RESALE PRICES BILL (Hansard, 18 June 1964)

HL Deb 18 June 1964 vol 258 cc1293-363 1293

§ 3.26 p.m.

§ Order of the Day for the House to be put into Committee read.

§ Moved, That the House do now resolve itself into Committee.—(The Lord Chancellor.)

§ On Question, Motion agreed to.

§ House in Committee accordingly.

§ [The LORD AILWYN in the Chair.]

§ Clause 1:

§ Avoidance of conditions for maintaining resale prices

§ 1.—(1) Subject to the provisions of this Act with respect to registration and to the powers of the Restrictive Practices Court thereunder, any term or condition of a contract for the sale of goods by a supplier to a dealer, or of any agreement between a a supplier and a dealer relating to such a sale, shall be void in so far as it 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 it shall be unlawful for any supplier of goods (or for any association or person acting on behalf of such suppliers)—

(a) to include in any contract of sale or agreement relating to the sale of goods any term or condition which is void by virtue of this section;
(b) to require, as a condition of supplying goods to a dealer, the inclusion in any contract or agreement of any such term or condition, or the giving of any undertaking to the like effect;
(c) to notify to dealers, or otherwise publish on or in relation to any goods, a price stated or calculated to be understood as the minimum price which may be charged on the resale of the goods in the United Kingdom.

§ (2) This section applies to patented articles (including articles made by a patented process) as it applies to other goods; and notice of any term or condition which is void by virtue of this section, or which would be so void if included in a contract of sale or agreement relating to the sale of any such article, shall be of no effect for the purpose of limiting the right of a dealer to dispose of that article without infringement of the patent:

§ Provided that nothing in this section shall affect the validity, as between the parties and their successors, of any term or condition of a licence granted by the proprietor of a patent or by a licensee under any such licence, or of any assignment of a patent, so far as it regulates the price at which articles produced or processed by the licensee or assignee may be sold by him.

§ (4) Nothing in subsection (1)(c) of this section shall be construed as precluding a 1294 supplier, or any association or person acting on behalf of a supplier, from notifying to dealers or otherwise publishing prices recommended as appropriate for the resale of goods supplied or to be supplied by the supplier.

§ LORD SHEPHERD, moved to add to subsection (1): Provided that nothing in this section shall prevent a manufacturer who offers for sale a new manufacture of United Kingdom origin where the capital investment is above £10,000 from entering into an agreemnt for a period of eighteen months with a retailer for the resale of such manufacture at the manufacturer's recommended price".

§ The noble Lord said: I beg to move the first Amendment which appears on the Marshalled List, but before speaking to it may I say a few words in regard to the Committee stage of this rather important Bill? The Committee will note that an Amendment which was printed last week does not appear on the Marshalled List, and I think some explanation should be given of that. A number of my noble friends felt that the course of the Government in producing this Bill was raising many difficulties which could be avoided. We therefore considered a possible alternative, and we put it in the form of an Amendment. However, on further consideration we felt that, in view of the fact that the House had given a Second Reading to the Bill, it would be perhaps rather early to move, as the first Amendment, what might appear to some as a wrecking Amendment. Therefore, we decided not to proceed with it, but to reserve our position to the Report stage of the Bill.

§ I think there is general acceptance throughout the Committee that some measures must be taken in regard to resale price maintenance. There may be some who are fervently against resale price maintenance, particularly those like the noble Baroness, Lady Elliot of Harwood, speaking for the Consumers' Council. There are other Peers who feel that resale price maintenance gives a sense of stability, and that many industries and traders would be affected by its abolition. Whatever may be their feelings, I think there are many who may take the divergent view and are concerned about the drafting of the Bill. One has heard such remarks as that the Bill is imprecise, that it is obscure, and that many merchants, whether they are suppliers or 1295 retailers, may not know their true position until a decision has been taken by the court.

§ I would suggest to the Committee that we should consider seriously, not only the criticisms but also the disquiet which has been expressed, not only in your Lordships' House but also by the public. if we feel that the Bill needs amendment, I think we should make strenuous efforts to see that Amendments are made. I would beg the Government to recognise that this House, as a revising Chamber, is trying to produce better legislation. We are, I think, free from the emotional atmosphere that was obvious in another place during the passage of this Bill. And may I also say to them that no Government, no matter how frail or fragile they may be, are likely to fall by any Amendment that is passed by your Lordships' House? The final decision will, of course, rest with the House of Commons. Therefore, I would suggest to the Committee that we should proceed in trying to make this a better piece of legislation than many of us feel it is to-day.

§ The first Amendment that I have placed on the Marshalled List is to make it possible for a manufacturer who produces a new manufacturing line of United Kingdom origin, where the capital investment is above £10,000, to enter into an agreement for a period of eighteen months with a retailer for the resale of such manufacturing line at the manufacturer's recommended price. I would make it perfectly clear that I would not stand by either the figure of £10,000 capital expenditure or the period of eighteen months. What I wish to establish as a principle is that where we are, in fact, making it possible for resale price maintenance as we know it to-day to be broken, a manufacturer who may have in production a new line and, in his view, feels it is necessary that there should be some form of stability in its retailing, should be empowered to make agreements with his retailers for them to sell at a recommended price.

§ I think 'I should remind the Committee that in 1956 the Government then took the view in abolishing collective agreements—and I think most of us agreed with them then—that it would be right (and I am using the phrase of the noble and learned Earl, Lord 1296 Kilmuir, in Committee and at Report) to give power to an individual supplier or manufacturer to impose resale price maintenance through the courts. I think that is correct. They then felt, in view of the need of industry for some stability in merchanting, that the provision of Section 25 of that Act was necessary. The Government of to-day have changed their mind to, I would stress, a marginal extent. They believe that resale price maintenance, as such, is against the national interest. But they recognise that there may be possible exceptions: they have provided the necessary machinery in the Bill for the exceptions that are possible, and have given power to the Restrictive Practices Court to decide which classification of goods should continue under Section 25—resale price maintenance enforceable through the courts.

§ I am not sure—and I should think that many noble Lords are in my position—of the extent of the five gateways that appear in Clause 5. I would stress to the Committee that all these gateways take into account the effect upon the retailer, but are mainly concerned with the effect upon the consumer. I would not disagree in any way that these five gateways should exist and about the way they should be slanted. But I think that it should be significant to the Committee that none of these gateways takes into account the position of the supplier or manufacturer—I would prefer to think of the manufacturer because I think he has something more at stake than the supplier has, if he is a wholesaler.

§ I have been in commerce, particularly marketing, and I can say, and do so very sincerely, that I recognise the importance of efficient marketing. By "efficient marketing" I do not mean the provision of unfair profit to the retailer as opposed to the consumer, but I mean efficient marketing in the sense that goods are spread throughout the country among various trade outlets; that the supplier will receive the maximum advantage which will follow from your production; and that there is a fair profit to the retailer and a fair price to the consumer. In marketing there has to be this balance.

§ I would stress to the Committee that no industry can be efficient unless there is efficient marketing. If there is bad marketing at the expense of the consumer, 1297 then it has a direct effect upon the manufacturer. As I said, the five gateways do not take into account the manufacturer. They relate merely to the retailer and the consumer. The Restrictive Practices Court will have to decide, after the suppliers have registered, which goods shall be classified and which should be exempt. As I said earlier, none of us knows whether the gateways will be wide or whether they will be rather like the eye of a needle. My own view is that they are more likely to be the latter, if one takes account of the decisions already made by the Restrictive Practices Court.

§ The point is that the Government have established two things: first of all, that there may be exceptions to resale price maintenance, and they have established their gateways. In Clause 1 of the Bill they have declared void all forms of agreements which would impose a minimum price. In general practice, in principle, I think they are right. Because I do not believe it is possible within the gateways to give an appeal to a manufacturer for his line to be exempted, but for some special reason his particular line may need some protection, particularly if it is a new line, I am trying to establish in Clause 1 that for a period a manufacturer should have the right to enter into agreements with retailers in order to give some stability to a new line.

§ I should like to speak again from personal experience. True, it was not in this country but in Malaya. I was selling a particular quality of cotton goods printed in Carlisle. The particular quality, unfortunately, did not sell anywhere else but in Malaya, and the printing requirement for Malaya was 12,000 yards. Unless I got 12,000 yards there was no business either for me, as the agent in Malaya, or for the printer in Carlisle. I found from my own experience that unless one gave some stability to the merchants who were prepared to place fairly large initial orders, those orders were not available.

§ I believe this could well be possible in this country, where a manufacturer is producing a new line, and where competition could be such that there was no stability and no sense of security in the mind of the retailer. Many people believe that the manufacturer or the supplier is the man who makes the line 1298 a success. My experience is that they play a certain part in it, but it is the enthusiasm and the willingness to give support by the retailer or by the dealer that is the cardinal point whether the line will sell. My experience in this is that unless in the very early stages one can give to the dealer a sense of security, he may well feel unable to place the quantity order that is so vital to the manufacturer in the very early days. One can cite many examples.

§ In regard to the Amendment, when I speak of a new line here I do not envisage, say, in the motor trade if Rootes produced a new mark of Hillman Minx that that would be regarded as a new line; but it would be in the case of Rootes when they produced the new Imp. Here was a vast capital expenditure of considerable risk to the organisation, and I think the Committee will also recognise that the distributors, who place very large orders in the very early stages, take on a considerable risk; and I feel that there should be some form of security for them in support of the manufacturer of the new line. Not only is it a case of buying the new line but there may be the question of spare parts. This is not only a question of motor cars; it could well be a question of textiles. I remember the breakthrough that was made by nylon and terylene. Those were very difficult periods when that particular yarn and cloth was put on the market. At the time it was a question whether it would be successful, but it was the good marketing of the organisation concerned and the form of security available to the buyers and dealers that made it successful.

§ I hope that the Committee and particularly the Government will see that this is not in any way to open or weaken the Government's determination to deal with resale price maintenance. It is to find a further gateway which is of benefit to the manufacturer. I do not think it is possible for the Restrictive Trade Practices Court when they are dealing with classifications to exclude particular companies who may be making a particular line that is on the fringe of the classification. I think we must recognise that in these classifications there will be fringe industries and fringe lines. I do not think it would be possible to 1299 have a repeal or an exemption from a general classification, but I think it would be right to give a manufacturer an opportunity of establishing some sense of stability when a new line is being put on to the market. I hope that the Government will look at this Amendment very seriously, because whilst we may be on the side of the consumer—and I think we all are—we should not be acting entirely for the consumer, in fact I think we should act against the consumer, if we were to produce legislation which would in any way prevent or slow down the development of new lines in our industry. I beg to move.

§ Amendment moved— Page 2, line 5, at end insert the said proviso. —(Lord Shepherd.)

§ LORD PEDDIE
This is a hotch-potch Bill with many imperfections, and I am quite sure that in practice it is going to provide a lawyers' paradise, certainly when one comes to interpretation of the true purpose of the Bill. And whatever virtues it may possess, I think the greatest disability is the one that has been highlighted by my noble friend; that is, the effect upon the marketing of new products. I would suggest to your Lordships that the easy availability of new products is in the long-term interest of the consumer, but inability on the part of a manufacturer to have some measure of control over the marketing and the pricing of an entirely new product would place a serious limitation upon his ability to launch it.
If I may give an illustration, a new product may perform a particular function better than the existing product on the market, but superficially it may be difficult to recognise the difference between the new product and the old; and therefore it becomes necessary for the manufacturer of the new product to persuade the retailer and the wholesaler to assist him in launching it. In 99 cases out of 100 the way in which the manufacturer of the new product ensures its launching on the market is to give a bigger margin to the retailer, but under the practice of this clause where there is a bigger margin offered by the manufacturer there lies a greater capacity on the part of the retailer to 1300 cut the price; and if it is not possible for the manufacturer of the entirely new product to enforce, at least for a limited period of time, a retail price, this new product with the wider margin is going to be the very product where there will be price cutting. As a result, the retailer who is offered this new product, realising that the shopkeeper down the road or in the next street is cutting the price, is disinclined to accept that new product.
I was glad that my noble friend expressed his willingness to withdraw the reference to the £10,000. That is wise, because I think it would be impossible to operate it on that basis. It could be exceedingly difficult for anyone to assess precisely whether there is £10,000, £5,000, more or less, involved in capital terms upon the creation of the new product. But I most certainly support the principle expressed in this Amendment, because I believe that in its application it would strengthen the Bill and, in the long term, would be of greater service to the consumer. It would prevent any limitation upon the willingness on the part of manufacturers to experiment, develop new products, and I believe acceptance of this Amendment would facilitate development and the sale of new products in this country.

§ LORD CHORLEY
I should like to add a word in support of my noble friend's Amendment. I think it goes a long way towards meeting a point about this Bill which has been rather worrying me. It arises on a part of the Bill which your Lordships will have noticed but which has not so far been underlined in the debates; that is, the fact that patented articles are now withdrawn from protection in respect of price maintenance. That may turn out to be a very serious business, and I think it ought to have had a good deal more attention than it has had.
I personally am not altogether satisfied that our methods of rewarding inventors under the Monopolies Act are quite correct. But we are committed to this. We reward inventors—and we certainly ought to do that, in one way or another. After all, a great deal of the industry of this country has been built up on the fertile invention of our people, who have been one of the most inventive in the world. The Industrial Revolution, 1301 which was in some ways the most significant affair of the whole of modern civilisation, originated very largely in this country out of the fertility of our people as inventors throughout the whole range of manufacture.
One of the most essential elements in this system, which has been recognised by the courts, is that the inventor is, or was, entitled to attach prices to his commodities, and that ran with the goods, as it were. While the ordinary manufacturer could bind only his immediate purchaser, in the case of a patented article the patentee, and any person to whom he assigned his rights, could fix a price which was not only binding on his first purchaser but binding all down the line. That gave the patented article a considerable advantage at Common Law over other articles, the ordinary commodities of trade. That right has been a valuable right of property to patentees. It is abolished in this Bill. It may be that that is the right thing to do, though I personally feel a little worried about it.
But the reason why I want to support this particular Amendment is that it goes quite a long way towards redressing that particular difficulty; because, in effect, it recognises that at any rate a man who has introduced some new type of commodity on the market should have—for a limited period of time, it is true; but it is a period that is not unsubstantial—a certain advantage in relation to that new type of commodity, that new enterprise which, in effect, he is putting on to the market. In that way, again, the Amendment goes some little distance towards supporting the man who is taking the initiative and is putting something new, something fertile, in the way of invention on the commodity market. That seems to me to be important, and if we do not do something to help these people, who, as I have said, have been one of the mainstays of the great export trade which has kept us alive in this country, it is going to be a serious matter. Therefore I hope that the Government will be able sympathetically to look at this proposal. It may be that they cannot accept the Amendment in the exact form in which it is drafted; but I am quite sure that those people who bring new ideas into business in this way need some sort of support. I hope that if this is not the right way of doing it, the Government 1302 will be able to think of some way in which they will be able to secure this objective.

