§ 11.57 p.m.
§ THE MINISTER OF STATE, BOARD OF TRADE (LORD BROWN)
My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
§ Moved, That the House do now resolve itself into Committee.—(Lord Brown.)
§ On Question, Motion agreed to.
§ House in Committee accordingly.
§ [The EARL OF LISTOWEL in the Chair.]
§ Clause 1 [Exemption from registration of certain agreements of importance to the national economy]:
EARL JELLICOE moved Amendment No. 1:
Page 2, line 12, at end insert ("and an order under this section approving an agreement solely concerned with the promotion of a single specific project shall not continue in force for a period exceeding three years.").
§ The noble Earl said: I think most of us would agree that experience has shown that there is a need for the exemptions machinery provided in Clause 1 of the Bill before us. There is a demand for it from industry. That has been reflected by bodies such as the N.E.D.C. and the Prices and Incomes Board, and it is, of course, a reflection of the contemporary phenomenon of the economics of scale. A typical example came to my attention only a couple of days ago, when I was reading the Business Supplement of The Times, where there was a very interesting article about a project to link by pipeline the ethylene production works of Shell on Merseyside with I.C.I. on Teesside. Now I strongly suspect that such a scheme would probably be caught by the 1956 Act, and it is of a type—I am not saying that this particular scheme would be justified in terms of the national economy—which would be covered by the Clause 1 exemptions machinery. It is quite right, therefore, that there should be this machinery.
§ However, I think it is equally agreed on both sides of the Committee that the operation of this new machinery will need very careful watching. As I think the noble Lord, Lord Brown, said 1414 in our Second Reading debate, this is latently controversial because it holds within it the seeds of monopoly. Therefore, it is right that there should be proper safeguards. I shall not adumbrate all the safeguards which are written into Clause 1, but there are a couple of very important ones. One is that orders will require to be laid before Parliament giving effect to specific exemptions; and the other is that any Clause 1 order should remain in force only for the period specified in the order itself.
§ A glance at the Bill will show your Lordships that the period for the operation of the order is not specified in Clause 1 itself, and I think the noble Lord, Lord Brown, argued at Second Reading that that is probably right in the interests of flexibility because these various specific agreements will vary and may require a different timing for the order. I am inclined to question this. I think that flexibility is obtainable in any event since the orders are renewable. This, I should have thought, gives quite sufficient flexibility. I myself feel it is important that with these agreements, some of which can be very important indeed, we should be absolutely certain that the review machinery is operated at not too infrequent intervals. Two years, I think, is laid down in Clause 2. I should have thought that for specific agreements, as envisaged in the Amendment which I am moving, three years would be ample, especially since they can be renewed; and I am therefore suggesting that there should be a maximum period of three years for specific agreements, of course renewable by further order.
§ I hope that I have explained the purpose behind this Amendment. I do not think we are very far apart on this particular point. I am inclined to feel that it would be better to write in a specific maximum, and that is provided for in the Amendment which I now move.
§ LORD BROWN
When I read this Amendment I thought that the intention was that there should be a maximum of three years, not renewable. I believe that the wording of the clause would lead to that interpretation. But, laying that aside (because one acknowledges the difficulty in drafting which the other side has), it is essential that exemption should be given for such period as is 1415 sufficient to secure the object of any scheme or project, and no longer; and Clause 1(3) provides for this. There is no point in exempting a project for a shorter period than that necessary to secure the objects of the project, and industry would be unwilling to make agreements if it were not assured of a sufficient period of exemption. This period will vary with the nature of the project, and cannot be determined except in relation to the project itself. Clause 1(3) already provides that exemption shall not exceed the period which appears to the Board sufficient for the purposes for which the order is made.
