Clause 1. — (Avoidance of Conditions for Maintaining Resale Prices.)

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

Alert me about debates like this

Photo of Mr William Wells Mr William Wells , Walsall North 12:00 am, 12th May 1964

I beg to move, Amendment No. 1, in page 2, line 6, to leave out "applies" and to insert "shall not apply".

Photo of Sir William Anstruther-Gray Sir William Anstruther-Gray , Berwickshire and East Lothian

With this Amendment it would be possible also to discuss Amendment No. 3, in page 2, line 7, leave out from "design" to end of line 20.

Photo of Mr William Wells Mr William Wells , Walsall North

I think it is right to say at the outset that our main purpose in putting down these two Amendments is to obtain some insight into the Government's philosophy on the question of patented goods and of the application of this Bill to them, because I think I am right in saying that in our previous debates this matter has not been discussed. We think it ought to be discussed because it is important. Hence our raising the matter.

The effect of these Amendments would clearly be to take patented articles outside the purview of Clause 1. The Clause as drafted states: This section applies to patented articles and articles protected by the registration of a design as it applies to other goods… It goes on to say: and notice of any term or condition which comes within Clause 1, if it is void by virtue of this Clause, shall be of no effect for the purpose of limiting the right of a dealer to dispose of that article without infringement of the patents or the rights of the proprietor of the design, as the case may be. Then we come to the proviso, that states that nothing in this Clause shall affect the validity, as between the parties and their successors, of any term or condition of a licence granted by the proprietor of a patent or registered design, or of any assignment of a patent or registered design, so far as it regulates the price at which articles produced or processed by the licensee or assignee may be sold by him. As we understand the proviso, this leaves untouched any agreement as between the owner of a patent and a licensee so far as it regulates the price of the patented article—where the goods are sold subject to design—but it leaves agreement between licensees and dealers fully within the scope of this Bill. It is important to make sure that we have understood this aright. Assuming for the moment that we have, it recalls the Amendment that we moved in Committee, in which we suggested that there might be a halfway house between avoiding agreements on the one hand and wholly exempting classes of goods on the other. In the debate on that Amendment in Committee, the right hon. Gentleman expressed disappointment that I did not explain to him more specifically what kinds of agreement, and in relation to what classes of goods, we thought this might be desirable. In fact, one need look no further, so far as we understand this proviso, than the right hon. Gentleman's own Bill to find what, in the right hon. Gentleman's opinion at any rate, is an example.

6.15 p.m.

If this case is valid for perpetuating a situation in which agreement is valid as between the parties but is outside the scope of Section 25 of the 1956 Act, may there not be others? What is the particular merit of this case? We fully appreciate that there may be very special reasons calling for the protection of patents and for their exemption or partial exemption from all the full rigours of Clause 1. But we think that some further explanation of the method that the right hon. Gentleman has chosen to adopt is called for, and though we would not anticipate deeming it necessary to divide the House at the end of the debate, we feel that this is an important matter, that some explanation is required, and we hope that the right hon. Gentleman will be able to give it.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

I shall endeavour to give the hon. and learned Member for Walsall, North (Mr. W. Wells) the explanation for which he has asked on this question of patents. He will have it in mind that I am proposing to move some Amendments dealing with this matter later on the Report stage.

As the hon. and learned Gentleman said, the Amendment which he has moved would, in effect, exclude patented articles and articles to which a registered design is applied from the scope of Clauses 1 and 2. As I understand, he has raised this as an exploratory matter in order to have a discussion about the position. If this Amendment were adopted, it would be perfectly lawful to continue resale price maintenance in respect of these goods. The view of the Government is that there is no greater case for maintaining or preserving resale price maintenance in relation to these articles than there is in the case of any other goods. Therefore, we have drafted the Bill as it is, because we are firmly opposed to making any such exemption as the Amendment would do.

Perhaps I may explain what is the position of patented goods. The position of a registered design is broadly the same. The relationship between the patentee's monopoly and resale price maintenance arises in the following way. The patentee is entitled to prevent other people from selling the patented goods except by his licence. The courts have held that the patentee can impose conditions on the granting of licences to other persons to sell the patented goods. These conditions can include conditions as to the resale prices of the goods.

If a person knowingly sells the goods at prices lower than those fixed, the courts have held this to be an infringement of the patent. This means that the patentee can enforce resale price maintenance against retailers with whom he is in no contractual relationship. He does not need the support of Section 25 of the 1956 Act to do it. He can do it simply by virtue of his patent monopoly. That is the present position. We do not see any reason why these goods should be treated in a different way from other goods, though naturally they have the procedure of the Bill at their disposal. What is important is that the patentee does not need to impose resale price maintenance conditions in order to secure his financial reward from the exploitation of his patent.

This may have been in the minds of some hon. Members, though I think those concerned with patents have understood this very fully from the publication of the Bill. The patentee can keep his monoply and fix his own selling price, or he can license another producer to manufacture the patented articles on a royalty basis. He can get his revenue or financial income in either of these cases. This, I am told, is the most common case, and in the majority of these cases the royalty is calculated on the price at which the licensee sells his goods. It is calculated not on the retail price but on the selling price. Therefore, he does not need to have resale price maintenance in order to maintain his income. It is not a resale price. It is simply a sale price. The fixing of this price in the licence is not resale price maintenance and is not affected by the Bill.

There are some cases—I am told that they are very rare—in which the royalty is based on a resale price. I am advised that they are infrequent but may occasionally happen. This type of case can be dealt with under the Bill by relating royalty to a recommended resale price, and, therefore, if the patentee wants to maintain his income, he can do it in this way. Instead of fixing on a resale price, he fixes on a recommended price. Whether the goods are sold at that price or not does not affect the amount of revenue he gets, because he gets his revenue from the retailer fixed at that rate.

Photo of Mr William Wells Mr William Wells , Walsall North

How does this affect an already existing agreement, where it is fixed in relation to a resale price and no provision is made, obviously, for a recommended price?

Photo of Mr Edward Heath Mr Edward Heath , Bexley

Then the resale price will become the recommended price. I understand that that is what would happen in the few cases where such an arrangement exists.

Photo of Mr Harold Lever Mr Harold Lever , Manchester Cheetham

Why does the right hon. Gentleman say that?

Photo of Mr Edward Heath Mr Edward Heath , Bexley

Because I am advised that it will be possible to renegotiate on this basis, if the parties wish to do so, and the licence can then be related to a recommended price. This would be the normal method of going about it.

I can assure the House, therefore, that the patentee's financial rewards from the legitimate exploitation of his monopoly will not be affected by the Bill. At present, many patented goods are produced and distributed without resale price maintenance. I think that this is the answer to those who may say that we are removing one of the factors encouraging the development of inventions and their exploitation. The Bill will not affect this. I do not think that it will in any way affect the number of applications for patents.

That is the general position regarding patents as it is affected by the Bill. I hope that I have given the House a satisfactory explanation of what our intention was.

Photo of Mr Graham Page Mr Graham Page , Crosby

Could we have a little better explanation of the point my right hon. Friend made about renegotiation? If there is a firm contract for calculating the amount to which the patentee is entitled, how can he change that contract unless the Bill gives him power to do so?

Photo of Mr Edward Heath Mr Edward Heath , Bexley

As I understand it, the price is fixed in the contract, so that the obligation on the part of the person with whom the contract is made to go on selling at that price will no longer exist—unless, of course, exemption were granted by the Court—but the obligation will still exist on the person who is selling to pay the patentee the amount, so that the patentee's financial rights will remain untouched.

Photo of Mr Harold Lever Mr Harold Lever , Manchester Cheetham

I do not wish to be unfair about it—the Secretary of State has been explicit in his explanation so far—but I should like to hear more. If there is an existing agreement in which the royalty is based upon an agreement to sell at minimum prices, it seems that that agreement, although one cannot enforce it either by the repealed Section of the 1956 Act or by the rights under the patent, will nevertheless, so far as it compels minimum prices on resale, be broken by reason of this Clause. I do not want there to be any mistake about it. The right hon. Gentleman has himself been the source of confusion by his reference to renegotiation.

