PNEUMATIC TYRES (MONOPOLIES COMMISSION'S REPORT) (Hansard, 9 December 1955)

§ Mr. P. Thorneycroft

The Report was published today. The Commission find that the conditions to which the Monopolies and Restrictive Practices (Inquiry and Control) Act, 1948, applies prevail as respects both the supply and the export of pneumatic tyres.

Their conclusions and recommendations are in summary as follows:

(1) The discussions on prices which take place within the Tyre Manufacturers' Conference strengthen the tendency inherent in the structure of the industry to reduce price competition and are against the public interest. The Commission recommend that the T.M.C. should cease to concern itself with the question of price levels and price changes and that no other committee or organisation should be set up or employed by the tyre manufacturers for this purpose.
(2) The system under which identical prices to the consumer are collectively maintained is against the public interest. A majority of the Commission consider that, in the special circumstances of this industry, the only way to secure genuine price competition at the retail stage is to abolish the maintenance of retail prices and recommend that no manufacturer should prescribe the resale price of his tyres. A minority dissent from this recommendation which they do not think is justified by the circumstances of the industry; they recommend that the British Motor Trade Association should refrain from enforcing resale prices until the T.M.C. arrangements described in (1) above have been abandoned.
(3) The system by which the T.M.C. fix the discounts to be allowed to users whose aggregated expenditure on car and giant tyres in the replacement and mileage contract market exceeds £500 a year, is in present conditions against the public interest.
(4) The T.M.C. tyre inspection panels, which consider claims in respect of giant and agricultural tyres which have failed prematurely, are not against the public interest as they are operated at present.
(5) The industry's ban on the production of unbranded tyres promotes safety and is not against the public interest, but the Commission consider that the ban on the manufacture of private brand tyres for concerns outside the T.M.C. is restrictive of competition and is against the 117 public interest. They recommend that this practice should be discontinued.
(6) The maintenance by the Tyre Trade Joint Committee of the Tyre Trade Register and, by the T.M.C., of the Agricultural and Earthmover Tyre Trade Register, the Aircraft Tyre Trade Register and (in so far as it relates to trade terms) the Aircraft Constructors Register, tends to create a privileged class of trader and is against the public interest. The Commission recommend that these registers should be discontinued and no similar registers should be compiled or maintained by any association concerned with the manufacture or distribution of tyres. They would not object, however, if the T.M.C. maintained lists of traders which could be circulated and recommended to manufacturers to observe or not as they pleased. A minority of the Commission, however, dissent from the recommendation that the Tyre Trade Register should be abolished, because they regard it as conducive to safety and efficiency in distribution.
(7) The limitation of best factor terms for cycle tyres to factors on the lists maintained by the British Cycle and Motor Cycle Manufacturers and Trades Union (the "Coventry Union") is against the public interest and should be discontinued.
(8) A system of controlled distribution of tyres, as operated under the Post-Control Tyre Distribution Plan from 1946 to 1954, would, if reintroduced in a market not short of supplies, restrict competition and would be against the public interest. The Commission have, however, no reason to expect that such a system will be reintroduced.
(9) The restrictions on advertising accepted by all members of the T.M.C. leave a sufficiently wide field open to allow all manufacturers a reasonable degree of competition and are not against the public interest.
(10) The Supplemental Agreement of the Society of Motor Manufacturers and Traders, which requires tyre manufacturers to prohibit traders from exhibiting loose tyres at shows not approved under the Society's Bond, interferes with the legitimate interests of traders. In this way it is against the public interest and should be terminated.
(11) The arrangements under which tyre manufacturers operate mileage contracts involve some restriction of competition but are not against the public interest.
(12) Such consultations as take place between tyre manufacturers on the net prices to be charged to vehicle manufacturers on the "No Restriction" register although in a sense restrictive of competition, do not operate against the public interest.
(13) In the original equipment market the secret end-of-year allowances paid by the Dunlop Rubber Co. Ltd. to certain customers, and the secret monthly credits allowed by a smaller manufacturer, provide a form of clandestine price competition which, in the special circumstances of this industry, is better than no competition at all. They are therefore not against the public interest.
(14) The common scale of rebate, based on aggregated purchases, allowed by T.M.C. members to nine of the largest commercial vehicle manufacturers in the original equipment market does not attract business to one group of manufacturers at the expense of another and is not rigid in form. It does not therefore operate against the public interest.
(15) All the T.M.C.'s registers of vehicle and aircraft manufacturers entitled to special terms for tyres supplied as original equipment are against the public interest. The Commission recommend that they should be abolished and that the prescribing of various classes of original equipment terms should cease. They would, however, see no objection if lists of reputable vehicle and aircraft manufacturers were circulated for the information of tyre manufacturers, so long as the tyre manufacturers were under no obligation to observe the lists.
(16) The arrangement by which Dunlop set the export prices for all T.M.C. members, after confidential discussions with their foreign competitors, are not against the public interest.
(17) The interests of Dunlop in the distribution field and the methods by which they have been conducted have not tended to restrict competition and are not against the public interest.
(18) The dominant interest of Dunlop in the retreading industry has not in itself restricted competition, but their secret ownership of the two retreading concerns, the Regent Tyre & Rubber Co. Ltd. and Tyres (Scotland) Production Ltd., hampers the efficient organisation of their retreading business as a whole. The secrecy of these arrangements is, for this reason, against the public interest.
(19) The confidential allowances paid by Dunlop to certain distributors and motor dealers are not against the public interest.
(20) Apart from the specific matters dealt with above, Dunlop have not used their dominant position in the industry to the detriment of the public interest.
(21) The arrangements of the Retread Manufacturers Association promote safety and are not against the public interest.
(22) The discussions within the T.M.C. resulting in identical prices for retreading materials and members' remoulds are not against the public interest.
This report was signed by a group consisting of the Chairman and eight members of the Commission, selected by the Chairman under Section 2 (2) of the Monopolies and Restrictive Practices Commission Act, 1953. They were unanimous on all but two of the conclusions and recommendations summarised above. In the case of certain recommendations in items (2) and (6) four of the members dissented for the reasons given.