Restrictive Trade Practices

Orders of the Day — European Communities Bill – in the House of Commons at 12:00 am on 4th July 1972.

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[Mr. E. L. MALLALIEU in the Chair]

Photo of Mr Robin Turton Mr Robin Turton , Thirsk and Malton

I beg to move Amendment No. 367, in page 16, line 39, leave out subsection (1).

The Second Deputy Chairman:

With this Amendment we are discussing Amendment No. 460, in line 41, at end insert: 'including provisions against abuse by undertakings of a dominant position within the Common Market or a substantial part of it'.

Photo of Mr Robin Turton Mr Robin Turton , Thirsk and Malton

Clause 10(1) is a glaring example of legislation by reference. It is so drafted that, should it be enacted unamended, those affected by its provisions would be quite unable to fathom which of their arrangements would be declared contrary to the public interest.

I have no doubt that it will be argued that this is the inescapable result of our joining the European Community. Should the 34 per cent. of the population who favour entry have their way against the 46 per cent. who are opposed to entry, this will be a confusion and uncertainty which will spread over the whole of our legislation. However, it is unfortunate that in an area where there is the problem of competition, especially with our neighbours in the Community, there should be this very great uncertainty.

I take as an example the issue decided on 4th April, 1971, in the Restrictive Practices Court. The court decided that it was contrary to the public interest for the National Farmers Union to advise its members on the prices to be charged or the terms of supply for cattle, sheep and pigs and for seed and nursery stock, or the prices that they should offer to dealers for agricultural machinery. That was in accordance with the 1956 Restrictive Practices Act.

On the Continent and in America exceptions are always made for agricultural bodies—groups of farmers—and agricultural products. In America the anti-trust laws are specially exempted from applying to farmers and to agricultural products. In the Community, the position is safeguarded by regulation 26 of 4th April, 1972, which makes it clear that to avoid compromising the development of a common agricultural policy and also to ensure the existence of legal guarantees and the non-discriminatory treatment of the undertakings concerned the Commission shall make special decisions with regard to the application of Article 85 of the Treaty of Rome. Article 2 of the regulation lays down that Article 85(1) of the Treaty shall not apply to agreements, decisions and practices referred to in the preceding article which form an integral part of a national market organisation or which are essential for the attaining of the objectives set out in Article 39 of the Treaty. It will be remembered that Article 39 lays down the common agricultural policy.

One has to look at Clause 10 against that background. It begins by declaring that Part I of the Restrictive Practices Act, 1956, shall apply to an agreement of the sort considered by Mr. Justice Mocatta in April, 1971, notwithstanding that it is expressely authorised by article 26 of 1972. It goes on to give the court a discretion to refuse action or to delay taking action under Section 20 or under Section 22, which give it power to vary any decision that it has made.

What, then, is the position of the National Farmers Union should this Bill become law and should we enter the European Community? I have given the instance of that judgment of Mr. Justice Mocatta dealing with the marketing of livestock, seeds and so on. However, it has a far wider application in agriculture and especially in horticulture. All the arrangements that the National Farmers Union would like to make to advise its members on the grading of produce, the holding back from the market of horticultural produce which is belowstandard—matters like the Wisbech Strawberry Agreement—all come within this area, as do all long-term contracts for bacon pigs. At present the National Farmers Union is cribbed, cabined and confined in its efforts to give good advice which its continental and American competitors are allowed to give under existing law.

For a long time we have been pressing for the amendment of the Restrictive Practices Act to make it clear that farmers do not have to face the possibility of going to the Restrictive Practices Court when their agreement is to enable a number of small farmers to group together to obtain satisfactory prices for satisfactory produce. At present they cannot even give a market intelligence service. Therefore, I ask the Government to look again at subsection (1) because farmers require to know where they stand, especially as directly we enter the transitional period they will be in direct competition with their counterparts across the Channel. Unless we can get this clear, farmers will have one hand tied behind their backs. They will not be able to get the market intelligence or to make the arrangements necessary in agriculture.

My right hon. and learned Friend the Chancellor of the Duchy may say "Let them chance their arms, since we have given the Restrictive Practices Court the widest discretion possible". However, my right hon. and learned Friend cannot know the cost of going to that court and the burden that it represents to any small group of farmers or to the National Farmers Union to embark on that system of litigation. Six years ago when the CBI went to the court the cost of its application ran into six figures. Today the costs of an application such as that would be a great deal more.

I am sure that my right hon. and learned Friend will be able to enlighten me, but I cannot understand why Clause 2(1), which makes regulations directly applicable, should not apply in this case. If it did, the President of the Restrictive Practices Court would have to apply regulation 26 of 1972directly, and the farmer would know that he could not break these arrangements and that the NFU could do anything that COPA does on the Continent. It is most unsatisfactory to have it in this vague form with such a wide discretion. According to the drafting, the Restrictive Practices Court can come to a conclusion contrary to a regulation that was directly applicable in this country.

5.0 p.m.

What can be done? I ask the Government to withdraw the subsection and to redraft it to make it clear to the National Farmers Union and to other groups of farmers exactly where they stand under arrangements they may make for the grading and selling of their produce and the market intelligence connected with it. It is important that there should be no uncertainty.

If my right hon. and learned Friend finds difficulty in that, I suggest that, instead of redrafting the subsection, it should be left out altogether. It would not do any harm. Here we are dealing with regulations. Those who are learned in the law talked for a long time on the previous Clause about what was governed by directives. Where we have directives there is a need for legislation. When we have this rather unhappy habit of making things directly applicable, we should use them in our favour.

As an opponent generally of that noxious system, I can see advantages when dealing with the Restrictive Practices Court and the National Farmers Union. However, I am disappointed, when it comes to the advantage of British farmers, that the Government neglect that method and use this one which is causing so much disquiet. I hope my right hon. and learned Friend appreciates that it is causing great concern to the farming industry. I pressed for many months, long before the question of entry, that this matter should be cleared up and that British farmers should be put on an equal footing with their competitors. I regret that the Government have made the Bill so unconscionably uncertain and harsh for British farmers.

Photo of Mr Peter Shore Mr Peter Shore , Stepney

I think the Committee will have accepted the points made by the right hon. Member for Thirsk and Malton (Sir Robin Turton) and his basic submission that the subsection—indeed, the whole of Clause 10—fails to do what it set out to do; namely, to clarify British law and its future concerning restrictive trade practices and the law of the Community which is about to be imported under Clause 2(1).

The fact that the Amendment appears in the names of right hon. and hon. Members on both sides should surprise no one. First, we have this common desire to elucidate and clarify what appears to be an extraordinarily muddled—indeed, dense—piece of drafting.

Secondly, we object on this Clause, as on others, to the furtive and appallingly muddled way of changing our laws and introducing a major amount of new law into our affairs.

Although the right hon. Gentleman made his point on a fairly narrow issue, I suspect that we would also agree about a third underlying point relating to the Community's competition policies which underlie Clause 10. We have certain agreement in that, however much we may take a different view on how far the State should intervene in the affairs of industry, it is far better for a British Government to do the intervening and to continue to have the right to intervene. This is one of the most important matters which are under threat and in dispute by the Community's competition policies.

