HL Deb 09 May 1967 vol 282 cc1301-3

2.6 p.m.


My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

[The Question was as follows:

To ask Her Majesty's Government whether the recent pressure for reduction in the selling price of a widely distributed branded commodity on the grounds of high promotion cost content in the selling price is to be now regarded as normal practice; and if so what other commodities are at present listed for similar attack.]


My Lords, the discussions between the President of the Board of Trade and the two major manufacturers of household detergents followed the recommendation of the Monopolies Commission that these manufacturers should be encouraged to reduce their selling expenses by 40 per cent. and to pass on the saving to the consumers by a reduction of 20 per cent. in their selling prices. The report was confined to the particular circumstances of that industry, and no other heavily advertised consumer goods in a comparable market situation are at present being investigated by the Commission.


My Lords, arising from that reply, which appears to report a savage attack on private enterprise and market-place economy, I gather, if I correctly understood the noble Lord, that it is not intended to apply this treatment to any other commodity he can name. But can the noble Lord now give an assurance that it is unlikely that the same treatment would be applied to synthetic fibres, the sale of which must necessarily contain a similarly large proportion of promotion expense, as is the case with detergents; and, therefore, if such a step were applied, does he not think it would create dislocation in the industry in succeeding stages?


My Lords, I would re-emphasise the fact that the particular action to which the noble Lord has referred was taken as a result of the recommendation of the Monopolies Commission, with which, I think I am right in saying, noble Lords opposite had something to do when the Commission was originally set up. The Commission made a particular recommendation, and it was following upon that recommendation that my right honourable friend made this particular order. Therefore, I do not think that it would be accurate to describe this as "a savage attack on private enterprise"; rather is it an action taken following upon a recommendation of the Monopolies Commission, which was set up to deal with abuses of monopoly situations.

With regard to the second part of the noble Lord's question, so far as I know there is no problem relating to synthetic fibres at present before the Monopolies Commission, which goes into these matters very carefully. It took some three years to make a thorough investigation of this last problem. Therefore, there need be no fear (if "fear" is the right word to use) that in the future, in the next few years, any similar order will be made. But clearly it would be wrong for me to give any blanket assurance covering the Government in future as to what might be done then. It will depend primarily on any action which the Monopolies Commission recommend.


My Lords, in thanking the noble Lord for his reply, may I ask whether he is in a position to make any disclosure as to the formula to be applied in similar cases, so that there would be some forewarning to other industries that might be attacked in a similar way, where the selling content contains so large a proportion of promotion expenditure?


My Lords, I certainly could not give any short or concise terms of reference, as it were, for any future action. But in an attempt to do so for the noble Lord—without I hope laying myself open to the possibilities of being misunderstood—I would say that if the Monopolies Commission, having made a thorough investigation, come to the conclusion that certain monopolies, or quasi-monopolies, are operating in such a way that it is against the public interest, then it is open to the President of the Board of Trade to make certain orders in the public interest. This particular order does not in any way affect the freedom of the industries concerned, or the firms themselves, to continue to advertise as much as they like and to market under any trade names they wish to. That is not impeded in any way. This is, if one wishes to call it so, simply an experiment to see how a non-advertised product of similar quality in fact appeals to the public.

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