When the matter was first raised with him, the right hon. Gentleman as I understood him, said that the agreement could be renegotiated. Then, in answer to the hon. Member for Crosby (Mr. Graham Page), he said, in effect, that it did not need renegotiation. He said that if I have agreed to pay 1s. or 5 per cent. on the fixed price of an article set at £1, that agreement will still stand so far as it obliges me to pay 1s. even though it will not stand so far as it obliges the enforcement of a minimum price of £1. As I understand it, therefore, no renegotiation is needed under the Clause.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

indicated assent.

Photo of Mr Harold Lever Mr Harold Lever , Manchester Cheetham

I see that the right hon. Gentleman is nodding his head. I take it that he is saying that there need be no renegotiation and that the contractual rights which the parties have entered into will not be tampered with by reason of the Clause, except in so far as the general law will apply forbidding the enforcement of resale price maintenance, save under the conditions set out in the Bill.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

indicated assent.

Photo of Mr Harold Lever Mr Harold Lever , Manchester Cheetham

I have that point. So far as it goes, it seems to me to be satisfactory.

I come now to the second point. I am very much against this Bill, but, if it is to be brought into law, I wish it to be fairly and universally applied in accordance with the intentions of Parliament. As I understand it, the Minister's intention is that patentees should enjoy no better position than anyone else in the enforcement of resale price maintenance, but if a patentee is entitled to fix any terms as to royalty that he chooses, no great ingenuity on the part of draftsmen will be needed to draft terms of royalty which would make it penal in the extreme to depart from the recommended price. In other words, if there is preserved here, as I understand from the right hon. Gentleman is preserved here, the right of the patentee to fix any terms he likes for his royalty agreement, except that he must not attempt to enforce an actual contract for a fixed price, he will be able, in effect, by careful drafting, to produce the result which Parliament intends to prevent. Although I am not in favour of the Bill, I am in favour of the House of Commons not being frustrated in its intentions, and I am pointing out to the House that bad drafting in this Clause will permit just that.

I shall give an example which occurs to me. I confess that I have not given any great thought to the matter—

Photo of Mr Harold Lever Mr Harold Lever , Manchester Cheetham

We cannot all cerebrate at the continuously high level which the hon. Gentleman always evinces when he is on his feet or is making interjections. The wit of his remark will, I suspect, be more appreciated by himself than by others.

I want the House to consider this sort of case. A patentee decides that he wants to enforce the sale of an article at £1. He is perfectly free to say that if the article is sold at £1 he shall have 2s. royalty, if it is sold at 19s. he shall have 3s. royalty, and if it is sold at 21s. he shall have 4s. royalty. Thus, by varying the terms of royalty in a way which is perfectly open to him, as I understand it, he can, in effect, achieve the enforcement of a resale price.

It is not desirable that the Bill should be avoided in that sort of way. I should like the right hon. Gentleman to look at the point again and tell us whether he is satisfied, in the light of the freedom which he is granting to a patentee to draft any terms he likes for his royalty, that he is not automatically giving him freedom to enforce resale price maintenance by financial sanctions of the kind which I have described.

I emphasise that, whereas I am perfectly happy to leave the law alone as it stands, I am most anxious to ensure that, if it is to be altered, it is not altered in a way which lends itself to abuse and the frustration of the enacted intentions of the House of Commons.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

Is the Minister saying that, where there is one of these agreements, previously enforced, by which a royalty is based on a maintained resale price, when the Bill becomes law that will automatically, without any renegotiation, carry on as the basis of future royalties as a recommended price rather than as a maintained price? Alternatively, is the right hon. Gentleman saying that the parties will have to renegotiate the agreement on the basis of a recommended price? I was not quite clear about that.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

I am advised that the contract would stand as far as payment of royalty is concerned—

Photo of Sir Harry Hylton-Foster Sir Harry Hylton-Foster , Cities of London and Westminster

The right hon. Gentleman will require leave to speak again. No doubt, he can have it.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

In that case, Mr. Speaker, perhaps I had better not speak at this stage.

Photo of Mr Reginald Paget Mr Reginald Paget , Northampton

I think that I quite appreciate what the right hon. Gentleman was about to say at that point. The contract would provide that the royalty should be charged on the resale price of £1 if that were to be the resale price. Under the Bill, the resale price would be no longer maintained at £1, but this would leave unaffected the proposition that, whether the article were sold at 15s. or 10s., royalty was still calculated at £1. I think that that is what the right hon. Gentleman was seeking to say, and, with respect, I should have thought that it made sense.

6.30 p.m.

I am concerned, however, with the entirely different point of a person being faced with the problem of presenting a new article to the public for the first time. The inventor makes his invention. He makes his agreement with the supplier. That agreement, as the right hon. Gentleman has said, is normally based upon the wholesale price, the production cost or whatever it may be.

If the article is to be effectively presented to the public, in its initial stage and while it is new there may have to be a wide margin to pay for its presentation. The public has to be introduced to the new article. It might be sold in a variety of ways. It might be sold by mail order, through retailers or through one's own distributive shops, or one might be doing all three of those things.

If with the patented article a situation is created in which somebody who takes advantage of all one's advertising and presentation costs can cut the price, the whole of the presentation campaign of the new article would be undermined and wrecked. I therefore feel that the case for price maintenance, even if it does not apply generally, applies with special force during the period of presentation of a new article, particularly a patented article or a new invention. The presentation of that sort of article would be made much more difficult and this would be greatly to the disadvantage of the public.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

The last point raised by the hon. and learned Member for Northampton (Mr. Paget) is a matter of judgment, but it goes further than the Amendment, which is concerned with patents and with registered designs. The right hon. Member for Battersea, North (Mr. Jay) said exactly what I would have said, as repeated by the hon. and learned Member for Northampton, that in the contract the price remains but no obligation then remains on the seller to maintain the price. If, on the other hand, the patentee wants to issue a new recommended price and base the article upon that, he would have to negotiate it. In the case of existing contracts, however, the seller can stay on the existing arrangement, but there is no longer any obligation for the price to be maintained.

The hon. Member for Manchester, Cheetham (Mr. H. Lever) asked about abuse by a patentee in the new arrangements. It is not that in the Bill I am giving him any particular liberties which the hon. Member mentioned. They already exist. I recognise the hon. Member's point about fairness. The real question is whether it would be to the patentee's advantage to try to make the sort of arrangement which, as the hon. Gentleman stated, he had thought up on the spur of the moment. I think that on further reflection the hon. Member will see that it is not to the patentee's advantage to make arrangements of that sort.

One must be realistic about this. We have, however, as the hon. Member would reluctantly agree, tried in the Bill to cover as many sources of abuse as possible. Indeed, the hon. Member has challenged some of the action which we have taken to do this. I will certainly consider whether any action should be taken in the case of patents to prevent abuse, but the hon. Member will recognise the great difficulties involved in doing this.

Photo of Mr Richard Winterbottom Mr Richard Winterbottom , Sheffield, Brightside

I am worried about the position. I understand that most of the agreements covering patents provide for a period of years and that usually there is no opportunity for revision of the agreement during that period. It appears to me, therefore, that if there is an agreement for patent rights on an article on which there is a percentage based upon the selling price or the minimum selling price of the article, making provision within the period covered by the agreement for fluctuations in the recommended minimum price, if r.p.m. allows for cut prices in regard to the specific article there can be no possibility of revision of an agreement except by mutual consent.

It could happen that under these patent agreements somebody will suffer in consequence of the Bill, unless the right hon. Gentleman assures us that in the event of this question being raised in connection with the gateway that has to be considered by the Restrictive Practices Court, these matters would be taken into consideration in view of existing legal agreements which had been entered into. I should like to know, either from the Secretary of State or from somebody responsible in the Government, whether consideration will be given to this point in view of the fact that agreements usually cover a period of years.

Photo of Mr William Wells Mr William Wells , Walsall North

In view of the explanation which has been given, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

I beg to move Amendment No. 2, in page 2, line 6, to leave out from first "articles" to "as" in line 7 and to insert: (including articles made by a patented process)". I suggest that it would be for the convenience of the House, Mr. Speaker, to discuss at the same time Amendments Nos. 4, 5, 6 and 8, which are grouped together and concern patented articles.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

These Amendments are concerned with patented articles, articles to which a registered design is applied and articles which are protected by rights now conferred under the Plant Varieties and Seeds Act, 1964, which was dealt with by the House of Commons after the present Bill was drafted. These are known as plant breeders' rights.