First, I turn to the point regarding clarification of the subsection. My worries are not simply confined to farmers. Virtually all businesses, enterprises and traders in this country will find themselves in considerable difficulty in trying to inform themselves about the laws of the land relating to restrictive trade practices from 1st January, 1973.

We should not in any sense underplay the importance of this matter. We are dealing with an area in which firms and individuals are expected to know and obey not only laws which until recently they have not even had a chance of seeing, let alone understanding and reading, but laws which carry with them substantial penalties for disobedience. We should not ignore that point. Indeed, the fines which the Commission can impose upon firms which are in breach of Community obligations, in breach of the Community's competition policies or in breach of the regulations and other laws made by the Community and set out in this volume of Community law under the heading of "Competition" are very extensive. As far as I can judge, there appears to be no limit to the fines. This is not an empty threat. Fines running into several hundred thousand units of account have been imposed on firms for breaches of Community law.

So we have this unparalleled situation, As I said, virtually every enterprise in this country is brought within the ambit of a law which has not yet been discussed and will not be approved by the House of Commons, because we shall not, despite the greatest latitude by the Chair, have the chance of discussing it in any detail. We are allowed to make only a few references to it. Yet under the provisions of these laws enterprises in this country could be subjected to fines and penalties of the most serious kind.

One has a sense of being in almost a nightmare when discussing the Bill. I do not think that right hon. and hon. Members on either side ever thought they would be taking part in this kind of incredible charade in which we are all forced to play our part as a result of the manner in which the Bill seeks to bring us into line with or to import into this country the laws of the European Economic Community.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

I understand the Clause simply gives the Registrar power not to pursue his remedies in the court, and the court need not necessarily enforce them. I cannot see how any new harsh law or penalty could conceivably be enaoted under the Clause. Will the right hon. Gentleman explain whether he is talking about the European Court or the Restrictive Practices Court?

Photo of Mr Peter Shore Mr Peter Shore , Stepney

I was referring to the imported Community law which comes in under Clause 2(1) which sets out the main new laws which will affect us in this sphere and forces upon us this minor, though muddled, change in our restrictive trade practices legislation. That is the situation.

Let me turn to the detail of the Restrictive Trade Practices Act, 1956. That Act set up the familiar machinery of a Registrar and the Restrictive Practices Court. It also, in Part I, enacted that a whole number of defined agreements between two or more business firms should be registered with the Registrar. The agreements covered include all manner of matters, such as prices, supply, processes of manufacture and the classes of persons from whom goods are to be obtained and to whom goods are to be sold. This comprehensive Act has been on the Statute Book since 1956.

On the face of it, the subsection now being debated seeks to continue to operate Part 1 of the 1956 Act after the entry date of 1st January, 1973. It says that the provisions of Part 1 of the 1956 Act shall continue to apply to an agreement notwithstanding that it is or may be void by reason of any directly applicable Community provision". It further states that its provisions shall apply to an agreement even if it is expressly authorised by or under any such provision". The situation, therefore, is that business agreements which, under Community law will be rendered void, or which, under Community law, are expressly authorised, have still to be registered with our own Registrar of Restrictive Trading Agreements. Whatever for? Why should they continue to be so registered if they have either been made void by the Community's own superior legislation or been explicitly exempted from voiding by the same Community law?

Are proceedings to be initiated in the British Restrictive Trade Practices Court against such firms? The odd thing is that the remaining part of subsection (1) authorises the RPC and the Registrar not to take proceedings as in the past they would have done under Section 20 of the 1956 Act and in the light of the criteria affecting the public interest set out in Section 22, but permits them to do so if and in so far as it appears to the court right so to do having regard to the operation of any such provision or to the purpose and effect of any authorisation or exemption granted in relation thereto". That is extremely unclear. The lack of clarity has been referred to on both sides of the Committee, and we are not totally uninformed about legislation. We are, after all, dealing with a law that will bear upon thousands—indeed, tens of thousands—of British companies, firms and traders, including farmers and others, who want a simple and clear guide to the changes that are to be made in the law of this country and to the new laws which they are to be asked to obey which will be imported from Europe. They want to know whether there is a clash between the two, and if so, how these matters are to be resolved. 5.15 p.m.

I have no doubt that we shall hear some learned disquisition from whichever Minister replies to the debate, and no doubt there will be some explanation which we shall grudgingly come to the view makes more sense of the words of the subsection than appears to us on a simple and thoughtful reading of them to be the case. But I put it to the Treasury Bench that it is not merely Members of Parliament who have to be satisfied on this matter. It is necessary that the firms and enterprises concerned should be clear about what is expected of them.

I further put it to the Government that the real source of the confusion is that there are here two different systems of law affecting restrictive practices, monopoly practices, and so on. There is a residual British system which is being phased out in a rather clumsy and ambiguous way, and there is a new system of Community law which is presumably to be overriding.

Regardless of the merits of the two different systems of law, it seems that this is again an example of the sheer unwisdom of trying to make these great changes simply by removing a little bit of what appears to be in contradiction to the superior Community law rather than by positively enacting the major new laws which will come into effect in this country. It is a great mistake to operate in that way. I think that in this matter, as in so many others, the Government have succumbed to the temptation of having a short Bill, regardless of the effects which its provisions will have on people outside and the great confusion that will be caused to them.

In the opening statement, as it were, from the Government during the Second Reading debate the right hon. Gentleman the Secretary of State for Trade and Industry did his best to put the matter clearly. Let me recall to the Committee what he said, because it illustrates as well as anything the real difficulties that we are in. The right hon. Gentleman said rather optimistically: Clause 10 deals with restrictive trade practices. Its purpose is to clarify the relationship between United Kingdom and Community legislation. One cannot do that if one does not even mention Community legislation in the first place. It is impossible to do it.

The right hon. Gentleman then said: It ensures that the relevant United Kingdom authorities can comply with their Community obligations and that they have sufficient flexibility to avoid actions which could conflict with those obligations. I do not know who will help the court to interpret the law. I have no doubt that it can be left to the court, but, clearly, it will have a great discretion in this matter.

The right hon. Gentleman went on to say: It also saves British firms from being burdened with avoidable duplication of inquiries under the United Kingdom and Community Systems. On the face of it, that is not so at all. On the contrary, the requirement to provide information to our own Registrar, which is written into the subsection, has now to co-exist with the new requirement to furnish information to the Commission. This is one of the great requirements of articles 17 and 27 of the Community legislation of 1962, the definitive laws of the Community in this sphere.

The Secretary of State—this adds to my point about the very serious difficulties everyone will be in—said: Similar provision"— that is, an amendment to our existing law— is not needed in relation to United Kingdom monopolies and mergers legislation"— as distinct from restrictive trade practices— since both the initiation of inquiries and the taking of follow up action under our legislation are in the hands of Ministers who will themselves be under an obligation, by virtue of Clause 2, not to exercise their power in a way contrary to the Community provisions."—[Official Report, 16th February, 1972; Vol. 831, c. 446.] So people in industry thinking in terms of how they may in future behave in relation to our monopoly legislation and mergers legislation no longer look at the relevant Statutes and say "Here is the guide." They can no longer look at the Community law, which only three or four months ago was translated for them. They have to inspect the mind of the Minister somehow to understand his intentions, unless the Minister tells them clearly and categorically—he has not done so yet—which of his powers under the monopolies and mergers legislation he intends to use and which of them he feels he must allow to lapse in order himself to conform with the superior legislation of the Community.

