§ 7.35 p.m.
§ LORD DRUMALBYN
My Lords, I beg to move that the House do again resolve itself into Committee on this Bill.
§ Moved, that the House do now resolve itself into Committee.—(Lord Drirmalbyn.)
§ House in Committee accordingly.
§ [The BARONESS EMMET OF AMBERLEY in the Chair.]
§ Clause 29 agreed to.
§ Clauses 30 to 43 agreed to.
§ Clause 44 [General power for Director to require information]:
§ LORD SAINSBURY moved Amendment No. 19:
Page 30, line 6, at end insert:
("( ) that a consumer trade practice adversely affecting the interests of consumers in the United Kingdom may exist in relation to the supply of goods or services of any description, or").
§ The noble Lord said: Amendments Nos. 20 and 21 are consequential on this Amendment. As I understand it, the Bill as it stands at present gives the Director powers to require information in respect of monopolies and restrictive practices, but not in respect of other trade practices which may be against the interest of the consumer. I think I am right in saying that this is a question which was not raised in the other place because, I am told, there were no Amendments to Clause 44. The general argument is that the Director would find it extremely difficult to investigate seemingly harmful trade practices, such as switch-selling and dual pricing, unless he had statutory powers to require companies to provide him with the necessary information. I suggest that it can be expected that the great majority of businesses would co-operate with the Director and would provide him with the information that he required, but reserve powers should, in my opinion, be available to him to deal with the few unscrupulous traders who may refuse the Director the necessary information. I 1546 have in mind such matters as salesmen's instruction manuals, some of which are extremely revealing and give a very good idea of the methods of operation of the company concerned. What we really want is any information necessary for the protection of the consumer. I beg to move.
§ VISCOUNT HANWORTH
I should like to support this Amendment. I believe that if you are setting up an organisation to deal with what is covered by this Bill, the maximum amount of information cannot possibly do any harm and must lead to better justice. In this instance, though the powers under this Amendment may be somewhat draconian I think they arc nevertheless justified in order to get better information and a better answer to any problem. I do not think one should draw an analogy with a court of law, because a great deal of discretion will lie with the Director General. And there are provisions to make sure that he cannot act in an irresponsible way. I think there is everything to be said for making it possible for him to get the maximum amount of information. I do not believe that industrialists, if they think about this, would oppose it. After all, the majority of industrialists, I believe, are out to try to produce a reasonable product and operate their business in an ethical way. It is their problem just as much as the consumer's to see that abuses do not occur. If therefore the industrialists get a bad name, it sometimes makes fair competition extremely difficult. I can see no valid argument against this Amendment.
§ LORD DRUMALBYN
I am grateful to the noble Lord, Lord Sainsbury, for moving the Amendment so clearly and to the noble Viscount, Lord Hanworth, for what he has said. I think that they realise that this Amendment fits a little uneasily in the place in which it is proposed to insert it. We are now considering that section of the Bill dealing with monopolies, and the Amendment does not fit in this clause. But I think noble Lords are more interested in the principle. In considering whether to extend the Director's powers in Clause 44, we have to analyse carefully the difference between the need for information to clarify a possible monopoly situation, 1547 which is what the clause is about already, and the need for information in connection with consumer trade practices. In the case of monopoly situations, the Director will need his power to require the provision of information in order to ascertain whether a monopoly situation exists. He must have the information already required in subsection (2)(a), (b) and (c) and the paragraphs in this subsection give the kind of details, many of them of a rather confidential nature, which are relevant to a proper assessment of the situation.
By contrast, the Director's work in connection with consumer trade practices will concern the effects of practices upon consumers already identified. In respect of a monopoly it is necessary to identify whether there is a monopoly situation; the consumer trade practices will already have been identified. The noble Lord, Lord Sainsbury, is advocating that there should be power to require information. But it will not matter too much exactly what the practices are. It is the effect on consumers that matters. I am sure that once the Director General's office is established consumers will not be slow to point out any adverse effects which they may feel as a result of consumer trade practices. I can tell the noble Lord that they have not been slow to do so in the past and have pointed them out to central Government and to local enforcement authorities. So the Director will not have difficulty in obtaining the kind of information necessary to form the basis of an action.
It is true that for a proper understanding of what is causing the harmful effects reported by consumers the Director General may have to approach traders for further information. But I do not believe that we need arm him with far-reaching inquisitorial powers for this purpose. There are sanctions in Clause 46 against anyone who refuses or wilfully neglects to furnish information. It is more likely that once traders learn that their practices are alleged to have harmful effects on consumers, they will come forward with information aimed at showing that what they do is innocuous; and the Director will be able to gauge the accuracy of the information, and probably diagnose what they are hiding as well, by reference to the effects reported to him by individual consumers, enforce- 1548 ment authorities, advisory services and so on. I would say to the noble Lords that powers of this kind are never taken lightly, and I do not think that they ought to be bestowed lightly. They can be justified only where they are essential to the performance of the talk which in itself is essential. I do not think this is so in the case of the Director's consumer work. As the noble Viscount, Lord Hanworth, very fairly said, it would be only a minority of cases involving the least scrupulous. It could also be the result of an oversight and so I do not think that I can recommend that the Committee accept the Amendment.
§ LORD SAINSBURY
At this hour, and in a "thin" Committee, may I say that I should like to study what the Minister has said. In the meantime, I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Clause 44 agreed to.
§ Clauses 45 to 50 agreed to.
§ Schedule 7 [Goods and services (in addition to those in Schedule 5) wholly or partly excluded from section 50]:
§ LORD DRUMALBYN
This Amendment, No. 22 goes with Amendments Nos. 11 and 12 the principle of which we have already discussed. I beg to move Amendment No. 22.
§ Amendment moved—
Page 109, line 12, at end insert—
(".The carriage of passengers or goods by air.").—(Lord Drumalbyn.)
