Source: https://api.parliament.uk/historic-hansard/lords/1956/jul/24/restrictive-trade-practices-bill-1
Timestamp: 2019-04-24 00:24:04+00:00

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§ LORD LUCAS OF CHILWORTHmoved, in subsection (4), to leave out "for the supply of goods or for the application of any process of manufacture to goods." The noble Lord said: My Lords, your Lordships will remember that on the Committee stage I tried to he of assistance to the Government in including in the excepted agreements thousands of what I called tripartite, agreements which could be cited to your Lordships as being between a producer and a seller, with a wholesaler intervening at some stage in the agreement. The noble and learned Viscount on the Woolsack, immediately, as he always does, seeing the point, said that he would like to give it further consideration. I hope he has done so. I put down this Amendment because, after reading carefully what the noble and learned Viscount said, I thought perhaps that this Amendment might help him, and would at least give me the opportunity of raising again the whole subject to see what the noble and learned Viscount had to say. Now that he has had time to give it mature consideration, I will move the Amendment formally to hear his reply. I beg to move.
My Lords, on the Committee stage the noble Lord, Lord Lucas of Chilworth, raised a very interesting and practical point. He has been good enough since that time to supply me with the further information that he promised. I must apologise to the House for again rather trespassing on its time, but, as this is a practical point in the running of a great series of businesses I feel that it would be useful if I were to indicate the views I have formed. The House will remember that on the Committee stage Lord Lucas of Chilworth's Amendment was designed to extend the exemption given by subsection (4) of Clause 7 to certain agreements for the supply of goods to such agreements when between a supplier, a wholesaler, and a dealer. I pointed out in that debate that such an agreement might not be an agreement for supply. because the manufacturer may accept restrictions vis-à-vis a dealer, although not supplying goods to him direct. The present Amendment is designed to get over this difficulty by deleting the qualification "for the supply of goods". After reflection, I have come to the conclusion that the Amendment would not in fact, achieve this object. Subsection (4) of Clause 7 refers to any term which relates exclusively to… goods supplied …in pursuance of the agreement. These words would be meaningless unless the agreement were an agreement for the supply of goods. Since the Committee stage, we have considered the point of substance which was raised by the noble Lord. As I said, he was good enough to give us more particulars of the agreements which he had in mind. The agreements described to us were not all tripartite agreements; in some cases they were agreements between a manufacturer and a dealer, or between a manufacturer and a wholesaler. I should like to deal with the points as I see them.
Agreements between a manufacturer and a dealer may provide for the dealer to place his orders for the manufacturer's goods through a wholesaler. Despite this, it seems to us that some of the agreements of this kind were purely agreements for supply and would be exempt from the Bill under subsection (5) of Clause 7. In other cases, however, the wording of the agreements did not indicate that they were agreements for supply. I think that 123 this is really a matter of drafting, so that, in general, it should not be difficult to bring within the exemption provisions of the Bill the agreements between manufacturers and wholesalers, or manufacturers and dealers, where these contain restrictions relating exclusively to the goods supplied and restrictions of the kind described in paragraphs (a) and (b) of subsection (5) of Clause 7—that is to say, restrictions by the manufacturer in respect of the supply of goods of the same description to other persons, or restrictions by the party acquiring the goods, in respect of the sale, or acquisition for sale, of other goods of the same description. This falls clearly within our intention to exclude from the Bill vertical transactions between two parties which are simply part of the ordinary machinery of commerce. I hope that what I have said on this score will relieve the anxieties of the noble Lord, Lord Lucas of Chilworth, and his friends who have feared that a very considerable number of agreements of this kind would have to be registered under the Bill.
Perhaps I may summarise what I hope I have made clear to the noble Lord, Lord Lucas of Chilworth. By an alteration in drafting, the agreements about which he had some fears can be brought into the other category, in which case they would be clearly within the exemption which we had. So, to that extent, I hope, that half of my answer has been of some help to the noble Lord; though I am bound to say that it does not resolve the problem of the tripartite agreement. We have carefully considered whether we could bring this within the exemption provision of Clause 7 and, frankly, the problem has defeated us. The difficulty is that it would be difficult to make an exemption for this kind of agreement which did not extend to agreements between the suppliers of goods as to the terms of sale of the goods which each supplied—that is, a price ring, even though perhaps only a limited one. Your Lordships will understand that it would not be sufficient to exempt this kind of agreement provided that the restrictions in it related only to the goods supplied by the manufacturer, since in fact the restrictions extend to goods of the same description provided by other suppliers. We considered whether the agreements exempted should be described as agency 124 agreements, since it seems to us that, in effect, that is what the kind of agreements the noble Lord described to us are. They arc not, however, agency agreements in form; indeed, it is stated in them that the wholesaler is not an agent. That possible avenue is therefore closed to us.
My Lords, perhaps I may at this point clear up a misunderstanding which I believe arose from something that I said at the Committee stage. In commenting on the noble Lord's Amendments, I said that the kind of agreements with which he was concerned would probably not in any case fall within subsection (4) of Clause 7, to which his Amendments related, since the restrictions in the agreement would not be likely to relate exclusively to the goods supplied. This did not, of course, mean that the only agreements which are exempted from the Bill are those in which the restrictions relate exclusively to the goods supplied. Subsection (5) of Clause 7 makes special provisions for agreements containing restrictions relating to other goods of the same description as those supplied. It was to this subsection that my noble friend Lord Mancroft referred, when he said that it was the Government's intention to exclude sole agency agreements from the Bill.
It may be useful if I refer also to a suggestion which has been made, that the agreements between manufacturers and dealers or manufacturers, wholesalers and dealers, to which the noble Lord, Lord Lucas of Chilworth, has referred, could be exempted from the Bill, because they stem from a root agreement between the manufacturers as to the conditions which they shall individually impose upon their wholesalers and dealers. However, the technique which the proviso in subsection (4) of Clause 7 applies to agreements relating exclusively to the goods supplied would be quite inappropriate for this other kind of agreement. The primary purpose of subsection (4) is to exempt from the Bill agreements for supply between a manufacturer and his customer. In some cases, however, manufacturers agree together that they will negotiate jointly with a customer or class of customer. The result of this will be an agreement between suppliers A, B and C. on the one hand, and a purchaser D on the other. This agreement is, however, merely a reflection of the agreement between A, B and C, to negotiate common terms. Under the proviso, 125 therefore, the agreement between A, B, C and D need not be registered if the root agreement between A, B and C has been registered.
Agreements with which the noble Lord, Lord Lucas of Chilworth, is concerned, are, however, in quite a different case. There, the agreements which result from an agreement between manufacturers are not agreements to which they are all parties but agreements to which the individual manufacturer is a party, together with one or more other people. Each of the manufacturers individually makes an agreement with one or more other parties, and some of the restrictions in these agreements may be quite other than those which the manufacturers have agreed amongst themselves to impose.
I hope that this rather long and complicated explanation will make it clear to the noble Lord, eventually, when there has been time to read it, if not at the moment, that there are real difficulties in the way of exempting from the Bill all the kinds of agreements of which he has given us particulars. On the other hand, it would seem that many of the agreements between manufacturers and dealers or manufacturers and wholesalers, which he had in mind, would be exempt from the Bill in any case, and that the others could be adapted so as to attract the exemption. I hope that, with that explanation, he will not press his Amendment.
I want to add only one word about taking up so much of your Lordships' time. As I see legislation, it has two purposes. One is to carry through a policy, and the other is to be quite sure that what is put on the Statute Book really fits into the facts of business life; and that is why, since the noble Lord was good enough to send me most voluminous particulars, I thought it right to inflict this rather long explanation on your Lordships, so that those engaged in business will know where they stand. I apologise, and I hope that your Lordships will accept my explanation.
My Lords, the noble and learned Viscount need not apologise, for he has rendered a signal service to a large section of British industry so that they know just where they stand. I would not claim to understand every word which he has 126 uttered, but I shall study his observations in great detail. It is far better for agreements to be re-drafted than for the law to be altered to try to take care of something which, as the noble and learned Viscount has said, cannot be taken care of. I am quite satisfied and, with your Lordships' agreement, I will withdraw the Amendment.
My Lords, this is a drafting Amendment, paving the way to No. 13. I beg to move.
My Lords, this also is a drafting Amendment. I beg to move.
My Lords, this is a procedural, rather than a drafting Amendment. It assimilates the procedure or dealing with recommendations by trade associations relating exclusively to exports or overseas trading to the procedure already laid down in the Bill for agreements relating exclusively to these matters. Thus both agreements and recommendations, if they relate exclusively to overseas trading, will be outside he scope of the Bill altogether, and if hey relate exclusively to exports will be object to Clause 30. Under Clause 30 they must be notified to the Board of Trade and will be subject to reference to the Monopolies Commission. The particulars which are to he furnished in the case of a recommendation relating exclusively to exports will be similar to those or other recommendations by trade associations—that is to say, the constitution of the association must be provided, 127 together with particulars of an implied term that the members will comply with the recommendations. I beg to move.
My Lords, this is rather a hefty drafting Amendment. I listened to the other three explanations given by the noble Lord, Lord Mancroft, and while it may well be an inherent purpose of the Bill to make distinctions between home trade and export trade, it seems to me to be rather inconclusive, having regard to the general recommendations of the Monopolies Commission, that there should be this distinction. If there is going to be collusion in practice in regard to trade in export, I do not see why it should not be brought within restrictive practices. I do not know whether I have missed some particular point — I am not a lawyer, and I do not study every word like the noble Lord does; but to describe the Amendment as a drafting Amendment seems to me to be extraordinary. I think the purpose behind these words is something more than drafting.
These are really, technically, only drafting Amendments. The distinction the noble Viscount wants to bear in mind between overseas agreements and home agreements is that the overseas ones—those confined to contracts and arrangements overseas—may bring within their orbit information which we cannot get at all in this country. If we are discussing, say, the diamond trade in South Africa, there may be information 128 which we could not get at all. That is why the distinction is made so sharply between the two. I assure the noble Viscount that there is no more substance in these Amendments than that.
What I had at the back of my mind was not diamonds but the particular arrangements that might be made with regard to the import into this country of certain foodstuffs. That is what I had in mind, and that is why I am rather anxious that we should not legislate to exclude altogether from the term "restrictive practices" businesses which are confined, or in respect of which the practice is confined, to export or import trade. I am not at all sure about this. However, I have not enough information with me this afternoon to put any more detailed questions. But I shall think over the matter.
My Lords, I still stick to my guns. This, also, is a drafting Amendment. I beg to move.
§ LORD MANCROFT moved, in subsection (2), to leave out all words from the beginning down to "that", and to insert: Subject to the provisions of subsection (3) of this section, the duty to furnish particulars under this section in respect of an agreement which at any time is subject to registration under this Part of this Act shall not be affected by any subsequent variation or determination of the agreement; and if at any time after an agreement has become subject to registration as aforesaid.
§ The noble Lord said: My Lords, this Amendment is by way of explaining this clause a little more fully. The effect of these two Amendments, Nos. 15 and 16, is to give parties to an agreement up to the final date for registration to decide whether to terminate or vary the agreement. If they decide to terminate it, they need not register it at all; if they decide to vary it, only the varied 129 agreement and not the original agreement need be registered. As the Bill is drafted, any agreement which existed on the appointed day—that is, the date of the beginning of the period of registration—would have to be registered, even if it were terminated or varied before the last date of the registration period. This, I think your Lordships may agree, is undesirable because it would discourage industry from voluntarily terminating or modifying existing agreements—a point which has frequently arisen in our deliberations. This breathing space, as it were, applies only to the period between the date on which agreements become subject to registration and the last date for furnishing particulars to the Registrar. The parties to an agreement cannot defer registration beyond the last date for registration on the grounds that they are subsequently going to terminate or vary it.
§ It may be helpful to the House to recall the procedure for registration and the Government's intentions as regards the agreements to be registered. After the Bill is enacted, the first step will be for the Board of Trade to make an Order under Clause 8 of the Bill. This Order, which requires approval of both Houses of Parliament, will appoint a date an which the classes of agreement specified in it become subject to registration and the period within which particulars of the agreements are to be furnished to the Registrar. It is expected that the first Order will come into effect some time in November, There will not be sufficient time for the Order to be approved by both Houses of Parliament until after the Summer Recess, but the Board of Trade will, in order to give as long notice as possible of its contents, make the Order and lay it before both Houses before Parliament adjourns for the Summer Recess. This is, of course, on the assumption that the Bill has passed into law by that time.
§ In accordance with the undertakings given by my honourable and learned friend, the Parliamentary Secretary to the Board of Trade, on the Second Reading of the Bill in another place, registration under this first Order will take place during a short period after the Order comes into effect and will cover the most important types of agreement—that is, those on prices and collective discrimination. These form the bulk of the restrict- 130 tive practices in industry. It is the intention, in order to assist both industry and the Registrar, to stagger registration over a period of four months. Agreements will he divided into two groups according to the commodities to which they relate. In order to avoid possible misunderstanding, it should, perhaps, be said at once that the object of this is simply to ease the administrative burden arid that agreements which have to be registered in the first batch will not necessarily be the first to be taken before the Restrictive Practices Court. I hope that these Amendments and this explanation which I have inflicted upon the House will set people's minds at rest as to the procedure which we contemplate and will clear up some doubts. I beg to move.
My Lords, this is consequential. I beg to move.
§ (4) The register, other than the special section, shall be open to public inspection during such hours and subject to payment of such fee as may he prescribed by regulations made tinder section eighteen of this Act.
§ VISCOUNT ALEXANDER OF HILLS-BOROUGH moved to add to subsection (3) Provided that where an entry is made in the special section of the register an indication to that effect shall be given in that part of the register which is open to public inspection.
§ The noble Viscount said: My Lords, the noble and learned Viscount on the Woolsack gave a good deal of attention to this Amendment on the Committee stage and put up one or two postulations, if I may call them such, as to cases A and B and what might happen; but, on the whole, I am not satisfied that it is not essential that this Amendment, or something equal to it in its purpose, should be included in the Bill. When one is drawing up legislation, it is difficult to foresee every kind of matter which is likely to arise, but the need for keeping the citizenship generally informed on most of the matters to be covered by the Bill is recognised by the fact that the Bill provides that the ordinary register will be open to inspection by the public. Apparently, the purpose of having a special section would, at first sight, be purely in the interests of public security but, reading between the lines—the most careful lines, as one would expect of the noble and learned Viscount, in his answer on the Committee stage—one can see that there might be some secret trade matters not necessarily constituting a threat to the State or requiring protection from the point of view of public security, the registration of which in the interests of the particular people concerned ought, for some reason or another, not to be made known. I am most anxious to prevent that from being a basis for a special register.