This is an appallingly complex matter and not at all what any serious person or, indeed, any well wisher, in the venture of joining the European Community on these terms would wish himself.

I hope that it will not be thought too strange, having dealt with this important matter of clarification, if I turn briefly to the substance of the new Community law which is to apply to virtually every business enterprise in the country from 1st January, 1973, and, at most, with a delay of six months to 1st July of that same year. What are the rules of competition embodied in Community law which is now to supersede our legislation in both the private and the public sectors? They embrace a number of very important categories.

First, there are restrictive trade practices, mainly agreements in restraint of trade between business enterprises. Second, there are abuses of large firms in what the Treaty of Rome calls "dominant positions". That is analogous, presumably, with our monopoly legislation. Third, the competition policy deals directly with State trading monopolies under Articles 37 of the Treaty of Rome. Fourth, the Community law deals with State aids, both in the form of regional assistance and in the form of aid policies directed towards particular industries.

This great range of Community competition policy covers a very large part of the industrial, regional and structural policies that successive British Governments of both parties have found it necessary to pursue.

I shall say little about the first category, restrictive trade practices, except to point out one very important difference in approach between the Community and our own restrictive trade practices law. Whereas in Britain these practices are considered by a court working within certain guidelines of the public interest which are laid down in Section 22 of the 1956 Act, in the case of the Communities these matters are decided by the European Commission, which has the power to issue "cease" and "desist" orders in the form of decisions which are directly applicable throughout the Community and have the force of law.

What is not clear, either from the Clause or from previous ministerial statements—I make this last point to the Government Front Bench—is what in future is to be the ambit of Community law in this field and what is to be the residual area left to British authorities under the 1956 Act, and to what extent, too, British institutions are to act or to be asked to act as agents of the Community policy and Community enforcement? I hope that we shall get clear answers on these matters.

The second category concerns the so-called "dominant positions" We have been told nothing about this. It is obviously of great importance. Successive Governments have found it necessary to promote mergers in the United Kingdom, in different industries, in order to strengthen them against world competition. Shall we be able in the future to pursue such policies, and, if so, under what conditions? These are matters which ultimately are involved in Article 86 of the Treaty of Rome and in all the decisions of the Commission and the subsequent regulations which have flowed from that Article.

On the third matter, State trading monopolies, I have only one question. Are there any enterprises in Britain which come within this category and, therefore, under the particular disciplines of Article 37 of the Treaty of Rome? I hope for an answer to that.

The fourth and last category, State aids within the broad range of competition policy of the Community, is in many ways the most important to us. Shall we be allowed to assist particular firms and industries in the years ahead? On this occasion I shall say nothing about whether we can do this under the heading of regional policy because we have had a number of discussions about this and, while I cannot pretend to be satisfied, I do not wish to go over old ground when there is so much new territory to explore. But what about firms and industries which need assistance outside development and intermediate areas? I am not talking about abstract or hypothetical matters.

Only yesterday the Minister for Industrial Development announced a £14·2 million subvention to the firm of ICL to help to sustain this most important—indeed, this only—British computer firm. Few will doubt that this is necessary, and no one doubts that it is beneficial to the industry and to the British economy as a whole. But the aid given to ICL is authorised under Clause 8 of the Industry Bill, a Clause which expires in December, 1977, when we are supposed, at the end of the transitional period, to enter fully the European Communities.

Some right hon. and hon. Gentlemen try to persuade themselves and the rest of us that there is no relationship between these two dates, the date on which the ability to give aid to an industry expires and the date on which Britain becomes a full member of the Community, and that it is all a coincidence and we have nothing to worry about. But that will not do, and it cannot seriously now be argued.

I hope that the Committee will recollect the very interesting admissions prised out of the Secretary of State for Trade and Industry when these matters were discussed on 22nd May, 1972, on the Second Reading of the Industry Bill. Replying to an intervention by one of his hon. Friends, the Secretary of State said: My hon. Friend will be interested to know that the White Paper upon which the Bill is largely based has been the subject of consultation with the Commission in Brussels. No objection has been raised by the Commission. In spite of a certain amount of uncertainty because the right hon. Gentleman did not fully understand the question that was put to him, later he returned to the same point and really stressed it. He said that he was giving guarantees against an over-liberal handout of money under the Industry Bill. He said: Further, the powers conferred by Clause 8 are subject to important safeguards. They are limited to the transitional period of our entry to Europe."—[Official Report, 22nd May, 1972; vol. 837, c. 1011, 1019.] That is, until the end of 1977. So that is a fairly clear statement and admission.

I need not go further than that except to remind the Committee—as I have reason to remind myself when I return, as I frequently do, to study the matter in these treaties—that there is stated within the Treaty of Accession, under article 135, a general limitation and statement of policy which is quite appalling and to which I am surprised no one has drawn attention before. Article 135 of the Treaty of Accession simply says: If, before 31st December, 1977, difficulties arise which are serious and liable to persist in any sector of the economy or which could bring about serious deterioration in the economic situation of a given area, a new Member-State may apply for authorisation to take protective measures in order to rectify the situation and adjust the sector concerned to the economy of the common market. The second paragraph says: On application by the State concerned, the Commission shall, by emergency procedure, determine without delay the protective measures which it considers necessary, specifying the circumstances and the manner in which they are to be put into effect. 5.30 p.m.

Let there be no doubt that we have to have specific authorisation to continue State-aided industrial policies outside the regions—and that is another matter altogether which we can discuss later—explicitly until 31st December, 1977. We have to satisfy the Commission. Its decision, not ours, will dominate. Has the Minister asked the Commission for its authorisation in the case of ICL? Or is it just a matter that since we have not formally joined yet, and will not until 1st January, 1973, he simply consulted it and obtained its consent under the procedures for consultation which are defined on pages 128 to 130 of the Treaty of Accession?

Would the Minister now frankly accept, so that we can all know, that even this limited power of the State to intervene in industry, subject as it is to the Commission's approval, will expire at the end of 1977? It is no good hon. Members pretending that provisions of the Rome Treaty relating to competition policy in all its different aspects, whether restrictive practices, monopoly practices or State aids to regional policy, are dormant or unused. As the volume of Community law indicates, and as the annual reports of the Commission make clear, the Commission has been active in these matters and increasingly so in the last two years. Only last year the Commission laid down the law on regional policy and defined the so-called central areas in which State aid is to be curtailed. It was only last year that it made its decision in Article 86 to prevent a merger which had already been agreed—I am not interested in the merits of the case; it might have made the right decision—of which it had disapproved. It was only in 1970 that the Commission ruled on a whole number of occasions against particular State intervention policies practised by the Belgian, Dutch, Italian and German Governments.