§ Schedule 7, as amended, agreed to.
§ Schedule 8 agreed to.
§ Clauses 57 to 87 agreed to.
§ Clause 88 [Action by Director in consequence of report of Commission on monopoly or merger reference]:
§ 7.48 p.m.
THE EARL OF LIMERICK moved Amendment No. 23:
Page 64, line 32, after ("73(1)") insert ("or in section 75(4)(e)").
§ The noble Earl said: I think that it would be convenient if with this Amendment the Committee considered Amendments Nos. 24, 25, 26, 27, and 28. 1549 Clause 88(6)(b) defines the relevant parties with whom the Director will be required to negotiate undertakings following an adverse report of the Commission on a merger reference. During the Committee proceedings in another place the attention of the Government was drawn to the fact that this definition was not apt to cover the situation where the reference had been made in anticipation of a merger rather than after it had taken place. Amendment No. 25 inserts a new paragraph (b) in Clause 88(6) providing an additional definition of the relevant parties to cover a prospective take-over, the acquiring company, following a report on a merger reference under Clause 75. That is a reference made in anticipation of a merger. This will make it clear that the Director will be able to engage fully in the usual follow-up work in such cases; and he would, for example, be able to seek undertakings from a bidder on the basis of which a merger might then be allowed to proceed. Amendments Nos. 23, 24, 26, 27, and 28 are purely consequential. I beg to move Amendment No. 23.
§ THE EARL OF LIMERICK
If it is convenient to the Committee, perhaps I might move Amendments Nos. 24 to 28 inclusive en bloc. I beg to move.
§ Amendments moved—
§ Page 66, line 13, leave out ("and").
Page 66, line 13, at end insert:
("(b) in relation to a report of the Commission on a merger reference under section 75 of this Act, which includes a finding that a merger situation qualifying for investigation will be created if the arrangements in question are carried into effect, means any person indicated in the report as being a person by whom in accordance with the arrangements any assets are to be taken over").
§ Page 66, line 15, at end insert ("or a reference falling within paragraph (b) of this subsection").
§ Page 66, line 23, leave out ("and").
§ Page 66, line 25, at end insert ("and, in subsections (3) and (5) of this section, the references to section 73 of this Act shall be construed as including references to that section as applied by section 75(4) of this Act.").—(The Earl of Limerick.)
§ Clause 88, as amended, agreed to.
§ Clauses 89 to 91 agreed to.1550
§ Schedule 9 agreed to.
§ Clauses 92 to 96 agreed to.
§ 7.54 p.m.
§ THE EARL OF LIMERICK moved Amendment No. 29:
§ After Clause 96 insert the following new clause:
§ Trade association not to include certain approved societies
§ ". In section 6(8) of the Act of 1956 (which contains a definition of "trade association"), after the words "or of persons represented by its members" there shall be inserted the words "and which is not a society for the time being approved under section 6A of this Act.".
§ The noble Earl said: I think it may be convenient to consider Amendments Nos. 29 and 30 together, and, in connection with these two, certain subsequent Amendments; namely, Nos. 34, 35 and 36, which are Amendments to Clause 108; Amendment No. 51, to Schedule 11; Nos. 52, 53 and 55, to Schedule 12; and No. 56, to Schedule 13. These new clauses will enable the Secretary of State to approve industrial and provident societies which meet certain criteria, so that they will not be deemed to be trade associations for the purposes of the restrictive trade practices legislation. To qualify for approval, an industrial and provident society will have to fulfil three conditions; namely, first that it carries on business in the production or supply of goods, or in the supply of services, or in the application to goods of any process of manufacture; second, that its shares are wholly or mainly held by industrial or provident societies; and, third, that those societies are retail societies or societies whose shares are mainly or wholly held by retail societies.
§ The Co-operative Wholesale Society, with other federal co-operative societies, is deemed to be a trade association by virtue of Section 6(8) of the 1956 Act, and its recommendations to its retail society members are registrable and subject to judicial examination. The C.W.S. has represented that it considers this to be unjust because it likens itself more to an interconnected group of companies with multiple retail outlets. The C.W.S. cannot, however, be considered to be the parent of its retail society members because, as a matter of fact, it does not control them. Rather the boot is on the other foot, because the retail societies 1551 control the wholesale society. The retail societies themselves are controlled by their members, who are of course the end consumers. To the extent, that wholesale co-operative societies are in a unique position, then the Government feels that there is justification for dealing with them in a unique manner and to extend the limited relief given in Section 11 of the 1968 Act. Having decided that some relief should be given to these societies, it was important to ensure that the freedom to make recommendations was not likely to be abused. For this reason we have set a time limit of two years on the approval, with provision to extend it by not more than two years at a time. Furthermore the Secretary of State will have power to withdraw approval if it appears to him that the society is acting in a way which is likely to have a seriously adverse effect upon competition. If the approval expires or is withdrawn, the society will then have to register any agreements or recommendations made during the currency of the approval, and, if necessary, defend them before the court.
§ The justification for taking special action in favour of wholesale co-operative societies is that they have been established to bring the benefits of co-operative buying and selling directly to a very large group of consumers. It is represented by the C.W.S. that the advantage this gives to consumers is entirely in the spirit of the early provisions of the Bill for the protection of consumers. Because the movement is so large, the Government recognise it is possible that a society's market power might be used unfairly in competition with other, equally valuable, retailers and retailing organisations. For this reason the Government have provided appropriate safeguards, and the Secretary of State intends to ask the Director to keep a watch on the activities of approved societies and to report to him if he considers that they are abusing their power.