An example may help to demonstrate clearly to the noble Earl what our objections are. Let us suppose that we are contemplating an agreement for the provision of new capacity. This might involve the building and commissioning of a large new plant—a process which itself may take longer than three years. But the case for exempting the agreement may well extend beyond the construction period—until, for example, a new product has established its place on the market. Industry, I suggest, will just not embark on desirable schemes unless an adequate period of exemption can be granted. They could not be absolutely certain of an extension when it came up for extension. We do not intend to allow exemption for an indefinite period. Indeed, the clause provides that it must be given for the fixed period which is appropriate to the particular case. If the object of the Amendment is to secure that the operation of agreements is reviewed at three-yearly intervals by the making of a series of orders each of no more than three years duration, I submit it is not necessary. The concept of a close watch being kept on the operation of agreements is embodied in Clause 1(4) already, which provides for exemption orders to be revoked if an agreement is not achieving its object or if it is being used for a purpose other than that for which it was intended.
I hope that in the light of those remarks the noble Earl will see fit to withdraw the Amendment, because I believe that if one were to put in this idea of a review every three years as a maximum period, it would put industry in a great deal of difficulty. They could 1416 not be absolutely certain of later extension, and if they were not certain they would be hesitant about involving millions of pounds worth of investment on the assumption that it would be all right—because we know that people can be caught by these assumptions. I therefore think it is somewhat dangerous, and I hope that the noble Earl will withdraw his Amendment.
The noble Lord is quite right in thinking that it was my intention not to have a period of three years and then a cut-off, but that thereafter it should be renewable by further order. I also agree with him, having looked again at my Amendment, that it would not have this effect, but would amount to a cut-off after three years. It could, of course, be introduced earlier in the clause, when it would have the effect that I have in mind. But I think that the noble Lord has a point, and a real point, when he says that some of these schemes may take more than three years to mature, and that they may he nipped in the bud if the sort of Amendment which I have in mind were accepted because the companies concerned would not have any absolute assurance that the order would be renewed. I think there is a point there, and in view of what the noble Lord has said I beg leave to withdraw my Amendment.
§ Amendment, by leave, withdrawn.
§ Clause 1 agreed to.
§ Clauses 2 to 4 agreed to.
§ Clause 5 [Information agreements]:
§ On Question, Whether Clause 5 shall stand part of the Bill?
I should like to put a point on this clause to the noble Lord opposite. It is a point of such infinite complexity that I intend to keep my nose well down on my brief. Under the 1956 Act, where agreements were referred to the courts and the defence was not successful, I understand that the practice was for the parties to give an undertaking to the court. The undertaking usually provided that the parties would not enter into any agreement which was to the like effect and to which Part I of the 1956 Act applied. For example, the undertaking given by parties to a price-fixing agreement would prevent 1417 them from making any new agreement caught by Part I of the 1956 Act which was to the like effect as the price-fixing agreement itself, and in such a case the parties were free to enter into a bona fide agreement providing for the exchange of information as to past prices.
The Bill as it now stands provides in Clause 5(2) that the Board of Trade can direct that Part I of the 1956 Act shall apply to the information agreements described in the Board of Trade order. In other words, when the order comes into effect Part I of the 1956 Act will apply to that class of information agreements. I gather that some concern is also felt that persons who enter into agreements permissible before a calling-up order under the new Act will, after calling-up, not only be required to register but may be found guilty of contempt where they continue to operate such an agreement. I think there is some uncertainty as to whether that is the case or not. In any event, there is the further point that price information agreements, or indeed other information agreements, made subsequent to a calling-up order should not put the parties to it in jeopardy of being in contempt of an undertaking given before a calling-up. This, I think, was not in the contemplation of the Court when the order was made; and although it is obviously quite fair to require parties to register and to defend their agreements before the Court, it is a very different thing to expose them to the risk of proceedings for contempt.
In view of these difficulties I wonder whether, even at this rather late stage, there might not be some provision made in the Bill that undertakings given to the Restrictive Practices Court should not be affected by calling-up orders subsequent to the court order. That is the inquiry on this clause which I wish to address to the noble Lord. I hope that he has understood what I have been saying as well as I, myself, have understood it and I await, with curiosity, his reply.