§ 3.54 p.m.

§ LORD COLERAINE
Since I have not spoken on this Bill previously, I must declare that I have an interest in the subject matter of the Bill—indeed, a double interest, both as a manufacturer and as a retailer. The principle behind the Amendment which the noble Lord, Lord Shepherd, has just moved is, I think, broadly the same as that behind another series of Amendments to Clauses 6 and 7 which appear on the Marshalled List under my name and those of two of my noble friends. Broadly speaking, the principle is that, like the noble Lord, Lord Peddie, I believe that it will be virtually impossible to launch a new product on the market unless some protection is given to the manufacturer, and indeed the retailer, by way of a maintained price, at any rate for a certain period. I do not want further to develop that argument now. Perhaps I shall have the opportunity on the later Amendments. But I have some doubts about the present Amendment, not because I disagree with the principle but because it seems to me to be unduly restrictive. I gather that the noble Lord, Lord Shepherd, has withdrawn the insistence on the investment limit of £10,000, and will have no investment limit at all. Is that right?

§ LORD SHEPHERD
No. I said that I would not stand on £10,000. I recognise that, so far as a large organisation like Rootes is concerned, £10,000 is insignificant; yet £10,000 could be quite a big sum for a small company. So I do not stand on £10,000, and I shall be quite happy to accept any suggestion of the Committee as to what the figure should be. Equally, I do not stand on eighteen months as the period in which stability and security should be given to a new line. Again I would welcome a suggestion from the Committee. It is the principle that I wish to see established. As the noble Lord, Lord Coleraine, knows, it is rather difficult for the Opposition, and indeed for Back-Benchers of any Party, to put forward Amendments that would stand up to exhaustive examination, shall we say, from the noble and learned Lord the Lord Chancellor. But it is the principle behind it, and I am glad that the noble Lord supports that principle.

1303

§ LORD COLERAINE
I am much obliged to the noble Lord for his explanation; but I still think that his Amendment as drafted is unduly restrictive. I cannot see why it is necessary to have any reference at all to capital investment, because it is perfectly possible and, I should have thought, where it is possible eminently desirable, for a manufacturer to develop a new product entirely using his existing plant, and it would be absurd to force him to make a capital investment that he did not want to make in order to get through the gateways.
The other restriction in this Amendment which seems to be unnecessary is the reference to" a new manufacture of United Kingdom origin". That seems to me to be nationalistic and restrictive in itself, and I cannot see why, if there were some new product which originated in Denmark or the United States, the consumer in this market should be deprived of the advantage of having it manufactured by a British manufacturer here. But I support the principle behind the Amendment, and I hope that my noble friend who is going to reply will be able to say that he will consider this principle.

§ LORD LUCAS OF CHILWORTH
I listened to the noble Lord, Lord Shepherd, proposing his Amendment with great interest because I wanted to see how he was going to persuade your Lordships to reintroduce into the Bill the very principle which this Bill seeks to destroy. It is no use denying it. The figure of £10,000 is being thrown overboard, so there is no limit. The Amendment seeks to retain the principle of resale price maintenance. You can camouflage that by saying that it is only for a new product. But what is a new product? The noble Lord, Lord Peddie, quite frankly stated that what you wanted to do, if you introduced a new product, was to have resale price maintenance in order that you could offer to the retailers a higher margin and so protect it. Does not the noble Lord, Lord Peddie, really understand that that was the greatest evil of resale price maintenance, because it introduced into retailing a competition in margins, and not a competition in retail prices to the public? That, I have always understood, was inherent in the principle to which noble Lords on the Opposition side have subscribed.
If the noble Lord, Lord Shepherd, will forgive me saying so, I think this is a 1304 bad Amendment. I will listen to the arguments of the noble Lord, Lord Coleraine, later on. For anybody to stand up in your Lordships' House and say, "Unless you accept this Amendment no new article will ever be introduced on to the market" is something that I do not believe any of your Lordships will accept. Do you mean to tell me that no new product has been pat on the British market unless it has been resale price-maintained? That is just not true. To say that there should be a figure of £10,000, or £10 million, or twopence is to destroy the whole thing.
I beg the noble Lord not to press this. This is a better wrecking Amendment than that which the noble Lord put down originally and which his conscience would not allow him to pursue, so that he thought it would be better to bring it in at some other stage of the Bill. This just would not operate. The noble Lord, Lord Peddie, started his speech to your Lordships by saying that the Bill is now a lawyers' paradise. With this Amendment included, it is going to be paradise and heaven as well. I do not know how one is ever going to implement the Bill if something like this appears in it. In my experience this would defeat the very object which the noble Lord, Lord Shepherd, has in view. It would tie the hands of the introducer of a new product and would make the Bill entirely unworkable.

§ LORD SHEPHERD
The noble Lord will recognise that it is optional whether the supplier makes an agreement or otherwise.

§ LORD LUCAS OF CHILWORTH
If it is optional, then do not put it in at all —because nobody is going to exercise the option.

§ LORD COLERAINE
Might I ask why the noble Lord thinks that this would wreck the Bill—this is a proposed exception to the operation of the Bill—any more than the five gateways in Clause 5?

§ LORD LUCAS OF CHILWORTH
Because it reintroduces the principle which this Bill was originally designed to destroy; the purpose of the Bill is to do away with resale price maintenance.

§ LORD CHAMPION
So does Clause 5.

1305

§ LORD LUCAS OF CHILWORTH
No, That is not right. As this clause is drafted it is not a gateway; it is an open door. The noble Lord himself quite rightly said that the five items in Clause 5 are not gateways: they are the small eyes of very small needles. When we come to discuss them, perhaps I may venture to pass a few observations upon them. This Amendment hits at the very principle of the Bill. It does no good, it does not benefit the introducer of a new product at all, but reintroduces the first evil of resale price maintenance, and that is to take away competitive sale to the public for the benefit of the consumer.

§ LORD PEDDIE
The noble Lord, Lord Lucas of Chilworth, has certainly not paid sufficient attention to the arguments which have been advanced in support of this Amendment. No statement has been made that it would not be possible to introduce new products.

§ LORD LUCAS OF CHILWORTH
Unless my hearing was at fault, I think that it was the noble Lord, Lord Coleraine, who said that.

LORD PEDDLE
That is a further indication that the noble Lord was not paying sufficient attention, because he attributed that remark to myself.

§ LORD COLERAINE
May I qualify it for the benefit of the noble Lord? It would make it very much more difficult to introduce new products.

§ LORD AIREDALE
I am another who does not understand this argument that it is difficult to introduce a new product without resale price maintenance. I understand that in the grocery trade resale price maintenance is practically dead, and yet whenever I go into a grocer's shop I see great pyramids of new products all over the shop.

§ LORD DRUMALBYN
I think that the noble Lord, Lord Shepherd, rather opened his flank by his introductory remarks. In the first place he said that this was too early to put down a wrecking amendment, and the noble Lord, Lord Lucas of Chilworth, then said that this is a wrecking Amendment. For reasons that I shall adduce, it comes pretty near to being such. The second flank that he opened was to attack the wording of the Bill on the ground that it was imprecise and obscure. It is true 1306 that in a later intervention he said that it was to the principle of this Amendment, rather than to the particular words, that he was attached. But the Amendment consists of certain ideas, and I suggest to him that these ideas themselves are somewhat imprecise and obscure.
First of all, what is meant by a manufacturer "of United Kingdom origin"? Secondly, as has already been said, what is a new line? It is all very well to give an example and to say that the Imp would be a new line and that a new model of the Minx would not be a new line. But how new must the line be in order to be new? For example, there are new models of dresses which are introduced every year in production.

§ LORD LINDGREN
They are styles, not models.

§ LORD DRUMALBYN
I think they are sometimes called models—and models are inside them as well! Is there to be a perpetual exemption for this kind of novelty under the Bill? Has every new model to be price-maintained for eighteen months? And what happens at the end of eighteen months? Is the restriction automatically cut off? Will there be no further opportunity, despite the provisions for exemption in the Bill, for these particular products to apply for exemption? All these difficulties are involved, but the main difficulty must be to define what a new model is.
These are matters of uncertainty, but on the main principle the point surely is this. The noble Lord is arguing that there are special circumstances for new products which should enable them to be given a blanket exemption without having to go through any of the tests to which other existing products have to be subjected if they are to obtain exemption. I suggest that there is no good reason for giving new products this kind of exemption. There is nothing to prevent suppliers, if necessary, from applying, under Clause 7(1), for exemption under the Bill if that exemption can be justified on any of the grounds listed in Clause 5. The noble Lord says that he does not disagree that these "gateways" should exist. If that is so, why should they not apply to the new products, as well as to existing products. If the interest of the supplier is to be taken into account, why should his interest not 1307 be taken into account in this way for the existing products as well as for the new products?
The Bill is in the interest of the consumer and of economy as a whole, and should be considered on those grounds. As the noble Lord, Lord Lucas of Chilworth, very cogently said, any number of new products are being introduced all the time without the assistance of resale price maintenance; and in the new climate which the Bill will introduce, surely it will be possible for manufacturers to adjust their practice for new products, as for others, without having recourse to a special exemption to cover all products that are classed as new, however they are to be classed as new, which as I said, is a difficult thing to do.
I would ask noble Lords to realise that all the time any number of new products are coming on to the market. This Amendment would drive a coach and horses right through the Bill—there is no question of that. I do not see how it would be at all possible for the Government to accept an Amendment of this character in principle, quite apart from the actual ideas that are expressed in it and the limitations, as my noble friend Lord Coleraine said. If we were to have such a provision, obviously it could not be expressed in these terms. But I would suggest to your Lordships that it really is not possible to give to new products, however they may be defined, a blanket exemption from being in any way subject to the criteria for exemption expressed in Clause 5.

§ LORD MABANE
May I ask the noble Lord a question? Can the manufacturer of a product not yet formed but to be produced five years hence register under Clause 6(1) of the Bill?

§ LORD DRUMALBYN
No. It is perfectly possible for him to apply for registration under Clause 7(1), and in that case he has, of course, to give a prima facie reason for the application.

§ LORD MABANE
Even for a product that is not yet in manufacture?

§ THE LORD CHANCELLOR (LORD DILHORNE)
I do not think my noble friend was quite right in using the word "register" in that sense. But the provisions of later clauses of the Bill do enable the manufacturer of a new line of goods, let us 1308 say in a year's time, to apply to the Court for exemption—I can draw the noble Lord's attention to them—and to do that without an entry being made upon the register.

§ LORD SHEPHERD
Could the noble Lord help me? Can the manufacturer register the goods, and will he have any chance of having that particular line exempted when the classification in which the goods would be included has not been exempted?

§ 4.2 p.m.

§ THE LORD CHANCELLOR
The answer—and we will come to it when we come to those clauses—is that, as your Lordships will be aware, the decisions of the Court granting or refusing exemption can be reviewed at intervals, should there be a material change of circumstances. I was dealing generally with the point put by my noble friend in relation to completely new goods. Of course, we will consider this point when we get to it in the Bill. If what might be called a new line, however you might define a new line, is really within the class of goods on which the Court has already adjudicated, it would still be possible, as it is under the Bill generally, to make a further application because of there being a change of circumstances. But if it was within a new class, the decision of the Court would operate pending a review by the Court.

§ VISCOUNT MASSEREENE AND FERRARD
Can the noble and learned Lord tell me how long, in his opinion, the Court will take in these instances to come to a decision? Is it going to take six months, twelve months or fifteen months?

§ THE LORD CHANCELLOR
I do not really think that that question arises out of this Amendment.

LORD HAWKE
I think my noble friend the Minister is under some slight misapprehension, if he thinks that a rejection of an Amendment of this nature is necessarily in the consumer's interests. I have had the same experience as the noble Lord, Lord Shepherd, at a more distant date but on probably a rather larger scale. My experience in markets where there was no question of any resale price maintenance was that 1309 no retailer or even wholesaler would look at a new product unless he was guaranteed the monopoly of that product for the market. Of course, it is rather more difficult in this country to enforce such a monopoly for the market, but I can well visualise the position of the traveller going round to try to sell a new product in a city. The first thing he will be asked by retailers, if there is no retail price maintenance on this product, is: "Whom else in this city are you intending to sell to? "Unless he can give the answer, "I will sell to you only", or, "You and so-and-so only", the retailer will not be prepared to take the risk of taking up the product.

§ LORD DRUMALBYN
Nothing under this Bill will prevent a manufacturer or supplier from undertaking to supply only a particular dealer. He can make a contract perfectly easily and perfectly validly to supply a particular dealer only, under this Bill. As for the other point which my noble friend made, I think that it is quite simple. It is simply this. When the retailer gets possession of goods in any particular case, and if these are new goods, I would agree that no doubt he will require some kind of assurance as to the way in which they are going to be marketed. But once this Bill becomes law, he will know that the only way in which resale price maintenance can be authorised is through an exemption granted by the Restrictive Practices Court in accordance with one of the criteria that are laid down. These criteria are available, and I cannot see why these criteria should not apply equally as much to new products as they do to existing products.

§ LORD STONHAM
But can the noble Lord explain what he has just said? In dealing with the point raised by the noble Lord, Lord I4awke, he said that there was nothing in this Bill to prevent a supplier from entering into a contract with the dealer whereby the dealer would be the sole trader selling that particular brand of goods in a particular area. This is an extremely common practice. It has a good deal to commend it, both on the part of the supplier and on the part of the dealer, and it has nothing whatever to do, necessarily, with resale price maintenance. 1310 But Clause 2(3) says this very clearly: For the purposes of this Act a supplier of goods shall be treated as withholding supplies of goods from a dealer— (a) if he refuses or fails to supply those goods to the order of the dealer;". If the supplier is supplying Messrs. Brown at one end of the High Street, and wants only to supply Messrs. Brown, but Messrs. Smith at the other end of the High Street think it is a good line and place an order with the supplier, how, under Clause 2, is he going to be able to refuse to supply them? I am thinking of what the noble Lord just said, and I cannot square it with Clause 2.

§ THE LORD CHANCELLOR
We shall be getting to Clause 2 quite soon. What my noble friend said was, in my view, entirely accurate, but I really do not think that one can undertake an exposition of Clause 2 at the time when we are dealing with this particular Amendment to Clause 1. I think it would be more convenient to examine Clause 2 when we get to it. But I should like the noble Lord, if he would, to go forward in considering this particular Amendment, in the hope that I shall be able to satisfy him—and I think I shall —that what my noble friend said about that is quite right.

§ LORD STONHAM
Since the noble and learned Lord put that so reasonably, of course I agree. But I did not start this; it was his noble friend who got up and said, "There is nothing to prevent this kind of contract." Frankly, I was not intending to prolong the discussion but was simply asking for information.