In substance, the Amendments do three things. First, they redefine a patented article for the purposes of the Bill. Secondly, they bring within the scope of Clause 2(2) the articles which are the subject of plant breeders' rights and which have not been dealt with in the subsection for the reasons which I have given. Thirdly, the Amendments deal with a case where a patentee has granted a licence to somebody else to manufacture the patented article and has authorised that licensee to grant sub-licences enabling a third person to manufacture the patented article.

The first objective is dealt with in Amendment No. 2. Patented articles are described thereby as including articles made by a patented process. This is the definition accorded to patented articles in the Patents Act, 1949, and I suggest that it is right that we should have the same definition in the Bill. The second objective is dealt with in Amendment No. 8, which introduces subsection (5) to deal with plant breeders' rights. These are conferred by the Act to which I have referred and in horticulture they are broadly identical to the patent rights conferred under the Patents Act. Therefore, as they are in the same case as patents and registered designs, they should clearly be expressed in the same way in this Bill.

The third object of the Amendments is dealt with in the third Amendment, that in line 18. Its effect is to make the proviso to subsection (2) apply to the price fixed in any sub-licence to manufacture patented articles granted by a licensee from the patentee. At the moment, this proviso relates only to the licence granted by the patentee himself. I have been advised by the experts that it is usual for a licensee to be authorised by the patentee to grant sub-licences authorising others to make and supply the patented article. Therefore, the proviso, as amended by the Amendment, will also deal with that case.

The other two Amendments in page 2, lines 13 and 18, are drafting Amendments as part of the whole scheme covered by the five Amendments. The Amendments have the three objectives which I have described—to bring the definition of the patented article in line with the Patents Act, to bring in the plant breeders' rights and to take account of authority given to licensees to grant sub-licences for a third person to manufacture the patented article. I hope that they commend themselves to the House.

Photo of Mr Harold Lever Mr Harold Lever , Manchester Cheetham

I wish to raise one point, and I hope that I am in order in raising it now. I might have raised it on the discussion which we have just had.

It would seem from what the Secretary of State has said about the effect of the Clause that all these people will operate a somewhat peculiar system concerning existing contracts. If a man has agreed to pay a royalty on the basis of an undertaking by his supplier that he will enforce a minimum price, the Clause would abrogate the obligation of the patent owner and the customer will still be obliged to pay the royalty. I may agree to pay 2s. in the £ on some of the articles covered by the Amendment on the ground that my supplier has contracted with me that he will enforce a minimum price of £1 for the article. As I understand the Secretary of State, I will not get the benefit of the contract in so far as it obligates the patentee to enforce a minimum price of £1 but will be made liable to pay the 2s. that I have agreed as a royalty.

It seems to me that this is an extraordinary state of affairs. I wonder whether the Clause should be looked at again because it takes away one part of the contract—that part which fixes a retail price. Any obligations which have been entered into become void from the patentee's point of view, but any obligation which the customer has entered into, which may have been directly occasioned by reliance on the price being maintained, will be kept in force. It seems most alarming that one party to the bargain must keep his part of the bargain and may well have been relying on a fixed retail price and the other party, however reluctant he may be, will be relieved of the obligation. Indeed, he will be compelled to renege on the obligation to enforce a fixed price.

Photo of Sir Harry Hylton-Foster Sir Harry Hylton-Foster , Cities of London and Westminster

Will the hon. Member help me? I do not follow how what he is saying relates to this series of Amendments.

Photo of Mr Harold Lever Mr Harold Lever , Manchester Cheetham

I confess that it would appear to me that it would have related more to the previous Amendment, but I had hoped that it would come within the ambit of this Amendment.

Photo of Sir Harry Hylton-Foster Sir Harry Hylton-Foster , Cities of London and Westminster

I am afraid not. I must abide by the rules. If I do not, the night becomes a little longer than otherwise.

Amendment agreed to.

Further Amendments made: In page 2, line 13, leave out from "patent" to end of line 14.

In line 18, leave out first "registered design" and insert "by a licensee under any such licence".

In line 18, leave out "or registered design".—[Mr. Heath.]

6.45 p.m.

Photo of Mr Reginald Paget Mr Reginald Paget , Northampton

I beg to move Amendment No. 7 in page 2, line 20, at the end to insert: (3) Where a supplier enters into an agreement with a dealer whereby he retains ownership in goods up to the time of delivery or sale to a consumer and his normal practice before the passing of this Act was to supply goods on sale to the dealer for resale the agreement shall be void. While I have never disguised my dislike of a Bill which condemns wholesale the evolved customs of the distributive trade of this country, equally I have never disguised my view that there may be instances in which a particular practice, such as resale price maintenance, may be abused. One of those instances—indeed the major one, to my mind—concerns expensive articles, such as motor cars, television sets and various items of machinery where maintenance charges are unjustifiably confused with price and where probably a price disadvantageous to the public, on the whole, is maintained without compensating advantages to any wide and established distributive system. It seems to me that, as drafted, the Bill exempts precisely such expensive types of articles.

I agree with my hon. Friend the Member for Manchester, Cheetham (Mr. H. Lever) that, if we are to have this Bill at all, we should seek to make it fair for everybody. But I regard that as a much less powerful argument than the argument that we should not leave open means for the dealers in expensive articles to exempt themselves. They can do that without any difficulty at all, in my view, by agency agreements.

The man dealing in bars of chocolates, breakfast cereal or in any of the small items handled by the small shopkeeper cannot protect himself by an agency agreement.

Photo of Mr Reginald Paget Mr Reginald Paget , Northampton

Because it would be far too complicated to work. It is not possible to have an arrangement whereby every small shopkeeper is one's agent to hold bars of chocolate until they are sold across the counter without running all the risks which a principal must take for the actions of his agents. One can escape from that sort of risk only when the agreement deals with a large enough sum to allow for a special contract which exempts the supplier from the liabilities which he would run at common law for the actions of his agent.

May I take motor cars as an example? If any motor car manufacturer wishes to retain resale price maintenance, all he has to do is to work out an agreement with his agents whereby the property in the car remains in him until it passes to the customer. On the sale to the customer the profit at the maintained price is payable to the dealer as a commission.

That walks straight through this Bill, and it is a very easy arrangement to make. I will come to that a little later, but, as an example, I would deal with the Ford company at this moment.

The Ford company at this moment is busily engaged in taking over the finance of hire purchase of its vehicles. It is now going to become, in so far as it can arrange it, the financier who owns the car which is let on hire purchase by the Ford dealer. In fact it is offering at this very moment interest advantages of between 17 per cent. and 24 per cent. to transfer this business from the finance companies to the Ford company. Now, of course, if that is done, then it would need only the smallest adjustment for the Ford company to remain the proprietor of that car throughout, till the point of sale, and as the proprietor it can say and maintain what the price will be.

There was some correspondence between the right hon. Gentleman and my hon. and learned Friend the Member for Walsall, North (Mr. W. Wells) on this point. The right hon. Gentleman wrote to my hon. and learned Friend as follows: Your Amendment had in fact already led me to consider the wider point of whether agency is likely to be used as a device for circumventing prohibitions in the Bill. I have reached the conclusion that the risk of this is in practice very small, and that in any event measures to counteract it, such as it is, could not help but work great injustice. I think the risk is small for the reason that to go over to an agency basis suppliers would have to undertake a very substantial reorganisation of their business arrangements. Moreover, they would have to assume responsibility for the conduct and liabilities of their agents which would entail the risk of heavy legal obligations. Pausing there for a moment, that would certainly be so if they left the matter at common law. But there is not the slightest difficulty. Any lawyer—the Attorney-General—any lawyer at all would have no difficulty at all in drafting a contract which excluded the common law liabilities. That is done with no difficulty at all. The provisions would be that in this case the principal would not be responsible for the actions of the agent as detailed in the contract. This type of contract which excludes the common law liabilities is drafted hundreds of times for every finance house under hire purchase, and they exclude all the common law liabilities which would normally adhere to the hirer and owner of the goods let to a customer. This is done, and so there is no difficulty at all in drafting a contract which would exclude all the difficulties suggested by the Secretary of State here.