I shall refer briefly to the Commission's report of 1970 in this respect. Again and again we find this kind of reference: It also went ahead with its investigation of the German measures connected with the remodelling of regional policy concerning which it had initiated the Article 93(2) procedure". The initiation of that procedure occurs again and again in the 1970 report. I hope the Committee is familiar with the procedure. In case there is anyone who does not understand what this refers to, I shall now make sure that he does. Article 93(2) gives power to the Commission to rule upon and rule out particular acts of industrial policy and of State aid by the member countries. I am speaking not of theoretical things, of dormant provisions, but of the reality and the actuality of powers used and reported upon in the annual reports of the Commission. The operative part of Article 93(2) is If, after giving notice to the parties concerned to submit their comments, the Commission finds that aid granted by a State or through State resources is not compatible with the Common market having regard to Article 92. or that such aid is being misused, it shall decide that the State concerned shall abolish or alter such aid within a period of time to be determined by the Commission". It goes on to say that if the State does not comply with this, the Commission will have recourse to the European Court, which will adjudicate upon the matter.

Let us have no more pretence about what is involved. A very considerable power over economic, industrial, regional and employment policy is clearly ceded to the institutions of the Community in the competition policy. The closest we get to this—and we hardly get at the matter in our discussions—is in consideration of it in this Clause 10 which touches upon one minor part of this great and important field, a field which is distinguished in being one in which the Commission has much greater power than in almost any other part of the treaty.

Photo of Mr Arthur Lewis Mr Arthur Lewis , West Ham North

Is my right hon. Friend saying that the Commission can tell this country and the Government not to subsidise such concerns as Upper Clyde Shipbuilders, ICL or anyone else, and that if the Commission does that we in Parliament cannot do anything about it?

Photo of Mr Peter Shore Mr Peter Shore , Stepney

My hon. Friend has put the matter in all its brutal simplicity. That is the correct interpretation. We lose the power to do these things. It does not matter whether a particular course of action is wise or not; the matter becomes subject to the superior judgment and power of the European Commission and the Council of Ministers which we have never elected.

This is a very serious matter and I shall certainly associate myself with the request by the right hon. Member for Thirsk and Malton that the subsection should be withdrawn and the matter should be clarified. We urge upon the Government that they should try to undo the damage which I am afraid they will otherwise create if they try in their way to make major changes in our laws.

Photo of Mr Robert Redmond Mr Robert Redmond , Bolton West

I have not previously spoken in Committee on the Bill, but I want to oppose the Amendment. In doing so, I shall in a sense be continuing what I had to say about small firms in a debate which I was fortunate enough to be able to initiate on a Private Member's Motion recently. There were not then so many Opposition Members present.

The Clause and the Amendment are to some extent technical. I am reminded of the story about Lord Hartington, who yawned when addressing the House during the reign of Queen Victoria and said "I am sorry, Mr. Speaker, but this subject is so damned dull." This is a dull subject, but a very important one, particular to the small and medium-sized firms.

I bow to the superior knowledge of farming possessed by my right hon. Friend the Member for Thirsk and Malton (Sir Robin Turton). I know practically nothing about farming, but I hope that he will accept that I know something about industry, and particularly the smaller firms. My right hon. Friend talks about the farmers' hands being tied. I hope to show that if the Amendments were agreed to and the subsection were deleted the small and medium-sized firms would have at least half a hand tied behind their backs against their bigger competitors. In effect, the Restrictive Trade Practices Act would automatically apply.

I am sure that small and medium-sized firms will experience a great change on our entry into the Common Market. There will be a change of management attitudes, a change in the competition and so on.

Until last autumn I was quite uncommitted on the question of support for British entry. I was not prepared to commit myself on behalf of my constituents until I had consulted industry in the constituency. I was uncommitted until last September, when I had completed a detailed study of the effect of entry on the smaller firms in my constituency. Having made that study, though I do not accept the principal arguments against entry, I understand them. What I do not understand is the attitude behind the Amendment. As Parliament has already accepted the principle of entry, and has agreed to other Clauses, though it is still possible to oppose the Bill on Third Reading, it is a great mistake to say that the Bill can become law without the subsection. If it did, we should have total and automatic operation of our present restrictive trade practices legislation, which above all would penalise the small and medium-sized companies.

Photo of Mr Robin Turton Mr Robin Turton , Thirsk and Malton

As I understand it, as we have passed Clause 2(1) any restrictive trade practices regulations of the Community are directly applicable in law, and, therefore, my hon. Friend's argument is going into reverse. If the subsection were deleted, we should be governed purely by Clause 2(1), which is a protection the small businessmen require, just as it is a protection the farmers require.

Photo of Mr Robert Redmond Mr Robert Redmond , Bolton West

That is a matter of opinion. It is certainly not the opinion of the Confederation of British Industry's Small Firms Council. It is certainly not the opinion of anyone who has spoken to me or advised me on the matter. The point I was coming to was that if the subsection were deleted and there were automatic operation of the Restrictive Trade Practices Act, that would penalise the small firms. The big firms, the international companies, would simply take their businesses away from where they come under the Act.

5.45 p.m.

Some people say that the subsection does not go far enough and that we should insert in the Bill something clearly saying that small firms up to a given size need not notify the Registrar when they begin to operate within trading agreements and the like. I include the CBI in that. I should like to read an extract from a letter written to me by the officer of the CBI concerned with the small firms. He asked me to make this point in the debate on small firms, but I only referred to it as I was not prepared to go into such detail then. I should like now to state some of the points he made.

The letter, dated 31st May, was written by Mr. H. J. Gray, who said: …there is one point I would like to make, and that is that in administering our restrictive trade practices legislation the Department of Trade and Industry might pay particular attention to the methods adopted by the Commission in so far as small firms are concerned and permit them without the necessity to notify the Registrar to enter into cooperative agreements which might otherwise be contrary to the provisions of our Acts, provided the firms concerned do not exceed a specified size and their combined sales of any particular products within the enlarged Community do not exceed a specified figure. This would not only encourage firms to consider what they might do in this way but it would also provide them with the necessary assurance that they would not be in any danger of being called to appear before the Court if they acted in this manner. United Kingdom firms would moreover then be on all fours with small firms within the Community instead of being handicapped as they may well be at present as a consequence of our legislation, or at least their fear of it. That may be a point my right hon. Friend was trying to make, but we must not repeal the restrictive trade practices legislation simply because we are entering the Common Market. If there were a need to amend the Act in the light of our experience in the Common Market, that would be a matter for Parliament later.

I do not see how anyone can want us to enter the Community with half a hand tied behind our backs. Therefore, I ask the sponsors of the Amendment to consider the matter very carefully. If their opposition is to the principle of entry, fair enough, but it should not be carried so far as to oppose the subsection.

For many years the small firms have been wanting to enter the Community and be able to compete on all fours with their opposite numbers in the Common Market. [An Hon. Member: "Some of them."] Ten years ago, when the Macmillan Government applied to enter, I had the honour to be chairman of the North-West Export Club, an organisation consisting of small companies interested in exporting. We discussed the principle of entry then, and the small firms in that area were anxious to get into the Common Market because it was to their advantage. I was not satisfied last autumn that that necessarily applied to small firms in my constituency, which is why I discussed the matter in detail with them in just the same way as we had discussed it in detail 10 years before. I was completely satisfied that it was to the advantage of those small companies, and that is why I am in favour of entering. We do not want them to have their hands tied behind their backs.

Photo of Mr John Farr Mr John Farr , Harborough

I am grateful to my hon. Friend for giving way.

Photo of Mr John Farr Mr John Farr , Harborough

Before my hon. Friend sits down——

The Second Deputy Chairman:

Mr. Deakins.

