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Orders of the Day — Restrictive Trade Practices

– in the House of Commons at 12:00 am on 2nd December 1957.

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8.36 p.m.

Photo of Mr Frederick Erroll Mr Frederick Erroll , Altrincham and Sale

I beg to move, That the Registration of Restrictive Trading Agreements Order, 1957, dated 29th October, 1957, a copy of which was laid before this House on 6th November, be approved. The House will recall that the first registration Order which was before Parliament about twelve months ago called for registration, under the Restrictive Trade Practices Act, 1956, the agreements that seemed to be the most important. These fell into two broad groups: namely, agreements involving restriction of prices, discounts or other trading terms and conditions; and, secondly, agreements involving discrimination between persons or firms. The first Order came into operation on 30th November last year, and particulars of the agreements in question had to be sent to the Registrar of Restrictive Trading Agreements within three months of that date, that is, by 28th February this year.

The purpose of the present Order is to call up for registration all the other classes of agreements covered by the Act. The main classes of these remaining agreements are agreements which impose restriction on the types or quantities of goods to be produced and agreements under which markets or areas are shared between suppliers. If Parliament approves this Order, it will come into operation on 31st December, and particulars of the agreements in question will have to be sent to the registrar by 31st March, 1958. Within the same period particulars of agreements affecting exports, but not the home markets, will have to be furnished to the Board of Trade, as is provided for in Section 31 of the Act.

Experience under the first Order has shown how registration itself provides an inducement for industries to review critically their own restrictive agreements and the need for retaining them or parts of them. It seems clear that some agreements were actually abandoned before registration was due, and others were modified and rewritten. The Registrar has recently informed the Board of Trade that he has examined a substantial sample of registered agreements. Of these, over one-third are agreements in which the relevant restrictions are in a document dated after 2nd August, 1956, or are pre-Act agreements in which it was apparent that significant alterations in the scope of the restrictions had been made since that date. In some cases, admittedly, a new agreement was entered into for the purpose of putting them into a form convenient for registration but without having alterations of substance.

The conclusion that the Registrar draws, however, is that apart from outright cancellation of agreements, about one-third of the continuing agreements were substantially modified in consequence of the provisions of the Act requiring registration. That is what the Registrar has told us about the effects of registration and that is why we attach great importance to registration itself. Registration induces industry to reconsider the need for restrictive agreements, and we think it right that this process of re-examination should now extend civet the whole of the remaining field.

Inevitably, there will be some agreements which those concerned in them will feel are not really restrictive and which ought, therefore, to be exempted. We cannot, however, exempt from registration in perpetuity any kinds of agreement which Parliament in the Act has decided should be subject to registration. The basic purpose of registration is not to condemn agreements, but it is the first step in the process of sorting the good from the bad. As to whether a particular agreement needs to be registered at all, I am sure that the Registrar will always be ready to discuss informally with those concerned, before registration, the position of agreements which seem to be on the borderline.

I hope that the House will agree that we have lost no time in bringing this important Act into operation. The register was opened in April and it now contains about 1,400 agreements. The Board of Trade also has given two directions to the Registrar about the first cases to be taken before the Restrictive Practices Court. These directions cover about 40 commodities and about 200 agreements. Our immediate object now, however, is to ask the House to provide the incentive for industry to review the remaining classes of agreement and complete registration of those which are retained. I ask the House, therefore, to approve the Order.

8.41 p.m.

Photo of Sir Arthur Irvine Sir Arthur Irvine , Liverpool Edge Hill

Before we can tell whether three calendar months is an appropriate period to prescribe in the Order, we really should know more than we do about the present state of the register and about how the whole process of registration of restrictive agreements is progressing.

Comparatively few agreements will come within the ambit of this Order, I imagine, because I suppose it to be the case that most of the agreements which provide for restrictions upon market sharing and upon processes of manufacture will provide for those restrictions compendiously with other price ring restrictions which are already incorporated in agreements presently upon the register. But, even so, I suggest that it is desirable, before we determine upon the merits of the Order and upon the correctness of the three months' period provided for, that we should know more than we do. Upon the answer to the question whether the Registrar is being heavily pressed or not will depend the determination of what is the appropriate period for which we should provide.