§ I do not think that the question of public security can be in any way abused if a special register is kept open to the public. All that needs to be entered in that special register is that registration has been made of a certain matter dealing with a certain commodity. That would enable people who are suffering from discrimination in their trade in respect of a commodity or a distributive agreement to know whether or not there was in existence a special agreement which had been considered by the Registrar to be registrable but, for some purpose or other, needed to be put into the 132 special section. I should feel much more happy about this matter if an Amendment, either in the words I have put down or something which would secure the same purpose, could be inserted in the Bill.
§ I come back to my pre-war reading of the books I mentioned earlier this afternoon, with regard to some matters in respect of which great public security was involved. It is a great pity that some of those were not known to the general public beforehand. I am not at all sure that it was to the advantage of the State that those secret agreements should have existed between particular firms in relation to the particular nations involved. I therefore think that no harm will be done by having a special section, as is suggested by the Bill, but that it should be open to the public. That is what I want, and I do not think it is unreasonable. I beg to move.
My Lords, this is a very difficult point and I am sorry to say that I have not been able to agree with the view of the noble Viscount, Lord Alexander of Hillsborough. I appreciate what he has specially in mind, that someone may find himself discriminated against by an agreement of which he knows nothing because it is on the special list. From that point of view, there is a hardship. On the other hand, the noble Viscount's Amendment proceeds on the basis that there will be a special list. If there is a special list, that special list is to include agreements which may concern national security but, equally, may be agreements which, though not actually dealing with security, are very important for the position of this country. One must approach it on that basis, that there are such agreements which are worthy of being put in the special list. Approaching it on that basis, if we accepted the noble Viscount's Amendment, people would know that company A and company B had made some sort of agreement. They might guess the truth; that might be bad. But they would be sure to speculate, and make two and two add up six—and that would be worse. Speculation as to what might 133 be in agreements might do an immense amount of harm. I think one might well come to the position, with which your Lordships are familiar in many aspects of life, that speculation as to content does more harm than publication itself. That is the other side of the picture we had to try to balance. I am sorry, because I do not like disagreeing with the noble Viscount, but that is the view I have formed.
I said on the Committee stage, and I repeat it now, that it is not the Government's intention that intensive use shall be made of the special section of the register. That will be, of course, a matter for the President of the Board of Trade; but it is not intended to be an easy escape valve. The special section is there to deal with the problem that I have mentioned. I also said that it will be open to Parliament to inform itself, by asking the President of the Board of Trade, how many agreements there are on the special list, so that it will be quite possible, at any stated period, to know whether the number appears to indicate that this procedure is being abused. I give those two undertakings on behalf of my right honourable friend, the President. I do assure the noble Viscount that there is no intention to abuse the procedure, but I feel it is a procedure by which, not only for public security but the general position of trade n this country, we must stand, and I ask him not to press his Amendment to-day.
My Lords, I am sorry the noble and learned Viscount takes that point of view. I think he could meet us in this matter. We have no desire to make public agreements which would come under paragraph (a) of subsection (3): particulars containing information the publication of which would in the opinion of the Board be contrary to the public interest. Only the Government of the day can be the judges of what is or what is not in the public interest: that we are not disputing at all. But other types of agreement which it might well be in the public interest to disclose can be put in the special register at the sole discretion of the President of the Board of Trade. I am not going to cast any doubt on the integrity of anybody holding the position of President of the Board of Trade, but the one object of this Bill is to let the 134 cleansing wind of public opinion and public knowledge go through the whole of this thing. If there is nothing to hide, why are the Government afraid of public opinion knowing it?
I think the noble and learned Viscount might meet us in this way. Some of these matters can be very important to the whole of British industry and to the wider national interest of national security. I should have thought perhaps there might be a tribunal to decide whether public disclosure would damage the public interest outside the realms of security. If the President of the Board of Trade is to be given the sole right to say that one type of agreement shall be exposed to the public and another type of agreement shall not, I think it will be highly dangerous. I hope the noble and learned Viscount: will try to help us. Perhaps he will take it back and look at it. Could he set up some tribunal to decide whether an agreement shall remain secret? I do not want a lot of top-heavy machinery, but I do not want the object of the Bill defeated. The professed object of the Bill, when the noble and learned Viscount first introduced it in your Lordships' House, was to expose to the public gaze all those restrictive practices which the Monopolies Commission said were against the public interest. They are to be registered. But now some will be registered in a special register. I say that these should he a very small number, relative to the whole, and I am certain that the noble and learned Viscount does not want anything to be hidden which should be, in the opinion of every right-thinking person, exposed to the public gaze.
I do not like to make a haphazard suggestion too hurriedly, but perhaps the agreement could be submitted to the Court to see whether it shall be included in the special list, because the Court has got to decide whether it is against the public interest or not. It will have to come before the Court at one time or another—at least, I assume that every agreement registered will have to come before the Court. If that is so, could we not allow the Court to decide whether or not the particulars of that registered agreement should be made open to the public? Perhaps my noble friend would be inclined to agree with that as a safeguard. Would the noble and learned Viscount think about that? I do not like the idea that 135 the sole arbiter of whether any agreement shall be put in the special section shall be the President of the Board of Trade.
My Lords, as my noble friend Lord Bridgman has just said to me: when is a secret not a secret? The answer seems to be: when it is put in the special register. If you are going to have a tribunal to decide whether it is in the public interest to put something in or not, what tribunal other than the Cabinet can possibly decide a matter of that kind? The President of the Board of Trade, presumably, if he thinks fit, will consult his colleagues. It may well be a matter of public interest that the Cabinet and the Government of the day do not want publicly known. As soon as the matter is submitted to a tribunal, people other than the Ministers know what is the point at issue—and that is something which they might well wish to keep concealed. Either a matter is going to be submitted to the Cabinet—which I maintain is impracticable—or it should be left to the Minister concerned. I believe that in this connection we cannot do better than leave it to the President of the Board of Trade.
The noble Lord says that the matter would become known to other people if it were submitted to the Restrictive Practices Court. Will he tell me why he thinks that?
There may be certain matters which the Government of the day consider it in the public interest should be concealed inside Government circles—inside the Cabinet, if you like. Under this Amendment that has to be divulged to someone else. It may well be that it is a matter which should not be divulged to someone who is not a member of the Government.
My Lords, I hope that the Government will resist the Amendment. I have had a good deal to do with the Board of Trade over a good many years, both during the time of this Government and of the previous one. I have had contact with the Board of Trade during the time of the present Minister and, I, for one, do not think that there is any need in this connection to go any further than him. 136 I should be quite content to leave matters of this sort to him. I entirely agree with the noble and learned Viscount who sits on the Woolsack, that there are certain matters in the case of which, if some indication of them were given, people would immediately start wondering what they were. I think that we should do much better to trust the President of the Board of Trade in matters of this sort. I believe that course would be perfectly satisfactory, and I hope that the Government will stick to their guns and not give way.
My Lords, I hope that I shall not offend the noble Lord, Lord Saltoun, if I ask your Lordships' leave to say one further word on this matter. I have considered this point very carefully, and I see that it is a subject upon which there can be two views. On the other hand, I have spent a great deal of my political life trying to delimit the line between what is a matter for a Minister and what is a matter for an independent appellate body. After the best consideration that I can give to it, I think that this is essentially a matter for a Minister. I am always ready to consider points raised, as the noble Lord well knows. I could take this back and discuss it again with my colleagues, but it would not be really honest if I were to hold out any hopes to noble Lords who support this Amendment. When I say that I will examine a matter again, I like everyone in the House to know that there will be an examination, with at any rate a sporting chance of some part, if not the whole, of the matter being conceded. I could not hold out any such hope here. It is never my desire to appear—if I may put it colloquially—to "stall" anything. I like everyone to know what I have in mind. I have considered this, and therefore, for reasons which I have given, I hope that the noble Viscount will not press the Amendment.
My Lords, we now move into the calmer waters of Clause 14. The next four Amendments are concerned with the power of the High Court to order examinations. Paragraph (a) of subsection (2) of Clause 14 suggests that the High Court will itself examine persons on whom a notice has been served in accordance with the provisions of subsection (1)—that is, where the Registrar has applied to the Court for an order requiring a person whom he believes is or may be a party to a 138 given, has been placed in the special section? That is the point, and I have received no real answer to that. As the noble and learned Viscount says that he holds out no hope of dealing with such an important question as that in the way which I think is in the national interest, I shall ask the House to divide.
§ Their Lordships divided:—Contents, 13; Not-Contents, 55.
Attlee, E. Archibald, L Mathers, L.
Listowel, E. Haden-Guest, L. [Teller.] Morrison, L.
Lucan, E. [Teller.] Henderson, L Quibell, L.
Alexander of Hillsborough, V. Lucas of Chilworth, L.
Kilmuir, V. (L. Chancellor.) Goschen, V. Ebbisham, L.
Templewood, V. Fairfax of Cameron, L.
Salisbury, M. (L. President.) Thurso, V. Gifford, L.
Albemarle, E. Ashton of Hyde, L. Hawke, L.
Buckinghamshire, E. Baden-Powell, L. Howard of Glossop, L.
Ferrers, E. Baillieu, L. Jessel, L.
Fortescue, E. [Teller.] Balfour of Inchrye, L. Lyle of Westbourne, L.
Grey, E. Barnby, L. McCorquodale of Newton, L.
Home, E. Bennett of Edgbaston, L Mancroft, L.
Limerick, E. Birdwood, L. Milverton, L.
Onslow, E.[Teller.] Blackford, L. Moyne, L.
St. Aldwyn, E. Brocket, L. O'Hagan, L.
Shaftesbury, E. Chesham, L. Saltoun, L.
Swinton, E. Conesford, L. Sandys, L.
Congleton, L. Strathcona and Mount Royal, L.
Falmouth, V. Derwent, L. Teviot, L.
Furness, V. Dinevor, L. Thurlow, L.
§ registrable agreement to appear before the Court and be examined on oath concerning matters relating to that agreement.
§ In practice, it will be the Registrar who will put questions to the persons who are before the Court, because he will be the only other person with knowledge of the matters in respect of which he has given notice to those persons under Clause 13. The first two Amendments, therefore, are designed to remove any misconception which might arise on this score, and to bring the clause into line in this respect with the appropriate precedent in subsection (4) of Section 167 of the Companies Act, 1948. The other Amendments are consequential. I beg to move.
and is further satisfied (in any such case) that the restriction is not unreasonable having regard to the balance between those circumstances and any detriment to the public or to persons not parties to the agreement (being purchasers, consumers or users of goods produced or sold by such parties, or persons engaged or seeking to become engaged in the trade or business of selling such goods or of producing or selling similar goods) resulting or likely to result from the operation of the restriction.
§ LORD BAILLIEU had given notice of three Amendments, the first being, in subsection (1), after "shall" to insert "not". The noble Lord said: My Lords, Amendments Nos. 23 and 24 are consequential on this Amendment so, with your Lordships' permission, I should like to speak to the three Amendments at once. The first two were moved by me, and supported by the noble Lord. Lord McCorquodale of Newton, and other noble Lords, in Committee. They were opposed by the noble and learned Viscount the Lord Chancellor, who then said [OFFICIAL REPORT, Vol. 198. col. 933]: The cardinal issue is that, under the Amendment, if the parties did not satisfy the Court on paragraphs (a) to (g) and the tailpiece, there would still be no grounds on which the Court could declare them to be against the public interest unless the Registrar satisfied the Court to that effect. The presumption about the public interest and the onus of proof hang together.
§ The third Amendment has been added in order to meet this objection, and we believe that it does so. At present, the clause sets up an initial presumption that restrictions are contrary to the public interest unless the Court is satisfied on the circumstances set out in paragraphs (a) to (g) and the tailpiece of subsection (1). Under these Amendments the order will be reversed. The Court would be directed not to declare a restriction contrary to the public interest if it was satisfied on all the circumstances (a) to (g) and the tailpiece; if it were so satisfied, it would not be directed—I would ask noble Lords to note that—to declare the restrictions contrary to the public interest. In other words, the Court is not left in a vacuum or left in any doubt as to what it must do.
§ I submit that these Amendments would in no way alter the legal effect of the clause, or impair the Government's policy. To use the words of the noble and learned Viscount in Committee, they would neither "undermine" nor "endanger" the solution of the Government. This remains intact. The amended clause, I am advised, would have the same legal effect as the present one. The onus of proof would still lie on industry—we never desired to shift it. The overriding presumption of the public interest, which we accept, would still operate. In the noble and learned Viscount's words, 141 " they hang together." The Amendments do not make it one whit easier to justify agreements before the Court, but from a psychological point of view they would impart a different flavour to the question and would help to allay the resentment which is widely felt throughout industry. If the Bill is to work, surely it is desirable to obtain the generous and full cooperation of industry. The present wording will prejudice the reaction of industry to the policy of the Bill. As my noble friend Lord McCorquodale of Newton said in Committee, our wording is merely a more polite way of putting it, but it would go far, in our view, to meet these difficulties.
§ I would ask noble Lords to accept my word that I have not raised these issues as a matter of stubborn emotion, or pique, or prestige, but as a simple matter of principle and conviction, and in a belief that any discrimination in legislation is always bad policy. Our purpose to-day should be not to create or aggravate differences, but to seek, within the nation and between Parties, on matters affecting us all, the widest common measure of agreement. That has ever been the role and the outlook of British citizens in a crisis. To-day, and for many a long day to come, we shall be faced in the national and international sphere with issues which greatly transcend the differences of Party politics, and which will challenge our statesmanship to the limit. I think we should bear this constantly in mind when we are dealing with what may be regarded as the small change of the local political scene. But I would say that, in my view and that of my friends, the groundswell from this clause as drawn will he felt for many a year. Magnanimity in politics is not seldom the truest wisdom. So at this eleventh hour, I beg the Government to set the Bill on a fair course. I beg to move.