§ If I may refer briefly to the other Amendments which are being discussed together with these two, the Amendments to Clause 108 (that is, Nos. 34, 35 and 36) ensure that the society approved under the new Section 6A, set out in Amendment No. 30, is the same position in relation to a restrictive agreement 1552 affecting the supply of services as it is in relation to agreement involving restrictions on the supply of goods. I think the Committee will agree that it would be anomalous to limit the new exemption to restrictive agreements affecting the supply of goods. Amendment No. 51, to Schedule 11, is an Amendment to the transitional provisions of the Bill. The new power of approval conferred by Amendment No. 30 will supersede the powers given by Section 11 of the Restrictive Practices Act. The question must therefore arise: what should be done with Section 11? The answer is quite obviously that it should be repealed. and this is achieved by Amendment No. 56, to Schedule 13.
§ A more difficult question arises as to what should be done about the approvals granted under Section 11. We think that they should be (if I may so describe it) frozen alive, so that there will continue to be exempt from registration under the Restrictive Practices Act any agreements made before the commencement of the new provisions. This transitional provisional result is secured by Amendment No. 51. Amendments Nos. 52 and 53 are then minor, consequential Amendments.
§ If one inserts the new Section 6A in the 1956 Act, it is necessary to change the reference in Section 6 to "the next two following sections" to make it refer to what become Sections 7 and 8. Amendment No. 53 merely paves the way for Amendment No. 55. Amendment No. 55 ensures that this is an appropriate period for the registration of any agreement which becomes subject to registration by virtue of subsections (2) or (4) of the new section set out in Amendment No. 30.
§ I have been asked to draw the attention of the Committee to an error in the last line of page 5, Amendment No. 30. For the word "particular" should be substituted the three words "Part of this". This, I have been advised, is a printing error. It is really a matter of common sense when you read it; there is no change of substance involved. Perhaps I should ask the permission of the Chair to move the Amendment with the substitution of "Part of this" for "particular" in the last line. I beg to move.
§ LORD KENNET
I understand that this Amendment has been brought forward by 1553 the Government in response to representations made in Committee in the House of Commons. On this side of the Committee we are much obliged.
§ THE EARL OF LIMERICK
I beg to move Amendment No. 30 on the Marshalled List, with the alteration to which I have referred in the last line of subsection (4)(b); namely the substitution of "Part of this" for "particular".
After Clause 96 insert the following new clause:
§ Wholesale Co-operative Societies
§ "After section 6 of the Act of 1956 there shall be inserted the following section:—
§ "6A.—(l) The Secretary of State may approve under the section any industrial and provident society which in his opinion fulfils the following conditions, that is to say—
- (a)that it carries on business in the production or supply of goods or in the supply of services or in the application to goods of any process of manufacture;
- (b)that its shares are wholly or mainly held by industrial and provident societies; and
- (c)that those societies are retail societies or societies whose shares are wholly or mainly held by retail societies.
§ (2)An approval given in respect of a society under this section shall (if it has not been previously withdrawn) expire at the end of the period of two years beginning with the date on which it was given or, if that period is extended, once or more than once under the next following subsection, at the end of that period as so extended, or further extended, as the case may be.
§ (3)The Secretary of State may extend or, if it has already been extended under this subsection, may further extend the period of two years referred to in subsection (2) of this section by such period, not exceeding two years, as he may specify.,
§ (4)The Secretary of State may at any time withdraw an approval given in respect of a society under this section if it appears to him—
- (a)that the society has made an agreement which would have been subject to registration under this Part of this Act if the approval had not been given, or that such a recommendation as is mentioned in section 6(7) of this Act has been made by or on behalf of the society, and
- (b)that the agreement or recommendation has such adverse effects on competition that it should not be precluded from being investigated by the Court under the following provisions of this Part of this Act.
§ (5)On the expiry or withdrawal of an approval given in respect of a society under this section, the provisions of this Part of 1554 this Act shall have effect in relation to agreements and recommendations made by the society during the currency of the approval as if the society had not been approved under this section.
(6)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 Earl of Limerick.)
§ Clauses 97 and 98 agreed to.
§ Loan STOW HILL moved Amendment No. 31:
§ After Clause 98 insert the following new clause:
§ Amendments to section 9 of the Act of 1968
§ "PART IX
§ AMENDMENTS OF RESTRICTIVE TRADE PRACTICES ACTS
§ .—(1) In subsection (2) of section 9 of the Act of 1968, for the expression "of such significance" there shall be substituted the expression "of such nature or importance".
(2)After that subsection there shall be inserted the following subsection:—
(2A) Where before the conclusion of any agreement all the proposed parties thereto acting jointly submit to the Director a copy of the proposed agreement and upon his request furnish such other particulars in relation thereto as are mentioned in the request, the Director may represent to the Secretary of State, if he believes that the agreement if made would be subject to registration under this Act, that he recommends either—
the Secretary of State may give directions accordingly."
§ (3)In subsection (3) of the said section 9 after the words "subsection (2)" there shall be inserted the words "or subsection (2A)".".
§ The noble and learned Lord said: My noble friend Lord Nathan has put his name to this Amendment and asked me 1555 to express his apologies because unfortunately he is not able to be present owing to another engagement which he had to keep. I shall endeavour to move the Amendment as shortly as I can in view of the hour, but it involves a little complication and also there is a certain amount of background material which I think I should bring to the notice of the Committee. The Restrictive Trade Practices Acts affect in particular small companies, small traders. There is, at it were, no lower limit beyond which an agreement as described in the Acts may have to be registered. Conversely, a large undertaking may, by its own arrangements and because of the extent of the undertaking and the size of its various operations, be in a position to enforce precisely the same restrictive arrangements as would be forbidden in the case of a number of small companies who had entered into a restrictive agreement to do so.
