Electric Wires and Cables Report (Government Recommendations) (Hansard, 20 May 1954)

§ Mr. Sandys

In their Report on the Supply of Insulated Electric Wires and Cables, the Monopolies Commission summarised their conclusions as follows

1. The restriction of members' freedom which is involved in their having to submit new designs and types to their associations for approval is a necessary concomitant of the minimum standards of quality established by the associations and has been reasonably administered.
1. 2 (a). A system of purchasing mains and super tension cable which is in the long term 143 interests both of the consumer and of the producer will have to be worked out by the British Electricity Authority with the industry.
2. 2 (b). The present arrangement for the Cable Makers Association (C.M.A.) members' costs to be investigated by independent accountants is in the public interest and so long as C.M.A. members act together as sellers of these types of cable, there should be an obligation on them, in the ranges in which no competition exists, to submit their costs to the British Electricity Authority in order to establish that the prices charged are reasonable.
3. 2 (c). Prices to buyers other than the British Electricity Authority should bear a direct relationship to the prices charged to the British Electricity Authority and this relationship should be reasonable.
4. 2 (d). This relationship should be made known.
3. The system of common prices for rubber cable and the Covered Conductors Association's (C.C.A.) system of common prices for covered conductors should be brought to an end.
4. As a defence against extreme price cutting the C.M.A. and C.C.A. should be allowed to fix minimum prices, giving no more than a reasonable profit to the lowest cost producer of each type of cable; if minimum prices are established on this basis, costs and profits should be reviewed by the appropriate Government Department from time to time to ensure that the prices are fixed in accordance with the conditions which we have recom mended.
1. 5 (a). So long as there is no independent competition in submarine telegraph cable the periodical cost investigations which are now made are clearly desirable.
2. 5. (b). Submarine telegraph cable is outside the international agreement and it is important that it should remain so.
1. 6. (a). We suggest that the General Post Office should leave itself free in future to place a proportion of orders for land telephone cable with independent concerns and should take appropriate steps to ensure the protection of the public interest for all its purchases of telephone cable outside the bulk orders.
2. 6 (b). Price agreements for sales of telephone cable to purchasers other than the General Post Office should be brought to an end.
7. If further bulk orders are placed, their existence should be publicly announced and provision should be made to safeguard the continuance and development of efficient independent competition.
8. The quota systems of the C.C.A. and of the affiliated associations of the C.M.A. should be brought to an end.
9. The system of allocations operated by C.M.A. members and others should be brought to an end in all cases in which it still obtains.
10. The covenant entered into by British Ropes, Limited in which they undertake not to make cables, should be allowed to lapse.
11. We welcome the co-operation of the C.M.A. and C.C.A. on the questions of quality clauses in B.S.I, specifications and we recommend that clauses governing the quality of the insulating materials (together with any warning addendum that may be thought appropriate) should be included in all B.S.I, cable specifications.
12. The C.M.A. and C.C.A. policy on patents has been liberal and we have no recommendation to make.
13. When the present arrangements for regulating copper supplies are brought to an end the Government should continue to keep a watch on the position to ensure that supplies are fairly allocated or that competitive supplies are available either within the United Kingdom or by import.
14. We make no recommendations as regards import restrictions, because they form part of a complex whole including provisions affecting the export trade which are outside our terms of reference.
15. The exclusive dealing provisions in agreements with wholesalers and other buyers of rubber cable should be brought to an end.
1. 16 (a). The aggregated quantity rebates payable in connection with rubber cable should cease.
2. 16 (b). Association rebates payable in connection with rubber cables should cease.
3. 16 (c). The rebate paid to the National Electrical Contractors Association on purchases by its members of mains cables should cease.
1. 17 (a). The C.C.A. aggregated quantity rebates should be brought to an end.
2. 17 (b). Their agreements with buyers who undertake not to make covered conductors should be brought to an end.

After a thorough examination of the complicated issues involved, the Government have asked the trade associations concerned to give an assurance that they will bring their arrangements into conformity with these conclusions, with the exception of numbers 2 (d) and 6 (b), not later than 31st December next.

The Government do not feel able to endorse conclusion 2 (d), since it would be contrary to well-established commercial and Government practice for the price negotiated in contracts to be made public. They have, however, asked the associations for an assurance that they will furnish the Government from time to time with information about the relationship between the prices charged to the British Electricity Authority and those charged-to other buyers.

With regard to conclusion 6 (b), the Government consider that the interest of general users of telephone cable can best be safeguarded by ensuring that the 145W prices charged to them bear a reasonable relationship to those paid by the General Post Office, which are settled after cost investigation. The Government have therefore asked the associations for an assurance that they will apply this principle and will furnish the Government from time to time with information about this relationship.

The Postmaster-General will take action to give effect to conclusions 6 and 7, relating to purchases of telephone cable by the General Post Office.

The attention of the British Electricity Authority has been drawn to conclusions 2 and 7.

If the trade associations concerned are prepared to give the assurances asked for, it will not be necessary to make an Order under Section 10 of the Monopolies Act.