§ LORD SHACKLETON
We are going to get into terrible difficulty—it is quite obvious—on this Bill, because the noble and learned Lord started referring to Clause 5. I, personally, am not very sympathetic with my noble friends' Amendment, but the noble and learned Lord's speech has inclined me to question him a little further. As I understand it, he was saying that somebody who invents something, or has some new type of goods, may be enabled under Clause 5 to have those goods exempted. I hope he will make the position absolutely clear to us, but the implication of what he said is that unless, in fact, that particular class of goods has already 1311 been exempted, it seems there is no possibility for the manufacturer to claim exemption.

§ THE LORD CHANCELLOR
May I interrupt the noble Lord? I do not think I in fact referred to Clause 5. If he will look at Clause 7(1), he will see that that makes provision for late applications.

§ LORD SHACKLETON
The noble and learned Lord is going rapidly through the Bill. We are now on Clause 7. Suppose there is a completely new invention. Suppose somebody invents an antigravity device which enables the noble and learned Lord to float into the Chamber. This would not fall into any particular class of goods. Perhaps he can relieve my mind by saying that this particular item would be covered under Clause 7(1), because, if so, I should then be with him in opposing this Amendment.

§ THE LORD CHANCELLOR
If the noble Lord wants to apply resale price maintenance to any new line of floating which the noble Lord would like to invent, provision is made for that under Clause 7, subsection (1). I hope the noble Lord will read the whole Bill. Provision is made under that clause for an application to be made to the Court.

LORD HAWKE
I am a bit befogged by all these exchanges. May I ask my noble and learned friend this question: am I right in thinking, then, that the alternative to resale price maintenance on a new product, which is the giving of a monopoly to a dealer or a retailer for a particular area and so enabling him to pick what price he likes, will be in order?

§ LORD WAKEFIELD OF KENDAL
Before the answer to that is given, may I ask: what, then, is the position of somebody who desires to distribute widely by mail order?

§ THE LORD CHANCELLOR
What I was saying a little earlier on was to suggest that we really cannot deal with the Committee stage of this Bill by taking a whole number of Amendments and different clauses all at the same time. There is difficulty, I agree, in dealing with the first Amendment, when noble Lords ask questions, as they quite 1312 rightly do, on what is the position under Clause 2 or any other clause. My noble friend and I have done our best to answer those questions quite shortly for the convenience of the Committee, but if we are challenged upon them then we will endeavour to substantiate by argument the reasons why we have expressed those views. So far as my noble friend's answer is concerned, which was an answer in relation to the interpretation of Clause 2, I would confirm that, in my belief, as the Bill now stands, a manufacturer would be able to adhere to a particular policy, if he wished it, as to the distribution of his goods, by saying for instance, "My policy will be to have not more than one dealer in this particular line at any particular time". But we will come to that in Clause 2, and will then be able to discuss it.

§ LORD AIREDALE
When the noble and learned Lord the Lord Chancellor referred, as he did, to Clauses 5 and 7, he was referring, was he not, to clauses dealing with goods of a particular class; whereas the point that I think the noble Lord, Lord Shackleton, was making was that if an inventor invents some new product which happens to fall within a class which has not been exempted under either Clause 5 or Clause 7, then neither of those clauses can in any event come to the rescue of the inventor.

§ THE LORD CHANCELLOR
I had hoped I had made that clear earlier on, when I said that if the new invention was in a class which had been exempted by the Restrictive Practices Court it would continue to be exempted unless and until the matter was reviewed. I also said—and I am sorry if I did not make myself clear—that if the new invention was within a class which either had not been registered by manufacturers or had not been exempted by the Restrictive Practices Court, then resale price maintenance could not apply with regard to that unless and until the matter had come again before the Restrictive Practices Court. I said that earlier on, although it may be my fault for not making myself clear.

§ LORD AIREDALE
I am much obliged.

1313

§ LORD SHEPHERD
The short debate we have had on this Amendment illustrates the difficulty which I think most of the Committee feel. Perhaps on this particular Bill there might have been some point if we had had a Second Reading debate on the principle as to what is the Government's intention, and then had had another debate during which we could have discussed all the various clauses and brought them together. However, I think we have had a useful debate. I am glad of the support of the noble Lord, Lord Coleraine, and of the noble Lord, Lord Hawke; and I also take note of the criticisms of my noble friend Lord Shackleton. I think that my noble friend and those who, like the noble Lord, Lord Lucas of Chilworth, are opposed to this Amendment must recognise that the Bill does not sweep away Section 25 of the Restrictive Trade Practices Act. The Government themselves have said that there should be exceptions, and they have laid down the method by which exceptions should arise.
This is not a blanket provision, as the noble Lord, Lord Drumalbyn, has suggested. He poked great fun at the dresses, which, of course, was a good Party point; but that position would have been well covered by the fact which the noble Lord, Lord Coleraine, mentioned as to capital investment. In the manufacture of dresses there would not be anything like such a figure. In any case, the agreement which the manufacturer would enter into would be for only a limited period of eighteen months or so, as suggested in this Amendment.
I think we have had a useful discussion. I should not wish to put this in issue at this stage, because I recognise that much may hinge upon later debate on Clauses 2 and 4 and Clauses 5 and 7; but I think we have had an introduction to the difficulties with which the Committee are presented, in spite of all that went on in another place. I would suggest that if, with the leave of the House, I withdraw this Amendment, we should look at the position as the clauses go by, and if we do not feel happy about the position to help new lines being brought on to the market, then we should come back to it on the Report stage. I hope that meets with the agreement of the Committee.

§ Amendment, by leave, withdrawn.

1314

§ 4.27 p.m.

§ VISCOUNT HANWORTH
moved, in the proviso to subsection (2), to leave out the word "licensee", where it occurs the second time, and insert "holder of any such licence". The noble Viscount said: I hope that this is only a drafting Amendment. The intention of the proviso to which this Amendment relates is, I find personally, a little obscure, but presumably it is that if a licensee grants a sub-licence, then under the sub-licence he is able to regulate the price at which the sub-licensee sells the articles which he manufactures under the sub-licence. It can be argued that a sub-licensee is covered by "licensee", but there is some doubt on this; and if the licensee grants a non-exclusive sub-licence—that is to say, a licence which does not preclude the licensee himself from manufacturing and selling—then he, the licensee, may regulate the price at which he himself sells the goods which he manufactures, but may not regulate the price at which the sub-licensee sells. To overcome any possible doubt on the interpretation of this Proviso, the Amendment substitutes the words "holder of any such licence". I beg to move.

§ Amendment moved— Page 2, line 19, leave out ("licensee") and insert ("holder of any such licence").(Viscount Hanworth.)

§ LORD DRUMALBYN
I am not quite certain, really, what the difficulty is that my noble friend has in mind, because the word "licensee" is followed by the words "or assignee". Surely, the sub-licensee would be an assignee for these purposes. Therefore, I do not quite see why my noble friend wants to make the alteration—or, indeed, what advantage the alteration would have for him.

§ VISCOUNT HANWORTH
If the noble Lord is quite satisfied that the point I was making is met, I certainly do not wish to carry the matter any further.

VISCOUNT COLVILLE OF CULROSS
Before the noble Viscount withdraws his Amendment, I wonder if my noble friend Lord Drumalbyn would just look at this point again. The ordinary use of the word "assignee" is to describe somebody to whom the whole of the licence has been assigned, and not only a part of it, with, as it were, a reversion to go back to the original licensee. That is the 1315 usual use of the term in the contexts to which I am used. If the sub-licensee is a person who ought to be specifically mentioned in this Bill, then I wonder very much whether "assignee" is apt to deal with it.

§ THE LORD CHANCELLOR
I think the word "assignee" in itself, is really not apt to deal with it; but I consider the wording of the clause is sufficient to cover both the licensees and the class mentioned, the sub-licensees. However, I will have a further look at that to make quite sure. It is certainly the intention that that should apply. Though I need not take the time of the Committee now, and I think the wording is sufficient to cover sub-licensees as well, I will certainly look at it.

§ Amendment, by leave, withdrawn.

§ 4.31 p.m.

§ LORD SHACKLETON moved, after subsection (2), to insert:

§ "() If it appears to the Registrar—

(a) that a supplier by any agreement purports to retain ownership in goods up to the date of delivery by a dealer to a consumer. and
(b) that the normal practice of the said supplier up to the date of the agreement has been to supply similar goods to a dealer or dealers for sale, and
(c) that the object of the said agreement is to circumvent the provisions of this section,

then the Registrar may refer the agreement to the court."

§ The noble Lord said: The purpose of this Amendment is to block up a possible loophole. If your Lordships will examine the Amendment closely you will see that the purpose is to prevent a supplier from enforcing the equivalent of a fixed price by retaining the ownership of the goods by some device. I have not come across an example of this happening, but it seems to me that it would be perfectly possible. I should like the views of the noble Lord, Lord Lucas of Chilworth, on this point, because it may be that this occasionally happens in the motor trade, where it would be possible for a manufacturer to enter into some form of agreement with a retailer by which the ownership of the particular goods remained with the manufacturer or supplier until the actual moment of sale. This could apply also in other fields—for example, in the case of petrol or tyres. Though 1316 I believe that it would be unlikely to apply in most small consumer goods, I think it would be possible particularly with radio sets and refrigerators.

§ Even if it does not happen now it is quite clear that with a Bill as complex and, indeed, as open to different interpretations as this, those people who wish to defeat its objects will look for loopholes. I hope the Government will be inclined to look favourably on an Amendment which seeks to serve the main purpose of what they want and which may save them the trouble of amending legislation in the future. I beg to move.

§ Amendment moved— Page 2, line 19, at end insert the said subsection.—(Lord Shackleton.)

§ LORD STONHAM
Before the Minister replies to the Amendment I should like to ask him to consider a very common type of transaction, which again has nothing to do necessarily with resale price maintenance, but in which a manufacturer does retain ownership of the goods. I refer to the case where the goods are delivered to a retailer on approval.
It is quite a common practice for furniture to be delivered to a retail store on approval, on show, as it were, not just for a day or two, but sometimes for several months. A whole display may be in the ownership of the manufacturer whose insurance even covers the goods while they are in the retailer's establishment. They are not invoiced in the ordinary way but only when the retailer says that they have been sold. Then the manufacturer sends an invoice for them. If they are not all sold then, of course, some of the goods are returned. This is quite a frequent type of transaction, and I wonder whether it would be regarded as an attempt at evasion of the terms of the Bill and whether the practice would need to be registered.

§ LORD SILKIN
I hope that my noble friend will not mind my saying so, but he has not read this Amendment with his usual care. The Amendment provides that where it has hitherto been the normal practice to supply goods for sale, and the practice is changed, by adopting a new method of retaining ownership, for the purpose of circum-venting this Bill, then it should be referred to the Registrar.
1317 Like my noble friend who moved the Amendment I cannot quote examples of this happening at the present time. Certainly the cases referred to by my noble friend Lord Stonham, which are normal practice, are not the sort of case that we have in mind. We are concerned with a case where a new practice is adopted simply for the purpose of circumventing the Bill. I am not even sure how it does, in fact, circumvent the Bill to retain the ownership. I am not sure whether it does or not; but it has been suggested that this would be a way of circumvention, and I should be glad to have the views of the Minister.

§ LORD LUCAS OF CHILWORTEL
I join the noble Lord in hoping that the Minister will explain the situation. I feel that the point cannot have escaped the Government's attention. I can illustrate it in this way. When the incidence of purchase tax was introduced into the motor-car industry, the amount of purchase tax on a motor car was so high that no reasonable, commercial-minded dealer in motor cars would ever stock a motor car because of the risk of a purchase tax reduction which was far more than the profit he made. So it was then conceived that the dealer of a high-priced article, such as a motor car, would buy the product from the manufacturer on a kind of hire-purchase system. He paid a deposit on the motor car, which was the amount of the whole-sale price, and left the balance, which was the amount of the purchase tax, to be paid when he sold the motor car to a retail purchaser. In other words, the title remained with the producer until a moment of time. The technical argument, which I hope the noble Lord will explain to the Committee, is at what moment of time does the transaction I have described become a sale for the purpose of deciding whether there is a new agreement between the producer and the seller aimed at circumventing these provisions of the Bill.
I now refer to the point made by the noble Lord, Lord Silkin. It may well be that, coupled with the consignment arrangement, or "sale or return" arrangement—but consignment arrangement is the one have in mind—the producer of a high-priced article—it may be an article like a motor car, a wireless set, a television set, a grand piano and so 1318 forth—again retains the title, not only under a consignment agreement but under a hire-purchase agreement. At what time does the hire-purchase agreement, where the title rests all the time with the producer, and at what moment of time does the title pass to the seller—not to the retail purchaser—where this Bill bites as regards the price maintenance agreement? I think that is the point that is worrying. I think that an attempt was made in another place to debate this point, but I never felt quite satisfied that the arguments put forward were valid. Perhaps the noble Lord will satisfy us that there is not a loophole, because I have every sympathy with the principle of Lord Shackleton's Amendment.

§ LORD SILKIN
Again the noble Lord has not really addressed himself to the terms of the Amendment. He is speaking of what might be normal practice. The Amendment does not purport to deal with normal practice at all. It deals with the case where a supplier delivers goods in the normal way as a sale and then, because of this Bill, changes his practice for the express purpose of circumventing the Bill.

§ LORD LUCAS OF CHILWORTH
With respect to the noble Lord, I have addressed myself to the Amendment. What is a normal practice with one producer is not a normal practice with another. For example, for a manufacturer to have his own hire-purchase agreement is not common practice with all manufacturers. I am interested in the principle of the Amendment, which wants to stop up a loophole of evasion. There are so many ways in which these things can be got round. I hope that the Minister will satisfy the Committee that there is no loophole and that our apprehensions about the law are unfounded.