§ LORD BROWN
The noble Lord was good enough to give me notice of this question; otherwise I might well have been lost. The short and perhaps oversimplified answer is that this Bill does not really bring about any change in the position of the people to whom he has referred. But that is, as I say, rather an 1418 over-simplified statement and I can add to it at greater length as follows.
Two matters can arise. First, there is the effect of a calling-up order on preexisting information agreements. Court orders and undertakings to the Court are usually in the form that the parties will not make any new agreement to the like effect, to which Part 1 of the Act applies. If the agreement is a bona fide information agreement, we do not see that it can be in contempt of the Court order; because at the time it was made it was not an agreement to which Part I of the Act applied. It might be in contempt, however, if the information agreement had been operated in such a way as to make it, in effect, a restrictive agreement; and as the noble Lord is aware, before this Bill appeared, two firms were fined £100,000 for doing just that. In that event, the information agreement would almost certainly amount to a registrable restrictive agreement because of the mode of its operation. In that event, it would be registrable, and consequently contemptuous, without regard to the event of the calling-up order. It would make no difference to the situation.
The second circumstance is when an information agreement is made after the calling-up order. In that event, if there were any possibility that the agreement could be held to have the same effect as the condemned agreement the parties could seek the leave of the Court to make the agreement under Section 22 of the 1956 Act, as amended by Clause 10 of this Bill. As the noble Lord knows, Clause 10 gives a new ground for making that appeal. The parties would have to demonstrate either that there had been a change of circumstances since their original agreement was condemned or, alternatively, that this new gateway in Clause 10 was relevant to their application. As this gateway has been inserted mainly for the benefit of information agreements, it is likely that it would be relevant.
But unless one or other of these circumstances apply, we should not wish the parties to be free to make the information agreement. If the noble Lord s view were to prevail, and the Bill were amended in some way, they would merely have a free holiday, albeit an uncomfortable one with something serious hanging over their heads, in which to 1419 operate an information agreement which produces the same result as the condemned agreement. If this practice became widespread, the work undertaken since 1956 by the Restrictive Practices Court would have to be done again.
I would end by saying this. If the information agreement is so worked as to be, in effect, restrictive, then it is in contempt, whether this Bill be passed or not. So it would seem advisable not to amend this Bill; because it would get people out of a situation in which they would have been since 1956. I do not think it is the noble Earl's intention to relieve people by this Bill of erstwhile responsibilities for honest conduct. I hope that he will be satisfied with my explanation.
I should like to thank the noble Lord for his explanation. I understood the first and the last parts of it perfectly. The rest I should like to study in my free, but I hope not uncomfortable, holiday over the weekend. On the whole, I do not think I shall wish to revert to this at Report stage but I should like to reserve that right in the light of having digested this legal mouthful.
§ Clause 5 agreed to.
§ Clauses 6 to 8 agreed to.
§ Clause 9 [Modification of duty of Registrar to take proceedings for investigation]:
LORD BROWN moved Amendment No. 2:
Page 10, line 7, leave out ("is") and insert ("has been").
§ The noble Lord said: I hope that it may be convenient to speak to Amendments Nos. 2 and 3 together. Clause 9(1) gives the Registrar of Restrictive Trading agreements a discretion not to refer abandoned restrictive agreements to the Restrictive Practices Court. As the law stands at present he is under a duty to do so. In practice, however, he needs to refer abandoned agreements to the Court only in exceptional cases where it is desirable to secure a court order to prevent the making of a series of short-term restrictive agreements "to the like effect". It was always our intention that the discretion contained in Clause 1420 9(1) should apply to agreements abandoned before the coming into force of the Act, as well as to agreements abandoned after the coming into force of the Act. Indeed, we believe that the clause as drafted secures this result. It has been suggested to us, however, that the use of the word "is" in lines 2 and 3 creates a doubt whether the power applies to agreements abandoned before the coming into force of the Act. In order to remove any possibility of doubt this Amendment replaces the word "is" by the words "has been". I beg to move.
