HC Deb 17 June 1976 vol 913 cc221-3W
Mr. Ward

asked the Secretary of State for Prices and Consumer Protection when she expects to publish the Monopolies and Mergers Commission's report on the supply of building bricks; and whether she will make a statement.

Mr. John Fraser

The report is being published today. The commission has found that monopoly conditions, as defined in the legislation in force when the reference was made, prevail with respect to the supply of building bricks in Great Britain because one manufacturer, the London Brick Company Limited (LBC) supplies at least one-third of the market.

The commission has unanimously concluded that LBC's monopoly position does not operate and may not be expected to operate against the public interest. The commission has decided, with one member dissenting, that LBC's practice of overcharging, for transport, customers relatively close to its works and undercharging those relatively distant from its works is a thing done as a result of the monopoly conditions which operates and may be expected to operate against the public interest because it represents unfair competition and could lead to an inefficient use of national resources.

No other things have been found to be done as a result of the monopoly which operate or may be expected to operate against the public interest, but the commission has noted that LBC has the power to charge excessive prices and to make excessive profits and has pointed out that, if LBC's policies on these points were to change, there could be a case for a further monopoly reference.

To remedy the adverse effects of LBC's pricing policy for transport the commission has recommended, with one member dissenting, that LBC should, so far as is practicable, relate its transport charges to the customer to the cost of delivery to him. In so doing, however, the commission noted that LBC could implement certain proposals already under consideration for changing its present zonal pricing arrangements without detriment to the general principle of this recommendation and also that an exception could be made temporarily to the general principle to permit development of new markets like that associated with the proposed rail "Fletliner" service to North-East England.

My right hon. Friend accepts the commission's majority recommendation as being requisite for the purpose of remedying or preventing the adverse effects specified in the report and is, therefore, asking the Director General of Fair Trading to consult LBC with a view to obtaining from it undertakings to take action to change its system of transport charges to customers to reflect, so far as practicable, the cost of delivery to them.

My right hon. Friend is also asking the Director General to discuss with LBC certain suggestions which the commission has made concerning the collection of bricks by customers, and on surcharges for deliveries in smaller than normal lorries.

The implementation of the recommendation on transport charges would involve an increase in LBC's prices to customers relatively distant from its works, as well as decreases elsewhere, and this would be inconsistent with the Price Code in its present form. However, my predecessor announced on 31st March 1976 that it was intended to make alterations to the Price Code in July of this year which would permit the implementation of the Monopolies and Mergers Commission's very similar recommendations on zonal prices for plasterboard; and it is my intention that the amended Price Code should also permit such changes in LBC's prices as would seem necessary to implement satisfactorily the commission's recommendation on building bricks.

In its report the commission has suggested also that the Government might consider the desirability of discussing with brickmakers the practicability of producing bricks for stock in times of recession. My right hon. Friend the Minister for Housing and Construction is making a separate statement on this point today.