§ Mr. Abseasked the Secretary of State for Prices and Consumer Protection when she expects to implement the recommendations made by the Monopolies and Mergers Commission in its report on the supply of contraceptive sheaths in the United Kingdom.
Mr. Alan WilliamsAs a result of the consultations which the Director General806W of Fair Trading has, at my request, had with LRC International Limited the company has given certain undertakings which I consider are requisite for the purpose of remedying and preventing the adverse effects specified in the report, and meet the suggestions made by the commission concerning a reduction in retail prices and the level of distributive margins. The aim of the undertakings is to reduce the company's profits on home sales of contraceptive sheaths to approximately £525,000 in a full year. The comparable profit figure for 1972–73, which was strongly criticised by the commission, was £2,0150,000.
LRC has undertaken to specify and publicise maximum retail prices for its principal brands of contraceptive sheaths and to make it a condition of sale that these maximum prices should not be exceeded. Despite cost increases the maximum prices of the higher-priced products will be reduced by 11 per cent. and medium-priced brands by 2½ per cent.; the prices of the cheapest products will be held steady. The new price structure will come into force on 1st December this year. The company has further undertaken not to alter any of these prices in future without the prior approval of the Director General of Fair Trading.
In the light of the criticisms made by the Monopolies and Mergers Commission of its pricing policy and of excessively high levels of distributive margins, LRC has undertaken to introduce a substantially revised and simplified wholesale discount structure which will give discounts of from 50 to 58 per cent., according to quantity, on the applicable new maximum retail prices exclusive of VAT, with proportionate discount arrangements for sales of "own label" brands of contraceptive sheaths. The discount structure also will not be changed without the consent of the Director General of Fair Trading.
As price, discount and profit levels may need to be adjusted in the light of changing circumstances, the undertakings will be reviewed annually or more frequently if necessary, to ensure that they are meeting the purposes for which they have been given.
Prices for vending machine sales, which are currently running at a loss, will be examined at the first annual review.
807WAlthough the undertakings given do not for the moment apply to new products, these will be considered at the annual and other reviews to see whether it would be appropriate for undertakings to be given in respect of them.
Copies of the undertakings will be placed in the Library.