§ Lieut.-Colonel Liptonasked the President of the Board of Trade when the Monopolies Commission's Report on cast-iron rainwater goods will be published; and if he will make a statement about the Report.
Mr. H. WilsonThe Report, which is unanimous, was published today. The Commission have found that the conditions to which the Monopolies and Restrictive Practices Act prevail as respects the supply in the United Kingdom of cast-iron rainwater goods. Over 90 per cent. of these goods are supplied by manufacturers belonging to the British Ironfounders' Association which restricts competition by operating three so-called "Rainwater Agreements," covering England and Wales, Scotland and Northern Ireland respectively. Moreover, at the distribution stage, about two-thirds of the goods are supplied by merchants who are signatories to these "Rainwater Agreements" and whose trade associations also operate so as to restrict competition.
The Commission describe a number of ways in which these "Rainwater Agreements" restrict competition, including the following. First, the participating manufacturers agree to maintain common minimum prices. Secondly, they fix common maximum discounts for various classes of buyer. Thirdly, the participating merchants agree to maintain the prescribed minimum prices and maximum discounts when they re-sell the goods to users. Fourthly, the agreements define the types of merchant who may be granted merchant terms. Builders and plumbers, for example, are in general excluded. Finally, the agreements are cemented by "exclusive dealing" provisions whereby the merchants undertake to buy only from manufacturers who are parties to the agreements and the foundries in turn grant merchant terms only to signatory merchants. Failure by a signatory merchant to observe the agreements may result in loss of merchant status and of the right to receive merchant terms.
22WThe Commission consider that, by dint of the "exclusive dealing" provisions, these arrangements are contrary to the public interest in various ways. First, "manufacturers and merchants who do not subscribe to the Agreements are excluded from a share in the great bulk of the trade." Secondly, "owing to the operation of the minimum price agreement, the introduction of low-cost methods of production is retarded." Thirdly, there are no means by which savings in production or distribution costs resulting from bulk buying of standardised goods can be passed on to the consumer.
The Commission recommend that those concerned should amend their trading arrangements in such a way as to meet these objections and that discussions should take place for this purpose between the trade associations and the Government Departments concerned. In particular they say that there should be no discrimination by foundries as regards supplies or terms of supply against merchants who are not parties to the agreements or not members of trade associations or against those who buy from non-members (including foreign suppliers) of the British Ironfounders' Association The Commission consider that the implementation of these recommendations would facilitate "the speedy and unfettered development of newer methods of production" to which they attach especial importance.