§ LORD DRUMALBYN
I would say to the noble Lord, Lord Shackleton, that we are not unsympathetic with what he has in mind here, but I do not think it is necessary to have this kind of Amendment. There are two kinds of case which noble Lords have in mind here. In one case, they have in mind the supplier who might go wholly over to a full agency, where the supplier will be supplying as principal to customers. In the other case, the supplier may devise some means which will enable 1319 him to keep control of the goods to the point where they reach the consumer.
So far as we can see, the only way in which resale could be avoided would be if the customer were to buy from the principal instead of from the dealer —in other words, if the dealer became agent for the principal and the principal assumed responsibility for his actions within the terms of an agency contract, and even, in some cases, if the agent went beyond his authority under a contract. In the other case, of the so-called sale and return or consignment sale, to which the noble Lord, Lord Lucas of Chilworth, referred, surely resale remains. As the noble Lord said, there comes a point in time—the noble Lord then stopped abruptly, but what I think he was going to say was "if the dealer is to remain the principal, at which the goods must pass to the dealer before they come to the consumer". This has been presumed, I understand, in the purchase tax cases to which the noble Lord referred.
I do not think that any difficulty arises on an attempt to evade the Bill by anything short of a full agency arrangement. The question is whether, in order to prevent the evasion of the provisions of the Bill, we should have a clause such as this, so that any arrangements which appear to be made for an agency to take the place of the present arrangement for selling should be referred by the Registrar for examination. Our view is that this is something which is remote. Suppliers are most unlikely to contemplate setting up agencies all over the country and accepting liability for the actions of dealers acting on their behalf as principals.
I can tell the House that in one particular case which springs to mind—that of motor supply—we have made inquiries and the principal suppliers have given us specific assurances that they have no intention of indulging in any subterfuge in order to find a way round the obligation of the Resale Prices Bill. Therefore we do not think it is necessary to go so far as is suggested in this Amendment.
We feel that the right course is to wait and see whether, in fact, agency arrangements will be used deliberately as a device to circumvent the Bill. If 1320 so, the Government will certainly take action. It will be necessary to think this through and find a solution to the sort of difficulties indicated. But the difficulties are probably greater than the noble Lord had in mind. For one thing, it would put the Registrar in a somewhat unparalleled position. Under this Bill and under the Restrictive Trade Practices Act he has been given no comparable discretion in respect of any of his other functions, but if this Amendment were to be introduced into the Bill, he would have to be given pretty far-reaching powers to obtain and verify information on the basis of which he could decide whether to make a reference to the Court. Indeed, it might well involve registering this kind of change from existing practice to full agency agreement, so as to give the Registrar notice that that had been done. I wonder whether noble Lords, in putting forward the Amendment, have thought so far ahead as that.
I think we have to look a little further still and see how the Court would deal with agreements that were referred to it. The Amendment does not give the Court power to declare an agreement void, but clearly some such power would be necessary, if the Registrar were to refer such an agreement to the Court. Nor would that alone be adequate. There would certainly be some cases where the Court was not satisfied that an agreement need be declared void, but where, all the same, it might be necessary to provide that the Court should be able to make modifications in the agreement. Obviously, this is a complicated matter and somewhat cuts across the powers and functions of the Registrar. Our general view is that the likelihood of full agency agreements being adopted in order to circumvent the Bill is not very strong, but we give notice that, if they are adopted, we will certainly take action.
On the other side, we do not believe that there is any means that can be devised for preventing a subterfuge which would enable the supplier to control the resale price without also controlling the goods as principal right up to the point of sale to the consumer. For these reasons, I hope that the noble Lord will not press this Amendment.

1321

§ LORD SILKIN
When the noble Lord says that the Government will certainly take action, does he mean there will be new legislation on the subject?

§ THE LORD CHANCELLOR
May I in answer to that question say what my approach to this would be, which I think is supported by what my noble friend has just said? When this Bill reaches the Statute Book, I am confident that the vast majority of manufacturers, who are reputable people, will say: "If resale price maintenance in relation to our goods is stopped we shall not seek to get round that by any devious device." I think that is worth saying. I am certain that the reputable ones will take that course. But in saying that one cannot exclude the possibility that there will be a small proportion who, by one means or another, will seek to obtain the advantages they now obtain from resale price maintenance. One can accept that, too. But I do not believe that one can deal with that situation by legislation in advance.
The noble Lord, Lord Silkin, has put the case for the Amendment with extreme reasonableness, and the Amendment is only linked where there has been a departure from the present practice. It is difficult to discuss in debate the precise moment when the change of ownership will take place. But the discussion has shown. I think, that there is no real risk, so far as we can see, of a means of avoidance occurring if, even notionally, the property in the goods is transferred to the dealer at or notionally before the time he sells it to the consumer. That would be caught, as I see it, by the Bill as it now stands.
The suggestion was put forward by the noble and learned Lord, Lord Gardiner, in the course of our Second Reading debate that it would be quite simple to devise methods, analogous to the methods of hire-purchase, whereby the manufacturer retains ownership and merely allows the possession (this was raised by the noble Lord, Lord Stonham) to be in the hands of the dealer, and then the title passes direct from the manufacturer to the purchaser. I do not see how that could be easily achieved, and I do not think it is at all likely.
1322 My approach to this, frankly, would be this. We think the risk of adoption of this kind of device is remote. But it may be adopted. It would be much better, I think, to take the course that we so often take in regard to our financial legislation. Let us see what the scheme for avoidance is, and then, if I may indulge in some slang, knock that scheme on the head, and make sure we do it. Legislating in advance to stop a possible avoidance device when we do not know what the device is may be singularly inoperative. The noble Lord asked the question: Does this mean fresh legislation? I think I can give him a fairly definite answer to that. If such avoidance devices do happen—and I rather doubt whether they will—then I think there is a case for fresh legislation to deal with it. As my noble friend pointed out, this particular question is raised by the Amendment, but it is not solved by the Amendment: because if you are going to knock a scheme of this sort on the head, you want to make sure that you do knock it on the head, and you would want to give powers to the court to condemn that scheme and in some way make it unlawful. I think it would be wiser to wait and see whether this happens, and then deal with it.

§ LORD LATHAM
The noble Lord, Lord Drumalbyn, specifically referred to what he termed a "full agency". It would not be necessary to have a full agency; one could have a limited agency. It was the case in the motor trade for many years—whether it is now, I cannot say—that the tyre companies appointed persons as stockists and supplied them with goods on sale or return, and the property in those goods only passed at the time the tyre was sold to the consumer. What would be the situation as regards agreements of limited agency?

§ THE LORD CHANCELLOR
It is hard to answer a general question like that on limited agency, because it depends on the limits imposed in the individual case. But I would say that, so far as the principal is concerned, he would still be at some considerable risk of finding himself involved in difficulties, and finding himself, as against third parties, having to dispute whether or not that particular agent had been held out for a particular purpose. The point put by the noble Lord is that where tyres 1323 were supplied (it is not so much a limited agency point) to a dealer on sale or return, how would this Bill apply in that case? I can answer the noble Lord quite simply on that. The dealer sells the tyre to the consumer. If he is to give the title to the consumer, the title in the tyre must pass immediately before he does so from the tyre manufacturer or tyre supplier to the dealer. So the Bill will still bite on that particular transaction. I dealt, first of all, with limited agency, but I do not think it has any bearing on this point. So far as I can see, the Bill will bite on the particular set of facts mentioned by the noble Lord.

§ LORD STONHAM
Perhaps I may say one word arising out of what the noble and learned Lord has said. He has just cleared up one point in my mind, as to where the title passes. But he used the word "device". I am sure he will accept that the practice of sale or return in certain industries is a perfectly legitimate and proper procedure, and, as my noble friend Lord Silkin said, it would be a customary method of trading. But assuming that a firm at present doing that kind of business—and in most cases it would be only a small fraction of their total business—decided for the wrong reason to do all their business in that way, would the Bill without this Amendment bite?

§ THE LORD CHANCELLOR
I am glad the noble Lord has intervened to put this point, for the simple reason that I should not like anything I said to be misunderstood. I am certainly not wishing to be at all critical of the practice of supplying goods on sale or return, and I should not like anything that I said to be so inferred. When 1 used the word "device", I was applying it in the context of some newly-devised system that got round the operation of this Bill by preserving the advantages, or alleged advantages, so far as the manufacturer and others were concerned, of resale price maintenance.

§ LORD SHACKLETON
The noble and learned Lord has been most helpful and conciliatory, and I can understand that there are good reasons for this in regard to a Bill that is already complicated enough: the Government feel that they have the tiger by the tail, and they do not want to add to its fury. They have conceded that there is a possible evasion 1324 or loophole here. The Lord Chancellor has said that he is quite sure the majority of reputable suppliers will have no wish to try to avoid the effect and intention of the control over resale price maintenance; and, of course, we accept this. He also agreed that there might be the exceptional case—the group who were determined to get round it, or words to that effect—and when that happened he said we must knock them hard and have new legislation, breathing a sigh of relief and hoping that he would not have to explain that legislation when it came about.

§ THE LORD CHANCELLOR
I may have been breathing heavily, but I certainly was not breathing a sigh of relief.

§ LORD SHACKLETON
When we introduce legislation, we ought to try to provide for what I think are likely contingencies. May I give a further argument as to why I think something like this is necessary in this Bill? We know only too well what a bad effect legislation of a restrictive kind can have in distorting patterns in industry, in a tendency to force a particular structure on organisation in order to avoid the effect of legislation. It is, of course, notably so in regard to taxation legislation. If we do not put something like this in, it is quite likely that in future we shall not be able to accuse people of evasion of the law. It will be perfectly legal for them to do it.
I admit that my anti-gravity device, which I mentioned, may be a little too futuristic, but there will be many new developments in the course of the next few years, and it may well be that a particular manufacturer, conscious of the failure to provide for his protection, which my noble friend's Amendment might have done, will decide that he will market a new product in a certain way, a way in which he is able to maintain the price of the goods. He can do this in a number of ways. First of all, he can do it by having his own outlets and merely operating through his own shops or garages, whatever they may be. Indeed, this may already apply in the case of petrol. It is perfectly possible that the petrol companies may extend their ownership, and I do not see how, under this Bill, and under my Amendment, we can deal with that. That I quite agree.
1325 I admit that in my remarks I am raising a very wide issue, but I think it is an important one for us to look at; and this is as convenient a point as any. There are certain manufacturers already who take certain steps to ensure what they regard as a proper return in order to avoid the effect of possible competition between suppliers. Let me take one example. There is certain office photocopying equipment—the Xerox machine is one, and there will no doubt be others—which you cannot buy but have to hire. This has the effect of keeping the price up. There are a number of devices open.
I should like to ask the Government, since we arc on such good terms at the moment on this issue—there is no real difference between us on the desirability of what we want to do and it is only a question of the timeliness—whether they would not look again at this question. There is force in the argument of the noble and learned Lord that it is better to wait and see what form this takes, and then knock it on the head. That means new legislation and, furthermore, it is apt to become retrospective legislation. People may already in good faith have set up a form of distribution through agents to enable them to maintain price control, and at that point the Government want to come and knock them hard. I said there was an obligation on us, if we are going to produce effective legislation, to try to foresee some of these things. I would ask whether the Government would consider these further points. It may be that other noble Lords may have some further observations to make.

§ THE LORD CHANCELLOR
Of course, we have considered, and given a lot of consideration to, these points; I can assure the noble Lord of that. The Amendment proposed deals only with one possible way in which there might conceivably be an attempt at evasion. It deals in paragraph (a) with the supplier, by an agreement, purporting to retain ownership in goods up to the date of delivery by a dealer to a consumer. As I pointed out, that will not affect the position where notionally the property in the goods must pass from the supplier to the dealer for the dealer to be able to pass the title, or to be able to be in the position to effect a sale from him to the purchaser.
1326 I hope that nothing I have said led the noble Lord to suppose that under this particular provision there would be evasion. My observations were much more general. Just as when one stops some practice in the taxation field it is impossible to predict in advance the various devices that may be sought to be adopted by various individuals or concerns and to deal with them at the outset, so in this field I think it is really impossible to deal effectively with such risk as there may be of some small section of the manufacturing industry entering into this field. I think the risk is slight, but again I make the point that until you know what that practice is it is not easy to legislate effectively to put an end to it. It is much better, therefore, I believe, to leave this as it is, to watch the situation, and to deal with it in, as we think, the remote event of some suppliers seeking to avoid the operation of this measure and to retain for themselves the advantages of resale price maintenance by devices intended to avoid and escape the operation of this measure.

§ LORD LATHAM
Surely everyone is entitled to avoid. To evade is another matter.

§ THE LORD CHANCELLOR
I am not going to enter into a difficult semantic argument with the noble Lord, with which I am most familiar in regard to the tax law, of the difference between "avoidance" and "evasion." As the noble Lord will agree, there are many avoidance devices.

§ LORD LATHAM
They are quite bone fide.

§ THE LORD CHANCELLOR
They are no doubt done quite bone fide, but which the Chancellor of the Exchequer has not infrequently to stamp upon and put an end to. I am using the word "avoidance" in that form. This Bill is not making any conduct criminal; that is one of the advantages of this measure. What I am saying is that, if a method was thought out for avoiding the operation of this Bill and securing the advantages of resale price maintenance despite the wishes of Parliament, it would be better to deal with that when it arises than to speculate as to the possible forms it might take.
I would add this. Even if I were wrong about that and I do not carry 1327 the noble Lords with me, the provision in this Amendment is wholly ineffective to stop even a practice which came within paragraph (a), because all that would happen would be that the Registrar would report to the Court. The Court has no power to do anything. I will be quite frank about this. You would have to put a whole new clause in this Bill to enlarge widely the powers of the Court and the powers of the Registrar. At the end of the day, having done that, one could have no confidence that one had hit the target, because one would not know what the target was at this stage.

§ LORD LUCAS OF CHILWORTH
May I just add this? I think the Committee should be very grateful to the noble and learned Lord for the exposition he has made; I think it will clear up a lot of misapprehensions. He has laid down the firm intention of the Government not to stand for any avoidance of this particular principle. I quite agree with him. If we were to do what the noble Lord, Lord Shackleton, clearly had in mind, it would mean a major alteration of the Bill, and for myself—I cannot, of course, speak for the mover of the Amendment—with some knowledge of the various devices which can be used, I am quite prepared to leave it where the noble and learned Lord has said the Government would like it left.

§ LORD SHACKLETON
I am sorry that we are not getting any further. I am very grateful to the noble and learned Lord. I still think there ought to be some provision on the lines of my subsection. The Government have not hesitated to put on to the Court the most onerous tasks in regard to this particular Bill, and I should have thought, if my Amendment is not satisfactory, which I fully understand, that we ought to consider some other words. However, in the circumstances, I ask leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ 5.12 p.m.

§ LORD SILKIN moved to add to subsection (4): provided that such notification clearly states that the recommended price is not the minimum price". The noble Lord said: This Amendment, at any rate, is a simple one, and I hope 1328 that it will be acceptable. Subsection (4) of Clause 1 provides that a supplier may notify to a dealer the price which he recommends as appropriate for the resale of goods supplied or to be supplied by the supplier. Such a notice would be legitimate. But the wording might well be misunderstood in some cases as meaning that that is the minimum price at which the goods should be sold. What I am suggesting is that to avoid any misunderstanding, where a supplier does, in fact, indicate to a dealer the price he recommends, he should state quite clearly that in so doing he is not recommending this as the minimum price. This is merely a clarification Amendment, and I hope that it is acceptable to the Government. I beg to move.

§ Amendment moved— Page 2, line 28, at end insert the said words.—(Lord Silkin.)

