HL Deb 22 January 1976 vol 367 cc660-2

4.1 p.m.

Lord JACQUES rose to move that the draft Restrictive Trade Practices (Services) Order 1975, laid before the House on 9th December, be approved. The noble Lord said: My Lords, I beg leave to move the Motion standing in my name on the Order Paper. At the present time the restrictive trade practices legislation applies only to the supply and acquisition of goods. The purpose of this order is to apply it to commercial services. In 1965, the monopolies legislation was widened to apply to services. By the Fair Trading Act 1973 the then Conservative Government, with all-Party backing, gave the Secretary of State power to extend the restrictive practices legislation to cover commercial services. This order implements that power.

May I say something about the effects of the order. Restrictive agreements affecting such matters as charges, terms and conditions and market sharing will have to be registered with the Office of Fair Trading. The parties to the agreement can, of course, abandon the agreement rather than register it. Many did so after the 1956 Act which applied to the acquisition and supply of goods. Failure to register causes the agreement to be void and it would be unlawful to operate it. There is no criminal penalty, but any body who suffers as a consequence of the application of an unregistered agreement can take civil action for damages.

The Secretary of State may direct, in response to representations made by the Director General, that the restrictions in an agreement are insignificant and that no further procedure is necessary. Of course, in his consideration of the matter the Director General may have consultations with the parties and suggest modifications to their agreement so that he can make those representations to the Secretary of State. Since 1969, when this provision was introduced, it has been used in respect of 173 agreements. If the Director General cannot accept that the restrictions are insignificant, he must refer the agreement to the Restrictive Practices Court. Even at this stage the parties to an agreement may choose to abandon it rather than go to court. If, however, they insist upon their agreement it is for the parties to the agreement to show to the satisfaction of the court, using the criteria in the legislation, that the agreement is not against the public interest. Of some 3,000 registered agreements, only 37 have come to the court for full hearing, and of those only 11 have been found not to be against the public interest.

The Schedule to the draft order pro vides for certain exceptions which are made on two grounds: first, that the control or supervision is already adequate and that it is not necessary to apply this order to the particular service or, secondly, that registration and investigation would give rise to problems of international jurisdiction. This applies in particular to international transport such as shipping.

I should like to say something about the procedure leading to the order. Under Section 111(2) of the Fair Trading Act, the Secretary of State has to give 28 days' notice of her intention to make this order. Within that period representations can be made and the Secretary of State must take them into account. Notice was published in August 1974 and, since this was the first use of these powers, 56 instead of 28 days were allowed in which representations could be made. In point of fact, the representations that had been made up to the time of making the draft order have been duly considered.

Exclusions have been sought on three grounds. First, it has been contended that the order represents a fundamental interference with trade. This objection has been rejected on the ground that Parliament itself has already decided, by the Fair Trading Act, that services should be brought within the scope of the legislation. Secondly, in some cases it was pleaded that the agreement was an agreement of merit and that it was in the public interest. This objection was rejected on the ground that Parliament had decided that judgment in this matter was not for the Secretary of State but for the court. Thirdly, representations were made that the service in question was already subject to adequate control. As a result of these representations, the schedule of exemptions has been amended, and extended.

In conclusion, may I direct the attention of the House to the fact that over the last decade we as a community have spent an increasing part of our income on services. Agreements concerning the acquisition and supply of goods have long been subject to registration, scrutiny and further action, and it is now appropriate that such agreements relating to services should be subject to the same kind of scrutiny. My Lords, I commend this order to the House.

Moved, That the draft Restrictive Trade Practices (Services) Order 1975, laid before the House on 9th December, be approved.—(Lord Jacques.)

Lord BELSTEAD

My Lords, I welcome this order which will subject restrictive agreements for services to registration and, possibly, to judicial investigation. I have two questions for the noble Lord. First, have the Government made any calculation of the weight of work which this order will generate? I realise that many agreements will be found to be restrictive only when they have been registered, but I should like to receive an assurance that, so far as the Department can see, the order will not lead to an increase in Civil Service manpower or more public expenditure. Secondly, I trust that the Office of Fair Trading will be issuing and circulating guidance about this order. My Lords, with those two questions I support the passage of this order.

Lord JACQUES

My Lords, the weight of work will be relatively small. It has been assessed and the increase in public expenditure will not be significant. On the question of guidance, I imagine that some guidance will be issued by the Director General. However, I will certainly direct the point which has been made to the attention of my right honourable friend.

On Question, Motion agreed to.