All that really happens is this. The car goes to the agent. The agent pays, in just the same way as he does now. That will depend on the particular arrangements with different agents. He does not pay it as the price for the car. He pays it as a deposit on the car, which remains the property of the supplier. On the sale by the supplier the agent retains his profit as a commission, and there the proceedings close. The contract between both the supplier and the agent, and the supplier and the ultimate customer through the agent, includes the necessary clauses which prevent the supplier from incurring any of the common law obligations which would normally arise in the case of a principal selling through an agent. As a matter of law there is no difficulty in this at all.

It will happen. The Ford arrangements at the moment are a foretaste of its happening. It will happen with the car manufacturers if, as is highly probable, they and their agents wish to maintain price maintenance. It will happen with television sets—again, articles which are quite expensive enough to warrant special contracts. Indeed, when one does buy a television set one nearly always does enter into a special contract which provides a guarantee of maintenance, in exactly the same way, of course, as, when one buys a car, one accepts a compulsory guarantee which in fact excludes the supplier from all his common law liabilities and liabilities under the Sale of Goods Act. These are the sorts of contracts which can exclude any common law embarrassment or Sale of Goods Act embarrassment to a supplier who supplies to an agent instead of a retailer.

It can apply, also, of course, to the various articles of machinery which are at present price maintained and of considerable value. I think that in practice this would probably not be a very workable system for articles costing—I draw a rough line—under £10 or £15, but for all the range over that kind of price this gate is absolutely wide open.

If this Bill has any justification at all I should have thought it had infinitely more justification in this sphere than it has in the field where distribution takes place through a small retailer who has probably invested his savings in a very small business and whose existence really depends on the maintenance of the prices of the articles in which he deals and on which he lives. He must maintain a larger profit-turnover than the supermarket which can operate on enormously large turnover. Where it is least justifiable, the Bill will probably work, but with more expensive goods the gate is wide open. It is to shut that gate that the Amendment is proposed.

7.0 p.m.

Photo of Mr Robin Maxwell-Hyslop Mr Robin Maxwell-Hyslop , Tiverton

The Amendment is largely unnecessary, because the class of goods described by the hon. and learned Member for Northampton (Mr. Paget) is largely that class of goods characterised by part exchange dealings, and where there are part-exchange dealings resale price maintenance is largely inoperative anyway.

Secondly, the Amendment is quite valueless—and it is hardly worth discussing it—because if it were embodied in the Bill, anybody who wanted to circumvent it would have between tonight and the date when the Bill received the Royal Assent to sign any agency agreement he liked. If he did so, he would escape the Amendment, because it would then be a normal contract before the passing of the Act. This is, therefore, a totally valueless Amendment.

Photo of Mr Donald Wade Mr Donald Wade , Huddersfield West

I would not wish to be bound to the actual wording of the Amendment, but it raises an important issue. There may be a substantial loophole, and we have to be realistic and appreciate that efforts will be made to find loopholes in the Bill. We have had that experience with collective price agreements. One of the reasons why so many agreements were withdrawn was because ways of getting round them were found. I do not think that they were withdrawn because it was thought that an application to the Court would fail. However, that is another story. I merely make the point that members of the legal profession will be advising on ways and means of getting round the Bill.

I shall be interested to hear what the Secretary of State has to say, but there may be a loophole in this Clause. The supplier of cars, for example, may appoint an agent solely to maintain prices, and the property would not pass until the actual sale, in which case, presumably, there would be no question of resale price maintenance as defined in the Bill. A garage might be financed by a manufacturer and the garage proprietor might be quite willing to enter into some such arrangement.

I take the point that where there is already exchange dealing the resale price system is largely ineffective because of the margin of difference in the allowance on second-hand cars. However, it would be possible for a supplier to arrange with a garage proprietor as his agent that any second-hand cars bought by the garage proprietor should be bought by him as agent for the supplier. That is not impossible. The Bill would be completely ineffective in that event.

Photo of Mr Reginald Paget Mr Reginald Paget , Northampton

It is said that part-exchange has destroyed resale price maintenance in the motor trade. I do not know whether the hon. Gentleman has ever tried to part-exchange a car, asking a number of dealers. In my experience they look it up in a book and the price offered varies almost not at all.

Photo of Mr Donald Wade Mr Donald Wade , Huddersfield West

I cannot entirely accept that. There is a price list, but the extent to which there are variations is curious. Frankly, I do not have a great deal of time to go round different garages when I sell a used car.

There are customs about the return of unsold newspapers. These customs may have varied over the years. There may be a difference in this respect between newspapers and journals. It is a benefit to a newsagent to be able to return newspapers or journals which he has not sold. What would happen if the supplier made the newsagent his agent for the purpose of selling, so that the property did not pass until sold? Presumably, the Bill would not cover this. The newsagent would merely be an agent selling on behalf of the supplier and would not be a retailer within the meaning of the Bill.

The Amendment, therefore, does raise an important issue. The doubts expressed may be completely set at rest by the right hon. Gentleman, but I am sure that it has been well worth raising this matter.

Photo of Mr Graham Page Mr Graham Page , Crosby

I remind the hon. and learned Member for Northampton (Mr. Paget) that this is a Resale Prices Bill and that the Long Title refers to resale prices and that Clause 1 deals with contracts for the sale of goods by a supplier to a dealer. The Amendment attacks direct sale from the owner to the customer. To that extent it goes far beyond the intentions of the Bill, and I am not certain where this principle would end.

It is true that the Amendment is fairly narrow and that all it says is that if a supplier has been selling to dealer X for his resale of the goods, after the passing of the Bill he must not appoint X as his agent. It takes the existing set of facts before the Bill becomes law and says that the supplier must not appoint the dealer, Mr. Smith or Mr. Brown or whoever he may be, with whom he has been dealing, as his agent. The supplier can appoint someone else as his agent. I would have thought that it was scarcely fair between one trader and another that a man who happens to have been dealing in the ordinary way of resale with a retailer before the Bill became law should not be able to appoint that man to act as his agent but able to appoint anyone else he chooses. In that way the principle behind the Amendment would be completely defeated.

I do not like the principle anyway. It is the thin end of the wedge of attacking agency sales altogether. I hope that my right hon. Friend will resist it, because it goes far beyond the intentions of the Bill. The end of the principle of the Amendment is that a supplier would not be able to appoint an agent to sell goods for him. He would not be able to appoint a salesman. The ownership in the goods does not pass when he appoints a salesman or agent and the supplier would therefore be caught by the principle of the Amendment, if not by the narrow Amendment as it stands.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

I appreciate the difficulty, but does not the argument of the hon. Member for Crosby (Mr. Graham Page) in substance mean an admission of the main argument of my hon. and learned Friend the Member for Northampton (Mr. Paget)—that it is possible to get round the Bill by direct sales?

Photo of Mr Graham Page Mr Graham Page , Crosby

I do not think that it will get round the Bill when it is a direct sale. The purpose of the Bill is to make resale price maintenance agreements void. It is not to attack what a man chooses to do about selling his own goods.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

Is it not the purpose of the Bill, in the opinion of most people, to make it impossible for manufacturers to dictate retail prices, and do not the circumstances outlined by my hon. and learned Friend get round that?

Photo of Mr Graham Page Mr Graham Page , Crosby

The Amendment says that the manufacturer who still keeps ownership of his goods cannot enter into certain agency agreements, that they are void. It happens to deal only with agency agreements between the manufacturer, or supplier, on the one hand and, on the other hand, the retailer with whom he had been dealing previously. That is the thin end of the wedge of an attack on the whole system of agencies, and I hope that my right hon. Friend will resist it.

Photo of Mr Harold Lever Mr Harold Lever , Manchester Cheetham

It would be useful to clear up the technical points involved. What the hon. Member for Crosby (Mr. Graham Page) said is right, but this is to argue the form and not the substance of the Amendment.