My Lords, I should like to support my noble friend Lord Baillieu in the clear and factual statement that he has made in moving this Amendment. It was through the courtesy of the noble and learned Viscount the Lord Chancellor, in giving a factual statement, when 142 he said that he had it in writing so that he could read it to me clearly, that we got clown to the practical effect of the previous Amendment which my noble friend moved, and which I supported. We are advised that Amendment No. 24 meets in full the point made by the Lord Chancellor on Committee stage. If that is so, and bearing in mind all the advantages, which one does not wish to repeat, but on which we held forth on the Committee stage, as to the desirability of industry working with and not feeling hostile to this Bill, I would ask your Lordships and the Government whether it is not worth while, even at this late stage, putting in the words that we suggest, rather than having the words at present in the Bill. I go further and say that I believe that if the Government, or we ourselves, had at an earlier stage—perhaps it could have been done in another place—put this Amendment forward it would have been generally accepted.
I would ask the noble Viscount, Lord Alexander of Hillsborough, if he would devote his attention to this matter for a moment. He did speak on the Committee stage, but I do not think he actually understood what we were driving at. He is an old campaigner; I have met him many times in another place, and I know his astute debating power. He said (col. 925): When it comes to asking that the whole position should practically be reversed … But we do not ask for anything of the sort. We say that the position should be exactly maintained, but presented in a little more acceptable language. We are not asking that anything the Government: set cut to do in the Bill should be reversed, but merely that it should be put in acceptable language which will not give offence to the great bulk of the law-abiding citizens who trade and, by their trade, carry on the prosperity of this country.
My Lords, it seems generally agreed that this Bill is necessary in these times. Like others, I have recorded my support of the Bill, but there ale some angles to it on which we have had the opportunity of expressing our thoughts, and I have had the opportunity to express vehemently some of my misgivings. I want to give my support now to the Amendment just moved, with clarity, reason and moderation, by my 143 noble friend Lord Baillieu, and supported by my noble friend Lord McCorquodale of Newton. These are points that we discussed on the Committee stage, when we took the opportunity of expressing our views. Here is a clear-cut issue, as my noble friend Lord Baillieu put it, of merely turning things around. On studying Hansard and carefully reading what was said in the debate on the Committee stage, it would seem that this Amendment does meet the points which the noble and learned Viscount the Lord Chancellor made.
What we have now is a reasoned appeal from my noble friend Lord Baillieu, who speaks with authority about what a vast number in industry think. They are in constant touch with organised labour, whose view was very properly put from the Opposition Benches. The interests are the same. Those of us who feel like the two previous speakers, feel strongly about the matter. In Committee we expressed our views. That was met on the other side by an eloquent and reasoned appeal by the noble and learned Viscount, the Lord Chancellor, who told us that he could not give way. We must accept that, because the noble Lord, Lord Lucas of Chilworth, who followed him, said that the resistance of the Lord Chancellor was the minimum they could accept. Assuming that my noble friend divides the House on this Amendment, and succeeds in the Division Lobby, what would be the attitude taken in another place? My noble friend Lord McCorquodale of Newton, speaking with experience, has expressed the view that the Amendment could be accepted in the other place. That ought to have a strong influence on the view that the Lord Chancellor takes on this Amendment.
At this stage of the Bill it is often appropriate for any speaker to look at the implications of the Bill, as a whole. The noble Viscount, Lord Alexander of Hillsborough, used this same reasoning the other day. The real misgivings which some of us have are based upon past experience, and on that point I have in my hand the issue of Hansard in which the noble and learned Viscount the Lord Chancellor gave a most considered reply to the point I raised in Committee, and emphasised. He said [OFFICIAL REPORT, Vol. 198 (No. 116), col. 934]: 144 If we are going to deal with the major problem of the balance of payments…we have got to get rid of restrictions in all parts of industry. The point I would make is that, while we agree that some restrictions are bad, there are others which, based on past experience, have been advantageous and. indeed, would have received the support of the Opposition, in spite of what the noble Lord, Lord Lucas of Chilworth, has said on this.
The Lord Chancellor went on to say (col. 932): …if we do not regard our economic position to-day through expansionist eyes, which means getting rid of restriction.… It is not timely to introduce controversial aspects, but let us take the electrical distribution industry. There, you have an agreement which in the past has been advantageous, and has been active under the Act of 1927. The sort of agreements which were desirable then are now taken out of the field of restrictionism because they have created a monopoly, and there is now the statement of the Government that you must raise the price of the commodity, regardless of the consumer, to meet the expenses of the service. That is why I have grave misgivings about this clause, based upon the thoughts of expansionism. That, surely, was in the minds of Governments in the past, and we can all be influenced by our own experience.
I have a vivid recollection of 1919, when we all thought, as we do to-day, in terms of an expansionist economy. I remember then, as a Member of another place, listening to the Minister recommending from the Treasury Bench the fixing of the price of wheat for a period of five years at what then seemed an extraordinarily high price. So little did they see what was required that, within a short time, the Government had to introduce legislation to renounce it. This is what we mean by rationalisation: that, in circumstances which the nation cannot foresee, the Government are here imposing fetters that will require revisionary legislation. It is here, and in the other angle of the difference between prices and commodities, and the prices of processing services—which many industries in this country stand on, to the advantage of the community—that I feel the noble Lord's proposals are moderate and reasonable, and, being based on legal advice that he 145 has had, meet the point of the Lord Chancellor. We hope that that attitude for which the noble Lord has appealed, reversing the proposals of the Bill, may find favour and acceptance.
My Lords, I think it is essential that, before your Lordships make up your minds upon this Amendment, you should have in mind the way that this matter has progressed. The first two of these Amendments which we are discussing to-day were moved by my noble friend Lord Baillieu on the Committee stage. One of the grounds upon which I opposed them then was that, in effect, they removed the onus placed on the parties to an agreement to show that it was not contrary to the public interest by coming within one of the seven "gateways" and the tailpiece set out in subsection (1) of this clause.
It is relevant to-day that the speeches of my noble friends Lord Baillieu and Lord McCorquodale of Newton agree that my criticism on the Committee stage was a valid criticism, and that the Amendment at page 21, line 6, is designed to meet it. I do not dispute that, as a matter of legal construction, with the addition which I have just mentioned, the onus of proof remains on the parties to the agreement, and thus that the legal effect—and I stress "the legal effect" as opposed to the psychological effect—of the clause would not be changed by the Amendments. What then is the reason for the Amendment? As I understand my noble friends, the argument is that the presumption that restrictive practices are against the public interest is in some way distasteful to industry, and that the rearrangement of Clause 20 in the way he proposes would mitigate this implication. But I cannot follow that line of thought. As I said during the debate on the Committee stage, the onus of proof and the presumption as to public interest hang together—as my noble friend, Lord Baillieu quoted from my speech a few moments ago. Because it is assumed that restrictive trade practices are prima facie against the public interest, the burden must be on the parties to an agreement which is before the Court to disprove this presumption in their particular case.
My noble friends do not, apparently, contest this. And yet, so it seems to me, the purpose of the Amendments must be to blur the issue, and therefore we cannot 146 accept them. How could we in all honesty, on the one hand argue that the basic principles of the onus of proof and the presumption as to public interest had not been compromised, and on the other accept the argument in favour of the Amendments—the argument, that is, that they will profoundly influence industry's attitude towards the Bill? The conclusion would inevitably be drawn—and this is the psychological point—that the Government had conceded something of substance.
It is relevant, as I think my noble friend Lord Barnby said a moment ago, that this Bill has been in existence broadly in this form for six months. If I assure this House, I am immodest enough to believe that in this House my assurance as to the legal effect will be accepted, because your Lordships are kind to me. But how could I expect people outside to believe that this change, made in the fifty-seventh minute of the eleventh hour, had no significance at all? It is a very difficult position, and I want your Lordships to consider that.
I want to make it clear that not only am I not prepared, as I said on the Committee stage, to concede anything of substance, but I am also unwilling—I must put it this; way—to do anything which would seem to detract from the clear-cut policy on which the Bill rests. I know the difficulty of those who are in the middle of the road, but I said last time that after grave consideration we had rejected the recommendation of the majority of the Monopolies Commission for prohibitions, and we equally rejected the minority opinion of the Monopolies Commission which was, broadly, to register and do nothing else. We are trying to take the middle path of registration, a presumption that restrictive agreements are against the public interest unless the parties to them prove that they can get through one of the "gateways" provided. That is our policy.
It is a year since my right honourable friend announced that policy in another place, and I think it will be a year to-morrow that I announced the policy in your Lordships' House. When I announced the policy, the noble Viscount. Lord Alexander of Hillsborough, and the noble Lord, Lord Lucas of Chilworth, said they would wait for the Bill to see whether we were going to put that policy, first clearly into words 147 and then into action. That is what we have tried to do. We feel that it is incompatible with a free enterprise economy to endorse, as a generally desirable practice, restrictions on competition, and that is why the presumption as to the public interest is clearly stated at the outset of Clause 20. We believe that that is the right place for it, because the detailed instructions to the Court immediately follow in that clause. The application of these instructions may show that in a particular case restrictions are in the national interest and it is possible for the parties to satisfy the Court.
I now come to the point which my noble friends have mentioned, that this may be distasteful or even offensive to industry. Nothing is further from my mind or the minds of the Government. After all, the majority of us believe, and my noble friends who have spoken believe, very strongly—though I would not admit that they believe it any more strongly than I do—that a private enterprise society is essential. But it must not only be free it must also be enterprising, and enterprise demands competition. I have always said that the evil of monopolies, public or private, is that one rests on what one has established and puts less energy and initiative into work than one would do if there were not the bulwark of monopoly on which to rest.
I should like your Lordships to look at the Bill to see that I am not merely expressing an intention but that what I have said about "no desire to be distasteful to industry" is clearly shown. If your Lordships will look at Clause 19, you will see that subsection (1) says: The Court shall have jurisdiction …to declare whether or not any restrictions by virtue of which this Part of this Act applies to the agreement…are contrary to the public interest. That is the issue which the Court has to decide under Clause 19. Then in Clause 20, subsection (1) begins: For the purposes of any proceedings before the Court under the last foregoing section. a restriction accepted in pursuance of any agreement shall be deemed to be contrary to the public interest unless the Court is satisfied of any one or more of the following circumstances… In other words, the machinery of this Part of the Bill is that Clause 19 gives the Court power to make a declaration that an agreement is contrary to the 148 public interest, and Clause 20 says how it is to be done. It is deemed to be contrary to the public interest unless it can get through one of the "gateways" which I have mentioned.
Now let us look at this clause with my noble friend's Amendments in it. I am not going back, your Lordships will understand, on what I have said is my legal construction of the clause, but I want your Lordships to look at the effect. Clause 20, with these two Amendments in. would read thus: For the purposes of any proceedings before the Court under the last foregoing section, a restriction …shall not be deemed to be contrary to the public interest if the Court is satisfied … and so on. That is the mischief of what was urged by my noble friends on the last occasion. That is purely negative. You know nothing further at all about public interest from that point. With respect, that was where my noble friends went wrong on the last occasion. The matter is simply left in the air. They say that a restriction will not be deemed to be against the public interest if it satisfies something, but they do not say what the public interest is. If they then say that something which is not proved to be within the exceptions—this is the effect of my noble friend's second Amendment—is against the public interest, that will be taken by many people, rightly or wrongly, to apply to those who have actually tried and failed to prove a case.
In this method of drafting the clause there is no clear guidance to the Court about where the public interest lies. It departs from what I have said is the logical method of setting it out, of saying. "There is a rule of public interest. Can you prove that you come within the exceptions?" I believe that whatever I say as to the legal position will be taken as a retreat from the position as to the value of competition—as I have said, when we say that we stand for free enterprise, it means that we stand for enterprise and competition, as well as for freedom. I would do anything that I believed was right to meet my noble friend, if I could. I have considered this matter extremely carefully, and I do not think it would be right. In the eyes of a large section of the Press and the public the effect would be to undermine the 149 sincerity of the Government in what they have said they would do. I hope very much that, in spite of the fears of my noble friends, whose sincerity I do not question for a moment, they will not press this change which I am certain would be misunderstood.
I come for a moment to the speech of my noble friend, Lord Barnby. I am not saying that it was on a higher plane, but it was on an entirely different plane from those of my noble friends Lord Baillieu and Lord McCorquodale, who are accepting that the onus should be by way of the Amendments they are moving, and of the Government, who are trying to improve the drafting from the point of view of its acceptance by industry. The noble Lord. Lord Barnby, whose approach was on the merits and not on the drafting, warned us that from 1919 to 1921 we had had a position in which high hopes were raised, and that then,. at the end of 1921, we saw unemployment come, and continue through the 1920s and the 1930s. I hope that your Lordships will not form your views on this Bill by the experiences of that time. That is the difference between Lord Barnby and myself. He may well say that his view is more sound than mine, but I believe it is a view which may well take away a great deal of hopes of expansion which we have at the present time.
I do not want to go wide of this matter and lecture the House on general economics, but I should have thought most of your Lordships would agree with me that in our present economic situation three things are essential, The first is restraint—and I use the term for want of a better one—on both sides of industry. That means, on the side of management, the most careful selection of capital investment, with a view to getting the greatest production from it. That is the first point; and, equally, on the workers' side of industry there must be restraint in wage claims, a matter which has been dealt with so often. That must be a general policy. The second policy, which applies equally to both sides, is that we want great productivity at the present time. The, third point, which is relevant to both of these, is that somehow—this is where I respectfully join issue with my noble friend Lore Barnby—we have got to get rid of the restrictions on both sides of industry; and I say that the elimination of these restrictions is one of the 150 most important problems that confront us. I do not believe that we can get rid of restrictions on the labour side of industry by legislation: I believe that it is a matter of negotiation in the National Joint Advisory Councils, and by example.
I have stated to your Lordships, again I am afraid at length, the faith which is in me and which makes me support this Bill. It would be an unutterable sadness, after all the effort of the past twelve months, which started in this House a year ago to-morrow, in the debate we then had, if, by blurring this issue, by appearing to soften our attitude on such an important point, we were to spoil the effect of the year's work. I hope that my noble friends, who have shown such consideration in this problem and, indeed, have shown a readiness to accept my own legal view by the addition to their Amendment, will also accept my psychological view, that it would be a great danger not only to the Bill but also to the hopes of a better state of things if this Amendment were pressed.