§ LORD DRUMALBYN
As I understand it, the Amendment which has been moved by the noble Lord would mean that no notification under this subsection (4) could be given except where it was clearly stated that the recommended price is not the minimum price. I would suggest that this is putting a very wide responsibility on to the supplier. I am not quite clear as to how wide the noble Lord wishes this to go. Perhaps I might explain how we think this is likely to operate, for that will probably best illustrate to noble Lords what we have in mind.
It seems to us that after Clause 1 has come into force it will be unlawful to try to maintain prices on any goods unless the goods have been registered. it follows, I think, that unless dealers are told by suppliers that the goods have been registered they will feel entitled to cease to sell at the old fixed prices. That is what is likely to happen. So I should expect suppliers would take that into account; that is the way they would reason. And suppliers who have been maintaining prices would, I expect, in their own interests, notify dealers if they intended to continue the maintained price pending examination by the Restrictive Practices Court. Indeed, I should expect them perhaps to notify dealers if they had not claimed the registration, because unless they do so I do not see how the dealers can be expected to know what was happening.
1329 So, if and when the Court decides that goods of any class are to be exempted goods, the suppliers again will probably inform dealers that they are, or are not, as it may be, even though the goods are in a class of exempted goods going to take advantage of the exemption. It seems to me this is what is likely to happen. If the Court decides that the goods of any class are not to be exempted, suppliers may be expected to inform dealers accordingly. In other words, this Bill is going to require changes in price policy wherever suppliers at present have a system of resale price maintenance. It seems to me that they will be bound, in their own interests, to inform dealers of what those changes are going to be.
In many cases, where, for example, the price is actually marked on the goods, suppliers will probably want to treat the price marked as the recommended price; but in all cases where they intend to recommend a price they will want to inform dealers of their price policy which, as I said, they wi11 have to revise in order to bring it into line with the Court's decision. In their own interests they will want to make it clear to dealers that they will not seek to maintain prices under the guise of a recommended price. If they do not do that they will all the time be under suspicion of trying to maintain prices under the guise of a recommended price. So, I think the real point is that, once the Bill has become law, dealers may possibly assume that they are free to sell at any price they chose, and I should expect suppliers right away, in their own interests, to take steps to tell dealers what the position is and what their price policy is.
If one were to go further than that and require on every tin of merchandise on which a price is at present marked simultaneous notification to be given that "this is only a recommended price," and, if, in every indication of a recommended price, we were to require that it should be made clear that it is only a recommended price, I should have thought that we were going very much further than is necessary. After all, in the field of trade people will be talking of these things all the time. I cannot envisage the possibility that, at the time when this Bill is being brought into operation, people will not be talking all 1330 the time about whether or not, in any particular case, and with regard to particular goods, prices are to be maintained for the time being.
In some cases, as I say, application will have been made for registration, and in such cases the supplier will want to inform the dealer that application has been made for registration. And when that has been done, of course, price maintenance will be able to continue. Alternatively, he may want the present price that he is maintaining to be a recommended price. But either way it seems to me that one can reasonably expect that in the normal course of business his salesmen will, as they go round, inform dealers of what the policy is, and that in many cases he will think it desirable to inform dealers what is his policy.
Therefore, to make it an essential statutory obligation to indicate, whereever a recommended price is suggested, that there should at the same time be a clear statement that that is not a minimum price, hardly seems to me to to be necessary. Therefore, I do not feel that it is necessary that we should accept this Amendment.

§ LORD SHEPHERD
I am quite sure my noble friend in moving this Amendment did not envisage the statement which is required in the Amendment being put on goods, such as a packet of toothpaste. This I think would be carrying this matter too far. But the noble Lord must be aware of the criticisms that were made by the Restrictive Practices Court and the Registrar's own report on some of the information agreements and information notices to which their attention had been drawn: that these information notices have passed between manufacturers, not in the sense of stipulating minimum prices but recommending a particular course of action and this has in fact become the minimum. This is what my noble friend, I am quite sure, had in mind; not the putting of this notification on the goods, but its being put on the price-list or the general circulars that pass between the various trade organisations. I should have thought, since we are not dealing simply with the transitional period, it would be wise to make it quite clear in any notification—and we have in mind the price-lists and general circulars—that the recommended price is not the minimum price.

1331

§ LORD MABANE
I think the Amendment should be opposed. I think it would be dreadful if anyone who can recommend prices must say, on every advertisement, on every window bill, "The price is x shillings, but this is not the minimum price". It would cause tremendous confusion.

§ THE LORD CHANCELLOR
I appreciate the point the noble Lord made with regard to information agreements. Whether they can strictly technically be called agreements is another matter. They are agreements which pass information between parties willing to maintain a restriction. The position here is rather different. I cannot believe, after all the debates in another place and the debates we are likely to have, that when this Bill reaches the Statute Book people will really not know that it is only in the case of the exemptions and those cases which are registered that resale price maintenance will continue. And where it is continued by registration and later perhaps by exemption, then I think the onus must be upon those who are seeking to maintain the resale price maintenance to notify those to whom they supply these goods that they are resale price maintained: and in the absence of this kind of notification, my belief is that everyone will assume, despite the price printed on the article, that there is nothing to stop the retailer from selling at a lower price if he wishes. If that line of argument is right it really is putting an unnecessary burden upon suppliers of goods if every time they supply goods with a price upon them they have to send out notification. I appreciate the noble Lord's point that he does not want it printed on a tin of toothpaste, but he wants a notification to be made; every time there is a new batch or a new price there would have to be a fresh notification. I do not believe it would be right to place that burden upon the supplier, and I really do not see that it would serve any useful purpose. At the end of the day when this Bill reaches the Statute Book the exceptions will be the goods in which resale price maintenance can continue and the majority will be the goods where it cannot continue. Therefore, I believe the approach in the Bill is right.

1332

§ LORD SHACKLETON
May I ask the noble and learned Lord whether there is any obligation on suppliers whose goods are price maintained where it is agreed to give this information?

§ THE LORD CHANCELLOR
There is not a statutory obligation, but it will be for them if they wish to maintain resale price maintenance to give notice; otherwise I cannot see that they are likely to be able to maintain it.

§ LORD SHACKLETON
Might it not meet my noble friend's point if the onus was on them always to indicate that their goods were price maintained, and then dealers would know that all other goods were not price maintained? This might meet the point. I am very much in sympathy with my noble friend's point on this. I think there is room for misunderstanding, and if by some simple device a distinction could be made I should have thought it was desirable.

§ THE LORD CHANCELLOR
I do not think there is any need to put a statutory obligation upon the supplier who is entitled to maintain resale price maintenance on his goods to take a step which will be absolutely essential if he wishes to retain resale price maintenance in relation to those goods.

§ LORD SILKIN
I must confess I am very disappointed indeed at the heavy weather which is being made of a very simple Amendment. If this Amendment is not accepted, then I must say I do not see the point of the Committee stage at all. It is being assumed that every dealer is going to be familiar with this Act; even the small shopkeeper around the corner is going to study this Act and understand all the implications of it. I think it is much more likely that when a dealer is notified by a supplier, "These are the prices which we recommend"—and not on each tin, of course not, but he will be notified these are the prices recommended—he will believe, or some dealers will believe, that they are the prices at which one is required to sell, the minimum prices. All that is suggested is that, at the time of the notification, on the circular or any other document it should be stated in clear terms, "These are prices we recommend but they are not to be regarded 1333 as minimum prices". If that is not accepted, then I really do not understand the point of the Committee stage at all.

§ THE LORD CHANCELLOR
I am sorry if the noble Lord feels like that about this Amendment. One is always apt to get enthusiastic about one's own Amendments. I remember in years gone by getting very indignant with the noble Lord when he rejected what I thought were very improving Amendments to the Town and Country Planning Bill in 1947. He took a very firm line and nearly broke my heart. I am not trying to break the noble Lord's heart. We do give serious consideration to all the Amendments. I

§ 5.39 p.m.

§ On Question, Whether Clause 1 shall stand part of the Bill?

§ THE LORD CHANCELLOR
There is one point I should like to make with 1334 can only express regret that the noble Lord should be disappointed. I should not like him to think that we do not consider, as carefully as he no doubt considered Amendments in those days, Amendments put up by noble Lords.

§ LORD SILKIN
I was much more reasonable. If the noble Lord will refer back to those days he will find that a large number of Amendments were accepted.

§ 5.30 p.m.

§ On Question, Whether the said Amendment (No. 4) shall be agreed to?

§ Their Lordships divided: Contents, 31 Not-Contents, 67.

1333

CONTENTS
Addison, V.	Latham, L.	Shackleton, L.
Alexander of Hillsborough, E.	Listowel, E.	Shepherd, L. [Teller.]
Attlee, E.	Morrison, L.	Silkin, L.
Champion, L. [Teller.]	Morrison of Lambeth, L.	Stonham, L.
Chorley, L.	Ogmore, L.	Summerskill, B.
Francis-Williams, L.	Peddie, L.	Taylor, L.
Gaitskell, B.	Rea, L.	Walston, L.
Henderson, L.	Sainsbury, L.	Williams, L.
Henley, L.	St. Davids, V.	Williamson, L.
Hobson, L.	Samuel, V.	Wise, L.
Hughes, L.

NOT-CONTENTS
Aberdare, L.	Digby, L.	Milverton, L.
Ailwyn, L.	Dilhorne, L. (L. Chancellor.)	Monck, L.
Allerton, L.	Drumalbyn, L.	Montgomery of Alamein, V.
Amory, V.	Falkland, V.	Nathan, L.
Ampthill, L.	Ferrers, L.	Newton, L.
Auckland, L.	Ferrier, L.	Northchurch, B.
Balerno, L.	Forster of Harraby, L.	Redesdale, L.
Belhaven and Stenton, L.	Fortescue, E.	Robertson of Oakridge, L.
Bessborough, E.	Fraser of North Cape, L.	St. Aldwyn, E. [Teller.]
Blakenham, V.	Goschen, V. [Teller.]	Sandford, L.
Boston, L.	Greenway, L.	Sandwich, E.
Brecon, L.	Hanworth, V.	Selkirk, E.
Brocket, L.	Hereford, V.	Sinclair of Cleeve, L.
Burton, L.	Howard of Glossop, L.	Somers, L.
Carrington, L.	Iddesleigh, E.	Soulbury, V.
Coleraine, L.	Jellicoe, E.	Stamford, E.
Colville of Culross, V.	Jessel, L.	Strange of Knokin, B.
Conesford, L.	Lambert, V.	Tangley, L.
Cowley, E.	Mabane, L.	Teynham, L.
Daventry, V.	Mackintosh of Halifax, V.	Thurlow, L.
Denham, L.	Margesson, V.	Wakefield of Kendal, L.
Derwent, L.	Massereene and Ferrard, V.	Yarborough, E.
Devonshire, D.

Resolved in the negative, and Amendment disagreed to accordingly.

1334

§ regard to Clause 1, as we shall be going on with this Bill and it is as well, I think, to get things straight. It may help in our consideration of the Bill at the later stages. The noble and learned Lord, Lord Gardiner, on Second Reading gave an explanation of Clause 1, when he said this: that it is simple 1335 enough and [OFFICIAL REPORT, VOL 258 (No. 80), col. 835]: The only effect of Clause 1 of this Bill is to repeal Section 25 of that Act, except in exempted cases. I am sorry to say that the noble and learned Lord was in error with regard to that. As I think the noble Lord, Lord Shepherd, sees, Clause 1 prohibits the inclusion of terms in the agreement which operate to restrict prices; it does not expressly repeal Section 25. Section 25 bites only where there is such a term included in the contract. But the mere repeal of Section 25 would not have the effect that Clause 1 of this Bill has. If we are going to understand! this Bill properly as we go along, I think it helpful to the Committee to correct that error.

§ Clause 1 agreed to.

§ Clause 2:

§ Prohibition of other measures for maintaining resale prices

§ 2.—(1) Subject to the provisions of this Act with respect to registration, to the powers of the Restrictive Practices Court thereunder and to the next following section, it shall be unlawful for any supplier to withhold supplies of any goods from a dealer seeking to obtain them for resale in the United Kingdom on the ground that the dealer—

§ (b) is likely, if the goods are supplied to him, to sell them at a price below that price, or supply them, either directly or indirectly, to a third party who would be likely to do so.

§ (3) For the purposes of this Act a supplier: of goods shall be treated as withholding supplies of goods from a dealer—

(a) if he refuses or fails to supply those goods to the order of the dealer;
(b) if he refuses to supply those goods to the dealer except at prices, or on terms or conditions as to credit, discount or other matters, which are significantly less favourable than those at or on which he normally supplies those goods to other dealers carrying on business in similar circumstances; or

§ LORD CONESFORD moved, in subsection (1)(b), after "sell them" to insert "in the United Kingdom". The noble Lord said: The Committee will notice that the first subsection of Clause 2 has paragraph (a) and paragraph (b). In paragraph (a) the words are: has sold in the United Kingdom at a price below the resale price goods obtained 1336 et cetera. In paragraph (b) it says: is likely, if the goods are supplied to him, to sell them at a price below that price et cetera. I think it is fairly clear that there is exactly the same case for saying "in the United Kingdom" in paragraph (b) as there is for saying it in paragraph (a). There is no reason at all, so far as I can see, why there should be any distinction in this matter between the two paragraphs. I think that the words "in the United Kingdom" have dropped out simply per incuriam, and I beg to insert them.

§ Amendment moved— Page 3, line 1. after ("them") insert ("in the United Kingdom").—(Lord Conesford.)

§ LORD DRUMALBYN
I can assure my noble friend that these words did not drop out per incuriam. Indeed, it is doubtful if the Amendment is really necessary, because Clause 2(1) is restricted to cases where supplies of goods are withheld from a dealer seeking to obtain them for resale in the United Kingdom. However, I think my noble friend has some case in symmetry, if nothing else, on this matter, and if he thinks this will make the Bill clearer we are quite prepared to accept the Amendment.

§ On Question, Amendment agreed to.

§ 5.43 p.m.

§ LORD SHEPHERD moved to add to subsection (1): Provided that for the purposes of this subsection goods' shall not he construed as including any trade mark or guarantee".

§ The noble Lord said: We now come to a part of the Bill which many people find quite obnoxious. I do not propose at this stage to debate Clause 2, but I think the noble and learned Lord the Lord Chancellor will agree that a case may well arise where a supplier is required to supply goods to a dealer whom he may not wish to supply. In other words, his grounds for withholding goods may not, in the Court's view, be sufficient to outweigh the price-cutting factor. It is one thing for us to require the supplier to supply goods, but I suggest that it is quite another thing to require the supplier to supply the goods with his own trade mark, or possibly with a guarantee.

§ It may well be that a full range of shoes—the noble Lord, Lord Mabane, drew my attention the other day to the 1337 case of "K" Shoes—is being sold in a big department store, and the owner of a smaller store close by goes along to the supplier and says: "I wish to purchase shoes from you and to sell them from my shop. I propose to sell below my understanding of the recommended price, but I want only one particular line of shoes, the quick-selling line. I do not want the full range." This is a regular practice and is something many retailers seek to do. I suggest that the supplier may be in some difficulty in refusing to supply them, but in order to protect his interests in relation to the bigger seller, who is buying in good quantities throughout the year, the supplier may say, "I will supply the shoes to the smaller applicant, but I do not propose to supply my particular brand"—in this particular case "K" Shoes.