My hon. and learned Friend the Member for Northampton (Mr. Paget) has no desire to put teeth into a Bill which already bites many honest citizens and traders viciously enough without any further intervention by those who hold the view held by my hon. and learned Friend and myself. The purpose of the Amendment is to open for discussion the inadequacy of the Bill by making it plain in the simplest manner imaginable that anyone who wishes to frustrate the declared intentions of the Government and the purposes of the Bill can do so by setting up an agency agreement where hitherto there has been the normal process of sale by a retailer. He continues the existing reality, if he chooses to do it behind a legal smokescreen; instead of saying to the retailer, "I will sell you an article for £2 which you must not sell for less than £3", he makes the retailer his agent to sell the article at an agreed price of £3. The latter is obliged to sell it at that price on pain of action for damages, which would not be prevented by the Bill. If the manufacturer dictates to the retailer that he must sell it at £3, then he must sell it at that price, because it is not his property but the manufacturer's.

Photo of Mr Norman Cole Mr Norman Cole , Bedfordshire South

The hon. Member meant "to the agent", not to the retailer.

Photo of Mr Harold Lever Mr Harold Lever , Manchester Cheetham

The retailer before the Act becomes the agent after the Act.

Where I disagree with my hon. and learned Friend is in imagining that there is any difficulty in applying this evasion of the Bill to smaller articles than television sets. It would be the easiest thing in the world to cover 1d. packets of pins just as effectively, because a little ingenuity and legal drafting will produce the reality of the original manufacturer-retailer situation but the legal form of an owner-agent situation. Nothing is changed in reality; only the legal relationship is changed. Instead of the device of selling to another man who, in turn, sells to the public, there is a device to sell direct to the public by means of an agent.

I have no desire to widen still further the mischief of this mischievous Bill, nor has my hon. and learned Friend. The purpose of the Amendment is to expose to the consideration of the House the totally inadequate way in which the Bill has been drafted and the mischief of this hastily conceived legislation. Per- haps it is not hastily conceived. Somebody likened the Bill to a mosaic, but I would rather liken it to a sleeping foetus with an elephantine period of gestation in the Board of Trade pigeon hole until the Minister, seeing a General Election upon us, induced a premature birth, with some of the horrible consequences of such a birth.

We have a situation in which the more righteous manufacturer, the more upright man, who is disinclined to seek protection for his trade practices through legal quibbles and evasions, may not make use of this way out, but the more ruthless and unscrupulous manufacturer will not have the slightest difficulty in riding his way through the Bill.

It is not difficult to think of innumerable other ways of evading the Bill if one is minded to do so, but I will concentrate solely on this way and on the arguments advanced. The Government are told, "You intend to prevent manufacturers from enforcing a minimum price. Here is an obvious loophole whereby manufacturers can enforce a minimum price". It is not then adequate for the Minister to send back a letter saying, "I do not think that many people will make use of this device because it may have many inconveniences". Those inconveniences referred to in the letter were adequately dealt with by my hon. and learned Friend, and what he said was sound and unchallengeable law. None of these inconveniences cannot be dealt with by suitable contract. Many people have such agency agreements and have already protected themselves, and we need not engage in the striking novelty of legal invention. One has only to adopt the wording of contracts already in existence in the areas of trade where sale by agency is the normal course of trade.

7.15 p.m.

I want to make it abundantly clear that nobody should imagine that I want the Bill extended to cover sales by agency or by a manufacturer of his own product. But it is worth highlighting in this manner the frivolous way in which the Bill has been drafted. It has been claimed that where we are dealing with such articles as motor cars and television sets, where the common practice is to have part-exchange, resale price maintenance has gone by the board anyway. I will not go into detail, because it would weary the House, and it can be dealt with in a sentence or two. If resale price maintenance has gone by the board in the motor and television industries, what are we legislating for? These are the prime evils with which we have been tormented throughout the passage of this ill-begotten, inadequately throughout and badly drafted Bill.

It is an extraordinary defence of the Bill now to say that in the main areas where the Bill is supposed to improve the situation, there is no need for improvement because the practice of part-exchange has already done the job for the Government. I understand why the Government rely on the blind forces, because they see a little more clearly than do some of the Ministers when they are trying to enact legislation. But this argument is untrue. If it were true, we should not need the Bill. In the motor trade, the classic area of part-exchange, resale price maintenance is effective. There are means of enforcing it even though part-exchange takes place. I do not want to turn the House into a discussion group of the Motor Traders' Association or to throw out speculative possibilities of how motor traders could enforce a resale price system against part-exchange. The answer is short: they were doing it for many years before the Bill was introduced. My hon. and learned Friend showed means whereby they can continue to do it after the Bill is enacted.

The Secretary of State simply says, "Well, if anybody is mean enough to use this device to get round the Bill…". When I mentioned one other of the innumerable devices for getting round the Bill, he adopted a contemptuous attitude, with such a remark as, "These are the sort of mean-minded chaps who will get round my drafting and frustrate my purposes". If he will interfere with people's legal trading rights, they are liable to exercise any legal ingenuity they may to avoid his legislation. He should be clear about that.

This is not a moral issue. The right hon. Gentleman may have convinced himself that every decent citizen regards with horror the idea of continuing a practice which has been respected for centuries by respectable trades, but he has not convinced the public. This may arouse horror in his breast, but there is no morality behind his legislation, which does not command the moral assent of the population so that they would be ashamed to find legal devices to circumvent his legislation. There is no moral passion on this issue. On balance, the moral forces in the country hold this legislation in contempt and think that it is aimed at a most honourable practice of trade in this country. Even so near to the General Election, I must pay tribute to many hon. Members opposite, because it is easy for my hon. Friends and myself to ridicule the Bill but it is not so easy for hon. Members opposite to do so.

Photo of Sir Harry Hylton-Foster Sir Harry Hylton-Foster , Cities of London and Westminster

Order. The hon. Member must apply himself to the Amendment. We have already had a passage of his speech on obstetrics.

Photo of Mr Harold Lever Mr Harold Lever , Manchester Cheetham

I wish to compliment hon. Members opposite on their integrity and courage in fighting for what they believe to be a moral cause. It is relevant to point out that if resale price maintenance were recognised more or less universally to be a wrong and criminal thing to do, the Secretary of State would be entitled to say, "There will always be shady firms who will seek to flout the general moral sense of the community in which they live". But that is not the case here. There is no general conviction that resale price maintenance in itself is an evil thing. I was supporting my contention that the nation is at least divided on whether it is right or wrong to enforce resale price maintenance by indicating the courageous struggle which many hon. Members opposite have conducted against the Bill in the course of our debates. I therefore respectfully submit that the case made out by my hon. and learned Friend cannot be answered.

I will try to close with a sentence or two, but it is directly relevant to this case. Everybody will agree that a genuine agency agreement not intended to circumvent the Bill should be and will be unaffected by the Bill, but that means that those manufacturers who are trading by agency agreements—leaving aside the question of evasion raised by my hon. and learned Friend—will be entitled to fix their retail prices as before because the goods will be theirs. This proves the illogicality of the Bill. If the fixing of a retail price is such a harmful thing for the community, whatever means produces that result should be opposed. Why, therefore, should we allow ordinary agency agreements to continue in force?

It is all very well to say that these are not intended to be covered by the Bill. That is the weakness of the Government's case. If it is evil to enforce a retail price, it must be evil whether it is done through a strange retailer or through a retailer who is a stranger but is one's agent. If it is evil to do it by way of deliberate circumvention of the Act, why is it virtuous to do it because one traditionally has traded by way of an agent? I cannot see the distinction. I am sorry to elaborate this but we are owed an answer. If A is a manufacturer and supplies a retailer and always has supplied him by way of an agency agreement, he is outside the Act; and if A is a manufacturer who used to sell to a retailer who in turn sold to the public, and he changes it to an agency agreement, he is still outside the Act; and yet in one case the Secretary of State thinks that it is a terrible thing and a mischievous evasion of the Bill, and in the other case he thinks that it is a normal trade practice. Why?

Is resale price maintenance an evil thing? If it is, then whatever mechanisms exist to bring it about should be abolished; and the reason that I stress the point is that once we accept that proposition we realise the impossibility of enforcing the Government's intentions, because nobody would consent to legislation which would have the effect which my hon. and learned Friend pointed out, because it would have the effect of preventing a man from selling his own goods.