§ On Question, Amendment agreed to.
LORD BROWN moved Amendment No. 3:
Page 10, line 8, leave out ("is") and insert ("has been").
§ The noble Lord said: I beg to move this Amendment formally.
§ On Question, Amendment agreed to.
§ 12.18 p.m.
EARL. JELLICOE moved Amendment No. 4:
Page 10, line 15, after ("that") insert ("any of").
§ The noble Earl said: Amendments Nos. 4, 5, 6 and 7 all affect Clause 9; and if the Committee have no objection I think it may be convenient to take them together. We can discuss them seriatim as we go along. These four Amendments are designed to meet three objects. Again, this is a fairly complex matter but not, I think, as complex as the matter on Clause 5 with which we have been dealing.
§ First, with the repeal of Section 12 of the Restrictive Trade Practices Act 1956, the Registrar will be no longer authorised to remove from the register particulars of such agreements on which particulars are for the time being entered therein as appear to the Board as having no substantial significance. The wording of the new Clause 9(2) provides for directions from the Board of Trade discharging the Registrar from taking proceedings in the court in respect of that agreement. This relates to the whole agreement and not to the particulars of any agreement. As I see it, the effect is that the Registrar will no longer be able to take in respect of insignificant bits of agreements the action 1421 that he might have been prepared to take under the 1956 Act which we are revising. The consequence, again as I see it, is that parties to a registered agreement may find themselves unable to obtain dispensation in respect of the insignificant parts of it, and will either have to abandon the agreement as a whole or defend it at considerable cost. This inconvenience, which could be a very serious one, could be corrected by inserting the words in Amendments 4 and 6.
§ That is the first point. The second point is that under the provisions of Clause 9(2) as it stands the Board's powers include discharging the Registrar from taking proceedings. There is, however, no provision in respect of the Registrar being discharged from continuing proceedings which he may have instituted, but which he might not have instituted had the provisions of Clause 9(2) been on the Statute Book. This could be taken care of by substituting the words, "or continuing" between the words "taking" and "proceedings". I hope that the noble Lord is clear as to the purpose behind these two Amendments.
§ The third matter is one which we discussed on Second Reading when I suggested that it might help firms if some sort of early warning system could be instituted. It might save them a good deal of trouble and expense if they could find out for certain, one way or the other, whether an agreement was so insignificant as to be deemed not to warrant reference. This is covered by the last Amendment, No. 7. In reply to me, the noble Lord was very reassuring. He told us what in practice happens, of the informal contacts which exist between firms and the Registrar, and said he felt that these contacts, which I am sure operate well, would meet the point adequately. Despite what the noble Lord said, I gather that there is still some anxiety among some of the interests potentially affected by the Bill. The Amendment would put the matter beyond any possible doubt. In fact their inclusion would formalise the informal machinery to which the noble Lord alluded on Second Reading. I hope very much that he will be able to accept this group of Amendments. They may not be perfectly drafted, and there may 1422 be parts of them—as they are covering three different objects—which he may feel unable to accept. Alternatively, he may feel that the whole lot are unecessary. However, I should very much like to hear the comments of the noble Lord on these proposed Amendments to Clause 9. I beg to move Amendment No. 4.
§ LORD ROYLE
There is a very small point to which I wish to refer regarding the printed copy of the Bill which we have this morning. I was trying to understand the noble Earl, Lord Jellicoe, but his words did not seem to apply at all. I find on looking at the Bill that the line numbers 15 and 20 are in the wrong place, so I am assuming that the noble Earl is moving his first Amendment in what should be line 15 and which appears as line 20.
§ 12.25 p.m.