I would think that two factors recently have eased the task of the Registrar, if I may put it in that way, and lessened the scale of registration. The first factor is the circumstance that, as the Government quite naturally and rightly desired, in a great many instances agreements which would have been registrable if continued in force have been, under the pressure of the provisions in the Statute, abandoned by the parties to them, with consent. That seems to be a perfectly legitimate consequence of the introduction of this novel legislation. One is glad to hear that it has had results of that kind, and, by that means, the number of registrable agreements in use in commerce and between traders and suppliers has become smaller. That would seem to be a factor diminishing the congestion upon the register.

The second and, some of us may think, much less welcome and certainly unforeseen factor which I conceive to be lessening the pressure upon the register is the decision in the Austin Motor Company case. It would be interesting to be told something of the consequences of that. I cannot go into the detail of that very important case, but it was conceded by those who acted in court for the Registrar that the effect of the Section 8 (3) exemption was a great deal wider than some of us had thought when we considered the Bill in Committee.

There is no doubt that a consequence of that decision—and it is important that the House should know this and weigh its significance—is that very large-scale exemptions have been conceded to bilateral agreements made between parties neither of whom is a trade association. That is the effect of the decision, as I think all will agree, and it seriously affects the whole objective of the legislation. The result is that a monopoly which is sufficiently powerful to do without the aid of a trade association can do almost what it likes in the way of imposing restrictive practices in its trading as long as it chooses to proceed to do so by way of bilateral agreements. The trade association may be caught by the Act. The monopoly, to a surprising extent, is not.

Those are factors, I suggest, largely affecting the issue now before us and the propriety of determining upon a period like three months in this Order, which is inherently the kind of thing which should not be allowed to float past without investigation and consideration.

8.47 p.m.

Photo of Mr Donald Wade Mr Donald Wade , Huddersfield West

The Minister has referred to the number of agreements which have been modified. I think we all welcome that fact, but against it we must keep in mind that there has been a tendency towards the creation of combines since the introduction of the Act. That is a factor which was forecast when the Bill was being discussed and it is one which we must keep in mind. The time may come when the House will have to consider what steps to take to deal with that tendency to create combines in order to get outside the orbit of the Act.

The Minister stated that the Government have lost no time in bringing the provisions of the Act into effect, but a considerable time appears to have elapsed between the date the Act came into effect and the date when we may expect the first case to be heard before the restrictive practices court. I should like the Minister's views about the effect of this further batch being added on to the prospect of the Restrictive Practices Court being able within a reasonable time to deal with the many cases which will be brought before it.

8.49 p.m.

Photo of Mr Lynn Ungoed-Thomas Mr Lynn Ungoed-Thomas , Leicester North East

The Minister seemed to find considerable consolation in the fact that mere registration or provision for registration, such as we have in the Order, leads to the modification and alteration of existing agreements. That is, of course, true, but that in itself is of no significance at all in the pursuit of restrictive practices. What matters is not whether an alteration or modification is made, but whether the alteration or modification leads to any diminution of restrictive practices.

It is futile for the Minister to say, "We have provided a nice piece of legislation. Look at all the modifications and alterations which have been made". The modifications and alterations are made not to reduce the amount of restrictive practice, but to avoid being caught within the four corners of the Act whilst, at the same time, pursuing restrictive practices. Therefore, the information which is significant is not really modification or alteration. What is significant is to what extent there has been diminution of restrictive practice.

That is the information we would like to have if the Minister has it. Or is what the Minister is saying mere guesswork about the diminution of restrictive practice? Of course there are alterations and modifications. Everybody practising the laws knows that perfectly well. The industrialists are entitled to make modifications and alterations to keep outside the Act. They are entitled to pursue such restrictive practices which, as a result of those modifications and alterations, are not within the four corners of the Act.