Photo of Mr Robin Maxwell-Hyslop Mr Robin Maxwell-Hyslop , Tiverton

Those must be two of the longest sentences that HANSARD will ever have printed.

Photo of Mr Harold Lever Mr Harold Lever , Manchester Cheetham

I am sorry if my enthusiasm provoked the hon. Member to an exhibition of wit. I must do my duty as my thoughts come to me. I am not seeking to delay the House but to address my mind honestly to the points which the House has to consider.

Photo of Mr Graham Page Mr Graham Page , Crosby

Does not the logic of the hon. Member's argument and of the Amendment mean that if one appointed a traveller to sell one's goods, he could sell them at any price he chose and it would be illegal for the supplier to make an agreement with the traveller to sell goods at a certain price? Does the hon. Member mean that we should legislate against that?

Photo of Mr Harold Lever Mr Harold Lever , Manchester Cheetham

The logic is that if we seek to abolish resale price maintenance and to do it comprehensively, we get ourselves into an utterly ridiculous and impossible situation, such as an attempt to abolish it in respect of a traveller. My conclusion is not to strength the legislation and to make it comprehensive and all-embracing but to sling it back into the dusty pigeon hole from which it was ruthlessly taken by a misguided Secretary of State, and mistakenly approved by a Prime Minister who, whatever virtues of integrity and charm he may possess, knows very little, except on the surface, of our economic and domestic problems; and it is too high a price to pay for having that Prime Minister to have this kind of misbegotten legislation.

Photo of Mr Norman Cole Mr Norman Cole , Bedfordshire South

I intervene briefly only because of some remarks made by the hon. and learned Member for Northampton (Mr. Paget) and the hon. Member for Manchester, Cheetham (Mr. H. Lever). The hon. Member for Cheetham does not want a Resale Prices Bill but a prices Bill. After listening to the hon. and learned Member for Northampton, I was not certain whether he would be in demand by those who want to find ways of avoiding the Bill or whether he would be avoided for having attempted to introduce the Amendment to stop them. First of all, he finds a very good way round the Bill and then he proceeds to make it void if that way is adopted.

7.30 p.m.

I do not know where the hon. and learned Gentleman stands on this matter. This is all rather nonsense. Where are we going to stop? What about the firms who advertise in journals and who make the goods which they are selling? What about the people who build their own houses and who advertise? We are not trying to stop everything. We are not trying to stop the practice of industrial development. We are merely trying to stop those practices which are not in the public interest. We are merely trying to prevent the public from paying more than they need to pay because the manufacturer or supplier is insisting on a minimum retail price.

This Bill is for the benefit of the public as a whole. It is for the benefit of the supplier, the dealer and the consumer, and what a difficult job it is to ensure that it is of benefit to all concerned. I am convinced that we shall need amending legislation in less than five years from now. That is no reflection on my right hon. Friend's efficiency. It is a reflection on our desire always to try to bring in the most up-to-date legislation for the benefit of the public. In many cases the provisions in the Bill will, in the light of experience, prove more than adequate, or not adequate enough, or not comprehensive enough. If we said anything else, we should be stupid, because amending legislation is a habit of this House, and may it ever continue.

I do not believe that half the things presaged by the hon. and learned Member for Northampton will happen. He mentioned motor cars and television sets. There is nothing in the Amendment which says that the article in question must be an expensive one. As the hon. Member for Cheetham said, we may be dealing with a penny packet of pins.

Earlier in the debate the hon. and learned Member for Northampton said that many people had been diverted from using their industrial energy because they were concerned about the time available for putting cases before the Court, the implication being that they ought to spend their time pushing their business. But that is what manufacturers are doing. They are not fiddling around with agencies and things like that. The firms which I know will get on with the job of making their goods and selling them.

Photo of Mr Reginald Paget Mr Reginald Paget , Northampton

I assure the hon. Gentleman that the legal problems and difficulties of taking avoiding action against the provisions of the Bill are so much simpler than the problems involved in applying for exemption to the Court and presenting a case there. One is a problem, whereas the other can be passed to a local solicitor and he will send back the appropriate document.

Photo of Mr Norman Cole Mr Norman Cole , Bedfordshire South

I did not say that there was a relationship between the amounts of work involved. I agree with what the hon. and learned Gentleman said earlier, that the job of directors of companies was to push their businesses. I do not think that they will be deflected from doing it by trying to find ways round the Bill, because in many cases that will not produce anything like an adequate reward for the time and trouble involved.

I am not sure that many firms in this country will necessarily apply for exemption, because, if they do, such will be the congestion of the Court that a lot of the Bill will be invalidated because of the length of time taken to get the cases through the Court. I am certain that many firms will not indulge in that practice but will, instead, go out into the market and sell their goods.

In one or two trades competition is such that the people in them may well accept an agent or a distributor to sell their goods at the best possible price. It is unfortunate that the hon. and learned Member for Northampton chose the motor car trade which, above all, is exemplified by the number of service-after-sale agreements it gives for 12 months. It is unfortunate that the hon. and learned Gentleman chose that example to illustrate his Amendment.

We have heard about how people will get round the provisions of the Bill. There will always be clever people who will always get round any Measure. The hon. Member for Cheetham does not want this pushed too far, because if it is he will lose half his business in future. I do not think that we need worry about this too much. We can all think of half a dozen things of this nature which would tend to compromise the Bill.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

The hon. Gentleman says that there are ways around the Bill, but he says that we need not worry about them. Is it that he does not want to stop up loopholes in the Bill?

Photo of Mr Norman Cole Mr Norman Cole , Bedfordshire South

I want a certain number of them to be stopped by the Bill, and I want a certain amount of resale price maintenance to go on. I have said that from the beginning. That is why I consider that the Bill has a certain job of work to do, and that is why some of us have done our best to ensure that it does that job of work. I did not say that we should not take notice of these loopholes. I said that this was not different from a number of other devices which one could consider. But if someone wants that, he does not want a Resale Prices Bill but a Prices Bill. It will be very much larger than this one, and it will cover everything under the sun. It will cover people who manufacture things which one buys on the spot.

The hon. Member for Cheetham said that his hon. and learned Friend the Member for Northampton was trying, not to put teeth into the Bill but to do something which he described in some other elegant phrase, but I think that the mischief is there. The hon. and learned Member for Northampton is trying to do just that. He is trying to open it up, and possibly to baulk the purpose of the Bill by drawing attention to various ways around it and by suggesting methods by which it can be circumvented. I am content to make the Bill deal with resale price maintenance, and to make it as efficient and direct as possible. I am prepared to do one thing at a time and to see how it works out. I realise that there are clever lawyers who will get round these things, but I think that the end result will be a good one.

Photo of Mr Edward Heath Mr Edward Heath , Bexley

We discussed this matter in Committee, and, as the hon. and learned Member for Northampton (Mr. Paget) said, there has been correspondence between myself, the right hon. Member for Battersea, North (Mr. Jay), and the hon. and learned Member for Walsall, North (Mr. W. Wells) about this matter. I am not certain what is the position of the hon. and learned Member for Walsall, North. I understood that he wished to stop up a loophole. It is obvious that the hon. and learned Member for Northampton wishes to do the opposite, and he is strongly supported by the hon. Member for Manchester, Cheetham (Mr. H. Lever), who alone has introduced crime and immorality and various other phrases which have no connection with the matters which we are discussing.

When we were discussing these matters, I understood that the objective was to plug a loophole in the sale or return system. I hope that by my earlier remarks, and in the correspondence which we have had, I have convinced the hon. and learned Member for Northampton that the sale and return system is not a way of evasion as far as the Bill is concerned. This, therefore, is not one of the devices about which the hon. Member for Cheetham will be able to advise his clients.

There has now come into the discussion the whole question of agency arrangements. Our view is that agency arrangements exist at the moment. They are justifiable and genuine arrangements, and there may be a need for such arrangements in the future. The Amendment would prevent them coming into effect, and therefore I could not accept it, nor could I recommend the House to accept it, because I believe that the opportunities for agency arrangements should remain.