I am sorry. I thought that I was probably pretty obscure, even without the help of the printers who have made me even more obscure. The noble Lord, Lord Royle, is absolutely right in his assumption. I apologise for not having explained this before. I was assuming that the printers had not made a mistake.
§ LORD BROWN
I am sorry that the Bill has this error in it. I shall have to give the noble Earl a detailed and fairly complex reply, but perhaps if I made a very simple comment first, it would make the rest more understandable. I shall have to ask the noble Earl to withdraw these Amendments, because if they were accepted they would take us into the field of administrative difficulty and could raise arguments between the Court, the Registrar and the Board of Trade. It is a question of definition and the intermingling of various things. That is the basic reason why I am going to ask the noble Earl to withdraw these Amendments.
It would appear that Amendment No. 4 is designed to enable the Board of Trade to deal with a part, and the Court with another part, of the same agreement. It would appear that the noble Earl's Amendment is based or the assumption that restrictions in registered agreements are all set out distinctly and separately, but in fact this is far from the case. The noble Earl may have in 1423 mind that the Board of Trade have in the past issued directions under Section 12 of the 1956 Act in relation to agreements after they have been considered by the Court. This practice was adopted in one or two cases with the concurrence of the Court, in order to preserve insignificant restrictions which otherwise the Court would have been forced to condemn.
The Court is required to presume that restrictions are contrary to the public interest unless they can be defended on one of the grounds set out in Section 21 of the Act. There were cases where trivial restrictions which did no harm could not be so defended, and consequently in one or two cases the Court, having condemned certain major restrictions in an agreement, has made no order as to the remaining restrictions but left the Registrar to approach the Board of Trade with a view to securing a direction under Section 12 in relation to the agreement as it subsisted after the major restrictions had been condemned. This procedure has not been satisfactory. It has proved workable only by the exercise of a considerable measure of procedural flexibility on all sides.
We think that the new gateway set out in Clause 10(1) could be employed to defend insignificant restrictions. Indeed, one of its purposes was to enable the Court to deal with all the restrictions in an agreement referred to it. If the parties plead the new gateway in relation to insignificant restrictions, the Court will not have recourse to condemning the restrictions as it has hitherto been required to do when none of the gateways in Section 21 were appropriate. We think, therefore, that the Restrictive Practices Court will not be obliged to condemn insignificant restrictions in future because, as I said at the outset, we think that the better course is that when called on to consider an agreement it should consider all the restrictions and that the matter should not be handled partly by the Board and partly by the Court. The Amendment would reintroduce the ideal procedure in an inconvenient form. May I add this? I believe industry would be a great deal better off if the Court did consider all these things and then industry was able to get the insignificant ones withdrawn. Industrialists would know where they 1424 stood. If you tried to separate them there might be consequential intermingling which would be most distressing.
On Amendment No. 5, we consider that if the Board were empowered to make Clause 9 directions after an agreement had been referred to the Court, it would give rise to an undesirable clash between the powers of the Judiciary and of the Executive. Parties to an agreement have an opportunity to amend their agreement to remove any detrimental restrictions before the agreement is referred to the Court. Moreover, again the new gateway in Clause 10 will allow insignificant restrictions, which have no material effect upon competition, to avoid the condemnation by the Restrictive Practices Court in a manner which has, unfortunately, occurred heretofore on occasions.
I will spend a little more time on Amendment No. 7 because I think that the noble Earl wants a reassurance on this point, and I have here a fairly long note. I did touch briefly on this matter during the Second Reading debate. The truth is that the Amendment really serves little useful purpose. No statutory provision is necessary to permit a person to ask the Registrar to make representations to the Board of Trade. Anyone is free to ask him to do so at any time.