The attack should not be upon the industrialists but upon the Government in so far as they have failed to provide a diminution of restrictive practices. They have chosen to bring in an Act which is complicated and full of loopholes. If the Government's case is that, because the registration which we have in this Order leads to an alteration, therefore the alteration and the Act are good, then he is living in a complete cloud cuckoo land.

The Chancellor of the Exchequer, who introduced this Act when he was President of the Board of Trade, is now stumping the country begging industrialists to reduce restrictive practices, apparently no longer caring to rely upon the inadequate and slow workings of the Restrictive Practices Act. When are we to have the first case decided under the Restrictive Practices Act? Until we have that case decided there will not be a single case of any agreement which is registered under the Act in which a restricted practice is stopped.

It was said when we were debating the Bill that we would have the first case heard in October. October has passed and a case has not yet been heard. I believe that it was said that it was expected to come on in January. The latest information we have is that we cannot be told when the first case will be heard. It would be interesting for the House to know whether the Minister is now able to give any reasonably reliable indication of when the first case under the Restrictive Practices Act will be heard.

As the Minister is bringing in further provision for registration, then, as my hon. Friend the Member for Edge Hill (Mr. A. J. Irvine) said, I suppose that the Registrar and the Board of Trade have in mind the bringing on of these agreements under the draft Order before the courts and that, therefore, they can see, and have in view, the ending of the hearings under the Order which has already been passed. Is that so? Have they obtained a calculation of the time when agreements already registered will have completed their hearing before the courts? If that is so, we should like to know what date or what appproximate time they have in mind.

Or are they just coming to the House to ask for this Order to be approved while having no idea of when they will complete the hearing of the agreements which have already been registered? If that is so, are they doing it because, as the Parliamentary Secretary so touchingly explained to us, the registration of the agreements will lead to some modifications or alterations, although he does not know what modifications or alterations, or for what purpose they are made, or what effect they will have on the restrictive practices?

I was a little concerned that the Parliamentary Secretary referred to the Registrar's willingness to see persons who were involved in agreements which, as he said, were borderline cases. The important question about that is, for what purpose will the Registrar see them about the borderline cases? I hope that the practice will not develop of the Registrar's advising them about what is registrable or what is not, in the so-called borderline cases, and on which apparently there is some doubt. Under the Act agreements are either within the Act or they are not within the Act. If they are within the Act they have to be registered. If they are outside the Act they need not be registered. It is only the Court which can decide in difficult cases of the application of the Act whether an agreement is within the Act or not within the Act.

I personally would not welcome—I am sure that hon. Members on both sides of the House would not welcome—the building into the registry under the Act of some form of discretion in practice which is not given by the Act. I was a little concerned when the Parliamentary Secretary referred to that, and perhaps he would be good enough to clear up that question. I hope that there is no danger of anything of that sort developing.

I know that Ministers, no matter which party happens to be in power, are always under pressure for a discretion to be exercised even when no discretion is given. If a discretion were exercised it would be the recognition in the Civil Service of a legislative capacity which should not rest there at all. Therefore, all those who are so concerned, as so many hon. Members on both sides of the House are concerned, about delegated legislation should be all the more concerned to see that delegation is not exercised when there is not even legislation for it. I hope, therefore, that the hon. Gentleman will cause these little doubts, which I have in my mind as the result of his observations, to evaporate when he replies to the debate.

8.58 p.m.

Photo of Mr Frederick Erroll Mr Frederick Erroll , Altrincham and Sale

I trust that the House will permit me to reply for a minute or two to the brief debate we have had upon this Order.

The hon. Gentleman the Member for Edge Hill (Mr. A. J. Irvine) raised the question of the three months' period in which agreements must be registered. I understand that the Registrar's staff are in a position to receive the remaining agreements which will be called up by this Order, and that there will be no difficulty in posing the time limit of three months. The work of the Registrar is so organised that the work on the court cases is performed by a separate section of his organisation, and the receipt of these remaining agreements will not in any way impede the work of the court side of the organisation.

