§ Mr. Wigginasked the Secretary of State for Trade and Industry when he expects to publish the report of the Monopolies Commission on the supply and export of machinery for the manufacture of footwear.
§ Sir G. HoweThe report has been published today. The commission found that monopoly conditions prevailed in the supply of footwear machinery in the United Kingdom because at least one-third of all the footwear machinery which is supplied in the United Kingdom is supplied by BUSM—the British United Shoe Machinery Co., Ltd. It also found that monopoly conditions prevailed as regards exports because at least one-third of all the footwear machinery produced in the United Kingdom is produced by BUSM.
The commission found that while BUSM occupied a powerful position in 146W the footwear machinery industry, it did not, taking its activities as a whole, exercise its power in ways which could be regarded as against the public interest. It concluded that the company's monopoly position in the United Kingdom did not operate against the public interest. As regards exports, the commission found no issues relevant to the public interest and therefore concluded that BUSM's monopoly in this field, too, did not operate against the public interest.
As regards the United Kingdom the commission, however, said that the implications for the public interest would need to be watched should BUSM acquire any of its competitors. The commission's views will be taken into account in considering any proposed acquisitions by BUSM to which the mergers legislation applies.
The commission made a number of minor recommendations and suggestions. The majority of the commission concluded that BUSM's practice, when leases were prematurely terminated, of varying the level of cancellation charges according to whether and how a returned machine was replaced was a thing done for the purpose of preserving its monopoly.
While the amounts involved are often not large the practice operated and could be expected to operate against the public interest since it restricted the ability of other suppliers to compete. It recommended that it should be abandoned and that the value of the reductions on the present basis should be distributed uniformly over all cancellation charges.
The commission suggested unanimously —but did not formally recommend—that BUSM should change its practices in two ways: by offering service contracts at an annual charge for machines which it sold and by relaxing its policy of not selling second-hand machines. It also considered that the company should keep under review the question of the appropriate length of lease and the question of offering alternative periods instead of a standard length of lease.
I accept the commission's conclusions and will be discussing the implementation of its recommendation and suggestions with the company.
147WThe commission also drew attention to certain patent pooling arrangements between BUSM and other companies in the group to which it belongs. I will consider whether this raises any issues which require further study.