The proposal that the Registrar should be under a statutory duty to notify his decision in relation to representatives is, I hope I can show, of no real practical importance. It in no way inhibits the Registrar from instituting proceedings under Section 20 if he desires that agreement must be referred to the Court. The Registrar could technically discharge the obligations imposed by the Amendment by notifying the parties of his decision immediately before serving a notice of reference to the Court. In practice, he notifies the parties of what his intentions are in good time. Moreover, the Amendment does not take sufficient account of the fact that directions under the new power may be revoked, and that the criterion of Section 12 of the 1956 Act has been changed. The Amendment seems more suitable for the once and for all type of direction which was available under Section 12, but which could not be revoked.
When the matter was touched on in our Second Reading debate, I explained 1425 that in his first Report the Registrar said:Whether or not the parties request it, the possibility of making a representation under Section 12 is always considered before an agreement is referred to the Restrictive Practices Court.The Registrar has assured me that this is still his policy, and he will continue it when Clause 9 replaces Section 12. He regards it as of importance that public money and the time of the court should not be wasted by inappropriate references. Moreover, there is no reason why firms or associations desiring to enter into a registrable agreement or making a recommendation should not approach the Registrar quite informally in advance with a prior indication of the likelihood of its becoming a successful candidate under Clause 92. How clear an indication can be given in any particular case must depend on all the circumstances, including the restriction of competition which is contemplated, and the extent to which a full explanation can be made of just what is envisaged.
But short of a binding promise, which plainly cannot be given, and is not, I imagine, expected, noble Lords may certainly take it that the Registrar will be as helpful as he can. When he makes a representation to the Board of Trade it is likely that directions will be issued fairly rapidly thereafter, because experience has shown that the Registrar with his expertise is able to gauge fairly accurately the sort of agreements in relation to which the Board of Trade are prepared to exercise their powers under Section 12, and is equally likely to be able to gauge which agreements will be eligible for direction under the new powers.
I hope that this is reassuring to the noble Earl. My main point is that if this Amendment were carried I do not think it would be helpful to industry. The Registrar has this pile of agreements before him. He is going through them as rapidly as he can. He is open to approach. He will give decisions as rapidly as he can; he cannot always be decisive. There is nothing in the Amendment which will cause him to be more helpful than he is. It will put him under a statutory duty to do what he is already doing as well as he can, and it might give people the feeling that 1426 they had rights to immediate answers on questions which were in fact the subject of a good deal of legal investigation, and pretty "dicey" issues at that; and he could not respond by giving immediate answers whether or not the Amendment was passed. In the light of this explanation, perhaps the noble Earl could reconsider the Amendments, and I should be obliged if he would withdraw them.
I think I made a mistake in suggesting that we should take these Amendments together, because, although they all relate to the same clause and are all interlinked in a certain way, the objects are a little different. I apologise to your Lordships. I should like, again, to say how grateful I am to the noble Lord, Lord Brown, far the great care he has taken in preparing his replies to these Amendments, and I can tell him straight away that I am going to follow his advice and withdraw them at this stage. I say "at this stage", because I wish to study carefully the comments he has made on what are pretty complex matters. I think it is necessary that we should get this Bill—which is a very important one, and which has come very late in the day in our Session—as right as we possibly can. I certainly wish to assure myself that we have Clause 9 right before we let it through. Therefore, I should like to reserve my right to come back to this on Report, if necessary, but I will not do so unless I feel it is necessary.
I am very sympathetic to what the noble Lord said on Amendment No. 7, that he did not really feel that in his judgment it would serve the best interests of industry. Clearly this is important. I should also frankly say that I have less sympathy for the argument which he advanced at the start of his reply, that I should not pursue these particular Amendments because of the administrative difficulties which they might cause for the department concerned. That is a reason which does not carry great conviction with me, and in fact, far from allaying any anxiety that I might have, it set a number of alarum bells ringing in my mind.
§ LORD BROWN
I should have made it clear that it is not a question of departmental administration. It is a question of arguments between the courts 1427 and the departments, which should be avoided at all costs, if possible.
I agree that arguments between the courts and departments should be avoided if possible. But I think it is equally important that we should be certain that we have this clause right. However, that said, I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Clause 9, as amended, agreed to.
