§ Mr. E. Johnson
asked the President of the Board of Trade when the Monopolies Commission's report on the process of calico printing will be published; and if he will make a statement about the contents of the report.123W
§ Mr. P. Thorneycroft
The Report was published today. The Commission have found that conditions to which the Monopolies and Restrictive Practices (Inquiry and Control) Act, 1948, applies prevail as respects the process of calico printing. Over 98 per cent, of the cloth printed on commission in the United Kingdom by this process is printed by members of the Federation of Calico Printers, who so conduct their affairs as to restrict competition; and nearly 50 per cent, is printed by one of the members— the Calico Printers' Association Ltd.
The principal arrangements found to restrict competition are:
- (i) a system of minimum price lists;
- (ii) a supporting "percentage quantum" (P.Q.) Scheme. Each member of this scheme is allotted a percentage quantum of total turnover of all the members during each year and pays into or draws from a common pool if his business exceeds or falls short of his quantum;
- (iii) the enforcement of certain uniform terms and conditions of trading;
- (iv) an "engraving rental scheme," applicable only to certain styles and markets, which prescribes minimum rental payments in respect of the engraving of new designs;
- (v) arrangements designed to limit the capacity available for calico printing. Under a redundancy scheme adopted in 1949 by most of the members of the Federation and administered by Print Trade Re-organisation Ltd., premises have been disposed of subject to restrictive covenants preventing their use, and that of the water rights going with them, for calico printing and certain other purposes. Members of the scheme who now dispose of premises must impose similar restrictive covenants to run at least until 1960 unless permission is given by Print Trade Re-organisation Ltd.
The Calico Printers Association have additionally a private agreement with the Bradford Dyers Association Ltd. and Bleachers Association Ltd. providing for similar restrictions.
The Commission's principal conclusions and recommendations about the effect of these practices and conditions on the public interest are as follow:(a) The minimum price and P.Q. schemes, although formally distinct, are, in practice, interdependent and must be considered together.The Commission believe that these schemes hamper the ability of merchants to compete in overseas markets: that they are bound in some degree to lessen the printer's incentive to reduce his costs and that they limit the opportunity for the low cost printer to reduce his costs still further by increasing his turnover. They note especially that on entering the P.Q. scheme in 1949 printers were required to renounce their freedom of action in regard to 124W prices and other important terms of trading for a period of ten years ahead.They consider that these arrangements may be expected to operate against the public interest and they recommend that the minimum price arrangements should be discontinued and the P.Q. scheme abolished. They see no harm, however, in the Federation's issuing a list of recommended minimum prices not enforceable by sanctions, provided that this list is published and freely available to all.
- (b) Insofar as the Federation's arrangements for uniform terms and conditions of trading are compulsory the Commission consider them to be contrary to the public interest. The Commission see no abjection however to the publication of standard terms and conditions which printers can observe or not as they wish.
- (c) The Commission consider that the engraving rental scheme in its present obligatory form is also against the public interest and should be discontinued. They would see no objection to the issue of a suggested scale of rentals provided it was freely available to all and printers were under no obligation to observe it.
- (d) The Commission express no view on the justification for imposing restrictive covenants as part of an approved scheme for dealing with redundancy in a contracting industry. They say however that they have had no clear statement from the trade that there is redundancy at the present time; and they consider that in present circumstances the covenants operate against the public interest by preventing for an unreasonably long period access to some of the most suitable sites by any new enterprises which might wish to enter the calico printing trade, or by concerns already in the trade which might wish to expand. The Commission accordingly recommend that the agreements providing for these covenants to which the Federation or their members (including the C.P.A.) are parties should be terminated and that covenants already imposed should so far as possible be removed. The redundancy scheme should be terminated and Print Trade Re-organisation Ltd. wound up.
- (e) The Commission recommend that restrictions on the disposal of printing machines contained in the redundancy scheme and in the P.Q. scheme should lapse when the agreements giving effect to these schemes are terminated.
- (f) The Commission recommend that the C. PA. should end an agreement informally maintained with Bleachers' Association Ltd., limiting the extent to which the latter may participate in the printing trade.