§ If a number of small companies enter into such an agreement, the agreement has to be registered under the Restrictive Practices Act and it may be declared contrary to the public interest. On the other hand, if a very large undertaking engages on precisely the same restrictive practice it does not become amenable to the law unless under existing law it commands not less than one-third of the market. It can then be referred to the Monopolies Commission. Therefore one finds an anomalous position. The small trader is disadvantaged by this legislation as against the very large trader. It is in general desirable to assist the small trader if possible and it is desirable, among other things, in order to promote just that kind of competition which it is the object of this sort of legislation to promote. As it is, small traders do not know where they stand and are therefore at a considerable disadvantage as against the very large undertaking with which they would otherwise hope to compete.
§ What the Amendment which, with my noble friend, I have put on the Marshalled List would propose is this. I omit the first and last parts of it and I will explain why later. By the second subsection which it contains it would provide the following proceeding. It would enable those persons who are desirous of entering into an agreement which might fall within the scope of 1556 restrictive practices legislation to get, as it were, anterior clearing if, before they conclude the agreement—so the Amendment runs—they refer it to the Director and submit any information in connection with it that he may desire. He may, before the agreement is entered into, report to the Secretary of State that, because of the small scale or otherwise insignificant character of the agreement, it is his view that either the agreement is not one which need be registered or, if it is registered, it is an agreement in respect of which it would not be appropriate to bring proceedings in the Restrictive Practices Court. The Secretary of State may on the report of the Director direct either that the agreement shall not, when entered into, have to be registered or that, even if it has to be registered, it is not one which should be regarded as amenable to the processes of the Restrictive Practices Court.
§ The first thing that I should like to emphasise is that this proposal really only effects a very marginal change in the existing law. There are already two provisions of existing legislation which go nearly, but not quite, the whole length which is envisaged by my Amendment. Under Section 9 of the Restrictive Practices Act 1968, after an agreement has already been entered into—and I emphasise that as being the basic difference between that provision and my Amendment—it may be pronounced upon by the Board of Trade, and the Board of Trade may, if they think it an unimportant agreement, give directions discharging the Registrar of Restrictive Practices from taking proceedings in the Restrictive Practices Count with regard to that agreement. That is already part of the law, so that that particular provision would be extended only slightly by the Amendment which I have put on the Marshalled List, and it would be extended in this sense: the Amendment enables the dispensation to be pronounced before the agreement is entered into. That is a very radical and vitally important distinction. That is one of the two provisions to which I refer.
§ The other of the two is Section 10 of the European Communities Act 1972. That, in form, is rather similar, so far as this particular aspect of it is concerned, to Section 9 of the 1968 Act. Section 10 provides that an agreement 1557 may be amenable to the Restrictive Trade Practices Acts even although it may have received a clearance for the purposes of the European Communities provisions. Under Article 85 of the Rome Treaty (which in effect is the European Communities version of anti-restrictive practices legislation) there may be a wholesale clearance announced for a wide variety of types of agreement. What Section 10 of the 1972 Act does in its opening words is to say that, although there may have been such a clearance under the provisions of Article 85, nevertheless the agreement in question may be one to which Part I of the Restrictive Trade Practices Act 1956 still has application.
That is the first part provided by that section, but one then comes to what is relevant for the purpose of my Amendment when one reads on and finds that:
The Restrictive Practices Court may decline or postpone the exercise of its jurisdiction".
The registrar may refrain from taking proceedings before the court in respect of the agreement if he thinks appropriate".
§ Therefore one finds in Section 10 of the 1972 Act a provision in relation to an agreement cleared for the purpose of Article 85 of the Rome Treaty very analogous to the provision which is at present contained in subsection (2) of Section 9 of the 1968 Restrictive Trade Practices Act. Both those provisions—this I would respectfully emphasise—contain one serious disadvantage which it is the purpose of my Amendment to remove. They both operate only after the agreement in question has already been entered into. They contain this serious defect: that parties, and particularly in this context small companies, who are minded to negotiate agreements of this sort cannot find out beforehand whether or not there will be under Section 9(2) of the 1968 Act or, as the case may be, under Section 2 of the European Communities Act 1972, a dispensation granted after the agreement has come into force. That makes for a great deal of uncertainty, and the major change which the Amendment I propose would introduce is that clearance can be obtained for that.1558
§ The Registrar and the Department are helpful now. They do their best to try to assist traders who are in that situation of uncertainty as to how the restrictive practices legislation will affect them by giving an intimation of what is likely to happen, and what is the likely view they will take. That, however, in the very nature of things, is bound to leave those concerned in a state of uncertainty. The Registrar cannot bind himself, nor can the Department bind itself. It may have to take a different view at a later stage when the agreement has been entered into. So the position as left by those two legislative provisions at present in force is unsatisfactory, because it creates a state of great uncertainty.
§ I endeavoured to obtain a little material to show how small companies are affected. Of the 3,000, or thereabouts, agreements which were on the register at one time, I am told that no less than three-quarters affected small firms, although some affected large firms as well. Most of those agreements have now come to an end, but some 10 per cent. still remain, and those 10 per cent. affect the small firms, and make it much more difficult for them to coalesce or to act together in co-operation in order to try to compete with their larger and more powerful competitors. Any step which can be taken to make it more possible for them to get together, to work together and provide some competition for the large multiple firm is, in my submission to the Committee, very much to be desired. This Amendment is designed to produce just that.
§ I think it right also to refer to subsection (2) of Section 7 of the 1968 Restrictive Trade Practices Act. That subsection provides that the obligation to comply with the requirement to register, where registration is necessary, is an obligation breach of which may give rise to a legal action for damages. The consequence therefore of finding oneself in this state of uncertainty may be extremely expensive for those concerned: they may find themselves involved in civil proceedings for damages for failing to register. It is crucial, in my submission, from their point of view, that they should know where they are before the agreement is entered into. It is that that this Amendment is designed to achieve.1559
§ I therefore move this Amendment in the hope that your Lordships will think it is desirable primarily to introduce certainty where uncertainty now prevails and constitutes a major obstacle to groups of small companies which wish to enlarge the scope of their activities and make themselves more competitive vis-à-vis their larger competitors.