Photo of Mr Eric Deakins Mr Eric Deakins , Walthamstow West

I am grateful to you for calling me, Mr. Mallalieu. The hon. Member for Harborough (Mr. Farr) may wish to intervene a little later, and as I do not think there will be all that many speakers in the debate perhaps he will be able to take part.

The hon. Member for Bolton, West (Mr. Redmond) seemed to be doing a great deal of special pleading. It seems to me that the small and medium-sized companies, if the hon. Gentleman is truly representing their opinion, are hankering to get rid of our restrictive trade practices legislation, and think that a backdoor way of doing it is by entering the Common Market so that they can get together with their competitors on the Continent and try to carve up the market between them. That is the sort of thing that goes on in British industry. I have as much experience of British industry as the hon. Gentleman in this regard.

Photo of Mr Robert Redmond Mr Robert Redmond , Bolton West

I do not argue that many people in this House have more experience of British industry than I have. However, if the hon. Member for Walthamstow, West (Mr. Deakins) thinks that small firms can possibly even start to carve up the market between them as big monopolies can, he shows that he does not understand small firms. Of course, he was not present at the debate on small firms.

Photo of Mr Eric Deakins Mr Eric Deakins , Walthamstow West

One is not always present in this Chamber when subjects are discussed in which one is interested. The hon. Member for Bolton, West seemed to be suggesting—this is the point which I have against his remarks—that restrictive practices legislation is not good for small firms, when, in fact, it is a protection to small firms. It is much more restrictive to large industries than to small or medium-sized businesses. The carving up of the market may not be within the capacity of small firms within the Common Market, but many of them are looking forward to restrictive trading agreements with their competitors on the Continent and, if not to carve up the market, to fixing selling prices and so on. That is the sort of restriction which we have and perhaps from which the hon. Gentleman and his small firms may be hoping to escape.

The hon. Gentleman said that the absence of the subsection would affect small firms rather than large firms, and that large firms are likely to flee these shores if something is not done. Of course, we have had restrictive practices legislation since 1956. It could not honestly be said by any hon. Member in this Committee that large firms have left the country or abandoned their operations here because of the Restrictive Trade Practices Act, 1956 or its successor, the 1968 Act.

The right hon. Member for Thirsk and Malton (Sir Robin Turton) moved the Amendment in rather a narrow manner. The right hon. Gentleman was concerned purely with farming. Now that the Amendment has been moved, one has the right and obligation to discuss it on a wider basis. I take the right hon. Gentleman up on one point. The case in which the NFU was hauled before the Restrictive Practices Court either last year or the year before, concerned a boycott which it had tried to promulgate on livestock markets in this country. Whatever may be the rights and wrongs of restrictive trade agreements, no Government, no country in the Common Market, will willingly allow a firm or an institution like the NFU, which has a dominant position and has a great deal of influence over its members, to exercise a boycott on the whole marketing function.

The right hon. Gentleman went on to say that as a result of that judgment the NFU has found itself with its hands tied in a far wider way than the matter of issuing instructions to members about boycotting markets. If I may say so, it is a classic case of being hoist with one's own petard. The NFU was unwise to enter upon that boycott, which was not only restrictive but inconvenient for those who have to work in the livestock and meat industry. The boycott did not have as much effect as it hoped. The net result is a ruling of the court which binds the NFU and has restricted it from doing other useful things which the right hon. Gentleman mentioned, including market agreements between groups of producers on a co-operative basis.

The future is very much in question. I take the right hon. Gentleman's point that if our agricultural competitors on the Continent are to be free of these restrictions, or at least free of the general restrictions which apply on the Continent which are to be modified in respect of agricultural trade agreements, it is only fair and proper that the same should apply in this country. But that is not what is being proposed in subsection (1).

I turn to the Clause, which will repay some detailed examination. I begin by asking one or two minor questions concerning drafting and the meaning of the Clause. I have no doubt that the Ministers in charge of the Bill will be able to answer these questions easily. Since the Bill is so perfect and no amendment is necessary, every single word must have been justified and weighed in the balance before it was decided whether it should be left out or put in. The two words to which I want to draw attention are in subsection (1)—"…or exemption…"

I hope that the Committee will bear with me while I explain my reasoning for putting this point to the Ministers in chargs of the Bill. In the first part of the subsection, we are told that the Community can have two sorts of provision which may effect restrictive agreements liable to be registered in this country. We are told in the subsection that an agreement may be …void by reason of any directly applicable Community provision. That is my first example—"void". We are then told that an agreement can be … expressly authorised by or under any such provision. We have two categories of action by the Community—usually the Commission or the court—in dealing with restrictive agreements on the Continent—they can make them void or they can authorise them.

Then we come to the second part of subsection (1) which gives discretionary power to the Registrar and the court whether they should proceed in respect of agreements where the Community has taken some action. We have the two cases covered where an agreement is void—that is covered in the second part of the subsection—and also where the agreement is expressly authorised. But we are then given a third category of Community action in respect of restrictive trade agreements, namely,"…or exemption…", which can apply only to Community exemption.

There is another form of exemption relating to the 1968 Act, but that is not relevant here. We are dealing in the subsection with Community action which has a bearing on restrictive practices legislation and action in this country. Is it the case that the Community can exempt an agreement? If the Community can exempt an agreement, why is there no mention of this Community power in the first part of the subsection? If there is no such Community power, why is a theoretical power of exemption referred to in the second part of the subsection? If the Community can exempt provisions from national restrictive practices legislation, there should be dual reference to exemption both at the beginning of the subsection and where there is reference to discretionary powers given to the Registrar not to proceed with the particular agreement. If the Community cannot exempt any restrictive trade agreement, which I strongly suspect is the case, why is there reference to exemption in the second part of the subsection, which does not logically tie up with the first part of the subsection?

My next question refers to Section 8 of the 1956 Act, where we are told about "excepted" and not "exempted" agreements. I shall refer to the wording of the 1956 Act at Section 8: This Part of this Act does not apply to any agreement which is expressly authorised by any enactment… Do the words "any enactment" refer basically to the United Kingdom legislation or must they now be construed as meaning "any Community enactment"? We have been told earlier that such directly applicable Community provisions shall be regarded as virtually Acts of Parliament or Statutory Instruments. Many of them, as we know—it has been a matter of controversy—are being passed directly into the law of this country without Parliament having any say. If the words "any enactment" in Section 8 of the 1956 Act cover Community enactments from now on or from 1st January, 1973, does that mean that the Community will be able to give authorisation to exceptions under the 1956 Act? If so, since we know that Community regulations have a mandatory power in this country, does this not mean that the Common Market will be authorising exceptions from the operation of our restrictive practices legislation in a mandatory way and yet here we are, in subsection (1), not giving a mandatory effect to Community provisions which void or authorise an agreement?

[Mr. BRYANT GODMAN IRVINE in the Chair]

6.0 p.m.

It appears to me that there is at least some uncertainty as between the effect of Section 8 of the 1956 Act and what is intended here. Either the Community can lay down the law on particular agreements for this country or it cannot. It it can do so, why is it not being allowed to do so in subsection (1)? If it cannot do so, what is to be the future effect of Section 8 of the 1956 Act, since that includes words, "any enactment"?

