Clause 5. — (Power of Court to Exempt Classes of Goods.)

Part of Orders of the Day — Resale Prices Bill – in the House of Commons at 12:00 am on 22 April 1964.

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Photo of Mr Edward Heath Mr Edward Heath , Bexley 12:00, 22 April 1964

Yes, of course we have addressed our minds to that. This is a particular problem which arises, and there are various ways of dealing with it, but it doe s not arise on this particular Amendment because it does not come under this particular Clause.

My right hon. and learned Friend the Member for Hertfordshire, East asked, first, what particular things we were afraid might be taken into account if this Clause were amended as proposed, as well as dealing with some of the other point. With great respect to him, I do not think that that is really a point which is at issue. I should like to deal with this by explaining the approach which we have so far taken in forming the Bill.

The Amendment, as my right hon. Friend the Member for Thirsk and Mahon said, is moulded on Section 21(1,b) of the 1956 Act. There was a particular reason why that provision was put into the Act, as I think my right hon. Friend knows. When the criteria were being set out in Section 21 the majority of them were set out to meet particular, peculiar circumstances, but the Act itself was covering a very wide variety of restrictive agreements. There had been an inquiry into restrictive agreements generally, but no one knew exactly how many different types of agreement there were or what might be produced once registration had taken place, and it was, therefore, necessary to have a gateway—to use this phrase—in the Act to deal with any sort or variety of agreement which was produced. This was the essential reason why it was put in. It was also put in to cover the particular problem of research, and this was commented upon by my right hon. Friend the present Minister of Defence in that debate.

I refer the Committee to Section 6(1) and the restrictions in relation to various matters with which it has to deal. There are five different sets of restrictions set out, and they are very elaborate. They are set out in five paragraphs: (a) the prices to be charged, quoted or paid for goods supplied, offered or acquired, or for the application of any process of manufacture to goods; (b) the terms or conditions on or subject to which goods are to be supplied or acquired or any such process is to be applied to goods; (c) the quantities or descriptions of goods to be produced, supplied or acquired; (d) the processes of manufacture to be applied…or the quantities or descriptions of goods…(e) the persons or classes of persons… This is a very comprehensive range with which the Act had to deal, and with which Section 21(1,b), on which this present Amendment is moulded, also has to deal; but, of course, only one of those, paragraph (a), and only part of paragraph (a), was concerned with resale price maintenance. It is suggested that in moulding this Amendment on Section 21(1,b) of the Act we are almost repeating something which was required and covered. But a very wide range of activities was set out in Section 6 of the Act. As a result it was not possible to be specific or particular in dealing with each of the items set out in that Section of the Act—whereas when dealing with r.p.m. we are dealing with only one type of restrictive practice, a very clear, simple and straightforward type.

8.0 p.m.

All r.p.m. consists of this one type and there is a great deal of information in existence about it. It has been carefully studied for a long time. Committees, including committees of officials, have considered it and, as I say, there is much information on which to form a judgment. It is, therefore, different in this respect from the situation which existed when we were dealing with the 1956 Act.

It is natural that when the phraseology of one Measure designed to deal with the sort of situation I have described is transferred to a different Measure, which is designed to deal with a different set of circumstances, certain difficulties should arise. Two such diffi- culties have been referred to and these may or may not have been recognised when the Amendment was drafted. First, the phrase "any goods" in the Amendment was, I think, natural and necessary when dealing with restrictive practices of the broad variety under the 1956 Act. However, when put into the Bill it has a special significance because it means that the Court would have to take account not only of the goods which had been brought before it by the Registrar, but any other goods as well.

This widens the whole thing over the whole sphere and brings in the question of the r.p.m. of goods beyond the goods being dealt with. This is a matter on which there may be two views, both of which have been expressed today. It is commonly put in this form; that a retailer may want to take the profits from one lot of goods in order to subsidise something else which he is selling. It is true that if he does this through maintaining the prices of those goods, the consumers buying them in other shops will still have to pay the maintained price.

Economically, I believe that it is right that the goods should, so to speak, stand on their own feet and that one should pay the price which is justified by the goods themselves—and that the consumer should not have his element of choice removed from him. If the consumer is paying a higher price than is necessary for that one lot of goods than he would otherwise pay in a shop in which they are not being subsidised, this removes the choice from the consumer and this is what would occur under the Amendment if "any goods" was included.

The next difficulty which arises is the use of the word "purchasers". This is not only connected with this Amendment, but with several others in the group which desire to insert the word "purchasers". Again, this is taken from Section 21 of the 1956 Act. It may in some cases have been included in some of the Amendments without full account having been taken of its implication or, perhaps—as some hon. Members opposite have suggested—that hon. Members want it put in for certain purposes.

Let us consider the situation. In the 1956 Act the restrictive practices with which that Measure was dealing were concerned with manufacturers. Thus, when the Court was judging a case the interests of the manufacturers were excluded. It was the consumer, as the purchaser or user, who had to be considered by the Court, and it was the benefit or detriment in those particular cases which had to be weighed up.

In the Bill what is comparable to the manufacturer is, in fact, the manufacturer, the wholesaler and the retailer because they are all concerned in the restrictive practice, which is r.p.m. Therefore, the people with whom the Court has to deal in deciding benefit or detriment are those beyond that situation, who are the consumers. As many hon. Members have emphasised, the purpose of the Bill is to secure greater competition and better use of resources in the interests of the consumer and it is in that interest that production and distribution takes place.

In this respect, therefore, it is those beyond parties to the restrictive practice—the manufacturer, supplier, wholesaler and retailer—with whom the Court is concerned. If we include the word "purchasers" we shall be including the wholesaler, retailer and all concerned in the distributive trade.