§ The second objective—and it was for this reason that I cited the European Communities Act—is to try to deal with a situation which may arise when you get what is in effect a conflict between the effect of the Rome Treaty and the English legislation applicable. It is really not in the public interest, I submit, that you have a number of agreements or categories of agreement in respect of which under Article 85 a dispensation may have been pronounced, and although the parties to those agreements are perfectly free to operate so far as the Rome Treaty provisions and Article 85 are concerned, they nevertheless may find themselves—not necessarily will find themselves—caught by the registration provisions of the Restrictive Practices Act in this country. You would there get a conflict of jurisdiction which, if it can be, should be avoided.
§ I am not suggesting by this Amendment that one should in any sense repeal the provisions of Section 10 of the 1972 Act. The two types of legislation will, so far as my Amendment is concerned, continue to be effective; that is to say, the Rome Treaty legislation and the restrictive practices legislation. All I am asking again is that when you have parties who wish to enter into an agreement affecting their operations, if they can be regarded as wholly free to carry out the agreement in so far as Article 85 is concerned, it should be possible before the Agreement is entered into for the Director to give them a similar dispensation so far as British legislation on restrictive practices is concerned. Again, therefore, what I seek to do by the Amendment is to bring some degree of harmony between the Rome Treaty legislation and the relevant British restrictive practices legislation, and to bring it about that that harmony should be established before the actual agreement is entered into; to remove the uncertainty which exists, both with regard to the operation of Section 9 1560 of the 1962 Act and with regard to the operation of Section 10 of the 1972 Act.
§ Those are the objects of the Amendment which I propose, and I hope that your Lordships will think, first, that it is useful, and it removes uncertainty, which in itself is a pest to almost everybody who wants to plan operations for the future; secondly, that it will help, in particular, the small traders who wish to act in unison and create stronger competitive conditions so that they further the general purpose of this legislation; and thirdly, that it does not really make any great innovation in the existing law: all it really does is to say that you may have certainty before you enter into the agreement, instead of having to wait until after you have entered into the agreement and then not know whether you will get the dispensation for which you ask.
§ Finally, I should like to add a word on the purely technical part of the Amendment. I seek to eliminate from Section 9(2) the word "significance"—because it is very doubtful what that word means—and to substitute the words which are much more clear, "of such nature or importance". That is merely a question of drafting, as is the second Amendment. I beg to move.
§ THE EARL OF LIMERICK
I am sure the Committee will be grateful to the noble Lord, Lord Stow Hill, for the full and clear way in which he has explained the purpose of the Amendment. I hope that I might seek to deal with this matter in non-legal terms. I believe there are issues which can be explained without going far into legal technicalities. However, I think it might be helpful if I began by explaining how Section 9(2) of the 1968 Act works. I really cannot do better than to quote from the Registrar's Fifth Report, pages 4 and 5, where he said:The possibility of making a representation under Section 9 is always considered, whether or not the parties requested it, before an agreement is referred to the Court. I would not be prepared to make a representation if the agreement appeared capable of causing detriments whether to purchasers or to other traders of which the Court would be likely to take account if the agreement came before them. Thus a primary consideration is whether the agreement is likely to reduce competition between those affected in any 1561 respect in which it is to the advantage of consumers, whether by affording them a useful choice or by acting as a spur to the efficiency of those engaged in the trade or industry. We also take steps to ascertain whether the agreement has or is likely to produce discriminatory or other unfair results... The agreements dealt with form a heterogeneous collection... They show I think that the legislation is sufficiently flexible to allow agreements of many kinds to be continued without reference to the Court provided of course that they are not detrimental in the sense above described.That is a somewhat lengthy quotation, but I thought it was worth giving, as it shows the way in which the Registrar approaches his task. I think at this point it would not be inappropriate to pay tribute to Sir Rupert Setch, who has been the Registrar of Restrictive Trading Agreements since the post was created by the Restrictive Trade Practices Act 1956. I feel sure that all your Lordships would wish to express your appreciation of the effective way in which he has carried out his task during those years.
I understand from what the Registrar says that the existing wording of Section 9(2) has never prevented him making a representation in any case in which the circumstances were such that he would wish to do so. He has never felt that the present phraseology placed any embarrassing limitations on him.
Referring specifically to the first part of the Amendment, it seeks to replace the words "of such significance" in Section 9(2) of the 1968 Act with the words, "of such nature or importance". I must beware of legal terms, but if there is a subtle difference in this context between the words "significance" and "importance", I fear it escapes me. To me, the words have the same meaning, and there appears to be no substance in the change. However, I am sure the noble Lord will agree that that is not a substantial point as regards his Amendment: his Amendment is rather more concerned with the block exemptions. In proposing the use of the word "nature" the noble and learned Lord, Lord Stow Hill, alleges that there are restrictions of a particular kind which may as a general rule be considered not to merit investigation by the Restrictive Practices Court—in other words, something akin to the block exemptions which are given to certain classes of restrictive agreements under the pro- 1562 visions of the Treaty of Rome which he cited.
If I might follow him on this point, I think the Committee will recognise that the European Communities need a block exemption procedure, because a vast range of agreements are swept up by the working of Article 85 of the Treaty of Rome. On the other hand, our domestic legislation defines precisely the types of restriction which are presumed to be against the public interest. With great respect—this is really a legal argument—I would suggest to the noble Lord that I do not see a conflict here. It is a case where our municipal legislation is, for domestic reasons which have been accepted by Parliament, more exacting than European legislation; and I see no reason why it should not continue in that way.
