Net Book Agreement (Hansard, 9 July 1992)

§ The Minister of State, Scottish Office (Lord Fraser of Carmyllie)
My Lords, the operation of the Net Book Agreement is essentially a commercial matter between publishers and booksellers. The agreement falls within the Restrictive Trade Practices Act 1976 and as such is a matter for the Director General of Fair Trading and, if appropriate, the Restrictive Practices Court to consider.

§ Viscount Montgomery of Alamein
My Lords, is my noble friend aware that it is curious that the Government should be encouraging a restrictive practice of this nature to continue? Furthermore, is he aware that this morning the European Court appears to have ruled that the fixing of book prices is wholly illegal?

§ Lord Fraser of Carmyllie
My Lords, in their manifesto the Government signalled their intention to tackle anti-competitive and restrictive practices and to introduce new legislation giving stronger powers to deal with cartels. However, as yet time has not been found for such a Bill. The agreement is essentially a commercial matter but I am aware of the decision that was handed down today by the court of first instance in Europe. I have seen in summary a report of its judgment, which is erroneous. It appears to indicate that the Net Book Agreement is illegal within the 1264 United Kingdom. In fact, all that it has indicated is that in so far as the Net Book Agreement affects trade between member states it contravenes Article 25.

§ Lord Strabolgi
My Lords, is the Minister aware that if the Net Book Agreement were abolished it would be difficult for small booksellers to continue trading and that would not, therefore, be in the best interests of consumers, particularly in small towns and outlying areas?

§ Lord Fraser of Carmyllie
My Lords, I understand that this is the fourth or fifth time that we have rattled around this particular track dealing with the Net Book Agreement. As the noble Lord will be aware from previous discussions, there are sharply conflicting views about the effect on smaller booksellers outwith the major cities if the Net Book Agreement were to be abolished.

§ Lord Beloff
My Lords, I declare a double interest as a writer and a reader of books. Is the Minister aware that the noble Lord, Lord Strabolgi, is right and that the current situation is the best possible situation for us as readers and writers? Is the Minister further aware that the absence of a Net Book Agreement in the United States is one of the reasons why that once great country is sinking into an intellectual desert?

§ Lord Fraser of Carmyllie
My Lords, I am reassured that my prediction that there would be sharply conflicting views in this House has quickly come about.

§ Lord Holme of Cheltenham
My Lords, does the Minister agree that the time has come to shift the burden of proof under the Restrictive Trade Practices Act? Does he further agree that any industry which seeks to maintain a price-fixing agreement—that is, in the end, what the Net Book Agreement is—should have the burden of proof placed upon it to show that an anti-competitive measure is not against the public interest?

§ Lord Fraser of Carmyllie
My Lords, I have already pointed to the signalling of an intention in the manifesto. I am sure that the noble Lord recollects that when in 1989 the Government published their White Paper entitled "Home Markets" the indication was that the changes which might be introduced would bring about a reversal of the presumption along the lines mentioned by the noble Lord.

§ Lord Goodman
My Lords, is the Minister aware that the Net Book Agreement has the support of the Publishers Association and the great majority of booksellers in this country? Is he aware that the attack on it is entirely inspired by one large wholesaler of books which sees possible advantage to itself if the small booksellers disappear?

§ Lord Fraser of Carmyllie
My Lords, I am aware of both the points which the noble Lord makes; namely, that there is support for the agreement but that one company takes an opposite view. As I have indicated previously, there are sharply conflicting views on the value to the reading public and in regard to the distribution to bookshops around the country if the 1265 agreement were to be abolished. It is not for government to resolve that matter but there may be an opportunity to look at what test must be applied in determining whether such an agreement is a restrictive practice.

§ Lord Monson
My Lords, does not the Minister agree that price riggers the world over invariably claim that their price rigging is in the public interest?

§ Lord Fraser of Carmyllie
My Lords, that is so. However, if one looks to the experience of other countries, yet again one sees sharply conflicting views on the worth of an agreement. For example, France abolished such an agreement and then reintroduced it some three years later.

§ Earl Russell
My Lords, while not disagreeing with what my noble friend Lord Holme of Cheltenham said about competition, I ask the Minister to consider that the consumer is not a single animal but an extremely multifarious animal. Will he further consider an area in which I declare an interest? The academic consumer is not always in the same position as other consumers. That is a small market and, in the case of students, inevitably to a degree it is a captive one. Will the Government consider as a separate question the effect of any abolition on academic publishing?

§ Lord Fraser of Carmyllie
My Lords, the Government's view is that it would be wrong, because this is essentially a commercial matter, to deal specifically with the Net Book Agreement. However, a more appropriate way to approach the matter may be along the lines indicated by the noble Lord, Lord Holme; that is, the test that should apply, where such restrictive practices are in place, is whether to have the presumption reversed.

§ Lord Peston
My Lords, I was rather puzzled by the intervention of the noble Lord, Lord Beloff. Academic standards in the United States of America far exceed those currently achieved in universities in this country. I believe that the first book published net was Alfred Marshall's Principles of Economics, but will the noble Lord tell the House what there is about books that makes it appropriate for them to be published net whereas, for example, classical records and tapes are not subject to the same constraints? Other than a suggestion of a conspiracy against the public, what enables them to be singled out in that way?

§ Lord Fraser of Carmyllie
My Lords, there is such an agreement. I believe that the noble Lord will appreciate that in 1962 the Net Book Agreement was considered by the restrictive practices court and at that time considered that it was not against the public interest. At a later stage, in 1989, the Director General of Fair Trading carried out an extensive investigation into the book trade. He concluded that there was an insufficiently strong basis to justify making an application to the court to review its earlier decision. It is a matter for consideration by the courts and, as I have indicated previously, it is not for the Government to intervene in that one commercial area.

§ Baroness David
My Lords, does the noble and learned Lord agree that price rigging is hardly a fair account of what happens under the Net Book Agreement? It is entirely a matter for the individual publisher as to whether or not he publishes a book net?

§ Lord Fraser of Carmyllie
My Lords, indeed it is an agreement between both publishers and booksellers. Of course, publishers have a considerable leeway in determining whether or not to take advantage of what is provided for under the agreement.

§ Lord Goodman
My Lords, may I suggest to the Minister that what makes books unique is authors? That agreement is much in the interests of authors. A round robin survey would show that authors almost universally support the agreement.

§ Lord Fraser of Carmyllie
My Lords, I am certainly aware that authors, in common with the majority of publishers, believe that the agreement should be maintained. As the noble Lord will gather from the exchanges during the course of our discussions, extremely strong views are held on both sides of the debate.