course—and this is what I would come to later on— which is the question of monopolies and mergers. I think one must recognise from the retailer's point of view that the number of suppliers is becoming smaller. We have companies merging into groups, and trade marks which were once independent have now come under one control.

I do not believe that this Bill is important in itself. We on this side of the House would have received it with far greater enthusiasm if we had seen a comprehensive attack on all trade restrictive practices. I am glad the noble and learned Lord the Lord Chancellor reminded us of the 1922 White Paper and the 1931 White Paper. My researches went back to 1944, when we had the Coalition Government White Paper on Employment Policy, which drew our attention to restrictive practices. The first major step in dealing with this matter was the Labour Act which set up the Monopolies Commission. But I would remind the House and the noble and learned Lord the Lord Chancellor that it was the 1956 Act which reduced the ability of the Monopolies Commission to act with greater speed. The reduction of its members and the abolition of the committee system undoubtedly delayed the activities of the Commission.

There is nothing new in the present situation regarding the need to remove restrictive practices. We have only to hear the speeches that are made in your Lordships' House by Members of my Party, and even on the other side, and to read the Financial Times and other trade papers, to see the wide concern there is at the apparent lack of aggression of industry and commerce, particularly in the export trade. We see the effect of that on our share of world trade. This is nothing new. I well remember the great speeches and debates that we had on the Common Market. Apart from the political implications of going into Europe, one of the most dominating points made by Ministers was that we needed a cold wind of competition to sweep through our trade and industry. The Prime Minister, speaking at Bath recently, spoke in terms of the present as though the Government were dealing with monopolies and mergers. He should not, in accuracy, have been speaking of the present but of the future, because, apart from the White Paper the noble and learned Lord the Lord Chancellor introduced in January, we have no legislation dealing with this important subject.

In the meantime, monopolies and mergers exist and mergers continue apace; in fact, I would say there is a tendency for them to speed up. The House will remember our anxiety on the Courtauld and I.C.I. merger. There was not only the question that if this merger had gone through nearly 100 per cent. of the man-made fibre industry would have been under one control, but there would have been a very serious monopoly in regard to chemical raw materials. We asked the Government then to refer this question to the Monopolies Commission. They, quite rightly, said they had no power to do so. They appeared to wish to take power in their White Paper, but they have not produced any legislation and therefore it would not appear possible for us to have an opportunity to investigate the possible merger which may be for or against the public interest, for another two years. It was, I believe, last week that the question of the Rootes and Chrysler merger arose. I feel there is a lot to be said for co-operation between overseas investors and British industry. Certainly we always welcome United States finance. It is questionable whether the same enthusiasm would have been evident if it had been Japanese capital. I make this point because we cannot just say broadly that because it is United States capital it is necessarily good. There are bad United States investors as there are bad British investors. What we have to consider in all these matters is the motive of the companies involved. In this case this may well be something that is right and good for the industry.

Here I would express one fear in this matter. It may well be good for overseas capital to come into our industries and perhaps obtain control during a period of development and expanding trade. It becomes another matter, however, if we enter a period of depression. One of the greatest fears of our Scottish friends is that so much of their developing industry has English capital and English control, and at the very first sign of difficulties it is the Scottish branch that is closed. Therefore, when one looks at these possible mergers, I think one must do so not only for the present but for the future. We shall have an opportunity, I hope, in July to discuss the White Paper on Monopolies and Mergers, and therefore I will leave it there. But it does seem strange to many that the Government have decided to deal with this small side of restrictive practices, yet have failed to take urgent action where it is perhaps needed more.

I think there are four criticisms that have been made of the Government Bill. The first is that the Bill is of little consequence within the general terms of restrictive practices. A lot will depend on how the Bill bites. I do not believe the Bill will bite for another two or three years, because I think most manufacturers who are operating resale price maintenance will in fact register, and one cannot expect the Restrictive Practices Court or the Registrar, with the best will in the world, to be able to make any decision in this matter for at least two years.

The second criticism is that this Bill is an attack upon the small shopkeeper. I do not think this will be so. So far as the very small shopkeeper is concerned, his overheads are small. I think he will perhaps be able to survive largely owing to the sort of loyalty that one has to the small shopkeeper. I think the shop more likely to be involved is the departmental store which is not within a chain group. I think that will be very vulnerable. But perhaps the person who will suffer most is the medium-sized shopkeeper who has endeavoured to provide service to his customers by fairly heavy investment, heavy compared to his resources. He will find that he must cover his capital investment in face of acute competition from organisations such as supermarkets and chain store supermarkets who may be able to buy at more favourable terms. I have the feeling that the suppliers who regard the smaller shopkeeper as the backbone of their business will in fact find some way to keep them in business. These are the people who do not buy adventurously; they buy the brands that they know and believe in. I think that in fact we shall find that many of the discounts that manufacturers have given to the larger organisations will now be offered to the smaller people.

The third criticism, which I hope my noble friend Lord Gardiner will develop, is the imprecise wording of the Bill. If one looks at Clause 2(4) one sees that a supplier can withhold goods on other grounds … standing alone. I have not seen anywhere what the Government have in mind as "other grounds". These may be the most important words of the Bill. Therefore. I ask the noble Lord, Lord Drumalbyn, when he replies to give us some information on this matter.

Turning to Clause 3, which concerns loss leaders, I would ask what is a "seasonal or clearance sale?" To many it is obvious that it is a Christmas or a spring sale. But one well knows that in certain towns in the country as soon as a dealer finds that his stock is slow in selling, or that customers need a little encouragement, he has a sale. I wonder whether he will, in fact, be able to have as many sales as he likes and thus avoid the question of loss leaders.

