HL Deb 17 December 1970 vol 313 cc1550-4

4.25 p.m.


My Lords, with permission, I should like to repeat a Statement which has been made in another place by my right honourable friend the Secretary of State for Trade and Industry. It is as follows:

"With permission, I should like to make a Statement about the measures which the Government are taking to strengthen the machinery for promoting competition in industry, and for providing safeguards against the abuse of market power.

"We shall in due course introduce legislation to re-shape the Monopolies Commission, to widen its scope and powers, and to make it more effective. Meanwhile, within the scope of the existing legislation, we shall make important changes of practice which will foreshadow the legislative proposals we shall eventually bring forward, and set the Monopolies Commission on a course enabling a smooth transition to be made to the new Commission which will replace it.

"In the transitional period we shall increase and strengthen the staff of the Commission, and appoint additional full time members as necessary.

"The Commission will be encouraged to become the expert and authoritative source of information to the Government on situations of imperfect competition, and I shall be ready to consider proposals from it of possible subjects for formal inquiry. The power to make references will remain with me, but I shall have no objection to the Commission making its proposals public if it so wishes.

"To enable shorter inquiries to be undertaken in appropriate cases the Commission will be asked, so far as is possible within the existing legislation, to direct its attention to specific issues as an alternative to the traditional wide-ranging monopoly inquiry. For example, the Commission may be asked to investigate a particular practice by a company or industry, or to report on prices in a monopolistic situation. I hope, too, that these limited inquiries will permit simpler procedures to be adopted.

"I shall make further references as necessary. I shall continue to use the power to refer proposed mergers to the Commission if I consider that competition in the relevant market would be restricted to a damaging degree as a result of the merger. I shall also hope from time to time to issue guidance on the principles being followed in making references to the Commission.

"The Commission has in the past been used to inquire only into the activities of private industry. In future, I shall be ready to make use of the power in Section 2(2) of the Monopolies and Restrictive Practices Act 1948 to ask the Monopolies Commission to give the Government information and assistance on questions arising out of the operations of publicly owned enterprises which are in a monopoly position. But I shall bear in mind the need to avoid burdening those industries with a wholly unreasonable succession of investigations as has happened in the past.

"These measures will start to strengthen the authority of the Commission at once, and to make it a more effective body for promoting competition throughout the economy. But the Commission cannot be fully effective in the new directions I have outlined without legislative changes. In preparing such legislation we shall aim in particular to provide for a reconstituted Commission; for appropriate new powers to collect information and to propose inquiries; and for its powers of formal inquiry to be extended to cover public monopolies such as nationalised industries and other statutory trading bodies which are in a monopoly position.

"The Government are also reviewing the restrictive trade practices legislation with a view to extending its scope and making it more effective. In particular, we shall be considering the case for bringing services within the legislation, for making registrable certain anti-competitive practices by single firms, and for making certain types of restrictive agreement illegal. I should like to emphasise that in the preparation of legislation I shall want to consult fully with representative bodies in the light of experience of the steps outlined above."

4.30 p.m.


My Lords, I am grateful to the noble Earl the Leader of the House for making that Statement to us. It is an important Statement, because since the prospective end of the I.R.C.,, the Prices and Incomes Board and the Consumers Association, we are left with few Government institutions for investigating matters that need to be investigated in our economic industrial life. What we felt when we were in Government was that the term "Monopolies Commission" was really a misnomer, and that what was needed was a body to protect the consumer and to ensure an increase in industrial efficiency. That was the reason for the Commission on Industry and Manpower, which we had drafted and were in the course of debating when the Government changed. The use of the phrase, "departures from perfect competition", is a little frightening. It sounds too purist. And with its openings to give the Commission rights to investigate Rolls Royce, which is a near monopoly, I.C.I., Courtaulds, the railways or coal, it worries us.

The questions that I want to put to the noble Earl are these. First of all, can we have a Green Paper? I know that setting out the proposed underlying principle is difficult, because we found great difficulty in stating the principles behind references to the Commission when we were in Government, but it is an important matter to get the Government's reshaping of the policy of the Monopolies Commission.

Secondly, I am puzzled about the references to nationalised industries. Will the Commission carry out an investigation of the National Coal Board, the Railways Board or the C.E.G.B., for example? And in the event of their making a recommendation, is it then within the purview of the Government to alter the Statute which set them up by the issuing of an order?—because these are the ordinary terms of reference of the Monopolies Commission when they investigate private industries.

There is in the Statement a reference to the inclusion of services. This puzzles me a little, because my understanding is that the Monopolies Commission can already investigate services so long as there is a 33⅓ per cent. combination of people giving these services who are, to speak, colluding together. Finally, can the noble Earl say anything about directing the Commission particularly to look at competition in the context of international trade? I personally, along with many others, have always been worried as to whether what is regarded as monopoly, which is actually oligopoly, would be considered in the context of how much of the internal trade of this country people got, instead of taking into consideration the very severe competition that comes to firms in the home market from the external suppliers.


My Lords, so far as the noble Lord's questions are concerned, I do not think I can promise him a Green Paper, but certainly I will pass on the suggestion to my right honourable friend. As for nationalised industries. I speak subject to correction but it would certainly be my understanding that in anything which required a change in the Statute under which the nationalised industry in question operates it would not be the Government's intention to proceed other than by Statute.

Thirdly, so far as the question of international competition is concerned, it would certainly be my view (and I will write to the noble Lord if I am wrong about this) speaking, as it were, without the book, that the monopolies reference would cover the type of international situation which the noble Lord has in mind, if it was creating a monopoly situation within this country; and I think it is possible to imagine circumstances in which that would be so.


My Lords, while thanking the noble Earl for the Statement, especially as it gives further proof of the dogmatic rage of the Government which confuses the economics of the 20th century with those of the 19th century, may I ask whether the Government have thought out how this situation of perfect competition can be established, deviations from which will be referred to this new Commission?


My Lords, I think the Secretary of State would make references where he was satisfied that there was an abuse of monopoly power. I cannot go beyond that. But I am grateful to the noble Lord for his welcome of this Statement. I see nothing dogmatic, ideological or doctrinaire in it. If he does, then of course he is entitled to his opinion.