It could be said, therefore, that a large block of agreements has already been exempted under the United Kingdom procedure in respect of all restrictions not covered by Part I of the 1956 Act—for example, exclusive dealerships are caught by Article 85 of the Treaty of Rome and not by domestic legislation. If I may recall what I said in reply to the noble Lord, Lord Nathan, at the end of our debate on Second Reading, there are a hundred-odd agreements which have been the subject of directions under Section 9(2), and these are far from homogeneous—your Lordships will recall that the Registrar himself used the word "heterogeneous". Furthermore, in many of these cases the parties had to remove objectionable features of the agreements before the Registrar was prepared to make appropriate representations to the Secretary of State. So there is no coherent category of registrable agreement which could be assumed to be harmless to the public interest. Where we have found that a particular agreement has consistently had insufficient significance to justify a reference to the Court, we have sought to remove it altogether from the scope of the legislation. An example of this is to be found in Clause 96, "Subscriptions to trade associations."
The proposed new Section 9 of the 1968 Act seeks to enable the Director and the Secretary of State respectively to make representations and give directions in 1563 respect of proposed agreements and to free them from registration or from reference to the court. In the case of freeing the proposed agreement from registration, the Amendment does not lay down any criteria, and for that reason alone I think we should find it difficult to accept. If the idea is that the terms of the agreement should not be made public, then I am afraid that is also something which the Government would find unacceptable.
Even though the restrictions in an agreement may not be of such significance as to call for investigation by the Court, it is—and I think it should remain—the practice that particulars of the agreement should be on a register which is open to inspection by the public and the Press. If there are overriding reasons for preserving confidentiality of agreements, then they may be placed on a special section of the register which is not open to inspection. However, if secrecy is not the aim, I cannot see what benefit the parties would derive, as they will have already furnished to the Director all the particulars which he would require for the purposes of registration.
So far as the freeing of the proposed agreement from a reference to the Court is concerned, the looking forward, I think I could do no better, again, than to quote from the Registrar—this time from page 6 of his latest report. He says there:Despite of a desire to be as helpful as we can, it is not always possible to reach a conclusion whether an agreement should be referred to the Court or not until it has been brought into operation. In many cases we ask customers whom we believe to be representative about the practical effects of the agreement upon them, and generally this cannot be done until the agreement has been made and registered so that they can see its terms.Essentially, the point is that we do not and cannot know the effect of an agreement until it has been in operation for a while and there has been a chance to see what effect it has on the people affected by its terms.
I hope I have said enough to persuade the noble and learned Lord, Lord Stow Hill, that there would be substantial objections to accepting his Amendment as it stands. I should certainly like to look again at what he said. But I must admit that, having listened to him, it seems to me these objections are fairly formidable in nature.
§ LORD DONALDSON OF KINGS-BRIDGE
Before my noble and learned friend takes up the serious part of the argument, I must refer to a question of English language, which interests me passionately. I could hardly believe my ears when the noble Earl said that he could see no difference between "important" and "significant". I think it is important that he should see some difference; it may be significant that he does not.
§ 8.31 p.m.
§ LORD STOW HILL
I am grateful for that assistance. I should like wholeheartedly to endorse the play of language on that. I am sorry that the noble Earl has not begun to satisfy me. I do not want to be truculent, and he knows how much I respect the endeavours he makes consistently with unfailing courtesy to satisfy those who put questions to him.
May I take the arguments that he put? First he quoted from the Registrar's report. May I at the outset identify myself with the tribute he paid to the Registrar, whom I have known for many years and have always admired. What that report says is: "I do exactly what you are asking me to do in the Amendment, unofficially; I do it after you have entered into the agreement. I do not say that I could not equally do it before you entered into the agreement." He does not deal with the question of uncertainty at all. He can only make any final pronouncement after the agreement is entered into. What he is saying is, as a matter of courtesy to the parties, that in order to assist them he, as one would expect from him when one knows him, does his best to assist them. In other words he unofficially does what the Amendment would seek to enable him formally to be able to do officially. The citiation did not disclose any obstacle, it was a reinforcement of the argument which I propounded. I am asking that the function he exercises as a matter of courtesy should be a function which is conferred upon him by the terms of the Statute when it is enacted. The first part of that argument, if I may respectfully say so, did not seem to get near forming any answer or indicating a substantial objection.
Then the noble Earl cited another report of the Registrar, saying that sometimes it is necessary to see how the agreement operates before you can decide 1565 whether it is one in respect of which you can pronounce a dispensation. If people ask him, before an agreement is entered into, to give it a dispensation and he feels that because of the nature of the agreement he cannot confer a dispensation until he has seen how it works, let him say so. But often there will be a case when it is perfectly clear and he will not have to say that; he will be able to say, "Certainly I will make a recommendation to the Secretary of State. This is an agreement which should not be put upon the register".
Thirdly, the noble Earl said there was a question of secrecy. But not a bit; it is a question of certainty. I thought I had emphasised that over and over again, almost ad nauseam. I apologise for using the word again. It is a question of know in advance where you stand. That is the object of it. I hope he will not let the question of secrecy influence him in the least. The noble Earl said that he would like to read the argument that I have used. I hope he will not think me discourteous if I say that the answer he gave was one which I found wholly unsatisfactory. It did not begin to meet the point I was seeking to raise. The point—and I emphasise it once more—is that this enables what the Registrar does now as a matter of kindness to be done officially before the agreement is entered into so that those affected by it may know definitely where they stand. If it is not possible to do that until the Registrar sees how it works, he can say so. He can say, "I am sorry, I cannot give you this dispensation. I want to see how it works out and then I will consider it."
