Book Industry: Pricing (Hansard, 4 July 1991)

§ The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Reay)
My Lords, under the Resale Prices Act 1976 review of the Net Book Agreement is a matter for the Restrictive Practices Court, on application by the Director General of Fair Trading or a publisher. The Net Book Agreement does not oblige publishers to set the retail price for all books.

§ Viscount Montgomery of Alamein
My Lords, I thank my noble friend for that reply, which was not wholly informative. Is he aware that in the past decade the retail price of books has far outstripped the retail prices index, despite great improvements in printing technology? Furthermore does he agree that that seems to indicate that a cartel, approved by Her Majesty's Government, is operating against the interests of consumers?

§ Lord Reay
My Lords, in 1962 the Restrictive Practices Court made an order exempting the Net Book Agreement from the Restrictive Trade Practices Act 1956 and upheld that decision in 1968 in relation to the Resale Prices Act 1964. The court concluded that the Net Book Agreement was in the public interest since its abolition would lead to fewer and less well equipped stock-holding bookshops, higher prices for books and fewer titles being available to the public. Ministers have no power to intervene under the present law. It is for the Director General of Fair Trading to come to his own decisions based upon investigation of the relevant circumstances in the book industry.

§ Lord Strabolgi
My Lords, is the noble Lord aware that, if the Net Book Agreement were abolished, it would have an adverse effect on smaller booksellers, particularly those in outlying and rural areas?

§ Lord Reay
My Lords, there must be strong reasons for supposing that most book prices would come down if the Net Book Agreement were to be abolished, as competitive price cutting was permitted between booksellers. In turn, that could be expected to lead to the sale of more books.
On the other hand, that development would put pressure on the smaller specialist booksellers. The price of more specialist books might also rise as an opportunity for cross-subsidy was removed and that might lead overall to fewer titles being published. But that is a matter of speculation.

§ Lord Holme of Cheltenham
My Lords, am I right in thinking that until fairly recently the Government had proposed to bring forward legislation on restrictive practices? The Net Book Agreement is certainly a restrictive practice. What has happened to the Government's commitment to legislate on restrictive practices?

§ Lord Reay
My Lords, no place has yet been found in the legislative programme for a Bill. However, as my right honourable friend the Secretary of State confirmed in his speech to the Law Society as recently as 12th June, the Government remain committed to strengthening legislation in that field, in particular in so far as it concerns the director general's investigatory powers and sanctions.

§ Lord Jenkins of Putney
My Lords, does the noble Lord agree that it is difficult to make a living as a private bookseller and that small, privately-owned bookshops are closing down already? Is he aware that if the protection of the existing legislation were removed the continued existence of the small private bookseller would be in jeopardy?

§ Lord Reay
My Lords, I acknowledged that pressure would be put on smaller specialist booksellers by the abolition of the NBA. The higher prices that some specialist bookshops charge may well be justified by the services that they offer, their ambience and the personal attention, which they would be able to continue to give.

§ Lord Annan
My Lords, does the noble Lord agree that whatever the effect of the abolition of the Net Book Agreement might have upon booksellers, it would have an extremely beneficial effect upon small authors?

§ Lord Reay
My Lords, many interests are represented in this House. I take note of the noble Lord's remarks.

§ Lord Williams of Elvel
My Lords, is the noble Lord aware that many of his predecessors as Ministers in the Department of Trade and Industry have come to the Dispatch Box and given the same reply to the question posed by the noble Lord, Lord Holme of Cheltenham, as the Minister gave today about restrictive trade practice legislation? Is it not clear that the Net Book Agreement is one example of an agreement that needs at least to be considered again and updated? That can only be done if the Government find legislative time to implement the proposals in their excellent White Paper of 1989. When will that happen?

§ Lord Reay
My Lords, as I said, we intend to legislate. However, it depends on time being available. One of the matters that any new legislation has to address is the treatment of agreements upheld by the restrictive practices court.

§ Lord Monson
My Lords, does the noble Lord agree that the argument that abolition of retail price maintenance would act against the public interest is precisely the same argument as was employed by retailers and manufacturers in the 1960s when Mr. 1105 Edward Heath was in the process of abolishing retail price maintenance on most items? Did that not turn out to be a false argument? Are books in a different category?

§ Lord Reay
My Lords, as I pointed out earlier, under the Resale Prices Act it is generally unlawful for suppliers of goods to impose minimum resale prices. However, Section 14 of the Act provides for individual classes of goods to be exempted if it can be shown that that would best serve the public interest.

§ Lord Campbell of Alloway
My Lords, is the Minister aware that books are very different from other items? They were held to be such by the restrictive practices court long ago. That is why the exemption was granted. Does he agree that that would not prevent a review of the situation some 12 years later?

§ Lord Reay
My Lords, it is indeed the case that the only other current exemption to the Act is in relation to certain pharmaceutical products.

§ Lord Williams of Elvel
My Lords, will the noble Lord undertake to maintain the net book agreement until my book is published?

§ Lord Reay
My Lords, I would do quite a lot to try to placate the noble Lord.