My Lords, the noble and learned Viscount has given us a great many reasons why this Amendment should he rejected, and I shall turn to the first one, the question of time. He said that it would be a tremendous pity if, in these last minutes of this eleventh hour, this Amendment were passed. But the fact that we are in the last minutes of the eleventh hour is a matter entirely in the hands of the Government. This Bill has not been before your Lordships' House for effective debate for more than a fortnight I think. If the Bill has been before Parliament for six months and at the end of a fortnight in your Lordships' House we are told it is the last minute of the eleventh hour then I submit that your Lordships' House is not being fairly dealt with by the Government. I do not think we should pay too much attention to that argument.
The whole argument, as I understood it, of the noble Lord, Lord Baillieu, was psychological, and there is nobody better fitted to advise your Lordships on a psychological matter than the noble Lord. So far as l understood the two speeches, the noble Lord, Lord Baillieu, said that if this Amendment were carried it would encourage industry to accept the Bill and work it with enthusiasm. The reply of the noble and learned Viscount was, 151 " Yes, but if you carry it, though I am not saying it makes any difference, it will have a frightfully bad effect upon the Government of the country." I think it is our duty to pass Bills into Acts in the form in which they will work best. The effect on the Government is a matter for themselves. The Bill is a matter particularly for us, and on this psychological question I should like to say a word or two.
Here the noble Lord, Lord Baillieu, says that if his words are accepted—and we understand that they make no difference to the real sense—it will greatly conciliate those people who have to register their restrictive agreements. Supposing all restrictive agreements, however important, however necessary, are tarred with some disputable brush—just as divorce is, in the minds of a large number of noble Lords—then you may have effects that you do not expect. In Clause 20 (1) (e) we see that a restriction will not be deemed to be contrary to the public interest if it can be shown that, having regard to the conditions actually obtaining or reasonably foreseen at the time of the application, the removal of the restriction would be likely to have a serious and persistent adverse effect on the general level of unemployment in an area … We had considerable discussion on that point during the Committee stage. A group of traders may say, "We are not particularly interested, as traders, in full employment—in fact, a certain mobility of labour is to our advantage; and we will not have the restrictive agreement. It is true that it might add to our profits but 152 we will forgo them to forgo the disrepute." I submit that it is very important that the Government should conciliate these people who, after all, have been engaged in no crime and should thus help in working the Bill properly. If the noble Lord, Lord Baillieu, goes into the Division Lobby, I shall go with him.
My Lords, I do not think it is necessary to detain the House for more than a moment or two, but I should like to express the views of my noble friends on this side of the House. The noble and learned Viscount has described this as a psychological question, and I agree with him. It is also a political question. We on this side have accepted this clause as it stands, as a compromise; it is a compromise between the two views which the noble and learned Viscount expressed. It seems to me that it is important that that compromise should not be disturbed. Many of the measures that we in this Parliament pass are forced upon the Opposition, and at some time or other the Opposition feel that they might wish to disturb them. This is a measure which, so far as I know, as it stands will be acceptable, and it will stand, subject only to its workability; and for that reason I think it would be a great pity to disturb it.
Nobody is suggesting that the Amendment is fundamental and, having listened to the arguments in favour of it, I think that the noble Lords, Lord Baillieu and Lord McCorquodale of Newton, are mistaken in its effect upon industry or in what it suggests. It is not a reflection upon industry as a whole; it is not even a reflection on a part of industry; it is saying only that certain agreements which have been perfectly lawful up to now and which nobody could complain about should now become the subject of inquiry by the Court, with certain exceptions. I fail to see that that is in the slightest degree a reflection upon industry. If it is, then I am bound to say that I do not think that the Amendment which has been moved is going to make the slightest difference. The agreements will be judged by exactly the same criteria as they would be under this Bill.
I put the case simply. I do not wish to argue the matter, as the noble and learned Viscount has delivered a most important and weighty speech which I commend to every noble Lord to read 153 again, even if he has heard it, and with which to a large extent I, personally, agree. I do not think it is necessary to argue the case on the merits; I merely submit these two points: first, that here is a compromise solution which is acceptable to the political Parties and should not be disturbed; and, second, that those who are wishing to amend the clause are really not achieving any psychological advantage, let alone any other advantage. I hope that the clause will be accepted as it stands.
My Lords, I need hardly say that I am grateful to the Lord Chancellor for the time he has given to this Amendment and for the way he has handled the problems that are implicit in it. May I, however, before saying what I think on the question of carrying the Amendment to a Division, make one or two comments. I have noted that the Lord Chancellor (I think I am right here) does not dispute the legal effect of the clause. We were grateful to the Lord Chancellor when, in Committee, he gave us the opportunity of framing the clause which we thought provided the ideal solution to a matter which has been at issue ever since the Bill was launched. It is true that the Government stated their policy twelve months ago it is also true that industry twelve months ago took exception to this particular provision. because industrialists could not understand why the wider or deeper purposes of the Bill could not be met by a clause such as this. I venture to say that Lord McCorquodale of Newton is right, and that if we had thought of this earlier this House would have accepted it, industry would have been happier and the compromise therein achieved would have been approved by all.
I am sure the Lord Chancellor would not wish me to follow him into the philosophical reasons behind the Government's attitude to the Bill. So far as we in industry are concerned, we have done everything we can to improve the measure, both in this House and in another place—and let me say here, we will do everything to make it work; it is our duty as citizens. Nor do I think that the Amendment that I submitted lacked the clear guidance which the noble and learned Viscount suggested it did. It states that: 154 If the court is not satisfied of any one or more of the circumstances contained in paragraphs (a) to (g) of the foregoing subsection or if so satisfied is not further satisfied under the remaining provisions of the subsection, then the court shall declare that the restriction is contrary to the public interest. With all respect, I should have thought that that was a perfectly clear direction to the Court.
The Lord Chancellor questioned whether the public would regard it as a sincere act on the part of the Government if he came forward with his colleagues and supported this Amendment. If I may say so, I think he underrates the range and weight of his voice and authority. I am sure that if the Government were convinced that this clause was due and proper to be made, then the Lord Chancellor's support and that of the President would carry conviction, not only to this House, but to the Commons and the wider public beyond. I deplore the conclusion reached by the Lord Chancellor because, as your Lordships know, I feel most deeply that this Amendment, simple in itself, would have provided a healing action; it is designed to that very end. In view of the strong appeal by the Lord Chancellor, I feel that I must withdraw my Amendment, but I shall have to consider with my colleagues whether or riot I should refer to the matter on Third Reading.
My Lords, would your Lordships allow me to say to my noble friend, without really speaking to your Lordships again, how grateful I am at the course he has taken. It would be difficult to say which of us has been right, but I value most sincerely his taking the course which I have urged to the House, and I know that he will accept from me that it is based on a most sincere belief or I should not have asked him to do it. I am very grateful to him.
§ LORD JESSEL moved, in subsection (1) (a), after "injury" to insert "whether to persons or to premises". The noble Lord said: My Lords, this Amendment is a modified form of the Amendment which I moved on the Committee stage but which the Lord Chancellor thought went too far. My present Amendment merely extends the application of the subsection to injury to premises in addition 155 to personal injury, and I hope, therefore, that in its modified form Her Majesty's Government will be able to accept it. I beg to move.
My Lords, I have considered the point that my noble friend Lord Jessel has made and I agree with him that the Amendment as now framed makes a very limited extension to the grounds of pleading under paragraph (a) of subsection (1) of Clause 20. We recognise that under the paragraph as at present drafted there might have been doubt as to whether danger, from fire for example, to premises would have been regarded by the Court as likely to cause injury to the public. Therefore I am glad to agree to what I think is an improvement in the clause and to accept the Amendment. On the Committee stage my noble friend Lord Saltoun asked whether the word "public" in paragraph (a) included employees of any firm concerned. I consider that there is no doubt but that it does. The words now proposed to be added to the Bill, which specify persons as well as premises, would in any case, I should think, remove any anxiety which my noble friend may have had on this point. I wanted to let my noble friend Lord Saltoun know that I have not omitted the point he raised on the Committee stage.
My Lords, may I thank the noble and learned Viscount, not only for the consideration he was kind enough to give to the point I raised but also for allowing me to feel that I am in London and calling me Lord "Salton", instead of making me feel that I am in a place called "Londoon".
My Lords, I should like to be quite clear what the noble and learned Viscount on the Woolsack is accepting. The clause in general is concerned with the presumption as to the public interest, and says: a restriction accepted in pursuance of any agreement shall be deemed to he contrary to the public interest unless the Court is satisfied of any one or more of the following circumstances", 156 under which the restriction is operated. What kind of restriction is to be covered by the extension of these words? I do not quite follow the purpose of it. Can the noble and learned Viscount on the Woolsack tell me how this has improved the position of the signatory to an agreement which is going to be ruled out—how, by adding these words, it improves him in the eyes of the Court by adding these things? I do not know how it would work, especially when you talk about purchasers and consumers of goods.
My Lords, I am sorry I did not go into this point. I hope your Lordships will allow me to deal with it. The noble Viscount. Lord Alexander of Hillsborough, will see that the addition proposed by my noble friend "whether to persons or to premises" operates in line 45 of page 19—that is, it operates, so to speak, at "gate" (a). "Gate (a)" is: that the restriction is reasonably necessary having regard to the character of the goods to which it applies, to protect the public against injury", and then my noble friend's words, whether to persons or to premises in connection with the consumption, installation or use of those goods". " Gate (a)" is the gate for servicing provisions—that is, you can get out of the general presumption of being contrary to the public interest if you can show that your restriction is necessary in order to provide services with the goods which will protect the public against injury in connection with the consumption, installation or use of the goods.
Having shown that your restriction provides the services under "gate" (a) and that these services protect the public, you then have also to show, under the tailpiece at the foot of page 20, that the restriction is not unreasonable having regard to the balance between the services you supply and any detriment to the public that the agreement may cause. That is the position. This is a case where you may have dangerous goods. Our original words were that the services should be designed to protect the public against injury, and, as I said, my noble friend's Amendment extends that very slightly because the injury may be to premises as well as to the public. The dangerous goods might cause a fire in the premises, and if your services with the 157 goods give protection against fire to the premises, that would be enough. It is a very narrow point and I assure the noble Viscount that I consider each of these gates like a terrier at a rathole.
My Lords, I should like an example of the kind of injury that would be covered under "gate" (a) in relation to the question whether or not it is a trade restrictive practice. That is what we are up against and want to cure in this Bill, and I have not had an example yet.
My Lords, I did give an example; perhaps the noble Viscount did not hear it. The example I gave was that if you are producing goods which are dangerous in that they may cause a fire and you supply with the goods the services which will protect people against fire, that is one of the things at which the Court should look. "Gate" (a) deals only with services. As the noble Viscount knows, there is an immense variety of services. This is a very narrow point; whether the danger must he entirely a personal danger (that is, where, for example, you cut yourself with the goods), or whether, as Lord Jessel wants, it is a danger of setting your house on fire. It is a small point and. I think, a very reasonable one.
My Lords, we now move on to the next "gate." At the Committee stage your Lordships may remember that my noble friend Lord Jessel said that the words "the public" in "gate (b)" might be interpreted as unduly limiting the class of beneficiaries. My noble friend said he thought it might be argued, for instance, that public authorities, or national or area utilities, would not be covered by the description. The Government think that there may be some substance in the noble Lord's arguments, and this Amendment is designed to remove any doubts. Your Lordships will see that the Amendment makes it clear that "purchasers, consumers and users" include not only public Authorities but also purchasers, and so on, of intermediate goods, such as plant and machinery. I think that meets my noble friend's point, arid I hope he will welcome the Amendment. I beg to move.
My Lords, this is a drafting Amendment to bring the provisions about partnerships in subsection (2) of this clause into line with other parts of the Bill, where partnerships are to be treated as single persons only if none of the partners is a company. I beg to move.
My Lords, the three next Amendments are drafting Amendments, put down to meet criticisms made at the Committee stage by my noble and. learned friend Lord Conesford and by Lord Alexander of Hillsborough. They were criticisms of paragraph (c) of subsection (2) of this clause, which is about the rules of procedure and the representation of the Registrar. It seemed clear to us, from the criticisms leveled against this particular wording, that the word "regulating" might be taken as implying that the evidence to be required or admitted before the Court might be restricted in some improper way. As I tried to explain, the intention of the paragraph is exactly the opposite—that is, to facilitate the proceedings before the Court by widening the range of evidence which may be brought before the Court so as to avoid undue expense or inconvenience. I hope that the re-drafting of the words will set the minds of Lord Conesford and Lord Alexander of Hillsborough at rest. It just goes to show that if you set out to do a really fine piece of draftsmanship you want not only all the precedents at your elbow but also that invaluable work,Conesford's English Usage. I beg to move.
My Lords, the next Amendment is consequential. I beg to move.
My Lords, this Amendment allows the Lord Chancellor's rules, which are to be made under Clause 22, to provide for the grouping or consolidation of applications before the Restrictive Practices Court. As the Bill stands, the Court would have to deal separately with each agreement, even if there were a large number of agreements, say between a trade association and individual distributors, all of which were in similar terms. The advantage of this new provision will be not only that it will save the time of the Court and the parties to the proceedings, but also that it will enable the Court to look at a restrictive practice in a particular industry in the round. I may remind your Lordships that the rules made by the Lord Chancellor under Clause 22 are subject to annulment by either House of Parliament. I beg to move.
§ or any agreement or arrangement authorising the recovery of penalties (however described) by or on behalf of the parties to the agreement from dealers who resell or have resold goods in breach of any such condition as is described in paragraph (a) of this subsection, or the conduct of any domestic proceedings in connection therewith.
§ VISCOUNT ALEXANDER OF HILLS-BOROUGH moved, in subsection (1) (b). after "favourable" to insert "to such dealers or their customers". The noble Viscount said: My Lords, I do not want to occupy a long time upon this Amendment. Clause 23 prohibits collective resale price maintenance and makes it unlawful for any two or more persons carrying on business as dealers in or suppliers of any goods to enforce certain arrangements in connection with the supply of those goods. We want to add these words to this clause because we are very much affected by it from the point of view of our members of industrial and provident societies. The way in which these things work ought really to appeal to the Government of the day, after all their assertions of their wish to meet us on this matter.