There is a difference of judgment as to whether these are going to be used as a means of evading the Act. The hon. and learned Member for Northampton thinks that this will be done easily by a local solicitor. I am advised that it will be very difficult to draw up arrangements which do not destroy the real concept of principal and agent. It may be that the hon. and learned Member for Northampton will be able to do this, but I am convinced that it will be difficult, and that it will have to be done with great care.

As my hon. Friend the Member for Crosby (Mr. Graham Page) has pointed out, the Amendment is defective. What it does not do is to find a means of distinguishing between the genuine agency agreement and the agency agreement which is being used in the form of evasion. I therefore do not believe that I could commend the Amendment to the House. We believe that opportunities for making genuine agency arrangements should remain, and we therefore consider that in this respect the Bill should remain as it is.

On the other hand, I do not believe that it will be used very much as an evasion. If it is, no doubt action can be considered later on. It is not likely that this method will be adopted in a large part of the field in which resale price maintenance is at present used. I say that the Amendment itself is defective, for the reasons that I have given, but I am not basing my answer on those points. I say that an opportunity should be left open for agency agreements to be made where appropriate. I hope that the House will not accept the Amendment.

Photo of Mr William Wells Mr William Wells , Walsall North

As I understand it, the dispute between the two sides on this argument is a comparatively narrow one. Probably everything that the right hon. Gentleman has said in relation to sale and return is right. I also agree that there is a sphere in which agency arrangements are appropriate, justifiable and legitimate. We would in no way seek to restrict them, although in the course of the debate I have felt from time to time that one of the defects of the Amendment is that it does not go far enough.

The right hon. Gentleman says that one of its defects is that it does not distinguish between the genuine agency arrangements and the agency arrangement which is entered into for the purpose of evading the Bill's provisions. Whatever may be the defects in the drafting of the Amendments, it is quite clear that the object at which we are aiming is simply the prevention of evasion. We are saying that where, up to the passing of the Bill, a supplier has been supplying goods to a retailer by way of sale but then, in order to avoid the provisions of the Bill, he alters the basis of his dealing so that the retailer becomes a mere agent, then, and only then, will the Amendment come into play. I accept the somewhat patronising intervention of the hon. Member for Tiverton (Mr. Maxwell-Hyslop), as a matter of words, but when he has been here a little longer he will know that it is quite simple to rectify matters of this kind at a later stage.

I commend the point made by my hon. and learned Friend the Member for Northampton (Mr. Paget) that, in effect, a large-scale operator may well find it worth while to frame arrangements that avoid the usual common law responsibility of the principal for his agent by the terms of his contract. The Secretary of State says that it is difficult to frame the terms of a contract of this kind, but my hon. and learned Friend thinks that a large-scale operator may look for ways of avoiding some of the provisions of the Bill and will be able to pay a skilful lawyer to draft his contracts for him. I have no doubt, however, that a loophole exists in these agency arrangements, and that is what we are seeking to deal with.

7.45 p.m.

Some of the speeches of hon. Members opposite have led me to the reluctant conclusion that the last thing they are anxious to do is to close these loopholes. That conclusion was forced upon me by the speech of the hon. Member for Bedfordshire, South (Mr. Cole) and also, in a different form, the speech of the hon. Member for Crosby (Mr. Graham Page). Being the son of a mathematician, I will not use his precise words in repeating that the point of the Amendment is a narrow one, because I was educated to think that a point was something which had no area. It is true that the Amendment seeks to achieve a limited purpose. It is a purpose to which we drew the Secretary of State's attention in Committee.

If he formed the conclusion that the Amendment was directed only to the question of sale and return, I can only say that I cannot understand how he came to that conclusion. The correspondence that has taken place between the right hon. Gentleman, my right hon. Friend the Member for Battersea, North

(Mr. Jay) and myself—a somewhat triangular correspondence—has covered many of the points in issue. I agree entirely with my hon. and learned Friend for Northampton that the arrangements which the right hon. Gentleman says are very difficult to frame are really not very difficult.

I believe that there is a danger of a large-scale evasion of the purposes of the Bill. We have laboured in vain to draw the right hon. Gentleman's attention to this fact, and to point out the gravity of the matter. That our efforts have been in vain may be our own fault. The fact remains that on several occasions we have tried to bring our point of view to his attention. He has not responded. He has taken up with us points which we do not believe to be the real points at issue. Although he has done this with his usual courtesy and still, we feel that this is a matter of principle and that if he is serious in pursuing the purposes of the Bill he will at some stage introduce an Amendment which will seek to close this loophole.

This is the last opportunity we shall have of dealing with it, and I therefore hope that my right hon. and hon. Friends will press the Amendment to a Division.

Question put, That those words be there inserted in the Bill:—

The House divided: Ayes 146, Noes 209.