I come to the main point at issue in this subsection. In the 1956 Act, a clear mandatory and statutory duty is laid on the Registrar under Section 1(2), which states: The Registrar shall be charged with the duty of…taking proceedings before the Court…in respect of agreements of which particulars are from time to time entered or filed in the register. That is a mandatory power. There is no discretion whatever. But in Section 20(1) of the 1956 Act, one finds that the power of the court to look into and make a decision on an agreement is also mandatory. So we have a mandatory power on the Registrar to bring before the court, and a mandatory power on the court to consider, and make a decision on, a particular agreement under the 1956 Act.

But in Clause 10(1) of the Bill we are introducing a completely new concept. We are giving a discretionary power to the Registrar and to the court. What are the circumstances in which this discretion given to the Registrar and the court would not be exercised? Since there is discretion we have a right to know the Government's intention. Since they have departed from the mandatory duty on the Registrar and the court, in which circumstances do they feel that discretion would or would not be exercised?

The argument is not that this is a rather remote legal point. It is that until the matter is cleared up there will be great uncertainty for businesses in this country which enter into restrictive agreements with, perhaps, competitors on the continent. They need to know whether, in addition to having to register such agreements under the 1956 Act, they would be liable to be brought before the court. If it is the intention that they should not be brought before the court, why not say so in the Clause? By leaving the matter in this way and giving discretionary power to the Registrar and the court, one leaves a great deal of ground for alarm and concern on the part of those firms likely to enter into business arrangements of one sort or another, whether restrictive or not, with competitors overseas.

This brings me to the main Regulation 17 of 1962, which sought to implement the provisions of Article 85 of the Rome Treaty. Here again, a great deal of uncertainty is likely to be engendered for business firms in this country as to the precise meaning of the regulation. Article 85 is a rather vague and in some ways self-contradictory article so far as restrictive practices legislation is concerned, but the regulation which seeks to interpret and put it into effect is, if anything, even more vague and imprecise. I particularly draw attention to Article 4(2) of Regulation 17/62, which excludes certain agreements. This is not just a particular agreement but a whole category of agreements about which the Community has said it will not take action. Article 4(2) of the Regulation states: Paragraph I shall not apply to agreements, decisions or concerted practices where: (1) the only parties thereto are undertakings from one Member State and the agreements, decisions or practices do not relate either to imports or to exports between Member States; On the face of it, that would seem to leave most of our restrictive agreements and restrictive practices legislation completely unharmed and unaffected by the operation of the Community provisions. On the other hand, it could be claimed that almost any agreement between trading companies in this country, whether in respect of goods to be supplied, prices, processes of manufacture, and so on, could in some way affect imports or exports indirectly.

Photo of Mr Peter Shore Mr Peter Shore , Stepney

I am following my hon. Friend with attention. Am I right in believing that he takes the view that under Article 4(2)(1) the exemption stands on its own and is not related to the succeeding paragraphs (2) and (3)? It is not clear, There is no "and" or "or". Perhaps we can get clarification from the Minister.

Photo of Mr Eric Deakins Mr Eric Deakins , Walthamstow West

I would not claim to be an expert on interpreting Community law. I dare say that a whole class of lawyers is studying the regulations and, no doubt, our debates and Community decisions. If there is to be an authoritative answer, it must come from those in charge of the Bill, who must have studied Article 4(2) of Regulation 17 with great care before framing Clause 10 of the Bill.

Another point which has puzzled several hon. Members is the obligation to register in respect of agreements which are voided or expressly authorised by the Community, even though it is unlikely, under the discretionary power given to the Registrar and the court, that such agreements will ever be brought before the court. Is there still an obligation to register such an agreement, if indeed there is to be no intention of either bringing it before the court or allowing the court to make an unfavourable verdict upon it? If so surely the Registrar's file will get cluttered up by agreements which will never come before the court, a useless and time-consuming exercise which surely would serve no useful purpose.

This insistance that Community-authorised or voided agreements should still be registered under the 1956 Act is peculiar, since under the 1968 Act, we allow certain classes of agreement to be exempt from registration. Here I draw attention to another anomaly coming into our law by this Clause—that certain categories of agreement which are judged to be in the national interest and to conform to the five or six criteria laid down in Section 1(2) of the 1968 Act are exempt from registration but that another category is not exempt from registration, yet may never be brought before the court.

Surely, if restrictive agreements can be exempt by statutory authority—in the 1968 Act—we should be consistent in our legislation and insist that in Clause 10 we go the same way and allow those agreements which are either voided or expressly authorised by the Community to be exempt from registration on the lines of the exemptions given in the 1968 Act. That is an anomaly which I cannot understand.

I come to a point raised by the right hon. Member for Thirsk and Malton and briefly alluded to by the hon. Member for Bolton, West—the potential conflict between the provisions of Clause 10(1) and the provisions of Clause 2(1). That is a very important point because a Common Market regulation which expressly authorises a restrictive agreement is an enforceable Community right under Clause 2(1). Perhaps the Committee could turn back to that Clause: any such regulation—and Clause 2(1) deals with regulations— shall be recognised and available in law, and be enforced, allowed and folowed accordingly;". In Clause 10(1) we are told that even if there is an express Community regulation authorising a restrictive trade practices agreement, nevertheless that does not automatically pass into the law of this country. There is still an obligation to register. There is no mandatory power on either the Registrar or the court not to proceed. The fact that we are given discretionary power means that there is a potential theoretical conflict between the power to bring such an agreement before the court for adjudication and the expressly enforceable provision of Clause 2(1).

I do not know what the outcome would be. I do not know whether the Government are aware that conflict exists. Those who examine the wording of these two subsections will see that there is a potential conflict as long as the Registrar and the Restrictive Trade Practices Court have a discretionary power in respect of whether to take action under the 1956 Act in respect of agreements which the Community has expressly authorised. Under Clause 10(1), Community regulations—which are supposed to be directly enforceable in this country under Clause 2(1)—may be disregarded. There are two possibilities. A void agreement—an agreement voided by the Communities under the provisions of Article 85 of the Treaty of Rome—could nevertheless be approved by the Restrictive Trade Practices Court and therefore removed from the Register in accordance with the provisions of the 1956 Act. Alternatively, an agreement which is expressly authorised by the Communities could be rejected by the Restrictive Trade Practices Court under the 1956 Act, as long as there is a discretionary power on the Registrar and the court. The Clause does not say that where agreement is expressly authorised by the Communities it shall not be brought before the Restrictive Trade Practices Court. The wording makes that clear.

My right hon. Friend the Member for Stepney (Mr. Shore) has alluded to wider issues. There is an important point that the Commission, under the restrictive practices legislation in the Treaty of Rome, is invested with executive and judicial powers. I regard that as a monstrous confusion of the powers which in this country we have always gone to great lengths to separate.

We know that the Commission can fine firms under Articles 15 and 16 of Regulation 17 of 1962. It can act as prosecution, judge and jury under the terms of Article 19 of Regulation 17 of 1962. That is a monstrous position. It is one we should not accept. We should reject that provision. The Common Market attitude to restrictive practice is not the same as ours. Its provisions are much more widely drawn than are ours.

I understand the expressions of hope the hon. Member for Bolton, West put forward on behalf of small firms. Restrictive practices legislation in the Community is far less onerous than is our own under the 1956 and 1968 Acts. I am not seeking to argue the political point whether it should be more or less onerous.