§ Clause 10 agreed to.
LORD BROWN moved Amendment No. 8:
After Clause 10, insert the following new clause:
§ Wholesale co-operative societies
§ .—(1) Subsection (6) of section 6 of the Act of 1956 (which relates to agreements made by trade associations) shall not apply to any industrial and provident society approved by the Board of Trade for the purposes of this section; and an industrial and provident society so approved shall be treated as not being a trade association for the purposes of subsections (3) and (5) of section 8 (excepted agreements) of the Act of 1956.
§ (2) The Board of Trade may, if they think fit, approve for the purposes of this section any industrial and provident society which, in the opinion of the Board, satisfies the following conditions namely—
- (a) that it carries on business in the production or supply of goods or in the application to goods of any process of manufacture; and
- (b) that its shares are wholly or mainly held by industrial and provident societies, being retail societies or societies whose shares are wholly or mainly held by retail societies.
§ (3) The power of approval conferred by subsection (2) of this section shall not be exerciseable after the end of the relevant period, that is to say—
- (a) in the case of a society which immediately before the commencement of this Act is registered or deemed to be registered under the Industrial and Provident Societies Act 1965 or under the corresponding law in Northern Ireland, the period of three months beginning with the commencement of this Act;
- (b) in the case of a society which is so registered after the commencement of this Act, the period of three months beginning with the date on which it is so registered.
§ (4) Where an agreement made before the commencement of this Act by an industrial and provident society is subject to registration under Part I of the Act of 1956 but would not have been subject to registration thereunder if subsection (6) of section 6 of 1428 the Act of 1956 had not been enacted and the society had at all times fallen to be treated as not being a trade association for the purposes of subsections (3) and (5) of section 8 of that Act, the agreement shall cease to be subject to registration under the said Part I if that society is approved by the Board of Trade for the purposes of this section.
(5) In this section—
'industrial and provident society' means a society registered or deemed to be registered under the Industrial and Provident Societies Act 1965 or under the corresponding law in Northern Ireland;
`retail society' means a society which carries on business in the sale by retail of goods for the domestic or personal use of individuals dealing with the society, or in the provision of services for such individuals;
'the corresponding law in Northern Ireland' means the law for the time being in force in Northern Ireland for purposes corresponding to those of the Industrial and Provident Societies Act 1965.
§ The noble Lord said: I apologise to your Lordships for producing a lengthy and complex Amendment at this late stage. The object of this new clause is to relieve Federal Co-operative Societies from certain of the disabilities which they suffer as a result of their falling within the definition of a trade association in Section 6(8) of the 1956 Act.
§ Subsection (1) defines those sections of the 1956 Act upon which the new clause operates. These sections are Section 6(6), which provides that an agreement made by a trade association is to be regarded as an agreement made by all the members of the trade association so that any restriction accepted by the association is to be regarded as accepted by all the members; Section 8(3), which provides that bilaterial exclusive dealing agreements are not to be registrable unless either of the parties to it is a trade association; and Section 8(5), which provides that bilateral agreements for the exchange of information relating to the operation of processes of manufacture are not to be registrable unless either of the parties is a trade association.
§ It is to be noted that the subsection does not bite on Section 6(7) of the 1956 Act which deems that a recommendation made by a trade association to its members is to be regarded as a binding agreement made by all the members of the association. Subsection (2) defines the type of Co-operative Society which is to benefit from the exemption. Although the 1429 type of society is narrowly defined, the Board of Trade are given a discretion to decide whether any particular society falls within the definition. The type of Co-operative Society which is to enjoy the benefit of the clause is defined as an industrial aid provident society that carries on business in the production and supply of goods et cetera, and whose shares are wholly or mainly held by other industrial and provident societies who are either themselves retail societies or federations of retail societies.