Division No. 91.]AYES[7.50 p.m.
Ainsley, WilliamDiamond, JohnHowell, Charles A. (Perry Barr)
Albu, AustenDodds, NormanHowell, Denis (Small Heath)
Allen, Scholefield (Crewe)Duffy, A. E. P. (Colne Valley)Howie, W.
Awbery, Stan (Bristol, Central)Edwards, Rt. Hon. Ness (Caerphilly)Hoy, James H.
Barnett, GuyEdwards, Walter (Stepney)Hughes, Cledwyn (Anglesey)
Beaney, AlanFernyhough, E.Hughes, Hector (Aberdeen, N.)
Blackburn, F.Finch, HaroldHunter, A. E.
Blyton, WilliamFitch, AlanHynd, H. (Accrington)
Bowden, Rt. Hn. H. W. (Lelcs, S.W.)Fletcher, EricHynd, John (Attercliffe)
Bowles, FrankFoley, MauriceIrvine, A. J. (Edge Hill)
Boyden, JamesFoot, Michael (Ebbw Vale)Irving, Sydney (Dartford)
Braddock, Mrs. E. M.Fraser, Thomas (Hamilton)Janner, Sir Barnett
Bradley, TomGalpern, Sir MyerJay, Rt. Hon. Douglas
Broughton, Dr. A. D. D.George, Lady Megan LloYd (Crmrthn)Johnson, Carol (Lewisham, S.)
Butler, Herbert (Hackney, C.)Ginsburg, DavidJones, Elwyn (West Ham, S.)
Carmichael, NeilGordon Walker, Rt. Hon. P. C.Jones, J. Idwal (Wrexham)
Chapman, DonaldGourlay, HarryKelley, Richard
Collick, PercyGrey, CharlesKenyon, Clifford
Craddock, George (Bradford, S.)Griffiths, David (Rother Valley)Lawson, George
Crossman, R. H. S.Gunter, RayLee, Frederick (Newton)
Cullen, Mrs. AliceHale, Leslie (Oldham, W.)Lee, Miss Jennie (Cannock)
Dalyell, TamHamilton, William (West Fife)Lipton, Marcus
Darling, GeorgeHannan, WilliamMcBride, N.
Davies, G. Elfed (Rhondda, E.)Harper, JosephMcCann, J.
Delargy, Hugh[...]Hayman, F. H.MacDermot, Niall
Dempsey, JamesHolman, PercyMcInnes, James
McLeavy, FrankPursey, Comdr. HarrySymonds, J. B.
Mallalieu, J.P.W. (Huddersfield, E.)Rankin, JohnTaylor, Bernard (Mansfield)
Mapp, CharlesRees, Merlyn (Leeds, S.)Thomas, Iorwerth (Rhondda, W.)
Mason, RoyRhodes, H.Thompson, Dr. Alan (Dunfermline)
Mayhew, ChristopherRoberts, Albert (Normanton)Thomson, G. M. (Dundee, E.)
Mellish, R. J.Robertson, John (Paisley)Tomney, Frank
Mendelson, J. J.Rodgers, W. T. (Stockton)Wainwright, Edwin
Mitchison, G. R.Short, EdwardWeitzman, David
Monslow, WalterSilkin, JohnWells, William (Walsall, N.)
Moody, A. S.Silverman, Julius (Aston)White, Mrs. Eirene
Neal, HaroldSkeffington, ArthurWilkins, W. A.
Noel-Baker, Francis (Swindon)Slater, Mrs. Harriet (Stoke, N.)Willey, Frederick
Noel-Baker, Rt. Hn. Philip (Derby, S.)Slater, Joseph (Sedgefield)Williams, W. T. (Warrington)
Oram, A. E.Small, WilliamWillis, E. G. (Edinburgh, E.)
Padley, W. E.Smith, Ellis (Stoke, S.)Wilson, Rt. Hon. Harold (Huyton)
Paget, R. T.Sorensen, R. W.Winterbottom, R. E.
Pargiter, G. A.Spriggs, LeslieWoodburn, Rt. Hon. A.
Pavitt, LaurenceSteele, ThomasWoof, Robert
Pearson, Arthur (Pontypridd)Stewart, Michael (Fulham)Wyatt, Woodrow
Peart, FrederickStonehouse, JohnYates, Victor (Ladywood)
Pentland, NormanStones, William
Popplewell, ErnestStross, Sir Barnett (Stoke-on-Trent, C.)TELLERS FOR THE AYES:
Price, J. T. (Westhoughton)Swain, ThomasMr. Redhead and Mr. Ifor Davies.
Probert, ArthurSwingler, Stephen
NOES
Anderson, D. C.Fletcher-Cooke, CharlesLongbottom, Charles
Atkins, HumphreyForrest, GeorgeLongden, Gilbert
Awdry, Daniel (Chippenham)Gardner, EdwardLoveys, Walter H.
Barlow, Sir JohnGibson-Watt, DavidLubbock, Eric
Barter, JohnGilmour, Ian (Norfolk, Central)Lucas, Sir Jocelyn
Batsford, BrianGilmour, Sir John (East Fife)Lucas-Tooth, Sir Hugh
Bennett, Dr. Reginald (Gos & Fhm)Glover, Sir DouglasMcAdden, Sir Stephen
Biffen, JohnGlyn, Dr. Alan (Clapham)McLaren, Martin
Bingham, R. M.Glyn, Sir Richard (Dorset, N.)Maclay, Rt. Hon. John
Bishop, Sir PatrickGower, RaymondMcMaster, Stanley R.
Black, Sir CyrilGrant-Ferris, R.Maitland, Sir John
Bossom, Hon. CliveGreen, AlanMarshall, Sir Douglas
Bourne-Arton, A.Grosvenor, Lord RobertMarten, Neill
Box, DonaldGurden, HaroldMathew, Robert (Honiton)
Boyd-Carpenter, Rt. Hon.JohnHamilton, Michael (Wellingborough)Matthews, Gordon (Meriden)
Braine, BernardHarris, Frederic (Croydon, N.W.)Maude, Angus (Stratford-on-Avon)
Brewis, JohnHarris, Reader (Heston)Mawby, Ray
Brown, Alan (Tottenham)Harrison, Col. Sir Harwood (Eye)Maxwell-Hyslop, R. J.
Browne, Percy (Torrington)Harvey, John (Walthamstow, E.)Maydon, Lt.-Cmdr. S. L. C.
Bryan, PaulHarvie Anderson, MissMills, Stratton
Buck, AntonyHastings, StephenMiscampbell, Norman
Bullard, DenysHay, JohnMore, Jasper (Ludlow)
Bullus, Wing Commander EricHeath, Rt. Hon. EdwardMorgan, William
Campbell, GordonHenderson, John (Cathcart)Mott-Radcliffe, Sir Charles
Carr, Compton (Barons Court)Hendry, ForbesNeave, Airey
Carr, Rt. Hon. Robert (Mitcham)Hiley, JosephNicholls, Sir Harmar
Channon, H. P. G.Hill, Mrs. Eveline (Wythenshawe)Noble, Rt. Hon. Michael
Chataway, ChristopherHill, J. E. B. (S. Norfolk)Nugent, Rt. Hon. Sir Richard
Clarke, Henry (Antrim, N.)Hobson, Rt. Hon. Sir JohnOakshott, Sir Hendrie
Clark, William (Nottingham, S.)Holland, PhilipOrr, Capt. L. P. S.
Cleaver, LeonardHolt, ArthurOsborne, Sir Cyril (Louth)
Cole, NormanHornsby-Smith, Rt. Hon. Dame P.Page, John (Harrow, West)
Cooke, RobertHoward, John (Southampton, Test)Page, Graham (Crosby)
Cooper, A. E.Hughes-Hallett, Vice-Admiral JohnPannell, Norman (Kirkdale)
Cordeaux, Lt.-Col. J. K.Hughes-Young, MichaelPartridge, E.
Corfield, F. V.Hulbert, Sir NormanPearson, Frank (Clitheroe)
Costain, A. P.Hurd, Sir AnthonyPeel, John
Coulson, MichaelHutchison, Michael ClarkPickthorn, Sir Kenneth
Craddock, Sir Beresford (Spelthorne)Jenkins, Robert (Dulwich)Pitt, Dame Edith
Crawley, AidanJohnson, Eric (Blackley)Pounder, Rafton
Cunningham, Sir KnoxJones, Arthur (Northants, S.)Price, H. A. (Lewisham, W.)
Curran, CharlesKerans, Cdr. J. S.Prior, J. M. L.
Currie, G. B. H.Kerr, Sir HamiltonPrior-Palmer, Brig. Sir Otho
Dalkeith, Earl ofKershaw, AnthonyProudfoot, Wilfred
Dance, JamesKimball, MarcusPym, Francis
Digby, Simon WingfieldKirk, PeterQuennell, Miss J. M.
Donaldson, Cmdr. C. E. M.Kitson, TimothyRamsden, Rt. Hon. James
Doughty, CharlesLambton, ViscountRawlinson, Rt. Hon. Sir Peter
Douglas-Home, Rt. Hon. Sir AlecLangford-Holt, Sir JohnRedmayne, Rt. Hon. Martin
du Cann, EdwardLeavey, J. A.Rees, Hugh (Swansea, W.)
Eden, Sir JohnLewis, Kenneth (Rutland)Renton, Rt. Hon. David
Elliot, Capt. Walter (Carshalton)Lilley, F. J. P.Ridley, Hon. Nicholas
Elliott, R. W. (Newc'tle-upon-Tyne, N.)Lindsay, Sir MartinRidsdale, Julian
Emery, PeterLinstead, Sir HughRobson Brown, Sir William
Errington, Sir EricLitchfield, Capt. JohnRoots, William
Fell, AnthonyLloyd, Rt. Hn. Geoffrey (Sut'n C'dfield)Ropner, Col. Sir Leonard
Finlay, GraemeLloyd, Rt. Hon. Selwyn (Wirral)Scott-Hopkins, James
Seymour, Leslie
Sharples, RichardThomas, Sir Leslie (Canterbury)Whitelaw, William
Shaw, M.Thompson, Sir Richard (Croydon, S.)Williams, Dudley (Exeter)
Smith, Dudley (Br'ntf'd & Chiswick)Tiley, Arthur (Bradford, W.)Williams, Paul (Sunderland, S.)
Spearman, Sir AlexanderTilney, John (Wavertree)Wills, Sir Gerald (Bridgwater)
Stainton, KeithTouche, Rt. Hon. Sir GordonWilson, Geoffrey (Truro)
Stanley, Hon. RichardTurner, ColinWolrige-Gordon, Patrick
Stoddart-Scott, Col. Sir Malcolmvan Straubenzee, W. R.Woodhouse, C. M.
Storey, Sir SamuelVane, W. M. F.Woodnutt, Mark
Studholme, Sir HenryVaughan-Morgan, Rt. Hon. Sir JohnWorsley, Marcus
Summers, Sir SpencerWade, Donald
Tapsell, PeterWalder, DavidTELLERS FOR THE NOES:
Taylor, Edwin (Bolton, E.)Walker-Smith, Rt. Hon. Sir DerekMr. Chichester-Clark and
Taylor, Frank (M'ch'st'r, Moss Side)Ward, Dame IreneMr. MacArthur.
Temple, John M.Webster, David

Amendment made: In page 2, line 29, at end insert: (5) References in subsection (2) of this section to patented articles shall include references to articles protected by the registration of a design and articles protected by plant breeders' rights or a protective direction under Schedule 1 to the Plant Varieties and Seeds Act 1964, and references in that subsection to a patent shall be construed accordingly.—(Mr. Heath.)