Those are the answers to the noble Earl's argument. I hope he will he able to say that he is not rejecting this Amendment out of hand, and that he will consider it further, and perhaps come back with something on Report. It is important because the existing legislation imposes an obstacle on small traders particularly, and it should be removed and could so easily be removed by this slight change in the law. I hope that the noble Earl will say that he will give this further consideration.
§ THE EARL OF LIMERICK
Of course I repeat my assurance to the noble and learned Lord, Lord Stow Hill, that I will look carefully at what he has said and 1566 at the points that he has stressed. I thought I had come nearer to answering them than he seemed to believe, but I will look with great care at what he said. If I may take up one point, he was founding his argument on the question of small firms and the inconvenience and uncertainties in which they find themselves. We shall come to this more directly in the following Amendment that the noble and learned Lord will be proposing, and it might be better followed up there. I just remark in passing, that the figures he quoted, the three-quarters of the 3,000 agreements involving small firms, are those quoted in the Bolton Report. They were very much a part of the facts and considerations before the Bolton Committee, but they did not apparently lead that Committee to the conclusion which is suggested in the Amendment that the noble and learned Lord has been explaining. I say that in passing and I will look with great attention at what he said.
§ LORD STOW HILL
In those circumstances—and I am most grateful to the noble Earl—may I ask the leave of the Committee to withdraw the Amendment?
§ Amendment, by leave, withdrawn.
§ Clause 99 agreed to.
§ Clause 100 [Examination on oath of certain employees of bodies corporate and unincorporated trade associations]:
§ LORD STOW HILL moved manuscript Amendment No. 31A:
Page 73, line 9, at end insert—
("( ) Provided that nothing herein contained shall impose any obligation on a barrister or solicitor employed by the body corporate for the purpose of advising it on its legal rights and obligations to make any disclosure in respect of which he would otherwise be entitled to claim professional privilege.")
§ The noble and learned Lord said: At first I was not aware that I had put down a manuscript Amendment but now I recognise it, may I explain what happened? I was asked this morning to put down an Amendment on these lines, and I did so thinking that there was not the slightest likelihood of its being reached. Having put it down, it never occurred to me that it would be convenient for the Committee to take it to-day. It being before the Committee, if I may have the 1567 permission of the Chair and the Committee to raise it, I will gladly argue it.
§ It is quite a short point, and it relates to the requirement to give information when asked for under Clause 100 of the Bill. The officer of the company who may be called upon to give information may be a barrister or a solicitor who is in the whole-time employment of the body corporate which is required under the provisions of Clause 100 to give the information asked for. This Amendment seeks to preserve the obligation of professional secrecy. The question arises because Clause 100 imposes what is, in effect, a new obligation on companies concerned to provide information when called upon. Very often it is the case that on the staff of the company there may be a solicitor or barrister who is a full-time employee of the company. It is at the suggestion of the Law Society that I have put down this Amendment. It does not really involve any great question of principle. I would have thought that in any event there was very little likelihood of a legal professional adviser being required by the provisions of Clause 100 to breach the obligation of professional secrecy. That is an obligation which I should have thought was of very long standing in our social arrangements. We respect, in almost every possible context, that between yourself and your legal adviser there is this obligation of secrecy. An Amendment, broadly speaking, on these lines was put down when the matter was being discussed in another place, and the Amendment then took the form of excluding barristers and solicitors whole-time employed by companies and called upon to give information from being liable to be called to give the information required.
§ The Minister who replied in another place felt unable to accept an Amendment in that form because he said that, after all, to do so you may start the practice of channelling certain information to your legal advisers which they are not to disclose, and thereby in effect evading the obligation which Clause 100 puts upon you. I have sought, in drafting and framing the Amendment which is being considered by the Committee, to avoid that possibility. All I say is 1568 that the barrister or solicitor in question, certainly if he is the repository of the information, should be liable to be sent for and to have to give the information required, subject always to this: that the very important obligation of professional secrecy which every barrister and solicitor holds for his client should be respected. That is all it does.
§ It is really designed to prevent Clause 100 by a side wind, as it were by accident, producing a situation in which barristers and solicitors whole-time employed by companies might be under a statutory obligation to break the obligation of professional secrecy which they are always regarded as owing to their clients. Therefore this Amendment prevents the possibility that the effect of Clause 100 might be to put a barrister or solicitor, whole-time employed, in a position in which by Statute he was obliged to disclose matters covered by professional privilege. That is the sole object of the Amendment and I hope that Ministers will feel able to accept it. It may be that it wants further looking at from the drafting point of view; I hope not. If it does, certainly I will do my best to try to correct it in such a way as to harmonise with any views that the Government may hold about it. I hope that the Government may feel able to accept it or something on those lines.
§ THE EARL OF LIMERICK
I think in the circumstances it would be no surprise to the House if I say that I have not had much time to consider this Amendment, but it would be helpful, I think, to say something very briefly about it. It is my understanding that salaried legal advisers employed whole-time by a single employer, despite the fact that they are also servants and agents of their employer, are regarded by the law as in every respect in the same position as those who practise on their own account. Communications between them in the capacity of legal advisers to their employer who is their client is the subject of legal professional privilege. It may come as a surprise to the noble and learned Lord, Lord Stow-Hill—it certainly came as a surprise to me—that I am able to cite a case for this authority. I think it was established recently, and it is the case of Alfred Compton v. Customs and Excise Commissioners. In every case in which such 1569 privilege is claimed, whether the legal adviser concerned is a salaried employee or an independent practitioner, the court will examine the merits of the claim and determine whether it is well founded in respect of any particular communication. We are therefore inclined to think that this Amendment is unnecessary, but I clearly should like time to consider it properly and to see whether that feeling is sustained on examination.
Section 15 of the Restrictive Practices Act 1956 merely empowers a court to examine on oath certain persons or to require them to produce documents as appropriate. We consider that the court would exercise its discretion so as not to require the disclosure of privileged information or documents. Having said that, I should like to look at the point much more carefully, and I hope that this will be agreeable to the noble and learned Lord, Lord Stow Hill.