Subsection (3) limits the period in which the Board of Trade may grant their approval. In the case of an existing society the period is three months from the date of the coming into force of the Bill, and in the case of a society registered after the commencement of the Bill within three months of registration. Subsection (4) deals with agreements made before the coming into force of the Bill. It provides that past agreements of the type which are to benefit from the new clause shall cease to be registrable once the Board of Trade have granted approval to the society in question. Subsection (5) defines an industrial and provident society by reference to the relevant legislation, and a retail society by the type of business which it carries on. It also deals with the application of the provision to Northern Ireland.
The main purpose of proposing this new clause is simply that it has now been discovered that a co-operative society, particularly the Co-operative Wholesale Society, rather surprisingly, has fallen within the definition of "a trade association" since 1956; and that if in fact this new clause is not introduced the Society, and others of a like kind, will be placed in a situation where their agreements to buy from suppliers which are of an exclusive sort will all have to be registered in future. It is to relieve the Co-operative Wholesale Society and others from this, I submit, unintended and onerous result of the 1956 Act that this new clause is now introduced. I beg to move.
After Clause 10, insert the said new clause.—(Lord Brown.)
I am grateful to the noble Lord for his explanation. As he said, it is rather surprising that we 1430 should be faced with what is after all a pretty substantial Amendment to this Bill at a pretty late stage. But I should like to say that my colleagues are grateful to the noble Lord for having given us as much advance warning of his intention as I think he could. I believe that this Amendment is acceptable in that it is only restoring the position which until very recently I think everybody thought already obtained. I hope that this is right, and I believe it to he so.
I have only one doubt which I should like to ventilate and upon which I hope the noble Lord may be able to give me some assurance. This situation has arisen rather unexpectedly, I understand and I am worried that perhaps other equally worthy trading organisations, which up to now have thought that they were excluded from the operations of Section 6(6) of the 1956 Act, may also find themselves within the toils of teat Act and possibly may not be covered by the knew clause. I wonder whether the noble Lord can give me any assurance on this point. Also, on a relates point, if unexpectedly—and there has be en one unexpected result already—this should prove to be the case, what remedy will there be after this Bill has become an Act?
There is, of course, one possible remedy, and that is that we she uld he alerted before it becomes an Act. There is very little time, since we are taking the final stages of the Bill, I think, next Wednesday, but I hope that the interests affected will be aware of the action which we are proposing to take to-day.
§ LORD BROWN
I think I can give the assurance the noble Earl is seeking. There are two types of case. One is where a series of retail traders join together and literally form an association to purchase on their behalf, and if that purchasing organisation which they have got themselves together to form make exclusive contracts they will be caught by the Bill. On the other hand, there are now, I understand, a large number of wholesaling houses which male contracts of various kinds with large numbers of individual retailers and which agree to service them by buying on their behalf and stocking them. Having taken serious legal advice on this matter, I am assured positively that these types 1431 of operation would not be caught by this Bill. I am quite positively sure on that account.
I have tried to be fair in saying that those retailers who form themselves into a body are inevitably a trade association; but if the formation activities, so to speak, come from the wholesaling end and the wholesaler makes these individual contracts with a large number of retailers, and gets on with his business in the way that a number of wholesalers have done, he will not be caught by this Act. I believe that that is the reassuring point the noble Earl wanted me to make.
§ On Question, Amendment agreed to.
§ Clauses 11 to 16 agreed to.
§ Schedules 1 and 2 agreed to.
§ Schedule 3 [Enactments Repealed]:
LORD BROWN moved Amendment No. 9:
Page 16, line 10, after ("order") insert ("made").
§ The noble Lord said: Lines 9 and 10 of Schedule 3 misquote the words in the 1956 Act which are to be repealed. The misquotation consists of the omission of the word "made". The object of this Amendment is to rectify this omission. I beg to move.
§ On Question, Amendment agreed to.
§ Remaining Schedule, as amended, agreed to.
§ House resumed by the Lord Chancellor: Bill reported, with the Amendments.