Orders of the Day — Commission for Industry and Manpower Bill

Part of the debate – in the House of Commons at 12:00 am on 8th April 1970.

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Photo of Mr Charles Fletcher-Cooke Mr Charles Fletcher-Cooke , Darwen 12:00 am, 8th April 1970

The hon. Member for Heywood and Royton (Mr. Barnett) reserved most of his fire for Part II of the Bill. The whole question we have to decide is whether it is right to marry the remains of the Prices and Incomes Board to the Monopolies Commission. It is clear from the speeches today that the answer is "No", and that is why we are voting against the Bill. It is as simple as that. Part II gives the Government powers to make all sorts of investigations, although very few powers to make any orders, certainly none on wages.

I regard this marriage as very damaging to the Monopolies Commission, which has won golden opinions from all those all over the world interested in the question of market domination throughout its 24 years of existence. I do not want to see anything done to injure that reputation. I fear that by foisting the rump of the Prices and Incomes Board on to the Commission its reputation will be damaged.

There is an excellent report by the O.E.C.D. entitled "Market Power and Law" which no doubt the Minister of State has read. It gives the Monopolies Commission a very good bill of health. Why spoil that record by attaching to the Commission what we regard as not only useless, but, as the hon. Member said, dangerous powers? There is, of course, great danger in attaching to the Commission any taint of political intervention.

There is, in the question of market dominance, a great dispute in the world as between what are called the "structural" approach and the "conduct" approach. The Americans and one or two others have the former. They look at the market and the people in it and, whether those people behave well or badly, they say, "No. They have too much potential power"—or even, "They may have too much potential power"—"and whether they wield it well or badly or at all they have to be divested."

We have the conduct approach—very much so. This is to say, even where an organisation has as much as 90 per cent., as in the case of B.I.C.C., of the market, if, on the whole, its conduct is considered to be good by the Commission it is not subjected either to price fixing or divesting procedures or anything like that. Again, this study of the various methods by which the various countries treat this difficult question comes out on the whole in our favour The conduct approach avoids all sorts of difficulties, although, of course, it has all sorts of dangers. The difficulties it avoids are such things as the definition of the market, whether by geography or by product.

In the case of the American system, hundreds of days are spent in first of all defining what the geographical market should be, whereas, for the Monopolies Commission, this is already defined by the Government, who have to operate within the wording of the parent Act, which says that …the market shall be the United Kingdom or any substantial part thereof… As far as I know, there has never been any problem as to what constitutes a substantial part of the United Kingdom for this purpose.

Even more difficult in the structural system is the definition of product. By defining the product, one almost gets the answer one wants. For example, if one defines the product as footwear, one will probably find that few people have a large or too large a slice of the market. But if one defines the product as children's footwear, or as ladies' footwear, or as gentlemen's footwear, one may well find the answer to be entirely different. Therefore, the defining of the market in both these senses is crucial. It takes a very long time and I think that the conduct system by which the Government predetermine these definitions is much more practical.

There are many other advantages of our system. They all depend absolutely upon public confidence in the impartiality of their operation because they give the Government an enormous say—much more than in the European systems and certainly much more than in the North American systems. I fear that, by the Bill, the opportunities for abuse by the Government are greatly increased.

For example, my right hon. Friend the Member for Mitcham (Mr. R. Carr) suggested that the time had come to take the question of references to some extent outside the sole purview of the Government. I believe that he suggested this much for the reasons I have given. The conduct system is only tolerable if the whole system is operated absolutely judicially because here there is no method of private enforcement. In many other systems, private companies, if they feel they are injured by monopolists or mergers, have an independent source of reference to the Commission or court or whatever it may be.

If the Government of the country do not choose to operate—for example, in the case of the Federal Trade Commission in the United States—then a private concern has powers of access to the sources of power and can initiate inquiries or suits as it chooses. That is true of many other systems. Here, it is not true, so far. Since it is not true, it is all the more important that whatever Government agency does the initiations it should act entirely judicially.

That, of course, has been very seriously doubted during recent years in the case of this Government, particularly over the recent episode of the I.C.I. bid for Viyella and Carrington and Dewhurst. If there had been a power of private reference or the power of a registrar, he would have put that question of the domination of the fibre manufacturers, both actual and potential, upon the textile industry, into a proper perspective. We were told that that was not done because speed was necessary.

Instead of that, a political organisation was set up—I am not sure whether the Minister of State was a member, and, of course, I would trust him, personally, absolutely—a political tribunal was erected ad hoc to do a job which, for the sake of the world, and not just this country, must appear to be completely above political suspicion. There were people involved in this who are not British subjects and who look upon our law and practice hitherto in this matter as being judicial in its approach if not in its form.

That is why the Bill is yet another nudge in the wrong direction. By slapping on to the Monopolies Commission the prices and incomes functions, which are extremely political—as we have known from the last five years' searing and bitter experiences—it does something to detract from the high reputation of the Commission. Also, the addition to the powers of the Monopolies Commission of references into absolute size, irrespective of market domination and monopoly is another push in that direction.

There has never been, in any of the systems and structures dealing with market power and the law anywhere in the world power to examine on the grounds of absolute size. To quote one sentence from page 60 of the definitive work to which I referred: It appears from the cases that criteria of absolute size have never been applied in order to determine the existence of market dominance or of market power in general. That is to say, we in this country are starting on a completely new and uncharted sea, completely new and more drastic and more interventionist even than in the Sherman and Clayton Acts in the United States, which are regarded as horrors by those who wish to monopolise