6.15 p.m.

There are a number of other anomalies to which the Committee's attention should be drawn. There is a definition of public interest in paragraph 3 of Article 85 of the Treaty of Rome. One needs to contrast that definition with our own very rigorous definition of what is in the public interest in Clause 1 of the Restrictive Trade Practices Act, 1968. There is an exemption for certain agreements in Article 85 of the Treaty of Rome, particularly where consumers may benefit from restrictive trade practices agreements.

If one compares the vague wording of Article 85 of the Treaty of Rome with the very strict wording laid down in the 1968 Act, particularly in Section 1(2) of that Act, one sees that we are adopting a much more rigorous approach to the task of protecting the consumer—and ensuring that there are no restrictive practices unless they can be strongly justified—than is the case in the Community.

Here are the seeds of potential future conflict between our own legislation and that of the Community. This is the heart of the matter: the definition of what is a restrictive agreement. In Section 6(1)(e) of the 1956 Act we refer to categories of restrictive agreements which have to be registered under the Act. But there is no mention of those categories in Article 85 of the Treaty of Rome. Our courts could void or undo an agreement which would be legal under Community law but not under our existing restrictive trade practices legislation.

What is to be the position of the companies concerned? I have referred to the great deal of uncertainty because of the conflict between our legislation and that of the Community. Our firms will have to abandon restrictive trade practices for home market purposes but, authorised directly by Community provisions, retain them for cross-frontier transactions concerned with imports and exports. If that is the case it will create a great deal of difficulty for British industry, for the courts, for the authorities, in seeking to decide whether an agreement is expressly authorised under Community law, and, if so, what the consequences are for the home market as a result of that restrictive agreement.

The Community has not made up its mind—this is a metaphysical point—what it wants so far as competition is concerned. The Treaty of Rome preaches the virtues of free competition in every article. The Community recognises that one cannot always have free and open competition all the time if one wants to make economic progress. Certain restrictions may be necessary, for various reasons. The only exception given in the Common Market legislation concerns restrictions which do not eliminate competition in a substantial part of the market.

Would the words "substantial part of the market" in Article 86 of the Treaty of Rome apply to Great Britain or would they have to apply to an area wider than Great Britain? If they apply to a wider area of the Common Market than Great Britain, then many of our firms with restrictive agreements confined to this country may rest content. If the words "dominant position" were held to apply to Great Britain, then—since we are a substantial part of the market in the Common Market for any commodity— that will cause a great deal of anxiety to our businessmen. The Common Market is muddled about its motives and its approach to the problem of restrictive practices, monopolies and mergers.

Photo of Mr Eric Deakins Mr Eric Deakins , Walthamstow West

The Common Market wishes to see more competition but dare not go the whole hog. It knows that in the last resort if there is unrestricted competition one will undoubtedly reach a stage at which there will be market dominance by one major firm. That is what it does not wish to see.

I hope that the questions I have asked are not too technical and detailed, but if I cannot ask them in Committee, I do not know when I can ask them. I hope that the Minister will give some clarification on those important issues.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

I should like to try to help the Opposition to carry this limping debate through to the time when the guillotine falls. It must be acknowledged that the hon. Member for Walthamstow, West (Mr. Deakins) made a mammoth contribution to that end. It is extraordinary, thinking back to the debate on the timetable Motion, that we should still be an hour and a half ahead of the programme after having had debates such as the last one on ultra vires, and this one in which nothing can be found for hon. Members to say. This shows that it would have been much better if less time had been given to this low-level stuff and instead my right hon. Friends had brought in their Bill on competition and used this day for the Second Reading. That would have been a valuable addition to the country's powers against monopolies and restrictive practices and would have achieved far more than the speeches to which we have been listening.

Secondly, I should like to help the Opposition by explaining what, as I see it, this simple matter is all about. It is simply an endeavour to achieve competition and to prevent mergers and restrictive practices which span frontiers, which are cross-national, whereas the prevention of restrictive practices and monopolies within the individual nation State is left to the national authorities. It is a very simple and perfectly obvious proposition. In the light of that, I do not find difficulty in reading this subsection, because it is conceivable, indeed likely, that there will be certain restrictive practices which have hitherto been register able, in some cases justiciable, which will conflict with some Community policy or other and therefore the court has to be given power not to rule or indeed to change its judgments where they conflict.

My right hon. Friend the Member for Thirsk and Malton (Sir Robin Turton), who introduced this Amendment, quite rightly put his finger on one such area, and there may be others. I will come to the area discussed by my hon. Friend the Member for Bolton, West (Mr. Redmond)—small firms—in a moment. Certainly agriculture is one such area, and where there is conflict it seems natural and right to allow the court discretion not to rule or to reverse its previous judgments. Hon. Members argue that this should be spelled out in legislation. How can it be spelled out, because whether an agreement conflicts with a ruling of the Community is not a finite question; it is in itself a justiciable question. This is the answer to most of what the hon. Member for Walthamstow, West said. There may well be a Community directive which promotes competition or allows a restrictive practice, whichever it may be, in a certain area of industry, trade or commerce. Whether that conflicts with the registered practice which the Registrar has before him is not finite; it is a matter of judgment. Therefore, the only way to deal with this is to give him the power to exempt a restriction when in his opinion it is right to do so, with, of course, the ultimate decision of the courts lying behind that.

I also draw the attention of hon. and right hon. Members to the second subsection which it seems should be read with the first, whereby information about directly applicable Community provisions affecting the agreement is to be given to the Registrar under regulations made in the parent Act. Where this conflict might arise, so far as I can make out, it is the Government who have to make a regulation setting out what it is that could be in conflict and what could be relevant to the thoughts of the court.

The figure mentioned by my right hon. Friend arises because we are changing from one state of affairs to another. I have sympathy with the points he reasonably put forward, which was taken up and mixed with the usual mass of fears and dark threats which are always produced in the speeches of the right hon. Member for Stepney (Mr. Shore). It seems that whether we go through Clause 2(1) or through this Clause, the important point is to get the Bill on to the Statute Book so that the determination of the point relating to farmers' unions can be made. Until that is done it will be impossible to have an answer. It would be much quicker under this Clause, because the farmers' unions could go to the Registrar as soon as the Act received Royal Assent and ask, "What is the answer?", whereas they would otherwise have to wait upon the Government under Clause 2(1).

I wanted to say a word about small firms. I, too, have a great interest in this. As I see it, the Community rules on competition do not impinge upon small firms in this country. There is a fear among our small firms that if a proportion of them get together to form reasonably sized co-operatives, they will infringe existing restrictive trade practices legislation in this country. The truth of the matter is that it depends entirely upon the proportion of them that wish to get together. It seems utterly wrong that what could be achieved by a merger, by taking over "X" number of small firms and forming one company, should not also be capable of achievement by co-operative agreement between a similar number. That should be allowable under our present legislation, and I believe that it is.

What is not allowable is that they should all get together—or a substantial proportion of them should get together—to make an agreement designed to uphold the price or to squeeze out competitors. That position is not changed by our joining the Community. We are still responsible for our own internal competitive policy and the concept that all the small firms in one industry throughout the countries of the Ten should find it possible to make a restrictive agreement among themselves is so unrealistic that it is unlikely ever to come about. It would be contrary both to Community policy and to British domestic policy.