§ One could think of other types of merchandise to which this would apply—for example, Burberry coats. In many cases the dealer who specifically goes after goods deliberately to sell them at a lower price than is generally recognised through the trade, is not after particular goods but is after the trade mark to which the supplier and other retailers have contributed their efforts to make into a selling line. I suggest that in that case a supplier should have the right to say: "I will supply, but will not supply with my trade mark."

§ To take the case on trade marks a little further, assume that a motor distributor, a garage, is out of favour with a motor manufacturer, the supplier—perhaps for not carrying a sufficient number of spares or for not providing the type of mechanical service he should do. As I see it, within this Bill the supplier will be called upon to continue to supply goods to the garage, and it may not be possible for him to take his brand off his goods. Will he be able to withdraw the signs associated with his goods which the garage has displayed? Whether that is a trade mark in this sense I do not know, but perhaps the noble Lord the Minister can help us. In the case of the guarantee much, depends on how the goods are applied. It depends a great deal upon the sales staff of the organisation concerned. In the case of electrical equipment, it depends whether the salesman has sufficient experience to tell the consumer the right equipment to buy to meet the particular circumstances. 1338 Furthermore, it depends upon the distributor's having the right sort of people to fit the appliance in the person's home.

§ The Government have said (and many people take this view) that the consumers should have the right to go to whatever shop they wish—perhaps to a shop which gives good, experienced service and provides spare parts and after-sales service. But the Government say (and again other people agree) that the consumer should be able to go to a shop which will sell the goods cheaply and give no service at all: the sort of shop which will reduce prices—and some will reduce them to the bone—and give no form of service at all. They will have no experienced people in the shop for they will not be able to afford to pay them. They will do it as an act of policy in order to sell an article. If such a shop is unable properly to advise its customers or unable correctly to install equipment in a consumer's home, then if the guarantee the suppliers issue with their goods is in any way in danger I suggest that they should be able to say: "We will supply these goods, but we propose to withdraw the guarantee. Therefore, you must make it known to your buyers that when they buy these articles they are buying them without our guarantee." This would go some way towards protecting the interests of the suppliers.

§ I know that some people will say, "This is against the consumer's interest. Why should the consumer, by going to a cheaper shop, not have the service that the manufacturer normally gives?" The shopper has gone deliberately to that shop; she is going to save money by deliberately going to that shop which does not provide any service, and I think it would be in the interests of the customer if she were informed at a very early stage of the purchase of, for example, a certain type of electrical equipment, that the shop was selling it at a particular price but was giving no service at all.

§ I am not thinking of shops which sell fractionally below the recommended price. I have in mind one particular company that has for some time had a policy of selling direct at very low prices, and is now in difficulties. There is a limit to how far you can reduce 1339 your margin, whether you are a wholesaler or a retailer. Once you start to reduce it below a certain figure something happens, and the consumer, in the end, is the one who suffers. I suggest that where a supplier is called upon under this Bill to supply goods, though in his judgment that is not the right course, he should have the right to say, not only in his interest but in that of the consumer, "I will supply those goods but without my trade mark." I beg to move.

§ Amendment moved— Page 3, line 4, at end insert the said proviso.—(Lord Shepherd.)

§ LORD MABANE
I think the intention of this Amendment is wholly justified, and I go back for its justification to the Lloyd Jacob Report, which said this: We take the view that the manufacturer of a branded article remains responsible for the quality of the goods sold under his own brand. He cannot, therefore, be indifferent to the terms on which his goods are sold to the public. Our evidence has shown that well-known branded articles are particularly liable to be used as loss leaders by distributors, and we are satisfied that their use in this way has not brought any permanent advantage to manufacturers, distributors or the shopping public as a whole. Resale price maintenance offers a convenient means of protecting brands against misuse by distributors in this or other ways. That is the whole purpose of this proposed Amendment. I think it is quite right that a manufacturer, who over the years has spent a lot of money on, and given great thought to, building up a brand name known to the public and trusted by the public, should be able, if he is required, to supply his goods, to say: "You cannot sell them under my brand name".

§ LORD LUCAS OF CHILWORTH
I am puzzled by this Amendment. Would the noble Lord, Lord Shepherd, mind explaining it to me? This Bill can apply only to branded goods, those which are sold under a brand name. The noble Lord mentioned "K" shoes. If a shoe shop which buys "K" shoes in quantity wants to sell them at a cut price, what does it have to do? Does it have to scratch the brand off the shoe? Perhaps the noble Lord will reply to me, because my recollection is that the brand is inside the shoe and on the instep 1340 of the shoe. What does the shopkeeper do in such a case? He sells it as a "no name" article.
The noble Lord talked about the guarantee. I wonder whether the noble Lord has ever studied a manufacturers' guarantee. I cannot claim to have studied them all, but in the industry with which I was connected for years the manufacturers' guarantee was never issued to protect the buyer. It was there to protect the manufacturer so that he could contract out of any obligation he had under Common Law: and if the buyer of a motor car could get away without the manufacturer's guarantee he was in Heaven. But he could not do so, because he could not get a motor car without signing a document, a contract, purporting to say that he accepted the manufacturer's guarantee.
The manufacturer's guarantee to the producer was not worth the paper it was written upon. It started off by saying that the manufacturer did not guarantee the article, or the merchandise, for any purpose whatsoever, in Common Law or otherwise. Do your Lordships not realise that the value of any guarantee lies in the good will of the manufacturer and the supplier? That is the guarantee. If a retail purchaser were foolish enough to go on dealing with a shop which never gave him any service, whether it was for a pair of shoes or whether it was for a motor car, that would bring its own reward.

§ LORD HOBSON
Will the noble Lord allow me to interrupt? While he is on the question of the manufacturer's guarantee, was that not so worded deliberately in order to contract out of the Warranty of Goods Act?

§ LORD LUCAS OF CHILWORTH
That is what I have just said. I said that it was to contract out of any obligation he had under Common Law. The noble Lord really ought to know that that is in Common Law. That is what I said.
I beg the noble Lord, Lord Shepherd, to realise that this Amendment is absolutely unworkable. You may want to say that the only goods that may be reduced in price are non-branded goods, but the whole purpose of this Bill is to say that price maintenance shall not be practised on branded articles. In regard to the wireless trade, the television trade 1341 or motor cars, can it be said that the service one can get on any article bears any relation to the price paid for it? The whole question of guarantee rests securely on the producer's and the seller's valuation of your good will. If they do not value your good will then they will not give you the service, whether you have paid the full list price or whether you have obtained the goods at a discount.
What is more, so far as service on some electrical goods is concerned—I expect I am now skating on some rather thin ice—if I could buy any piece of electrical apparatus at 10 per cent. discount, I should be better off than with the value of the service I should get if I look it back after a fault had been disclosed. So the buyer in the street can have the choice. He can go and buy branded goods; he can buy them at a supermarket, pick them out and carry them home, and he can pay one price for them; or he can have them delivered to his door, in which case he will, very likely, have to pay another price for them. But I can assure your Lordships that, in my interpretation of this Amendment, it is absolutely impossible. Again, I do not think the noble Lord realises—

§ LORD SHEPHERD
May I help the noble Lord?—because I would not want him to be under too much strain. I would suggest that he reads the Amendment and the Bill. The Bill says that it shall be unlawful for him to withhold supplies of any goods, and the Amendment says: 'goods' shall not be construed as including any trade mark or guarantee". The goods that the man will supply may be goods that are in the course of manufacture or in the warehouse. If the noble Lord had some experience of trades other than the motor manufacturing side, he would have found that a great many goods are, in fact, made up and labelled when the order has been received (the noble Lord, Lord Mabane, will agree with me here), because many customers like a small, special trade mark put on to their goods. So there would be absolutely no difficulty in dealing with this matter.
May I further correct the noble Lord? It is not a question merely of price-cutters. 1342 Looking at Clause 2 to-day—and we may be subject to correction later on, when we are dealing with the clause as a whole—it will be seen that it is not only the price-cutter who can get the goods but that any dealer, merely by saying that he intends to be a price-cutter, can get them. This is the effect of it, we think. It is not merely a pricecutter: it is any other dealer whom the supplier does not wish to supply.

§ LORD LUCAS OF CHILWORTH
I think that in his last remark the noble Lord has anticipated an argument which will take place on another Amendment, because, if he will permit me to say so, his last remark is a total misreading of the Government's intention on another part of the Bill. However, let us argue that later. The reason why I mentioned motor cars is that I thought the noble Lord spoke about the fact that you could not remove the nameplate from the radiator, or the outside signs. Of course you cannot; and, may I say, do not forget that you are dealing only with branded goods; you are not dealing with goods you buy from a manufacturer who sells them without his brand upon them and upon which you put your own brand. That is done, as I am well aware, in regard to many categories of goods. This Bill deals with those goods that are supplied by a supplier with his brand upon them. The noble Lord mentioned "K" shoes. You do not buy unnamed shoes and put a "K" brand upon them; you buy "K" shoes from the "K" shoe manufacturer, whose price protects him. They are his manufacture, his brand. If you have them in your shop you sell them as that brand.

§ LORD SHEPHERD
You can sell them at what price you like.

§ LORD LUCAS OF CHILWORTH
And you can sell them at what price you like. As to the other type of goods the noble Lord mentioned—at least, this is my understanding of what the noble Lord said—you buy them as unnamed goods and put your own brand upon them. Those are not price-protected. So I would ask the noble Lord to consider this, first of all. These are branded goods, price-protected by the original manufacturer who supplied them, and I say that this is totally unworkable when you take that into consideration.

1343

§ LORD STONHAM
The noble Lord, Lord Lucas of Chilworth, varies in manner between the avuncular and the Almighty so far as his knowledge is concerned. Of course, we always acknowledge his limitless awareness of the ramifications of the motor industry, but I think that in answering my noble friend's argument he tended to assume omniscience on a much wider range of products than is usual. I do not agree—in fact, I think it is a libel on a great many manufacturers—that the only value of their guarantee is their assessment of your goodwill. Some of the greatest businesses in the country have been built up because they supply a very good article and are prepared to stand by it.

§ LORD LUCAS OF CHILWORTH
If the noble Lord would forgive my interrupting him, that is what 1 thought I said. It is the goodwill of the producer which is far more valuable to the customer than any written document. That is what has built up the names of these great manufacturers. I have never known one who would not honour his guarantee in the spirit without the letter.

§ LORD STONHAM
I think that is mere dialectics, because the value of the guarantee to the consumer lies in the fact that, if there is a defect in the article within the guarantee period, the manufacturer will either put the article right or supply another one. This question of branded goods does not apply only to motor cars, electrical goods or machinery; you can find guarantees when you open a box of branded chocolates, with a packer's number, and if they are defective you can send them back and get another box of chocolates. The point here is the very simple one that in a good many classes of goods the branded name, the recognised name, is one of very great value to the public and, of course, to the manufacturers, which has been built up over the years. Covered by the price is an element of service which, in conditions described by my noble friend Lord Shepherd, cannot he given to the consumer. In many cases retailers just do not employ enough staff to give the service. It is one thing to pick up a package in a shop and take it away if it has on it a brand name which implies, or in fact gives, a specific guarantee; but if the retailer of that article cannot give the service which is stated in the guarantee, and which is normally 1344 covered by the price, then quite obviously it is doing damage to the consumer and certainly great damage to the manufacturer.
The proposition put forward in my noble friend's Amendment is that under such circumstances the supplier would be justified in withholding from those particular goods his brand name and the guarantee that he would normally give. That means that he would then be, though perhaps unhappy about it, fairly indifferent to the fact that there would be price-cutting in his goods, because those sales would not damage the brand image or the guarantee. I think it is a perfectly reasonable Amendment, and one that many of the greatest and most reputable firms in this country would support.

§ LORD DRUMALBYN
The noble Lord, Lord Shepherd, in introducing this Amendment, started off by saying that we were now approaching a part of the Bill which is obnoxious to many people. On that, I would only just say this: that this clause does deal with withholding, and that that is one of the principal ways of enforcing resale price maintenance. It is quite clearly something that has to be dealt with. Obnoxious or not, it has to be dealt with if we are to deal with this practice. It seems to me that this Amendment poses quite a simple question, which is: is the fact that a dealer has sold below the resale price, or is likely to sell below the resale price, a good reason to deprive that dealer of the brand-mark on the goods, to withhold the goods bearing that brand-mark, or to say that the goods will not be accompanied by the guarantee? That is the sole question that we have to deal with here.
If we are being asked to say that any form of discrimination in the supply of the goods for the reason that the price has been cut, or is likely to be cut, is a good reason for withholding the trademark or the guarantee, then, quite clearly, I think it cannot be denied that withholding the trade-mark or the guarantee is a form of discrimination. It must be so. Therefore, what the noble Lord is really trying to do is to exclude entirely from the purview of this Bill the supply of goods bearing the trade-mark Of accompanied by a guarantee. I cannot think that that is right. Surely, the 1345 withholding of the trade-mark is just as much a form of discrimination and just as much a withholding as the other kinds of withholding; that is to say, refusing to supply to a dealer. except at prices, or on terms or conditions … which are significantly less favourable than those at or on which he normally supplies those goods to other dealers carrying on business in similar circumstances". Surely, this is exactly part of that. I do not see that it is right to exclude from that the trade-mark. After all, what happens when a dealer comes along and asks, for supplies of "K" shoes? It is "K" shoes he wants. He wants them because his customers want to buy "K" shoes, or, as the noble Lord, Lord Lucas of Chilworth, said, because of the consumer goodwill created for "K" shoes. Even though you supply shoes from the same last, of the same quality leather, if you refuse to supply the trade-mark as well it would obviously be a form of discrimination and withholding.
This is not to say that there may not be good reasons for not supplying. This is dealt with later on in the clause and we will deal with it when we come to it. But to say that, whether or not there are good reasons for not supplying, the supplier would be entitled not to supply the goods with the trade-mark but only with another trade-mark or with the dealer's own trade-mark or with no trade-mark at all, surely must be a form of discrimination; and for that reason I am afraid we cannot accept this Amendment.

§ LORD SINCLAIR OF CLEEVE
Would the noble Lord confirm that the goods in respect of which he has been speaking are goods which are not exempted goods under this Act? The opening words of Clause 2, as I read it, makes it apply to goods not exempted. Is that correct?

§ THE LORD CHANCELLOR
If the goods are exempted goods under later provisions of this Bill then resale price maintenance can continue in relation to those goods. But all we are concerned with here, under this clause, is the enforcement of the abolition of resale price maintenance; where that cannot be carried on in respect of any particular class of goods.

§ LORD SHEPHERD
I do not propose to press this Amendment because, as the 1346 noble Lord, Lord Drumalbyn, said—and correctly, I think—much of this problem hinges on subsection (4) which we shall be discussing later. In these circumstances, I beg leave to withdraw my Amendment.