§ They ask us to believe that they are greatly concerned about the cost of living and want to bring it down. And yet under this clause, in seeking to obtain wide ranges of goods for sale, we can be required—and this is a matter of discrimination, as compared with the treatment of other traders—to add to the maintained resale prices what the suppliers consider to be a proper modicum in relation to the distribution of surplus or profit at periodic accounting intervals. That, we maintain, is completely unreasonable. I shall be saying something more about it on a later Amendment. In the meantime I am concerned at this particular practice. For example, in the case of a large number of commodities handled by the Proprietary Articles Traders' Association, they say, in effect:" You can have these goods provided that you charge a halfpenny, a penny, three-halfpence or twopence to what is the fixed resale maintenance price we apply to other people because you have a different method from 161 other people of distributing your profits." That, we maintain, is completely unreasonable.
§ I am challenging the Government upon this point, in view of the fact that they say they want to reduce the cost of living and are taking some extraordinary economic measures in the belief that they will bring that about. However, perhaps the debate on the Finance Bill next Monday will be the appropriate time to go into more detail on that matter. The Government are allowing this sort of thing to go on, in spite of their pledge to take steps to bring down the cost of living. They are discriminating against the 11½ million members of the industrial and provident societies by saying that they are not to be allowed to pass on to their members and customers the great advantages of collective buying and collective distributive services. I beg to move.
My Lords, this Amendment deals with a relatively minor aspect of the major point which I am quite sure the noble Viscount, Lord Alexander of Hillsborough, will make in his speech on Amendment No. 35. I hope that your Lordships will bear with me while I just explain the narrower position with which this Amendment is concerned. Clause 23 makes it unlawful for suppliers to agree or arrange to supply, or offer to supply, their goods to price-cutting dealers on terms less favourable than the terms on which they supply or offer to supply non-price-cutting dealers carrying on business in similar circumstances. That is the general effect of Clause 23.
The Amendment now before the House introduces the concept of terms which are less favourable to the customers of the retailers. A similar Amendment was moved on the Committee stage, but was withdrawn after my noble friend Lord Mancroft had said that, in his view, even if it were agreed that the co-operative dividend should be made the subject of some special provision, the Amendment would not achieve it. In making that point, Lord Mancroft made it clear (and I think he made an important statement, and one with which I 162 entirely agree) that agreements among manufacturers about how the co-operative dividend was to be treated were registrable agreements; that is to say, agreements to the effect that every manufacturer would individually impose a condition that co-operative societies should not allow the dividend on the manufacturer's price-maintained goods would be registrable. I think the noble Viscount, Lord Alexander of Hillsborough, was relieved and indicated that that had never been stated clearly before. That is the position and with respect to my noble friend Lord Mancroft, I endorse it to-day.
The Government adhere to their view that, if some provision is desired to safeguard co-operative dividends from being regarded as an infringement of resale price conditions, the present Amendment is not successful in effecting this. I venture to submit that, if anything, it would place the co-operative societies in a more difficult position than that in which they are to-day, because manufacturers would not be able to allow co-operative societies to pay divide ads while other traders were prevented from doing so. At the present moment, some manufacturers sell their goods to the co-operative societies without any restriction, knowing that the societies would pay dividends, while they do not sell the goods to private traders. Since the Amendment does not allow customers of co-operative societies to be treated better than customers of private trailers, the effect of the Amendment might well be that manufacturers would bring themselves within the law by preventing co-operative societies from giving dividends or else refuse to supply their goods to them.
I suggest to the noble Viscount that it would be more appropriate to reserve our fire—and I know that the lire from his batteries will be heavy—until we consider the question of co-operative dividend in relation to Amendment No. 35. As was stated during the Committee stage, under the Bill as drafted agreements between manufacturers, to the effect that the co-operative dividend shall not be allowed, must be registered and must be justified to the Restrictive Practices Court. I think it is important that that should be made clear in your Lordships' minds. I hope that: the noble Viscount, having made the gesture of moving this Amendment, may feel disposed that we should join issue 163 and argue a question on which I know he feels strongly and sincerely when we get to Amendment No. 35.
My Lords, it is always difficult to resist the pleading of the noble and learned Viscount. In response to what he has said I will withdraw the Amendment, but I would draw the particular attention of the advisers of members of industrial and provident societies to the situation which has been arrived at by the legal mind of the noble and learned Viscount and by the Department represented by the noble Lord, Lord Mancroft —namely that agreements of the kind I have in mind are registrable. That is a good thing to have brought out, and it will, I hope, be a guide to anyone who wants to exercise this practice against industrial and provident societies. They should be warned that we will see to it that the Registrar does register these agreements; and if he does not, we shall go to him to see the reason why. I beg leave to withdraw my Amendment.
§ 24.—(l) Where goods are sold by a supplier subject to a condition as to the price at which those goods may be resold, either generally or by or to a specified class or person, that condition may, subject to the provisions of this section, be enforced by the supplier against any person not party to the sale who subsequently acquires the goods with notice of the condition as if he had been party thereto.
§ LORD LUCAS OF CHILWORTH moved, in subsection (1), after the first word "the" to insert "maximum" [price]. The noble Lord said: My Lords, I ask your Lordships' pardon for returning to this Amendment which we discussed on Committee stage, but we discussed it in conditions and at a time when the majority of your Lordships had a social engagement elsewhere, and I had to do it rather hurriedly. I consider Clause 24 to be the Achilles' heel of the Government in this Bill. if I could write shorthand and had taken down the speech of the noble and learned Viscount on the Woolsack in reply to Lord Baillieu's Amendment, I could not have had a better argument in support of this Amendment.
§ We have been told right the way through this part of the Bill that its whole object is to unfreeze trade, to get it out of the rigidity in which it has grown up through the enforcement of resale price maintenance. The noble Lord said definitely that the Government's object was "to do away with the restriction of competition." What the Government do right up to Clause 23 is to try to do away with all restrictive practices that are against the public interest. They make collective boycott unlawful; they prevent two or more people conspiring together to enforce a resale price; they open the channels of distribution. Then in Clause 24 they give power to any single producer of any article to nullify the whole of what they have done. Any single producer can defy the Government and say that he will have "none of this doing away with restriction of competition," and that nobody shall sell any article he produces at a price different from that included in an agreement. And Clause 25, with which I will deal when we conic to it, goes even farther.
§ Where I think the Government have gone wrong is that they have no real backing from the Monopolies Commission to do this. Paragraph 176 of that Corn-mission's Report says: We consider it to be within our terms of reference to consider whether it would be in the public interest to introduce legislation to facilitate the enforcement by an individual supplier of conditions as to the maintenance of resale prices and other conditions of sale.
§ That is what the Monopolies Commission say. The Lloyd-Jacob Committee on Resale Price Maintenance, who have been called in aid by the Government, in paragraph 114 of their Report say: It appears to us to be contrary to the public interest for a manufacturer to use his power to cut off supplies in such a way as to obstruct the growth of particular methods of trading, to impede the distribution by another manufacturer of competitive goods or to deprive the public of the benefits of low cost systems of distribution.
§ That is precisely what the Government do.
§ I have put this simple Amendment down again to give myself the chance of impressing upon the Government what they are doing. I have said that in the interests of the consumer—and it is the consumer with whom we arc really concerned—the only price enforcement should be that of a maximum price, and 165 we should not legislate against the passing on to the consuming public of the benefit of the individual distributive unit's efficiency. That is what this does. This clause says that you do not trouble how efficient a distributive unit is: if it can distribute the goods on a lower price range it is prohibited from doing so. I do not think that that is in the public interest. I feel that this clause, as it stands, will operate very much against the public interest, because some manufacturers will enforce their price and others will not, and the good manufacturer, or the manufacturer who wants, perhaps, to conduct his business according to a decent plan, will possibly be subjected to vicious competition by another manufacturer.
§ One of the things that I believe have influenced the Government—and I think the noble Lord brought it out in his speech on the Committee stage—is that they want the individual manufacturer to have soma protection against what is popularly known as the "loss leader." In all my years in industry—I challenged the noble and learned Viscount, the Lord Chancellor, the last time on this point, and I challenge him or any other noble Lord in your Lordships' House now—I have never found that the "loss leader" made any lasting impact upon the distribution of a branded article, or the profits of the producer of a branded article. That is a myth. As I said last lime, the best "loss leader" I ever knew was a hot-cross bun—it was not a. branded article—which used to be given away by the dozen a week before Easter. This fear is a myth. The "loss leader" does riot interfere for any lasting period, although it may cause a temporary setback for a day or so. I think that Clause 24 nullifies the whole effect of this part of the Bill. Therefore, I beg the noble and learned Viscount on the Woolsack to give this Amendment reconsideration.
§ I think the public should be protected by a ceiling, and any manufacturer should be able to say: "You must honour a maximum price." The Government want this part of the Bill to he a success and want to carry out what they have said is their objective; that is to say, to make some mark by unfreezing the frigidity of distribution in this country so that the consumer can get a lower price. They will never get that until they, if I may use a vulgarism, "go the whole hog." What is the difference between allowing six producers in one industry to combine together, and allowing one producer who has a monopoly of production, or a near monopoly of production in that industry, to effect individual price maintenance? I am not going to say more. That is the gist of my argument. I shall return to some of it later on in regard to another Amendment on the question of equity of enforcement, but that is my argument on this simple Amendment. I beg to move.
My Lords, the noble Lord, Lord Lucas of Chilworth, began by referring to this Amendment as the Achilles' heel of the Bill. I was wondering whether I could find anything better connected with Achilles with which I could compare it, and all I could think of was the Lady Briseis, to whom we used to refer slightly ungallantly as τυτθον 'αλλ' 'íµον—" a small thing, but mine own." Certainly in one sense this clause is our own, 167 because it is the via media between the collective retail price maintenance which we have prohibited by Clause 23 and doing nothing about resale price maintenance. I know the noble Lord, Lord Lucas of Chilworth and I could have a great argument by selecting passages of the Lloyd-Jacob Report. but I suggest that the result of that Report is that individual resale price maintenance should not be barred, although I do not say for a moment that that Report suggests legislative action. All we say is that we are getting rid of collective resale price maintenance, and therefore we are going to give the manufacturer a chance of dealing with anybody who takes his goods with conditions as to price, and then cuts the price with full knowledge that he is breaking the conditions on which the goods came to him. That is what we have suggested: that the remedy will follow the goods, so to speak, and that the manufacturer will be able to deal with the person who cuts his prices in that way. That is the only point in Clause 23 which raises this issue between us. Is it wrong to make it somewhat easier for a manufacturer who is not in direct contractual relationship with retailers—because he supplies through wholesale intermediaries—to enforce resale price conditions against retailers? In other words, is it reasonable, given that collective action is forbidden by Clause 23, to put all manufacturers, whether they deal with retailers or through wholesalers, in roughly the same position in regard to enforcement of resale prices?
I must for a moment deal with the Amendment which is actually before the House, because your Lordships will appreciate that the Amendment the noble Lord has moved would not make individual resale price maintenance unlawful. It would still be possible to enforce resale conditions by contract. But it would make it extremely difficult or impossible for those manufacturers who deal wholly or mainly through wholesalers, and who find it difficult in practice to establish contractual relations with retailers, to enforce resale price conditions against retailers. That is what the Amendment will do. The Government consider that on balance it is reasonable to strengthen the powers of individual manufacturers—I repeat "individual"—in this respect 168 as a consequence of the prohibition of collective enforcement.
I do not want to put my opinion against that of the noble Lord, Lord Lucas of Chilworth, with his great experience. All I can say is that the Government have collected information on the point, and many manufacturers claim that they can embark with greater assurance on mass production and sales programmes, or on building up proper servicing facilities, if he knows that a reasonably stable distributive system is available to deal with his products. There are certainly reasonable grounds for providing manufacturers with some protection against the disruption which "loss-leading" may cause. I have heard with great interest what the noble Lord. Lord Lucas of Chilworth, said about that. All I can say, with the greatest respect to his opinion, is that it is not a generally held view.
Again I crave in aid the view of the Lloyd-Jacob Committee, and I repeat that the whole tenor of that Committee's Report was that collective enforcement ought to be done away with, not only because of the use of secret courts but also because it had led to the strangulation of the distributive trades. That view was shared by the majority of the Monopolies Commission. But the Lloyd-Jacob Committee—and, after all, there is no other post-war Report on individual resale price maintenance in this country —came down firmly in favour of not depriving the manufacturer of power to exercise some control over the retail price of his goods. As I have said, they did not recommend legislation, but they did recommend what I have stated a moment ago. The problem that faced us was to provide for some measure of stability in distribution without causing stagnation or denying the public the benefits of new or cheaper methods. The abolition of collective enforcement, and the rigidities and inflexibilities which are associated with it, taken together with the provisions of Clause 24, appear to the Government to constitute reasonable and practical steps to meet these two objectives. Clause 24 is thus an integral part of the Government's proposals in resale price maintenance, and I am afraid that the Amendment cannot be accepted. I want noble Lords to know that I have considered it very carefully. We have chosen this via media in dealing with the matter and, I do not think, great as is usually the effect 169 of the eloquence of the noble Lord, Lord Lucas of Chilworth, on myself, that after the consideration I have given this matter even he could prevail.
My Lords, I am grateful to the noble and learned Viscount for stating what the Government viewpoint is. We could go on arguing over this matter for a long time. I know what the Lloyd-Jacob Report said: I read all the evidence that was given before the Committee. As I did so, the words of the old song came into my mind: So they say, but what they say ain't always true. What is popularly known as price-cutting has never yet hurt the manufacturer. What hurts the manufacturer, and what spoils the market for his goods, is either a drop in the quality of his product or the behaviour of the buying market through the action of Government, as we are seeing to-day. But to say that, because his distribution organisation is to be allowed to pass on the benefits of its efficiency to the public, that will unstabilise his market or his production methods is—with the greatest possible respect to anyone who says it—just a lot of nonsense to those who know industrial and commercial industry in this country.
I could mention names and tell your Lordships about producers of goods in this country who have a huge market, and whose article has suffered the biggest price cut in commerce. But what has always kept their market right up high is the quality of the article they sell. When you market a branded article, the quality of that article is the first and last medium for keeping up your sales. I will not ask your Lordships to divide on this Amendment. If I did, I think I should be trespassing upon the courtesy your Lordships always show to me, because I divided on this Amendment last time. I am certainly not going to ask your Lordships to weary yourselves by going into the Lobby again. But I shall come back to this matter in a further Amendment. History will prove that now you have stopped collective price maintenance, one day or another you will have to stop price maintenance wholly. With that, I beg leave to withdraw my Amendment.
