Diazo Copying Materials (Hansard, 2 March 1977)

§ Mr. John Fraser

The report is being published today. The Commission found that a monopoly situation existed in favour of Ozalid Group Holdings Limited on the ground that the company supplied more than 25 per cent.—in 1974–75 over 50 per cent.—of diazo copying materials supplied in the United Kingdom. It also appeared to the Commission that a complex monopoly situation might exist by virtue of the fact that Ozalid and the three other principal United Kingdom manufacturers, namely GAF (Great Britain) Limited, Addressograph-Multigraph Limited and Harper & Tunstall Limited, together supplied at least 25 per cent.—in 1974–75 over 90 per cent.—of all the diazo copying materials supplied in the United Kingdom and so conducted their respective affairs as to restrict or distort competition by charging the same or similar list prices and offering the same or similar discounts.

However, early in its investigation, the Commission received indications that there had been agreements between the companies, concerning prices and discounts, which might be registrable under the Restrictive Trade Practices Acts 1956–73, now consolidated into the Restrictive Trade Practices Act 1976; and Section 10(2) of the Fair Trading Act 1973 precludes the Commission, in deciding whether a monopoly situation exists, from taking account of any provisions of any agreement in so far as they are provisions by virtue of which it is an agreement to which the Restrictive Trade Practices Act 1976 applies.

After a considerable time the Commission received further information from the companies which revealed differences between them about the terms of the 192W agreements and who had been parties to them. After further discussions the Commission reluctantly decided towards the end of last year, in the light of continuing uncertainty over the extent and duration of, and parties to, the agreements, that it could not delay the completion of its report any longer. This meant that it could not readily tell how much of the information in its possession it was precluded, by Section 10(2) of the Act, from considering. The Commission, therefore, stated that it was impossible for it to reach a conclusion whether a complex monopoly situation existed at present or had existed at the time of the reference. It did, however, firmly record its regret, as I do, that the existence of registrable agreements was not notified within the statutory period allowed and that details were not notified to it for a considerable time after it had started its inquiry.

The Commission thought that Ozalid's profits had been higher in recent years than might have been expected in fully competitive conditions, but again it was unable to say how far the profit levels resulted from any limitation of price competition arising from unregistered agreements or how far if at all from the monopoly position of Ozalid. Bearing that in mind, it concluded that the monopoly situation which existed in favour of Ozalid did not operate against the public interest. Because of the possibility of significant changes in the competitive situation within the industry the Commission felt unable to reach a conclusion on the likely future effect of Ozalid's monopoly on the public interest. Within the limitations imposed by Sections 10(2) and 54(5) of the Fair Trading Act 1973 as to the facts which it was able to consider, and bearing in mind the uncertainty about the effect in the future of Ozalid's monopoly situation, the Commission concluded that no facts found by it operated against the public interest or might be expected to do so in future.

In the absence of any adverse public interest finding there are no grounds for action by my right hon. Friend. However, the most significant outcome of the Monopolies and Mergers Commission's investigation has been the discovery of an extensive series of agreements between 193W the four principal diazo manufacturers, none of which had been registered with the Office of Fair Trading. The agreements were not in writing, and so the process of uncovering all the details of their number, nature and extent has proved to be a very protracted one: but the Director General of Fair Trading has told me that he has today placed 22 agreements on the public register. I understand that all of these agreements have been brought to an end.

It is of course, for the Director General of Fair Trading to decide what to do about these unregistered agreements. I understand that he proposes to start proceedings against the companies in the Restrictive Practices Court. The Government take a serious view of the situation that has been disclosed by the Monopolies and Mergers Commission's investigation. The largest firms in one sector of industry have ignored a law which has been in existence for 20 years and have operated an extensive series of unregistered restrictive agreements over a period of some five or six years. This is the third time in just over two years that a Monopolies and Mergers Commission investigation has revealed the existence of unregistered agreements. The previous two occasions concerned telephone cables and bread. I find it particularly disturbing that on each of these occasions large firms have been involved which should have been well aware of the requirements of the law.