§ LORD STOW HILL
I am much obliged to the noble Earl. The Law Society has very carefully considered Compton's case, and the apprehension they felt was that this legislation might overrule in this particular context Compton's case. Really this is a precautionary Amendment. If it is perfectly obvious that the Bill cannot overrule that case, then the Amendment is unnecessary. I cannot help feeling myself that it might be open to argument hereafter that the provisions of Clause 100 may have the effect of overruling Compton's case in this particular context. I am most grateful for what the noble Earl has said, and in the circumstances would ask the Committee's permission to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Clause 100 agreed to.
§ Clause 101 [Extension of certain powers of Restrictive Practices Court]:
§ On Question, Whether Clause 101 shall stand part of the Bill?
§ LORD KENNET
I agree that Clause 101 should stand part of the Bill, but perhaps this is an opportunity for making the following remarks. It is a thin House, it is getting late and I have no doubt that the Government share the wish of the whole Committee to go as 1570 fast as we possibly can; and while I should not wish to suggest to the Government how much they ought to tell the Committee about each of the numerous Amendments they still have to introduce, nor can I speak for my noble friends behind me, it may be for the convenience of the Government and the Committee as a whole to know that the Opposition as such does not intend to oppose any of the Amendments which the Government still have to move.
§ LORD DRUMALBYN
I am obliged to the noble Lord. Is the noble Lord proposing to move, or is someone proposing to move, Amendment No. 32A and so on?
§ Clause 101 agreed to.
§ Clause 102 agreed to.
THE EARL OF LIMERICK moved Amendment No. 32:
After Clause 102, insert the following new clause:
§ Industrial and Provident Societies and their subsidiaries
§ "In section 36(1) of the Act of 1956, in the definition of "inter-connected bodies corporate", after the words "all other bodies corporate which are its subsidiaries within the meaning of section one hundred and fifty-four of the Companies Act 1948 "there shall he inserted the words" or (in the case of an industrial and provident society) within the meaning of section 15 of the Friendly and Industrial and Provident Societies Act 1968"."
§ The noble Earl said: For the purpose of Sections 6 to 8 of the 1956 Act (which defines the agreements to which Part I of that Act applies) two or more persons being inter-connected bodies corporate shall be treated as a single person. The term "interconnected bodies corporate" is defined in Section 36(1) of the 1956 Act as bodies corporate which are members of the same group, and "group" is defined by reference to Section 154 of the Companies Act 1948.
§ I am sure your Lordships will agree that this is an eminently sensible provision. The policy of such groups is usually directed centrally by the parent company. The subsidiaries, in conforming with that policy, have no need to make agreements between themselves: any concerted action can be achieved by direction. This has a parallel in the 1571 central management of a multiple concern which can instruct the branch managers. We now propose in this Amendment to extend the concept of a group to an industrial and provident society and its subsidiaries. This seems a logical step and it is made easier now that the Friendly and Industrial and Provident Societies Act 1968 has introduced appropriate definitions of "subsidiary" which did not apply when the Restrictive Trade Practices Act 1956 was enacted. I beg to move.
§ Clause 103 agreed to.
§ Clauses 104 to 107 agreed to.
§ Clause 108 [Provisions as to certain associations]:
§ THE EARL or LIMERICK: Amendments Nos. 34, 35 and 36 were explained along with Nos. 29 and 30. I beg to move.
§ Amendments moved—
§ Page 79, line 38, leave out ("the following provisions") and insert ("subsections (2) to (5)").
Page 80, line 6, at end insert ("and
(c)is not a society which is for the time being approved under section 6A of the Act of 1956").
Page 81, line 6, at end insert:
("( ) In relation to a society which is for the time being approved under section 6A of the Act of 1956, but which, in consequence of an order made under section 103 or section 104 of this Act, is a society to which the preceding provisions of this section would apply if it were not so approved, subsection (4) of that section (which confers power on the Secretary of State to withdraw any such approval) shall have effect as if in that subsection—
§ Clause 108, as amended, agreed to.
§ Clauses 109 to 111 agreed to.1572
§ Clause 112 [Application of provisions of Acts of 1956 and 1968]:
§ THE EARL OF LIMERICK moved Amendment No. 37:
Page 86, line 43, at end insert—
("(5) In section 9 of the Act of 1968 any reference to particulars entered or filed in the register pursuant to Part I of the Act of 1956 shall be construed as including a reference to particulars so entered or filed pursuant to any provisions of Part I of the Act of 1956 as applied by subsection (1) of this section.")
§ The noble Earl said: This Amendment rectifies an omission. Clause 112 deals with the application of the provisions of the Restrictive Trade Practices Acts 1956 and 1968 to the service agreements which will in the future be brought within the scope of the legislation under Part X of the Bill. It was suggested to the Government in another place that the clause was defective and that it did not go far enough in applying the provisions of the earlier legislation. In particular it was suggested that it would not enable the useful procedure in Section 9 of the Restrictive Trade Practices Act 1968 to be used for agreements registered under The new provisions. The Government promised an Amendment to deal with the matter and this is the Amendment. The procedure of Section 9 of the 1968 Act has been generally welcomed, as was clear from the remarks of the noble Lord, Lord Nathan, during the Second Reading of this Bill. It is obviously desirable that it should be clear that this useful procedure is applicable also to the agreements brought under control by the Bill. I beg to move.
§ Clause 112, as amended, agreed to.
§ Schedule 10 agreed to.
§ Clause 113 agreed to.
§ LORD DRUMALBYN
I think we have made quite good progress to-day. I beg to move that the House do now resume.
§ Moved, That the House do now resume.—(Lord Drumalbyn.)
§ House resumed.