Right through the Bill there are a number of matters which I think are imprecise in their drafting, and may well cause much heart-searching, not only among retailers but also among suppliers. I want to stress this point, because I think the Government have slanted the Bill too much against the supplier or manufacturer. First of all, the entire onus of proof, except on the question of credit, lies on the supplier. I would ask the House to consider Clauses 2 and 4, as they go together. As I understand it, a supplier may not withhold supplies of any goods—I would stress the words "any goods", which really mean "all goods"—if he believes that a dealer has, within a period sold, or is likely to sell, either directly or indirectly to a third party below the recommended price. This provision causes me some concern, because my experience in marketing is that the price factor, the profit margin that the dealer expects, is the major point in whether a customer supports his goods, not only in an initial purchase but in respect of continuity. In deciding your marketing arrangements you are faced all the time with the fact that you will have to take into account the profit margin of the dealer, and you will have to try to ensure that dealers obtain a reasonable margin.

I should like to put three illustrations before the noble Lord, Lord Drumalbyn. Here I put myself forward as a textile manufacturer. I have a distinctive dress material, beautifully coloured; I print 12,000 yards and I sell it to a chain store, and recommend that the store should sell it at 18s. 11d. per yard. I further agree, as is the practice in the trade, that I will print a further 6,000 yards and hold it in reserve, to fill up if the original order is not sufficient. Then along comes a competitor, another chain store, and says, "We have seen that design. We will place an order for 12,000 yards, and we now tell you that we propose to sell it at 17s. 11d.". I ask the noble Lord, Lord Drumalbyn, having printed the 18,000 yards for the first chain store, can I refuse to supply it to the second chain store, having been told the price at which they are going to sell which is below the recommended price?

To take a second example, I am a manufacturer of knitwear, and a large organisation— one can think in terms of Marks and Spencer's—comes along and gives me an order for 12,000 dozen. This may be Marks and Spencer's own design. They may well have given me a lot of know-how in the manufacture. I produce the goods, and they are therefore part of the goods made by me as a supplier. Then along comes another chain store, saying, "I know of this garment. It is my intention to sell it at is. 6d. per article below the recommended price which you have agreed with your original buyer." Can I refuse to supply? Those are most important matters, though they may sound quite simple.

The fear I have in regard to the Bill as it is now drafted is that the big buyer who keeps your factory going with the initial order may now be frightened that if he places a large order somebody may come along and give a smaller order, or perhaps even the same size of order, with a view deliberately to under-selling. If that is the case, then I do not think that Marks and Spencer's, or Littlewood's and the like, will be placing the same size of orders as they have done in the past.

I have drawn special attention to the words "withhold any goods". Many of our leading manufacturers have built their reputation on a trade mark. What I want to know from the noble Lord, Lord Drumalbyn, is: if I am now called upon to supply goods to a recognised price cutter, have I to supply the goods with my trade mark upon them? As I see the Bill, that is so. But I should have thought, if that is the case, that it would be fair to the supplier that, although he may have no choice in regard to where he supplies his goods, he should have some choice as to where his trade mark appears. In any case, I would ask the noble Lord whether he would consider this matter.

The Government made some concessions in regard to credit. I do not think they have gone sufficiently far. One of the difficulties for a supplier in dealing with shops—it is relatively easy if one is dealing with public companies, because one has their balance sheets—is that one sees a balance sheet rarely. In any case, if one does see a balance sheet one rather suspects it. In my experience of giving credit, it is a question of judgment. It is a question of how the shop conducts its business. As a distributor, both at home and overseas, may I say that one facet of one's judgment whether a shop is credit-worthy is the number of sales that the owner has in the year and the type of margins that he has on his goods. One often finds that the shop that is in financial difficulty is the shop that sells the goods cheap merely to get the cash. Therefore I suggest that, even with the Bill as it is amended, the supplier is going to be in serious difficulties in deciding whether he can withhold goods on the question of credit.

It is true that the Bill has been so amended that the onus of proof lies upon the dealer, but if the dealer has taken the supplier to court and can prove, as I hope he can prove, that he has cut prices, surely then the supplier must produce a defence; and if his defence says "In my view this man is not creditworthy", this would be one of the most difficult matters to prove. It may not be a question of the man's being insolvent or a question of the man's not being able to pay the bill the following month, but when one grants credit one has to take into account whether the man is over-trading—whether he has too much credit. He may be all right now, but the way in which he is conducting his business may mean there is going to be trouble in three or four months' time.

This is my own experience and I have suffered, as most people in trade have suffered. The granting of credit is one of the most difficult acts of judgment; one has very little to go on. But as the Bill is now drafted it does not seem to me possible that the supplier is likely to find it easy in a court to substantiate why he refused credit. I would ask the noble Lord, Lord Drumalbyn, whether, between now and the next stage of the Bill, he would look at this matter further, for I think it is quite intolerable that a supplier should be called on to give credit when, in his view, that dealer is not likely to be creditworthy —and I would stress the words "not likely".

There is a great deal more in the Bill one can discuss, but I have been speaking long enough and there are a number of other speakers on both sides who wish to take part in the debate. In conclusion, I would stress to the House that marketing is as important as efficient production. Without an efficient market one cannot get efficient production. Therefore we should look at this piece of legislation not so much in the sense that we wish to abolish retail price maintenance (because I think we should all agree on that, with the possible exceptions which can be proved by the industry), but as to whether our actions and the words we use in this Bill may not in fact prove to the detriment of goods suppliers, and that this might well outweigh the action of the Government in dealing, with those who would go against the sense and the purpose of the Bill. Somehow we need to strike a balance that is fair to supplier and retailer. My feeling at the present moment, as one who is against retail price maintenance, is that the Bill is too heavily balanced against the supplier.