§ The noble Viscount said: My Lords, having saved your Lordships' the time of considering two very important Amendments, I hope that we shall get a great concession on this Amendment, which, to us, is a vital one. I am afraid that, as we were cut short by the necessity of so many of your Lordships having to go to Buckingham Palace last Thursday week, I did not then adequately state the case for this Amendment. It needs stating in some detail.
§ It is not at all a bad thing for your Lordships' House, in the present economic circumstances of the country, and with the many difficulties facing the Government and industry, that there should be some little recital impressed upon the minds of your Lordships as to what is really embodied in this Amendment. It springs from pure history. It arises from the time when the workers in this country were working under the new form of industrialism and the exploitation of their labour for very little reward and for long hours, with a low rate of direct taxation of incomes and with an ample provision of places in which people could sing themselves to the heavens on Sundays and nothing happened for the rest of the week. At that time, men were gathering together to try to learn new philosophies and to understand whether there was anything they could do for themselves collectively to improve their lot and position. That is where the movement of industrial and provident societies carne from. That is the basis upon which we move the Amendment to-day.
§ What did the workers do? They collected a few pence per week until, by a little collective saving from their miserable weekly wage, they got a small sum of money to start a distributive business and drew up a programme for themselves so that, as a club, they could begin to eke out the miserable existence that a prosperous capitalism was beginning to bring about in Lancashire and Yorkshire. That is how it arose. Ever since then, the industrial and provident societies have been steadily advancing, in the teeth of the very kind of boycott behind which we are seeking to get to-day. There would have been no Co-operative Wholesale Society in 1860, when it was started, if there had not been a deliberate boycott of co-operative societies for the supply of goods because they gave back their profits to the customer. Ever since then the fight has been going on. Never in the history of the industrial and provident societies have we had a Government like the present one. definitely up against the objectives of the industrial and provident societies. That is where we feel that we have a right to a most careful consideration by your Lordships of this Amendment.
§ The real fact is that much of the development of modern industry, especially in the distributive sense, has had a great deal to learn from industrial and provident societies. The principles of collective buying and the organisation of area distribution have been adopted by other organisations, though perhaps with different directives and different influences. But no matter what those organisations outside who handle branded goods and the like can save by way of their collective gain and knowledge, they must sell those branded goods at fixed prices, with the result that in the modern multiple shop profits soar and soar. So we have these huge fortunes made and distributed upon a limited number of shares in the multiple shop concern, instead of being spread over the great mass of the people in the industrial and provident societies, enabling them therefore themselves to become better individual purchasers and better demanders for goods, which means more employment in the country. That was why, in the old clays, so many Conservative Governments used to stand by us in their main objectives—and Liberal Governments, too. What is the situation 172 now? The situation is that the industrial and provident societies grow alongside the multiple shops and there is a widening of agreements—agreements written, agreements not written, a practice arising, perhaps, only from the distribution of information from one firm to another, or one organisation to another, as to what is their intended practice.
§ Then we have the refusal to supply goods. If one looks back upon one's experience of the Proprietary Articles Traders' Association, covering almost every kind of range of popular proprietary medicine, photographic goods, electrical and wireless goods, and things far too numerous to mention, one finds these things are being withheld from cooperative societies which are driven over and over again into the same production—a production which they need not have attempted at all had they been given reasonable treatment in regard to supplies and terms of trade. That is a quite unnecessary duplication of productive effort, and one not at all in accordance with the needs of the country at a time when we wish to conserve our capital resources for a wise and unduplicated state of production at home to assist our capitalisation and development abroad.
§ From some of my experiences when appearing before tribunals on this matter from time to time. I thought we had established a case which was absolutely unbeatable, in argument at any rate. I have never found any tribunal before which I have appeared on this matter which could ever find a flaw in our case—none at all. I have listened to the noble and learned Viscount on the Woolsack in the course of these debates, and I cannot find that he is against us in principle: he is not against us in principle. All the Government are concerned with in this Bill is to find what has been described as "the middle way" between the recommendations of the Majority Report of the Monopolies Commission and those in industry who would be entirely opposed to the Majority Report of the Monopolies Commission. Sometimes the middle way is a very dangerous one to tread, and I fear that the. Lord Chancellor has felt that during the debate.
§ It reminds me of the present Chancellor of the Exchequer who wrote about the middle way before the war, in between the wars. I sometimes wonder 173 whether he now feels that he ought to have written all the things he wrote at that time. He would have been much better advised to grasp the nettle in this case and to deal at last with what the general working class of this country have been crying out for for the last seventy or eighty years, and which up to this time, as a general rule, they have never found any Government, capitalist or otherwise, really opposed to in principle. The present Government, because of the experience in the First World War, when the Coalition Government then played such a foolish game and drove the co-operators to take their own political action, insist that they must go on treating them now as a hostile force; and so they will not give them justice upon this matter.
§ I wish your Lordships would all reconsider this matter in this House. This is a perfectly logical and sound business thing to do. The industrial and provident societies do not stand alone when they give deferred rebates, as some people call them, or, as we call them. the distribution of our profits and surpluses every six months, at the end of a balancing period. They are by no means the only people who do that. The great multiple shops, or the well-established family grocers and the like, are called up by the suppliers of goods because they give a discount, and it is so often done in a gentlemanly way! Take, for instance, a respectable district grocer like the International Tea Stores or Sainsbury's, who have a monthly account with the local squire or any of his relations upon that same basis. They could not be expected to come down and pay every day, or even every week, for their goods; they pay a monthly account, and the grocers are only too glad. They would give a discount on the lot, including branded goods. Nothing is said about that. But because the co-operative society produces a balance sheet which is readable and understandable by anybody who has been to an elementary school, and tells the truth about everything, there is a denial of the right to receive the same kind of supplies as are given to other traders.
§ I charge the Government here with—what shall I say?—cowardice in dealing with the Report of the Monopolies Commission. 'The biggest mass of evidence has been produced over and over again by the co-operative societies. The case 174 has been proved over and over again. The Lloyd-Jacob Committee arid other Commissions have reported, and now, when it comes to being a Majority Report of the special Monopolies Commission, appointed largely as a result of co-operative pressure, what do you turn round and do? You give the people who are against the co-operative societies in this matter, for the first time, a special legal right to proceed against them in the courts of this land; and you establish by law something which ought never to be allowed to go on to the Statute Book. I think that that is a perfectly scandalous position to arrive at, and I submit that we have every reasonable right to propose this Amendment.
§ We had a reference just now to this being the fifty-seventh minute of the last hour of the debate upon this Bill. It is not quite as late as that—it is not too late for sinners to come to the penitence form. I assure members of the Conservative Party in this House that they would be doing better for their Party it they granted this Amendment. I assure them of that. Instead of that, you are running away from the issue. Why is it that you run away from the Monopolies Report? Do you run away because you have special advice from your experts? Of course not. You are handling this matter with the same sense of indecision with which you have handled so many matters in the last three or four years. You wonder which course is going to be best for the Conservative Party in order to please—should it be left or half left, right or half right, or centre? You decide upon what you call the middle way, and, judging from the speeches we have had from the noble Lord, Lord Baillieu, and others this afternoon you do not satisfy anybody at all.
§ We make our last stand here on the Report stage for real justice for the mass consumers in this country—and that is where you will find the mass consumers, in the industrial and provident societies. They are growing every day, and they will go on growing, in spite of this obstacle to which you arc going to give legal argument. You must take your choice. While I want the Amendment now more than anything else at this time—I want it tonight—I am quite certain that, if you throw it out, you will be making the chance for your political views to be on top at the next Election very much worse. I beg to move.
My Lords, your Lordships have had the privilege of listening to a strong and forceful speech on a subject very near the maker's heart; and that is something we always like to hear. I am sure the noble Viscount will not take it amiss if I say that. However, there is one piece of his philosophy which I challenge. I am not going to take long because I know of the noble Viscount's interest in religious matters, but I would refer to a book which he may have read and which I am sure would interest him, The Marquess of Montrose, the life of a great figure in the Scottish Presbyterian Church in the 17th century which was written by an old colleague of some of us in this House and of some in another place—John Buchan, the first Lord Tweedsmuir. In that person the feeling for moderation burnt as clearly and as strongly as in most men does the feeling of fanaticism. I put it to the noble Viscount that the middle way, the way of moderation, sometimes requires just as much strength for the reason he mentioned: that one is attacked from both sides as taking an extreme course. Beyond that I leave it to him to read the far better words of an old friend of both of us.
My Lords, I accept entirely what the noble and learned Viscount says about moderation; but moderation in pursuing a great spiritual objective I find neither in Daniel nor in Nazareth.
I shall never be ashamed, my Lords, if anyone in the future compares me with the great Marquess of Montrose. I want to deal with the point that the noble Viscount has made and to make one reference to the Amendment. I do not want to take any technical point of the Amendment, but it does demonstrate the difficulty of the subject on which I wish to speak. The noble Viscount will see that the first part of his Amendment reads as a general prohibition against resale price maintenance in the case of the co-operative societies, whether there is an intervening retainer or not and, whether there are contractual relations or not. The second part of the Amendment prohibits action 176 under the clause we are discussing, Clause 24, which gives the special power of dealing with a retailer. I want to make it plain, despite what the noble Viscount has said, that in resisting this Amendment the Government have no antagonism or antipathy towards the co-operative dividend. My right honourable friend the President of the Board of Trade has already stated in another place our position on this point, and I state it again out of deference to the speech we have heard and to make the point perfectly clear. We see the greatest difficulty in singling out the co-operative dividend for special favourable treatment. It would be unfair to oblige all distributors other than the co-operative societies to take their chance with manufacturers in the matter of paying dividends and discounts. Therefore, in the Government's view, it would be necessary to go much further than this Amendment does, and it is out of this necessity of going further that the serious difficulty arises.
It would be a relatively simple matter to exempt all deferred dividend schemes from being regarded as equivalent to price-cutting. But merely to make provision for deferred dividends would be demonstrably unfair to those traders who, either because of the class of goods which they handle or because they cannot face up to the administrative problems involved, cannot operate a deferred dividend scheme and yet find themselves open to competition from the deferred dividend schemes operated by larger organisations. To regard people in that position may be considered a finicky search for justice, but nobody could say that it is vote-catching or leaning over to attract a powerful section of the community.
I want to follow this up logically. The question is how much further the Government would have to go. They might exempt any immediate discount scheme, but it is extremely difficult to see in practice how a distinction could be drawn between an immediate discount scheme of a bona fide nature and harmful price-cutting which injures not only the distributive trades but also the interests of manufacturers of branded articles. I do not want to repeat what I said in answer to the noble Lord, Lord Lucas of Chilworth. on, I think, the last Amendment we discussed. I know his view and I respect it. On the other hand, I have 177 said that we have had put to us the serious effects of "loss leaders" and price-cutting on mass production and on sales programmes.
I have mentioned, when discussing the matter, in answer to the noble Lord, Lord Lucas of Chilworth, my general view of the effect of the Lloyd-Jacob Report. May I just quote the words which I had in mind? The Lloyd-Jacob Committee said that they saw no reason why a retailer who, for example, carries a wide range of relatively cheap and non-durable goods and finds himself able and prepared to operate an immediate discount scheme, should in any way be prevented from doing so. It will be noted that this view of immediate discount schemes did not extend to all goods, and the Committee themselves said—this is the point that we must remember with the first quotation; I thought it only fair to give both: We recognise that there may be difficulties in applying the principle generally. Those very words lend support to what my right honourable friend, the President of the Board of Trade, said—namely, that it is easier to make a recommendation of this kind than to translate it into legislation.
Would the noble and learned Viscount forgive me, but is he there not saying quite plainly that the Government cannot see their way to support the obvious desire to free the channels of distribution and allow wide-scale experiments so that the benefits of efficient distribution can he passed on to the public? Is he not saying that the Government's view, on the one hand, is that that should be done arid, on the other, that they want the rigidity of the present system preserved?
If it had not been for the last words of the noble Lord I should have said that he had put the case admirably. What the Government want preserved is, on the one hand, that the manufacturer should have some stability, through knowing that the retail prices of his products will not be frittered away, and, on the other hand, that distribution should have the greater flexibility which the prohibition of collective resale price maintenance by Clause 23 will undoubtedly give to him.
I do not think that I am particularly 178 stupid on this point, but you do away with rigidity with collective boycotting and then transfer it to the individual manufacturer who can do precisely the same thing.
That is exactly the point which I put to the noble Lord: that collective boycotting is a formidable joint operation and results in rigidity and inflexibility because it is a collective boycott. If it is left to the individual manufacturer he can deal now only with people with whom he has a contract—that is before Clause 24 comes into operation. That means that he has got to find the person with whom he is in contract and go to the courts about it. Nobody has suggested that he should not be able to do that—I except, for the first part, this Amendment relating to the co-operative society. Nobody has suggested that an individual manufacturer may not be able to make a contract as to the terms and conditions on which he sells his goods. Once you allow that, what is wrong with it—this is the point that i put to the noble Lord. If somebody takes these goods, knowing that the condition on which they are sold to the retailer is that there will be a minimum price, and then he breaks that condition, why should not the manufacturer be able to go, over the wholesaler, to the retailer who knows that he is breaking the condition on which these goods arc being sold? I cannot see anything wrong with that. I must say that, for once, the noble Lord and I do seem to see each other's side of the fence. We always think that our side is the correct one. But there it is. I have stated it once more and I do not think I need go further.
I should like to know how the noble and learned Viscount on the Woolsack "squares" that with the avowed desire of the Government to reduce the cost of living. He says that it is perfectly open—and I agree—for a manufacturer to make a contract with conditions of sale. The contract is going to fix prices which give him, first of all, all his costs of raw materials, labour and overheads, plus his profit, and then he has these two other integrated prices to he charged on top of that. It can be shown that these goods can be sold far more cheaply than the ultimate price. How' are you going to get that into the 179 hands of the consumer? How do the Government "square" their action with the fact that they are restricting the passing of that surplus over to the consumer, where it ought to be?
The answer to the noble Viscount is that I do not believe that all his premises can co-exist.