I am sure that, with his own legal experience, the hon. Gentleman will realise that I could not possibly comment on the High Court's decision in the Austin Motor Company case. I do not think that it is in any way relevant to the period of time for registration.

The hon. Member for Huddersfield, West (Mr. Wade) referred to the growth of combines. I should point out to him that the Monopolies Commission is still available to deal with monopolies—which is., perhaps, just another word for combines and which I think the hon. Member has in mind—when they reach a particular size.

Sir L. Ungood-Thomas:

To deal with some monopolies.

Photo of Mr Frederick Erroll Mr Frederick Erroll , Altrincham and Sale

The hon. Member for Huddersfield, West also referred to court cases and he and the hon. and learned Member for Leicester, North-East (Sir L. Ungoed-Thomas) asked when they would be likely to come along. I am not in a position to say when the first cases will be heard. The discussion of court cases and of the question when court cases are likely to come along are not really relevant to the present Order because, as I have explained, the staff which will be occupied in attending to the further batch of agreements which will come for registration is different from the staff engaged on court cases and the latter will not have its work in any way held up.

Photo of Mr Lynn Ungoed-Thomas Mr Lynn Ungoed-Thomas , Leicester North East

If the Government are anxious to cut down the Civil Service and to save expense, it is most relevant for us to know whether or not there is a whole organisation inside the Registrar's department for registering agreements, for without complete registration of agreements there is no hope of doing that of which registration is merely an ancillary, which is having the cases heard by a court. It is, therefore, relevant to know whether there is an organisation in the Registrar's department and whether part of that organisation is given to court work and is clogged up, with the result that cases take too long to come along, and part is devoted to registration work which can be skipped through in a comparatively short time.

Photo of Mr Frederick Erroll Mr Frederick Erroll , Altrincham and Sale

The hon. and learned Member need not be so hard on the Registrar and his staff. The preparation of court cases is quite different from the semi-clerical work of registration, and it is properly performed by different staffs.

The Registrar has so arranged the work of his department that those who are looking after court cases get on with their part of the work and those engaged on handling the first batch of agreements are now, quite properly, available to handle the second and remaining batches. The hon. and learned Member might criticise us if we failed to call up the second and remaining batches and left the staff in idleness. It surely is appropriate to call up these batches, if only for that reason. There is, however, a better reason, in that the act of calling up agreements in itself brings about a quite noticeable change.

The hon. and learned Member asked whether these were modifications merely of detail in agreements, or whether they meant a reduction in the amount of restriction in individual agreements. I am going on what the Registrar has told the Board of Trade. It may help to reassure the hon. and learned Member if I quote a relevant sentence. The Registrar says that he had a substantial sample of 200 cases looked at, and he refers to a proportion of them as being …pre-Act agreements in which it is apparent that significant alterations in the scope of the restrictions have been made since that date. In other words, in the proportion that I have quoted, significant alterations have been made in the scope of the restrictions. That, therefore, is a point on which we are entitled, if not to take credit for them, at least to be satisfied that a step forward has been taken in the reduction of the scope of the restrictions.

Photo of Mr Lynn Ungoed-Thomas Mr Lynn Ungoed-Thomas , Leicester North East

The reference is not to "reduction" in the scope.

Photo of Mr Frederick Erroll Mr Frederick Erroll , Altrincham and Sale

It is "a significant alteration".

The hon. and learned Member also referred to borderline cases. I remind him that I said that the Registrar was prepared to discuss informally the position of agreements. I did not suggest that he would do anything more than that, and I can say that he will do this only where there is a genuine issue about registrability on the part of the parties. He fully recognises, as does the Board of Trade, that the High Court is the last resort. There is no question of any discretion being exercised by the Registrar. I hope that I have been able to reassure the hon. and learned Member, at least on this point, if not so well on all the other points.

Question put and agreed to.

Resolved, That The Registration of Restrictive Trading Agreements Order, 1957, dated 29th October, 1957, a copy of which was laid before this House on 6th November, be approved.