§ Amendment, by leave, withdrawn.

§ 6.14 p.m.

§ LORD CONESFORD moved, in subsection (3)(a), to leave out "or fails". The noble Lord said: Perhaps I should say, since it will be observed that my name on this Amendment is followed by a number of others on both sides of the Committee, that I and my noble friend Lord Colville of Culross head the list because we put down the Amendment some days earlier and the Opposition put a similar Amendment down later. In saying that, needless to say, 1 welcome the fact that this Amendment is thus supported, but expect that I may possibly give different reasons for wishing to omit these words from those that may be put forward in other quarters. May I point out at the outset that this subsection (3) says that a supplier of goods shall be treated as withholding supplies of goods from a dealer in circumstances which it then gives in paragraphs (a), (b) and (c), and it will be noted that the introduction of subsection (3) is "For the purposes of this Act" and not merely "for the purposes of this section". Although for the purposes of my argument I think it will be sufficient to refer to this section, it is possible that these words, if they are wrong, will concern other parts of the Bill as well. The supplier shall be treated as withholding supplies of goods from a dealer … if he refuses or fails to supply those goods to the order of the dealer".

§ Let me give one example of where he may fail to supply those goods to the order of the dealer where, it seems to me, it would be preposterous to say that he was withholding them. Suppose he has not got any. Suppose he has completely sold out. Suppose he has sold all his goods to another dealer and a dealer comes along and orders those same goods. Is he really withholding goods if he fails to supply what he has not got? I submit that under the terms of this subsection he is, undoubtedly.

§ I do not suppose for one moment that, if my noble and learned friend the Lord 1347 Chancellor is to answer this Amendment, as I rather think he is, he will refer me to subsection (4), as a subsection which gets the Government out of the difficulty that I have described. For that subsection merely says that he shall not be treated as withholding the goods if he has other grounds which, standing alone, would have led him to withhold those supplies. But having reasons to withhold the supplies implies that you have the supplies. Therefore that subsection will not meet the difficulty. I agree with what was said by my noble friend Lord Drumalbyn: that, if we are to have this Bill at all, there must be some such provisions as are included in Clause 2 for preventing defeat of the purpose of the Bill by simply not supplying. I am not even saying that it might not be necessary to put in some words in substitution for those words that I am proposing to omit. All I am saying to the Committee is that those words, as they now stand, cannot be right. I beg to move.

§ Amendment moved— Page 3, line 15, leave out ("or fails").—(Lord Conesford.)

§ THE LORD CHANCELLOR
I hope I may be able to save time by answering my noble and learned friend who concluded his argument by saying that those words in this particular provision cannot be right. I would preface my reply by saying that on this occasion I regret that, in my view, my noble and learned friend cannot be right. He drew the Committee's attention to subsection (4), but I fear and regret that he did not draw your attention to the relevant subsection, which is subsection (1). If my noble and learned friend will look at subsection (1) he will see that what it does is to make it unlawful to withhold supplies "on the ground that …". Any other withholding is not unlawful. If in fact you withhold supplies because you have not got any supplies to deliver you are not withholding supplies on the ground that either paragraph (a) or (b) of subsection (1) applies. That was put in the forefront of my noble and learned friend's argument. He said: "Can he be said to be withholding if he has not got any?". If he has not got any, he will not be withholding supplies on the ground that the dealer has sold in the 1348 United Kingdom at a price below the resale price or is likely if the goods are supplied to him to sell them below that price. It is only in that case that this clause bites. So what you are seeking to do, for the purpose of subsection (3), is to define what is meant by withholding in that context.
My noble and learned friend may ask why we want to put in the words "or fails" at all. The answer to that I can put shortly and simply. It is to meet the case where a supplier thinks that a dealer comes within paragraphs (a) and (b) of the subsection and intends, if he can, not to supply him. He may say emphatically to the person ordering the goods, "I refuse to supply you". That is one form of withholding supplies. He may not even state the reason. That might have to be established in relation to subsection (1).
But, of course, having received an order from someone whom he suspects is a price cutter, he may not bother to refuse at all. He may just stick the order in his file and do nothing about it. Yet the effect may well he that he is failing to supply goods to the order of a dealer. There is no real refusal, but it is a failure, and a deliberate failure. Why this clause has been drafted in this way is to make sure that the man who deliberately ignores an order cannot come forward and argue that, although he did receive an order, he did nothing about it and therefore could not be said to be withholding supplies. This subsection. as drawn, brings the man who said that within the ambit of subsection (1). Subsection (1) only makes unlawful the withholding of supplies where it is on one of the two grounds mentioned.
I hope I have gone some way to satisfy my noble and learned friend. In view of the reaction only recently to some observation about "strange bedfellows", I say nothing of the arguments being supported both by noble Lords opposite and by some of my noble friends, nor would I describe the alliance between my noble and learned friends on both sides of the Committee as an unholy alliance. At the same time, I must ask my noble and learned friend to look at it again in this light. There is a case for putting in the words "or fails", to cover the instance where there is no actual reply to the order. The case that he gave as an example is not really a good one, because 1349 if the man has no goods at all and that is the reason why he cannot supply, he cannot be withholding on one of the two grounds mentioned in subsection (1). I intervened at this stage because I thought that that perhaps might help, but, of course, if my noble and learned friend is not satisfied with the arguments I have advanced, I know him well enough to know that he will not leave me alone at this stage.

§ LORD CONESFORD
I wonder whether I may ask my noble and learned friend to deal with one matter, with which I think he did not deal. It may surprise him to know that I had not overlooked subsection (1), but I thought, supposing the man could not be held to have withheld supplies in any real sense, he should not really have to depend on the definition of motive in subsection (1) to get him out of his difficulty. The point I made in my speech in moving the Amendment, with which I think my noble and learned friend has not dealt, is that the subsection which I am attempting to amend starts off with the words not "for the purpose of this section" but "for the purpose of this Act." Is my noble and learned friend telling me that subsection (3) is important only in the case of things which come within the mischief of subsection (1)?

§ THE LORD CHANCELLOR
I am sorry I did not deal with that point raised by my noble and learned friend. I noted it, but I forgot to deal with it. The provision dealing with withholding supplies in the Bill is Clause 2, but I think I am right in saying that the expression "withholding supplies" appears elsewhere in the Bill, and it is for the purpose of securing that that phrase should have the same meaning wherever it appears that it is prefaced by the words "for the purpose of this Act." I think it would be undesirable that there should be confusion between the meaning of "witholding supplies" in subsection (2) and the meaning of "withholding supplies" where it appears elsewhere in the Bill, and that is why this definition clause—because it is no more nor less than a definition clause—is prefaced by the words "for the purpose of this Act".

§ LORD SILKIN
My name is attached to the Amendment. It may surprise 1350 my noble and learned friend very much to know that, had I proposed to move it, I should have used the same reasons he has mentioned and put up much the same arguments but I am bound to say that I have been impressed by what the noble and learned Lord, the Lord Chancellor, has said. The only question is that subsection (4) says …shall not be treated as withholding supplies of goods … Why are the same words not used, if those words are necessary?

§ THE LORD CHANCELLOR
I think the answer is that, having said what is meant by "withholding supplies" in subsection (3), one can read that interpretation into subsection (4).

§ LORD STONHAM
I see a point of practical difficulty here. The noble and learned Lord has said that if a supplier received an order from a dealer and just stuck it on his file and did nothing about it, he would be failing to supply. On the other hand, would he be covered if he sent the order back to the dealer and said that he could not supply? I have in mind the case where a supplier has estimated his output for a period and told his sales representatives how many goods they can sell. If a dealer then sends in an order—and he might be someone who wants to sell below the price at which most people are selling—and the supplier has supplies, but not more than sufficient to satisfy the orders he had instructed his representatives to book, what would be the position of a supplier in such circumstances?

§ THE LORD CHANCELLOR
That supplier would come under subsection (4), to which no doubt we shall come. As I explained earlier, he would be able to put forward as the reason for withholding supplies that, under his pattern of distribution, he did not desire to have more than one retailer in a town or in a street, or he would be able to say that he did not have any to supply because all his manufactures were pledged and booked up for six months to come. But I think that this question arises under subsection (4).

§ LORD HUGHES
I have no legal knowledge whatsoever, and get up to ask a question because I do not know where I am, in view of what the noble and learned Lord has said. If I understand him, Clause 2(1) only makes it illegal for a man to withhold supplies on the 1351 grounds mentioned in paragraphs (a) and (b). Assuming that someone comes along and wishes supplies, whom the supplier believes to be either an established price cutter or someone, in terms of paragraph (b), who intends to be a price cutter, and he does not wish to supply him for that reason, does the supplier keep himself within the law if he does not mention anything about price-cutting but withholds supplies and, for instance, says, "I do not like your shop. It is a dirty place. It is in the wrong place. It would not be suitable for my goods to be there", or if he states no reason at all? Does he break the law only if he is honest in saying: "I am not supplying you because you are a price cutter."?

§ THE LORD CHANCELLOR
I think the answer to that again is in subsection (4). It might help the Committee if I quite shortly say a word in answer to the noble Lord as to how the clause is intended to work. You start with subsection (1) declaring what is to be made unlawful—namely, for a supplier to withhold supplies of any goods from a dealer seeking to obtain them for resale, on one of the two grounds mentioned. Subsection (2) defines what is meant by the term "resale price". Subsection (3) defines what is meant by the expression "withholding supplies of goods from a dealer". So you get subsections (2) and (3) really interpreting the meaning of subsection (1). Then you go on to subsection (4), which says: For the purposes of this Act a supplier shall not be treated as withholding supplies of goods"— that is to say, as coming within subsection (1)— on any such ground as is mentioned in subsection (1) of this section if, in addition to that ground, he has other grounds which, standing alone, would have led him to withhold those supplies. The answer to the question put by the noble Lord is this. He will not be held to be doing an unlawful act in consequence of withholding supplies because he has believed the man to be a price cutter if, in addition to that ground for withholding supplies, he has other grounds, whether it be the distribution policy of his shops or anything else, which, standing alone—that is to say, disregarding the weight to be put on the price-cutting factor—would have 1352 led him to withhold those supplies. What the Court will have to determine in those cases, in the light of the evidence given to the Court, is the question: were the other grounds on which supplies were withheld—the grounds advanced by the supplier—standing alone, grounds which would have led him to withhold those supplies if the man had not been a price cutter and had not been believed to be a price cutter at all? I hope I have made that clear, and I hope the Committee will forgive me, because I think I have set an example that I should not wish to be followed of going rather outside the terms of the Amendment.

§ LORD HUGHES
The noble and learned Lord has gone to great lengths in attempting to get it into my poor head, and if he has not succeeded I cannot blame him. But I am still in some difficulty. Subsection (4), which he quoted. says: … a supplier shall not be treated as withholding supplies of goods … if, in addition to that ground … But that is implying that he is saying in the first instance: "I believe you to be a price cutter". What I am asking is: what is the situation where he does not have that ground at all? If he is not claiming in the first instance that the man is a price cutter, or is going to be a price cutter, he cannot have put to him some other ground in addition to something which he has not claimed in the first instance.

§ THE LORD CHANCELLOR
That is obvious. The short answer is that if he has not withheld supplies on the grounds put forward in Clause 2(1)(a) and (b), Clause 2 does not bite on him at all.

§ LORD HUGHES
In that case, so long as he is not making the accusation of price-cutting or the intention of price-cutting, he is perfectly free to withhold supplies.

VISCOUNT COLVILLE OF CULROSS
I think not. The noble Lord, Lord Hughes, has not looked at Clause 4(4), where there is a presumption that he is withholding the goods on the grounds set out in Clause 2 if there is a certain state of knowledge proved. In those circumstances, I think the situation envisaged by the noble Lord, Lord Hughes, would be caught.

1353

§ LORD PEDDIE
May I ask the noble and learned Lord whether the question here is one of deliberately failed? The example was quoted of a dealer putting the order on the file and forgetting all about it. That leaves me with some doubt in my mind as to whether where it was deliberately left on the file it would be a contravention. One can envisage many cases where there is a failure of supply arising out of something that is not under the control of the dealer. It could be the misdirection of the goods; it could be an employee who, for some reason or other, forgets to deal with the transaction. What are the two situations? If you have a quite deliberate case, one can recognise that. But if it is a situation where it is not in the control of the dealer, is it then a contravention?

§ THE LORD CHANCELLOR
I think I can answer the noble Lord quite simply. I said that Clause 2(3)(a) is really a definition of the meaning in Clause 2(1) of withholding supplies. I think it might help to read Clause 2(1), expanding it a little: … it shall be unlawful for any supplier to refuse or to fail to supply goods on the grounds that … They are linked together. The failure to supply must be on the ground that the dealer has done (a) or (b), to be caught. I hope I have made that clear, and if not, I am afraid I cannot put it in better language. I am trying to be helpful, and I think I have already covered the point in what I have said.

§ LORD CONESFORD
I am grateful to the noble Lord, Lord Silkin, for indicating that he was going to move the deletion of these words on very much the same grounds as I put forward. That gives me hope that I shall be acting with the agreement of all who put their names to this Amendment if, in a moment, I ask leave to withdraw it. I agree with my noble and learned friend the Lord Chancellor that paragraphs (a) and (b) in subsection (1) will mean that a man who fails to supply the goods on the ground that he has not got them will escape any serious mischief under subsection (1) by reason of not having the motive set out in paragraphs (a) and (b). But it seems to me altogether unnecessary that he should be put in the position of having to rely on the absence 1354 of motive when in no real sense has he withheld the goods at all.
What I would ask my noble and learned friend to consider is the addition, in the subsection which I am proposing to amend, of some such words as would make it run as follows: If he refuses or, being in a position to supply the goods, fails to supply them … That, I think, would probably serve all the purposes both of my noble and learned friend and of the draftsman, and put something a little more reasonable in the clause. I should be grateful if the noble and learned Lord would consider that before a later stage of the Bill. Meanwhile, in view of my noble and learned friend's very reasonable reply, I ask leave to withdraw the Amendment.

§ Amendment, by leave, withdrawn.

§ 6.40 p.m.

§ LORD HOBSON moved, in subsection (3)(b), to leave out ("credit"). The noble Lord said: As the Bill stands, I think it is implying that credit has something to do with resale price maintenance. I submit to your Lordships that it does not. The matter of credit raises the question whether the individual has the ability to pay. This should be the prime factor, and it is difficult to assess a person's credit-worthiness. In these circumstances, it seems strange that it has been found necessary to include the word "credit" in this clause, and we should like to know the reasons, whether they are valid or not. At the moment I can think of none. The question of credit is a completely variable factor. It is something which only the tradesman or the retailer or the wholesaler can determine. It is strange to find that credit is associated with the other conditions which are mentioned, and are quite intelligible, in Clause 2. It is perfectly easy to understand that, if he refuses or fails to supply goods to the order of the dealer, or if he refuses to supply goods to the dealer except at old prices. But when it comes to questions of credit, it seems strange that this factor has been introduced when, 1 submit, it is nothing to do with resale price maintenance. If a man insists on credit conditions, surely it is not necessarily a ground for refusing him supplies. We should like to know why this is in the measure. I beg to move.