Nor do I believe that manufacturers would be so stupid, in these circumstances, to take the course of maintaining a price which, on the hypothesis of the noble Viscount, is much greater than that at which other people can produce them. I put the other horn of the dilemma to the noble Viscount. I say: are you going to take away the right to impose prices by contract? I remember that when I suggested the slightest infringement of the rights of contract in the interests of bombed-out slum dwellers there was such a howl of protest from that Bench that I almost shuddered to mention the term "contract" again. The Labour Peers said: "This awful attack on the sanctity of contract!" It was in the interests of people who had been bombed out or who were dwelling in slums and had to buy property at increased rates. I was regarded as one of the greatest sinners since Karl Marx went out of fashion.
I come back to the point I was making: that this is an extremely difficult matter on which to introduce provisions in the Bill. The fears which have been expressed to the effect that the Bill places the co-operative dividend in danger are exaggerated. I just want to summarise the points. The Bill does not affect what the individual manufacturer may do, as I have indicated more than once. There are certain manufacturers who will not supply co-operative societies at all. There are other manufacturers who supply co-operative societies only provided that no dividend is paid, and these manufacturers will be free to continue this practice in so far as they are acting on their own initiative. If the Government were to compel them to accept payment of dividend in respect of their goods, there is no guarantee that they would continue to supply. But there are other manufacturers who supply co-operative societies 180 and who place no restrictions on payment of dividends. There is nothing in the Bill to give them any cause to change their policy in this matter. Indeed, it must not be overlooked that the Co-operative Movement has, it is said, over 11 million members, and manufacturers cannot be blind to a market of that sort.
Then, when we come to collective action by manufacturers, the Bill in Clause 23 makes the radical change which I have mentioned, and which I need not go over again. Part II of the Bill deals with methods of enforcement. It will eliminate collective enforcement by means of the boycott or the stop list. But it does not seek to alter the resale price conditions which manufacturers can impose. As I said earlier, and the noble Viscount accepted it with some gratitude, where manufacturers agree—I repeat agree—to operate discriminatory resale price conditions, they must be prepared to register the agreements and justify them before the Court. But there are great difficulties in seeking to define what should and what should not be regarded as infringement of resale price conditions. Therefore the Government have decided to leave this to the decision of individual manufacturers, and cannot accept the Amendment.
I know that I have not said anything new; it has been said before. But I thought it right, in view of what he will allow me to say was a most forceful speech from the noble Viscount, to restate the difficulties in the way of the Government, and I have tried to do so. I am afraid we cannot accept the Amendment, and without any disrespect to the noble Viscount, I think this is an Amendment which has been discussed so fully, and he has done it so much credit tonight, that after he has demolished me with a few pungent phrases we might consider going to a Division on the matter.
§ 25.—(1) For the purposes of this Part of this Act a condition as to the amount of discount which may be allowed on the resale of any goods, or as to the price which may he paid on the resale of any goods for other goods taken by way of exchange, shall be treated as a condition as to the price at which goods may be resold.
§ (2) In this Part of this Act any reference to selling goods includes a reference to letting goods under a hire-purchase agreement within the meaning of section twenty-one of the Hire-Purchase Act, 1938.
§ (3) In the application of this Part of this Act to Scotland, for references to the plaintiff, the defendant and an injunction, there shall be substituted references respectively to the pursuer, the defender and an interdict; and for the reference to a hire-purchase agreement within the meaning of section twenty-one of the Hire-Purchase Act, 1938, there shall be substituted a reference to a contract to which the Hire-Purchase and Small Debt (Scotland) Act, 1932, applies, or would apply if the limitation as to value contained in section one of that Act were omitted.
§ (4) In the application of this section to Northern Ireland for the reference to section twenty-one of the Hire-Purchase Act. 1938, 182 and the maintenance of excessive profits that arc advanced by these collective arrangements, against which they would take no action. I think, therefore, we had better take the vote—and we will bear it in mind.
§ Contents, 16; Not-Contents, 29.
Listowel, E. Amulree, L. Lucas of Chilworth, L.
Lucan, E. [Teller.] Grantchester, L. Mathers, L.
Greenhill, L, Milner of Leeds, L.
Alexander of Hillsborough, V. Haden-Guest, L. [Teller.] Morrison, L.
Stansgate, V. Kenswood, L. Quibell, L.
Kilmuir, V. (L. Chancellor.) Bridgeman, V. Fairfax of Cameron, L.
Albemarle, E. Howard of Glossop, L.
Breadalbane and Holland, E. Ashton of Hyde, L. Jessel, L.
Buckinghamshire, E. Barnby, L. Killearn, L.
Fortescue, E. [Teller.] Bennett of Edgbaston, L. Mancroft. L.
Home, E. Chesham, L. Moyne, L.
Munster, E. Conesford, L. O'Hagan, L.
Onslow, E. [Teller.] Congleton, L. Strang, L.
St. Aldwyn, E. Digby, L. Strathcona and Mount Royal, L.
§ there shall be substituted a reference to any corresponding enactment for fae time being in force in Northern Ireland.
§ LORD LUCAS OF CHILWORTH moved, after subsection (1) to insert: (2) Where any supplier who supplies goods, subject to conditions as to the price at which they may be resold, enforces such conditions inequitably as between one dealer and another or fails to observe such conditions himself when effecting retail sales in competition with any dealer in his goods the Crown shall be entitled to secure the equitable enforcement or observance of such conditions by civil proceedings against the supplier.
§ The noble Lord said: My Lords, we now come to an Amendment which I think it will be very difficult for the noble and learned Viscount who sits on the Woolsack to refuse to accept. All the way through our debate upon Clause 24—that is, the clause relating to individual enforcement—the noble and learned Viscount put to us the right of the individual manufacturer to fix his prices. As your Lordships who support the Government have defeated us in the Division Lobby on that particular issue, we must 183 accept the fact. So my energies now are concentrated on seeing that the enforcement of resale price maintenance is conducted on a basis of equity. I am sure that in this I shall carry the noble and learned Viscount with me, because when I attempted to argue this case at the Committee stage the noble and learned Viscount, rather unkindly, I thought—though let me say straight away that I do think he meant it unkindly—accused me of wanting to disregard the sanctity of contracts. I could not have made myself clear, for there is no one keener than I upon the sanctity of contracts. But my keenness in that regard is matched only by my keenness that a contract should have equity. I have no place in my theories or my practice for the individual who signs a contract with a manufacturer to maintain his prices and does not intend to keep it. But what will happen under this Clause is that the only individual or firm who will be penalised will be not the individual who signs an agreement with no intention of keeping it but the individual or firm who will not commit perjury by signing a contract pledging his word, or the firm's word, to carry out the obligation into which he has entered and then does not do it.
§ I am going to ask the noble and learned Viscount to take this fact into consideration. A producer of an article binds those who sell it right along, the run of the goods that they will maintain certain retail prices to the retail consumer. That producer who so binds those individuals is himself—let us say for the sake of argument—the controller of 60 per cent. to 70 per cent. of the retail outlet. Is it conceivable that he is going to take himself to court for a breach of his resale agreement? So the agreement starts off by being completely one-sided, and the producer of the article binds every one of his retailer outlets to honour those prices but allows himself the scope of being able to sell at what price he likes. I want to ask the noble and learned Viscount this question; does he not think that if you are going to give a manufacturer the right to tie a retailer to sell his goods at one specific price, the manufacturer should so bind himself that he will not compete with that retailer except on the price level which he binds that retailer 184 to observe? Again, take the case of the individual manufacturer. Does the noble and learned Viscount think it conceivable that the individual manufacturer is going to take to court for a breach of the agreement a big retailer who may absorb 25 per cent. of his output? There is no compulsion on him so to do. Is that equitable?
§ So what you will get unless you do make provision for it in this Bill is that this clause can, and will, be operated only against the seller of an article who has not sufficient economic strength to stand up to the producer. That is not right. So much for sanctity of contract. If the noble and learned Viscount is going to give in this Bill the right to a producer to bind his retailer (leave out the wholesaler; that does not come into it at all; there is hardly any price maintenance on wholesale prices, it is on the price to the consumer that it is imposed), is it right for a producer to bind his seller and not be bound himself to honour the same agreement? That is a simple proposition and that is what I call equity. I could mention half a dozen of the largest industries in this country where the producer can bind his independent retail outlets to honour a price and have sanctions against them, while he competes either through his own depôts or through shops with different names over the top. And what about the large retailer? Can your Lordships imagine any producer taking some of the large stores that we could all name into court and suing them for breach of contract for not selling "XYZ Soap" at the right price?
§ Noble Lords may ask why I put my Amendment that the Crown should accept the onus. I do so because this clause, as it is written, will operate only against the small man. What chance has the small, independent shopkeeper of taking a large producer into court? If your Lordships will look at the preceding clause, Clause 23, upon the question of collective enforcement, you will see that subsection (8) states: Without prejudice to the right of any person to bring civil proceedings in respect of any contravention or apprehended contravention of this section, compliance with this section shall be enforceable by civil proceedings on behalf of the Crown for an injunction or other appropriate relief. 185 If we can do it against somebody who makes a breach of collective price maintenance, surely we should do it against anyone who commits a breach of individual price maintenance. After what the noble and learned Viscount has said, I think he must accept this for the sake of equity. It is no good passing Clause 24 unless it is going to be worked in equity throughout the length and breadth of the land. I beg to move.
My Lords, before the noble and learned Viscount replies, I hope your Lordships will forgive me if I say a few words on this problem, as I put down an Amendment on Committee stage which dealt with it. I certainly support the idea behind Lord Lucas of Chilworth's Amendment, because its object is to protect a dealer against the unfair enforcement of price maintenance conditions by a supplier. I doubt whether he has the right method or whether his Amendment is any better than the one I put down. The noble Lord's Amendment attempts to put the onus of dealing with this matter on the Crown. I doubt whether this method is going to be acceptable to the Government. It seems to me to raise all kinds of difficulties about whether the proceedings are going to be for damages or by injunction. I agree that subsection (8) of Clause 23 gives the Crown power to proceed by injunction, and I shall be interested to hear from the noble and learned Viscount whether it can be extended to unfair methods by retailers under this Amendment.
If the Government are adamant against dealers having any collective agreements, I suggest that they might consider the American non-signer procedure. On Committee stage my noble friend Lord Lucas of Chilworth attempted to give an explanation of the non-signer procedure and I am now going to have a shot at it myself. I understand that once a supplier has entered into a contract with the retailer requiring the retailer to observe a prescribed price, the observance of that price becomes binding on all dealers selling the product, even though they have not signed a similar agreement 186 to do so. That is why it is called "non-signer". The condition of price runs with the goods, as it does now under Clause 24. But the Amendment goes a step further and provides that this condition may be enforced not only by the supplier but by any dealer damaged by another dealer who knowingly breaks the condition.
I suggest that under the present Bill retailers have had taken away from them rights to protect themselves against competitors which they have had for many years. I can think of industries, such as the motor vehicle industry, the refrigerating industry and the radio industry, which are specially interested, as they are essentially service industries and have standards of service to keep up. I suggest that this non-signer procedure has great merits, in that it cannot be called collective price maintenance and it gives the dealer a chance to take some action against a fellow dealer who is not playing the game. As my noble friend Lord Lucas of Chilworth has said. Her Majesty's Government have come out strongly on the side of individual price maintenance. In my submission, what this Bill fails to do is to give the retailer any powers to implement this policy. Although I am not personally interested—I have never had any connection with retail business in my life; my only experience has been in manufacturing business—from what I know about it, I can say that the result is so unfair that I felt compelled to speak, and I shall be interested to hear what the noble and learned Viscount will tell us about it.
My Lords, we have had two interesting speeches on this subject, both with the same general inspiration, though starting from different angles of the problem. The noble Lord, Lord Lucas of Chilworth, raised two points. The first is: does individual resale price maintenance, through its inherent difficulties, operate unfairly? Secondly, can it be made to operate unfairly by someone who, either through his own property or through somebody else, controls the wholesale market or part of the retail market. On the first broad question, of whether the individual resale price maintenance operates unfairly, I do not think that it does. I think there is ample evidence that it appears to work reasonably satisfactory in certain trades in 187 this country, and both the Lloyd-Jacob Committee and the Monopolies Commission Reports state that individual manufacturers do enforce their resale price conditions—and I could give an example of a trade where that is done. One knows (and this is relevant to what my noble friend Lord Jessel had to say) that collective enforcement is much easier and more convenient. But the one thing, where we have secured unanimous support in this Bill is in prohibiting collective enforcement, and that is now buried so far as the legislative course is concerned. Therefore, I do not agree, on the first point, that individual maintenance is necessarily bad.
On the second point made by the noble Lord, Lord Lucas of Chilworth, there are at least three matters that have to be considered. The first is this. If a manufacturer is immense he now becomes in danger of being a monopoly, in the ordinary sense of the term, and also a statutory monopoly within the Act of 1948. That may well be his danger if he is operating his own sales machinery and, it may be, his own retail organisation. Then one comes to the person that the noble Lord seems to fear most; that is to say, someone who operates his own retail organisation, but at the same time sells to people outside. The noble Lord, Lord Lucas of Chilworth, is afraid that he may not "chase" (if I may put it colloquially) his own organisation, or that wholesale organisation, but that he will "chase" the small man. If the hypothesis is that he depends on the small people (and after all, they are not entirely unorganised—at any rate, they were not unorganised in any of the matters with which I had to deal when I was at the Home Office, in regard to hours of shops and things like that; I then met strong organisations of all the people concerned—I should have thought it highly improbable that the monopolistic giant pictured by the noble Lord, Lord Lucas of Chilworth, would be, on one side, organising their machinery, and, on the other side, chasing the small man.
The third point is one which I am glad to be able to make, because the noble Lord, Lord Lucas of Chilworth, rightly took as his text, equity. We have a salutary rule in the law, which was started by my predecessors on the Woolsack, who introduced equity in order to deal with 188 hardships of the law. At the same time as they introduced that, they formulated the rule that he who comes to equity must do equity. The relevance of that—and it is relevant to the noble Lord's point—is this. Imagine the situation that he has had in mind, where you have the manufacturer in a big way, who is treating his own organisation with the greatest consideration and allowing them to charge all they want so long as it suits him or some other organisation. Suppose he then goes to a court of equity, having let his own organisation do what they like with prices, and asks one of the Judges of the Chancery Division for an injunction against the small man. As President of the Chancery Division, I do not want anything that I say to be taken as guiding the decisions, but I can say that I would not give a great deal for his chances. That is a point that may be of some help to the noble Lord.