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§ Amendment moved— Page 3, line 18, leave out ("credit").—(Lord Hobson.)

§ LORD SHEPHERD
I should like to support my noble friend in this Amendment. This matter was dealt with in part of my Second Reading speech, and my noble friend Lord Hobson put it very succinctly when he said that there was a considerable difference between goods and credit. At an earlier stage, I suggested that trade-marks and guarantees should not go with the goods. But as the noble Lord, Lord Drumalbyn, said on the Second Reading, they could be part and parcel of the same thing. But I think credit is something utterly different. It may not be within the ability of the supplier to give credit. Many of our manufacturers (shall we say?) finance their sales through other agencies, such as merchant banks, confirming houses, and the like. They call upon this finance.
I would apologise to the Lord Chancellor for the fact that I was away discussing, through the usual channels, the progress of this Bill and therefore I did not hear all he had to say in regard to the previous Amendment. But I gather that a great deal hinges upon the words "the other grounds", which we shall be discussing in greater detail on Monday, because I agree with most noble Lords (and I think the Lord Chancellor would agree) that the words "other grounds" give the main concern. If we can clear this up, then many of our difficulties will disappear. At the moment, as I see it "other grounds" will depend, not on what Parliament has said, but on what the courts may decide. We have heard from the noble and learned Lord the Lord Chancellor, and other Ministers, what are the Government's intentions—that there should be no interference with the general pattern of trade and commerce. I think most of us feel that this was the Government's intention, because they would be extremely foolish if they did anything to upset it.
The noble Lord, Lord Lucas of Chilworth, suggested that I was reading something into the Bill which was not there. I am not the only one who takes the view that the Bill is not clear. In fact, I think the Lord Chancellor would agree that we shall know what it means only when the courts have made a decision, 1356 and perhaps finally when the Court of Appeal decides. At the present moment, as I see it a supplier may have withheld goods from a dealer because the dealer has asked for credit. I can well understand the Government's Amendment, which they moved in the Commons, to Clause 4, which lays the onus of proof on the dealer. In any case, if the dealer has taken the supplier to court, the onus of proof is upon the dealer to establish the fact that he is a price-cutter or has threatened to reduce prices. I should have thought it would naturally follow that the supplier would have to make a defence.
In regard to credit, it would be relatively easy to say, "This man is insolvent. He is not paying our bills." This happens. But there are other cases where the question of his giving credit arises and often, I would suggest, it arises only from the conduct of the business. One may feel that a dealer is overstocked, that he is bringing far too many goods into his shop. One may also feel that, with his capability of selling he is getting too much credit, and you would presume that if he is asking credit from you he is getting credit from other people. One of the first things a businessman thinks when he sees a shop which is obviously overstocked is that the man is over-trading. One of the first things you do as a merchant is to start making inquiries and perhaps slow down your deliveries, or you may in the end say, "I will deliver only on payment."
Until we have got the "other grounds" cleared up, it seems to me that the supplier, if he has already given credit to this or other dealers in similar circumstances, may be brought up in front of the court to substantiate the reasons why he withheld that credit. True, the onus is on the dealer to show that he was solvent, that he was able to pay the bill, and therefore the allegation that the goods were being held for price-cutting applied. I should have thought it would be difficult for the supplier brought before the court to make his case.
I do not think our attitude to this Amendment should rest on that. I would suggest to the Committee that there is a considerable difference between the supplying of goods and the giving of credit. We would never dream of legislating that the banks, because they give credit to 1357 millions of people, should give credit to all. But this is largely what the Government are saying in this Bill, until we have "other grounds" cleared up. At the present moment, it seems to me that "other grounds" could mean many things. It could be wide, it could be narrow. At the present moment it would seem to me that a supplier would be in serious difficulties in deciding whether he should or should not give credit to avoid being brought to the court.

§ LORD GARDINER
My noble friend Lord Shepherd has been inviting the Committee to look at this from the point of view of traders. From the point of view of lawyers, I suppose that we cannot complain if the law is uncertain, because it is good for trade. But from the point of view of the community, to which we must also have regard, of course nothing is worse than uncertainty. The difficulty which I feel, if I may say so, about this clause is that there may be a case, and indeed many cases, in which the supplier does not refuse to supply the goods at all. He offers to supply goods but the retailer, rightly or wrongly, thinks that the terms which he is being offered as to credit are terms which show that he is being discriminated against. If in those circumstances there is talk of an action for damages, and both the retailer and the supplier go to their own solicitors to ask them what the prospects are, it seems to me an impossible task for any lawyer to be able to tell either of them. Because of these circumstances he would be bound to advise them that whether or not an action for damages lies will depend entirely on whether the retailer is being offered goods by the supplier on terms or conditions as to credit… which are significantly less favourable than those at or on which he normally supplies those goods to other dealers carrying on business in similar circumstances. If it is the retailer who has gone to his solicitor, and if it is a supplier whom he has not dealt with before, it would be impossible for anybody, until the action had started and they get what lawyers call "discovery of documents", to tell what the supplier's normal terms as to credit are—if, indeed, there are necessarily such things as "normal terms". The subsection assumes that every supplier has what can properly he called "normal terms" as to credit, 1358 but I apprehend that in some trades and in many cases the credit given may depend almost entirely on the creditworthiness of the customer.
In the same way, if the supplier, where those circumstances obtain, goes to his solicitor, I should have thought that it would be virtually impossible for any lawyer to tell him whether a judge is or is not likely to take the view that the particular terms or conditions as to credit offered are, or are not, significantly less favourable than those on which he normally supplies those goods to other dealers. His other dealers may all be men with whom he has been used to dealing for years, whereas, in the case of this particular retailer, he may have a good reason for not giving him the same credit.
It is quite true that under Clause 4 the onus of proof will be on the supplier, but the mere fact that the onus of proof will be on the supplier will not make it any easier for the lawyer to advise one party or the other what is likely to happen in the event of an action for damages. I should have thought that the terms as to credit vary so much, and must depend so much on the credit-worthiness of the particular retailer, that the clause would lose nothing very much if the word "credit" were not there, and it would reduce the present virtual impossibility of lawyers being able to advise their clients in circumstances to which I have referred.

§ LORD DRUMALBYN
May I reply right away to the noble and learned Lord who has just sat down? I am bound to say that I would agree with him that the clause would lose nothing much if the word "credit" were not there, the reason being that in that case credit would then enter into the other matters that are significantly less favourable. So, in point of fact, this particular Amendment, even if carried, would make no difference to the operation of the Bill. But what we are concerned with is whether or not we are to regard a differential treatment in the matter of credit, where it is established, as grounds for considering the goods as being withheld. That is the sole question we have to consider.
One would concede that it is not always easy to find out what the "normal terms of credit" are; but where 1359 it can be shown that discrimination has been exercised in this way, surely this is precisely one of the ways in which a supplier might be tempted to make it difficult for a dealer who was cutting prices. Therefore, that is why "credit" is included as one of those circumstances which are to be considered in the matter of withholding supplies.
I would not for a moment dispute that it will not be easy to find the facts in every case of this kind, but if a man is asked for cash on delivery, or even for cash with order, in circumstances where he knows that he has previously been supplied with goods on credit, and also he thinks, or knows, that the supplier is aware that he has been cutting prices, then he would have reasonable grounds for supposing that he was being discriminated against because of his price cutting. So I should think that in a case like this it is reasonable to include the terms of credit which may be quite normal—they may be stated on the ordinary price list, for example: "payment at the end of the month following the month of delivery", or something of that kind.

§ LORD SHACKLETON
May I interrupt the noble Lord for a moment? He has not yet said what are the "reasonable grounds". If the price cutting takes place at a time when the dealer is in trouble and is "trying to raise the wind" one way or the other, it may be a parallel. This might happen at the same time; in which case why should these be reasonable grounds for him to suppose he is being discriminated against for price cutting?

§ LORD DRUMALBYN
The point the noble Lord has made is, of course, one of the reasons why we can look forward to the Bill again. There is the proviso to Clause 4(4) which says that evidence of requirements in respect of the time or manner of payment is not to raise an assumption that the withholding is on resale price maintenance grounds. That is an exception that is made there.
So, I would suggest to the House that where it can be shown that in any matters the supplier is discriminating against the dealer and supplying on conditions in a manner significantly less favourable than those on whch he normally supplies, 1360 in any cases of that kind where prices are being cut or it is likely that prices will be cut, it is not unreasonable to suppose that the reason for withholding the supplies in the form of discrimination in credit is because of price cutting Where that is so, I should have thought that this was just one of the things that ought to be prevented by the Bill. I would not say that it would always be easy to prevent, but where it can be established, it is reasonable that we should try to prevent discriminations of this kind.

§ LORD SILKIN
It is not surprising, after three-and-a-half hours of concentrated attention on this Bill, that the noble Lord is not as lucid in his explanation as one would have expected. We are not disputing the need for something of this sort. The case that my noble and learned friend made was that this clause, and particularly these words, are wholly ineffective for the purpose; they are so vague and so uncertain in their effect. The noble Lord says that it is going to be difficult to enforce; I say it is going to be impossible. I cannot conceive of a case where all the conditions required to be provided will be satisfied. This Amendment is really designed to force the Government to look at this matter again and see whether they cannot make something which really is enforceable and is not sheer window-dressing. It is in that spirit, as I understand it, that the Amendment is being moved.

§ THE LORD CHANCELLOR
This is no mere window-dressing. I listened with interest to the speech of the noble and learned Lord, Lord Gardiner, on this Amendment, and while I appreciate that circumstances may arise (they often do) where it is difficult for a lawyer to advise his client on what is the best course for his client to take, that is not an argument for not retaining this provision in the Bill. I put it this way to your Lordships. If your Lordships take the view—if noble Lords opposite do take the view—that the sanctions for seeking to enforce resale price maintenance after this Bill has been enacted should be criminal sanctions—and certainly that was not the view in another place of Members of the Party opposite—that is one thing. If you do not take that view—and we do not take 1361 that view, having considered it very carefully—it is necessary to rely on other procedures.
Under subsection (3), there are three ways in which goods supplies can be withheld. The first is by refusal or failure of the supplier to supply goods, on the ground that there has been price-cutting. Then a trader can be prejudiced not only by the refusal or withholding but also by the imposition, because he is a price-cutter, of discriminatory terms. Thirdly, he can be prejudiced by discriminatory conduct on the part of the supplier. Paragraphs (a), (b) and (c) of subsection (3) deal with those three methods, and the word "credit" is inserted there quite designedly, because that is one of the respects in which the supplier seeking to penalise the price cutter may be discriminatory. It is really headlining one of the matters.
My noble friend was quite right in saying that if you take out "credit" or "discount", so long as you leave in "other matters" the effect of the provision would be the same. But I think it is a matter of convenience that attention should be drawn to this at this stage (we are not, of course, concerned with enforcement here) making it clear in this clause that unlawful withholding, on the ground of price-cutting, or discriminatory conduct, whether in restriction of credit or discount, or other matters, will come within subsection (1) of Clause 2. That is the effect of it. I am certainly always glad to consider any suggestions which are put down for verbal alterations. Here the only Amendment is for the omission of the one word. I do not think that would improve the Bill.
It is difficult, until we come to subsection (4) to put the whole clause in its proper perspective. But I do ask the Committee to bear in mind that in subsection (3), paragraphs (a), (b) and (c) are really listing the different types of discrimination, of withholding, that there may be. They may be withholding by refusal of supplies; by the imposition of discriminatory terms, and by discriminatory conduct—for instance, instead of delivering, requiring the trader to collect the goods. All those matters are brought within the scope of subsection (1) of Clause 2. I do not believe that paragraphs (b) and (c) will be ineffective. If think the Bill would be ineffective if 1362 provision were not made for treating conduct of that kind, if proved, as being conduct no longer permitted.

§ LORD SILKIN
Might I suggest that the noble and learned Lord looks at this clause again to see if it can be made more effective? That is the purpose of our Amendment. I admit it makes very little difference whether we leave out "credit". But we do want to make it more effective than it appears to be at the present time.

§ THE LORD CHANCELLOR
I am glad to hear the noble Lord say that, and of course I can respond. I read this clause a great many times before it saw the light of day; but if the noble Lord says that, it is a very different approach from the very critical approach of the noble Lord who introduced the Amendment.

§ LORD PEDDIE
The noble Lord, Lord Drumablyn, in opposing my noble friend's Amendment, indicated a particular point: that in his opinion differential treatment regarding credit was considered to be withholding. But I think the main point at issue is that differential treatment regarding credit is not necessarily discriminatory. The real point at issue is whether or not discrimination is being applied, and we can have a situation here which I think justifies the deletion of the word "credit", because in many cases a supplier must necessarily insist upon what may appear to be substantially differential treatment—and justifiably so, because he has little faith in the creditworthiness of the customer.

§ THE LORD CHANCELLOR
I think I can go this far: that I am substantially in agreement with the noble Lord, except when he said that "credit" must be taken out. If withholding credit is justified on the ground, as the noble Lord, Lord Shepherd, said, that the supplier thinks the man has been over-stocking and his credit is not good, that case will come within subsection (4), I am only on the very narrow point, whether or not subsection (3)(b) should contain the word "credit". The point put by the noble Lord, Lord Peddie, really arises under subsection (4).

§ LORD SHEPHERD
Might I make a suggestion to the noble and learned Lord the Lord Chancellor? We have agreed 1363 through the usual channels that we would adjourn this Committee stage at seven o'clock this evening. There is still some doubt. The noble and learned Lord the Lord Chancellor, has admitted that he has read this particular clause time and time again.

§ THE LORD CHANCELLOR
Not always in this form.

§ LORD SHEPHERD
We have done the same. I think he will recognise that there is still some disquiet on this side. Might I make the suggestion that we adjourn the discussion and look at it and come back to it on Monday?

§ THE LORD CHANCELLOR
I would ask your Lordships not to do that, because I think we shall be in a better position to see the full scope of this clause when we get to subsection (4). If you take out the word "credit", you are not getting anywhere because it is still covered by "other matters". We will have a debate on subsection (4) when we shall get this into perspective. Bearing in mind that this is only on the omission of this one word, I feel that we might conclude this Amendment before we adjourn. I am, of course, willing to consider any suggestion or any idea.

§ LORD HOBSON
In view of the undertaking that the noble and learned Lord the Lord Chancellor will look at this matter further when we come to consider subsection (4), I beg leave to withdraw the Amendment.

§ Amendment, by leave withdrawn.

§ House resumed.