I recognise what is in the mind of the noble Lord, and also the difficulty of my noble friend Lord Jessel—and he stated it, I thought, with great candour and frankness. However, before this Part of the Bill was drafted, we considered this point carefully—and I assure my noble friend Lord Jessel that we went into the non-signer agreements, and the effect they would have—but we came to the conclusion that this would be so great a complication that it should not be put into the Bill. I am sorry that I cannot help the noble Lord, Lord Lucas of Chilworth, further so near the end of the Bill, because if I may say so—and this is not being fulsome at all—he has been of the greatest service to the House and to the understanding of the Bill in the most unselfish course he has taken of devoting so much time to these difficult problems and then putting them forward in your Lordships' House. I should like to be able not only to wave an olive branch to him, but to throw one at him; but I am afraid that it is not in my power.
My Lords, I can assure the noble and learned Viscount that he has thrown not only an olive branch at me, but the whole tree; because he has said precisely what I wanted. I do not want to get cheap legal advice from the noble and learned Viscount—I should not think of putting noble Lords on the other side of the 189 House out of business—but if I understand him aright, he has said that any producer who goes to the courts of this country to try to enforce an individual resale price agreement which is so inequitable as to require the other party to the agreement to do things he is not required to do himself, would get short shrift. In my view, that pronouncement is far better than putting this in the Bill. I feel that the Lord Chancellor has said something that is of the greatest possible importance.
I had intended to divide the House on this Amendment, but the noble and learned Viscount has been so helpful that that would be a mere waste of time. However, before withdrawing the Amendment, I must remind him that when he talks, from his experience of being at the Home Office, of the small retailers not being unorganised, he should bear in mind his own Bill, because as soon as they organise themselves against a producer there is a restrictive practice. So that his own Bill puts any organisation of the small retailers out of court. I hope that the Lord Chancellor does not mind my reminding him of that. So, with my thanks to the Lord Chancellor for saying precisely what he has, of which industry throughout the length and breadth of this country will have to take strict notice, I ask leave to withdraw the Amendment.
§ LORD LUCAS OF CHILWORTH moved to leave out Clause 25. The noble Lord said: My Lords, what I am about to say I ask the noble and learned Viscount to take seriously into consideration. I maintain that most of Clause 25 of this Bill is absolutely and completely unworkable. What does it purport to do? Subsection (1) reads: For the purposes of this Part of this Act a condition as to the amount of discount which may be allowed on the resale of any goods, or as to the price which may be paid on the resale of any goods for other goods taken by way of exchange, shall be treated as a condition as to the price at which goods may he resold.
§ In other words, what the Government are trying to control is the second-hand market of this country. If you want to go into that market you will be trying to do something which the wisdom of industry collectively has never yet been 190 able to do. wish to ask the noble and learned Viscount whether he would like to control the second-hand car market, because that is what he is trying to do here. What he is saying is that, if a manufacturer makes an agreement as regards resale price, he can put a condition in that agreement which will control not only the price which is allowed for a second-hand article, but what it is sold for as well. That is just utter and complete nonsense.
§ How is the noble and learned Viscount going to get over this problem? Your Lordships know of my connection with the motor industry, and I will cite one problem. Before the war, the motor industry tried to control the second-hand car market. What happened was this. The manufacturers of the high-priced new car said that the price, or the intrinsic value, of a used car increased with the price that you were prepared to pay for the new car. If you bought a car for £500 to-day, you might get allowed for your old motor car, say, £100; but if you bought a motor car for £1,000, you would be allowed £200 for it. Perhaps the noble and learned Viscount will tell me how he is going to control the price at which those two cars are sold. It is just beyond the wit of man to enforce that. I could go on ridiculing the thing up hill and down dale. Take second-hand furniture. Supposing the noble and learned Viscount had a disused wardrobe, and he went down to the local furniture dealer and wanted to buy one of these latest branded cheap utility pieces of furniture. I expect he would be allowed half-a-crown for his wardrobe. But if he wanted to buy a walnut wardrobe, priced at about £500, I expect he would get about £100 allowed for his old one. How is he going to control that in his Bill?
§ I will not divide the House but I beg the noble and learned Viscount to look at this point before the next stage of the Bill and at least take out this proviso which seeks to control the second-hand car market, the second-hand furniture market, and, for that matter, the secondhand clothes market, too. How can the Government think of stepping in and saying, that a condition about the allowance or resale price of the second-hand article taken in part exchange for a new branded article shall be maintained through the courts of this country? Let 191 me tell the noble and learned Viscount that at the present time there are about 2¾ second-hand motor cars taken in part exchange for one new one, and if the market goes on as it is at the present time there will be about four second-hand motor cars in succession taken for the sale of one new motor car. How are the Government going to control either the buying price or the selling price of the last one of all along a line like that? I need say no more. I think it is utterly ridiculous, and I hope that at the next stage of the Bill the noble and learned Viscount will have this silly thing removed, because it is absolutely unworkable. I beg to move.
My Lords, first of all, may I say that this Bill does not make any effort to control second-hand prices. All that the Bill does is to make it permissible for manufacturers to fix second-hand prices, if they can. After that it is up to the manufacturer. That diverts a certain amount of the noble Lord's fire, but I want to answer him in this way. First, I want to say what this clause does. I assume that the noble Lord is referring to subsections (1) and (2), and not to the subsections dealing with Scottish and Northern Ireland application. What these subsections do is first, for example, to make clear that Part II of the Bill covers resale price conditions attached to goods sold by hire purchase. Secondly, as I said, they make it clear that those manufacturers who wish to control allowances to be given on goods traded in part exchange may continue to do so. Furthermore, it is provided that where a manufacturer lays down that goods may be resold subject to a discount—for example, by a wholesaler to a retailer—he may continue in this practice. Those are the essential matters which must be provided for in this Bill.
If the noble Lord's Amendment were accepted, and these explicit provisions were removed, it would throw doubt on the meaning of resale price conditions in connection with Clauses 23 and 24. The removal of this clause might cast doubt on whether the ban on collective enforcement of resale price conditions extended 192 to prohibiting the use of stock lists for enforcing resale conditions attached to goods sold by hire purchase. That would be a serious matter. That is the trouble about the interconnection of drafting in these matters. It might cast doubt on how far individual manufacturers could continue to specify different resale prices by reference to various discounts off a basic or list price. In other words, Clause 25 is a reflection of the fact that Part II of the Bill, as I have said, is concerned with methods of enforcement and is not concerned to legislate on or to alter the kind of resale price conditions which may he enforced at the discretion of manufacturers.
Clause 25 makes it entirely plain, in subsection (1), that individual manufacturers can, if they wish. continue to regard the payment by a retail shop of a discount or dividend as an infringement of a resale price condition. The individual manufacturers would be able to use the provisions of Clause 24 to prevent payment of dividend in the cases which we have discussed. There is nothing new in this. but it does, as I have said, preserve the position. It is a serious point which is difficult to pick up unless you have your mind directed to it, as I have. For that reason, I would ask the noble Lord, Lord Lucas of Chilworth, to withdraw the Amendment. All I can say is that we will ponder over what he has said, although he must not hold me to make any promise on it.
My Lords, I accept what the noble and learned Viscount has said—with the exception, perhaps, of what he has said about subsection (1) of this clause. He is not telling me, surely, that the manufacturer is given the right to control the price which may be paid on the resale of any goods taken by way of exchange. so as to enforce the outlawing of collective price control. Surely, the noble and learned Viscount is not saying that. I would beg him to look at that. Hire purchase is one thing; a discount is one thing. But the value of a second-hand article is precisely what it will fetch at any moment of time. It can vary from hour to hour and from day to day. In the history of trade people have tried for years to control this, and it has proved an utter failure. I will withdraw my Amendment, of course—I did 193 not intend to press it—but I would ask the noble and learned Viscount to look at this point between now and the next stage of the Bill. I will try to help him if I can. I would say that this makes nonsense of matters already covered by the Bill. With those words, I beg leave to withdraw my Amendment.
§ '(c) any agreement or arrangement, whether legally enforceable or not, in respect of the distribution of any product on the United Kingdom market, the result of which is that the wholesale or retail suppliers thereof are restricted in the range of products which they are at liberty to supply in the ordinary course of their business '."
§ The noble Lord said: My Lords, I am hoping that the Government will accept this Amendment because I first contemplated, when the Second Reading of this Bill was before your Lordships' House, trying to include in the Bill a provision that would bring under review and control the solus or sole agency agreement. The sole agency agreements and solus agreements are not all altogether bad. There are some that are good, there are some that are thoroughly bad and there are some that hover between those two extremes. There are some that can be operated very much against the public interest and can also operate against what any Government of the day may think the national interest.
§ On Second Reading, I cited the petrol pump case. I asked your Lordships this question: Is it right and in the interest of the national economy at the present moment, when the Government want to stop unnecessary capital expenditure, that an oil company should enforce an agreement that one filling station, which they will subsidise in some way or another—I need not enter into that now—shall sell only one brand of petrol? You then get ten filling stations around a certain spot, each selling a different brand of petrol, because each filling station is prohibited by the terms of the agency agreement from selling any other brand of petrol. I should have thought it would 194 be more in the national interest for one station to sell ten brands of spirit than for ten stations to sell one brand of spirit. I cite that as an example. There are many other agreements I could mention which have an adverse effect upon trade and industry. I do not think it is right for any accumulation of economic power to be vested in the hands of one concern which has the economic life and death of any large section of other trades in its hands.
§ The noble and learned Viscount said on a previous Amendment that a dealer or a retailer who makes an agreement does it of his own free will; he need not make it he can go to a competitor; he can choose to whom he will go to make an agreement. That held some truth some years ago, but, with the development of trade and industry in this country, where the supply of many commodities is getting into fewer and fewer hands, the choice is not there. All I am seeking to do in this Amendment is to have these cases referred to the Monopolies Commission, so that they can be reviewed. If the Commission come to the conclusion that there is nothing against the public interest, the matter drops. If they come to the conclusion that: certain types of solus agreement are against the public interest, then those cases will come before the Board of Trade and will be passed on, I take it, to the Restrictive Practices Registrar, to see whether the agreement will be registered as against the public interest. That is all I propose.
§ I think some of these agreements are good and some are bad. They should be sorted out. I understand—I hope the noble and learned Viscount will correct me if I am wrong—that this Bill in essence has nothing to do with monopoly.. The only thing it is concerned with is restrictive trade practices. Any form of monopoly, as I have just mentioned, is solely the preserve still of the Monopolies Commission which was set up under the 1948 Act. I hope the noble and learned Viscount will accept this Amendment. It is proper to refer this to the Monopolies Commission, for them to decide what is good and what is bad and to make their appropriate report, as they have done in so many cases in the past. I beg to move.
My Lords, I do not find any fault with the basic and underlying arguments that the noble Lord, Lord Lucas of Chilworth, has used, but my only answer is that I do not think this Amendment is really necessary because, to put it broadly, a reference can already be made to the Monopolies Commission where there is one manufacturer who supplies, or two or more manufacturers who supply, one-third of the goods, either in the United Kingdom as a whole or in a substantial part of it—I took as an example central Scotland as showing what a "substantial part" means—and who employ exclusive sole agencies. Thus, if you have in an industry individual manufacturers who together account for more than one-third of the total supply of a substantial part of the country and use exclusive sole agencies, a reference can be made to the Commission. It is not necessary that there should be any agreement between the manufacturers in respect of the exclusive sole agencies.
I think this can be seen from the terms of the existing subsection (2) of Section 3 of the Act of 1948. I should like to read it to your Lordships because it is extraordinary how wide it is. The subsection includes, among the conditions to which the Act of 1948 applies, cases where two or more persons whether voluntarily or not, and whether by agreement or arrangement or not, so conduct their respective affairs as in any way to prevent or restrict competition in connection with the production or supply of goods of the description in question (whether or not they themselves are affected by the competition and whether the competition is between persons interested as suppliers or producers or between persons interested as customers of suppliers or producers). When I read that and saw its comprehensive nature, I took some credit for a very minor share in the admirably wide drafting.
My Lords, may I ask the noble and learned Viscount this question? He has referred to the case where the manufacturer produces one-third. A restrictive practice can, by a sole agency agreement, be operated very largely and detrimentally by a producer who manufactures less than one-third.
It can either be a manufacturer or two or more manufacturers who supply one-third but employ the sole agency.
Does the Lord Chancellor mean that the sole agency has to be operated by two manufacturers for the same person? Take my case of the petrol pumps. There might be five oil companies in this country, none of them doing a third of the business, but they have or may have, sole agency agreements which tie one seller to their brand of petrol or oil and will not allow him to have anything to do with any of their competitors. I want it to be referred to the Monopolies Commission as to whether that is a restrictive practice which is harmful to the public interest.
I should have thought that it would have been referred, but I hope the noble Lord will not hold me to that. That is my feeling on the very wide words of the clause, but I should like just to look at the specific point. We are anxious to see that the work of the Monopolies Commission is completely complementary to the work of this Court, so as to avoid any gap. I think that answers the spirit of the noble Lord's point.
My Lords, with that assurance I am very grateful to the noble Viscount. He will know that we on this side of the House started off with very strong objections. I will say, frankly, that it is only the charm and co-operation which the noble and learned Viscount has shown us all the way through that has made us rather try to go along with him. That is also true of the big Amendment put up by the noble Lord opposite on the whole basis of this Bill. If it is now said that it is the Government's intention and desire that the Monopolies Commission should operate alongside the Restrictive Practices Court, I think that is a very great advance. This is the last Amendment I shall speak on and the last Amendment I shall move, so may I personally thank the noble and learned Viscount very much for his courtesy, and also for the great trouble he has taken—although I have not always agreed with him—in explaining one of the most difficult Bills that has 197 ever been before Parliament. With that, I beg leave to withdraw the Amendment.
My Lords, perhaps your Lordships will allow me the informality of thanking the noble Lord.
My Lords, I shall do nothing to disturb the mellow atmosphere, because this is a wholly innocuous Amendment. Where an association makes a recommendation about both home and export matters, recommendations on exports which do not affect the home market do not have to be registered. though they will have to be notified to the Board of Trade. I beg to move.

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