I agree with much of what my hon. Friend the Member for Bolton, West said, but I do not believe that our joining the Community will lead to a great loosening of the present rules in relations to small firms. Equally, I think that many small firms do not know of the opportunities under existing legislation for applying for exemption so that they may pursue a co-operative agreement provided that it is of a reasonable scale and nature.

Community competition policy is solely for the purpose of ensuring that there are Community rules about competition between nations. Domestic policy remains, and it seems reasonable that we can fix our own competitive policy at home. When we consider mammoth companies such as the British Steel Corporation, ICL or similar concerns which may have dominant positions in this country, we may be prepared to accept that situation for various reasons—I do not want to argue the merits of that point. It is all right from our point of view that this should be so. It ceases to be all right from a Community point of view if those large and dominant firms are given unfair advantages compared with similar organisations in other States.

It is not a question of having within one State one dominant firm which can be controlled by various means; it is a question of allowing one Government, with the resources of their taxpayers, to offer an unfair competitive advantage as against other companies in other countries. That would be something which should not be tolerated and the Community is absolutely right to lay down safeguards ensuring that it is not tolerated. The practice has been not to prevent money from being given to firms, particularly firms which have run into deficit or have serious problems, but to prevent money from being given to firms for the express purpose of acquiring a competitive advantage over other firms.

6.30 p.m.

Photo of Mr Trevor Skeet Mr Trevor Skeet , Bedford

Is the hon. Gentleman suggesting that the dominant position is in one market or in the Community market, because that is the point to which we were referring.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

I am talking solely about the Community market. Indeed, all these questions of large companies and subsidies seem to me to be relevant only within the concept of the Community market. It would be a mad world if each nation State were able to subsidise its firms in a certain, possibly competitive, way against other nation States and the Community were unable to intervene to prevent that crazy situation. There is also a move on the restrictive policies front towards some alignment of subsidies to induce firms to go to difficult areas so that one nation State does not have an advantage as compared with another.

All these things are sensible, but the right hon. Gentleman talked as though they were dark plots to deprive us of our birthright of freedom. Not a bit of it. It seems to me that these are valuable common rules of behaviour which we should do well to accept. I do not believe that there is anything in this Clause to worry the Opposition.

Half of what I have said goes well beyond the scope of the Clause. The narrow point whether Community rules should be allowed to override our own Restrictive Practices Court is admirably dealt with in the Clause and I welcome being allowed, by your generosity, Mr. Godman Irvine, to stray into the wider issues of Community competitive policy. Instead of fearing it, as the Opposition seem to do, I welcome it as a wider market and a wider sphere in which our industry can succeed.

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

I must say that I envy the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) his ability to pronounce these matters to be simple and clear to him. To me and to others they seem exceedingly confusing, and nothing more so than the inter-relationship between this Clause and Articles 85 and 86 of the Treaty. I do not think it can be argued away simply by saying that in the one case there is domestic legislation and the domestic situation, which is dealt with by domestic law, and in the other case we have Community law, because these things are inter-connected. It is not as simple as that, and in future there are likely to be clashes between Community law in relation to the promotion of competition, as they call it, and domestic legislation.

Photo of Mr John Mendelson Mr John Mendelson , Penistone

I am sure that other hon. Members recall that the hon. Gentleman used to say that the affairs of the Upper Clyde Shipbuilders were extremely simple whereas the Secretary of State for Trade and Industry now finds them extremely complex.

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

My hon. Friend's point is well taken. These matters are rarely simple in a complex society and I should have thought that the Government had learned that lesson by now.

I want to raise the question, very briefly, of the inter-relationship between the monopolies legislation of the Community—that is, Article 86 and the question of the dominant position of a firm in the Community market—and our domestic legislation. There may be some difficulties in the future in this field. No body has referred as yet to the latest decision of the Commission on the Continental Can case, which seems to be extremely far-reaching and to impinge on and in some ways be contradictory to our own monopolies legislation. As I read that case—and I accept that it was decided on its own facts and that future situations may be different—there are two very important pronouncements to be considered, and we should get the Government's views on these when discussing this Clause.

The first point which has been laid down in that case is the meaning of "dominant position within the market". In that case the Commission said that a market of 50 per cent. to 55 per cent. would amount to a dominant position within the meaning of Article 86. As I understand it, under our own monopolies legislation a dominant position, although that is not the phrase used, is 30 per cent. of the market. I believe that the American anti-trust legislation also lays down 30 per cent. The Commission has in this case laid down 50 per cent., which is contrary to our domestic legislation.

Secondly, and perhaps more important, the Continental Can decision determined that a substantial part of the market could mean one domestic country—in other words, that Germany for the purpose of the Continental Can decision was itself a substantial part of the Common Market for the purpose of Article 86.

Photo of Mr Trevor Skeet Mr Trevor Skeet , Bedford

The hon. Gentleman has referred to the Continental Can Company but the action came up only when the subsidiary of that company endeavoured to take over Thomassem and Drijver, which was a Dutch company. Therefore it is pertinent only to the West German subsidiary.

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

I am coming to that point. First it must be established that the company is in a dominant position in a particular market. Then, if it acquires only 5 per cent. more, it comes up against the Commission, and that is what happened in that case.

We might have a resident company in the United Kingdom—and there may not be many of them—which controls 50 per cent. of the United Kingdom and Republic of Ireland market. That would be a substantial part of the Common Market within Article 86.

Photo of Mr Trevor Skeet Mr Trevor Skeet , Bedford

What about steel?

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

I will come to that.

Then that company moves into a situation in which it acquires a company on the Continent which controls 2 per cent. of the continental market. If the Continental Can decision represents the thinking of the Commission, there is then a situation in which the United Kingdom company will come up against the Commission despite the fact that as far as the continental market is concerned its interest may be minute, because its interest in the whole market, its dominance, has reached the level which the Community says represents a monopoly situation. The Government should tell us how they view that on the basis of our own legislation, which says that 30 per cent. creates a monopoly situation.

This may not present very great difficulties to private companies, but I come to the point about the British Steel Corporation. As I understand it, Articles 85 and 86 are not confined to private companies. If one reads further in the Treaty of Rome to Article 90, that specifically applies Articles 85 and 86 to public undertakings. There are various restrictions later, but basically those Articles are extended to public undertakings. I do not know what the exact meaning of "public undertakings" may be, but I think that the British Steel Corporation and the National Coal Board are public undertakings. What is to happen to them in the future?

If the British Steel Corporation, which presumably has more than 50 per cent. of the United Kingdom market, which is a substantial part of the Community for the purpose of Article 86, strays on to the Continent, and acquires a very small French company which has 1 per cent. of the French market, what is going to happen? We shall then be in a position which is basically similar to that of the Continental Can people, because the British Steel Corporation will be up against the Commission and it will be the Commission which will determine, according to its own investigations, whether the Corporation is acting in contravention of Article 86.

I ask the Government to tell us what their thinking is on these matters and whether, in their negotiations, they were given some kind of assurance or undertaking from the Commission that these so-called Articles on competition would not be applied to large public bodies such as the British Steel Corporation should they, for the purpose of their own business and to protect that business, stray on to the Continent in the way I have suggested.

Photo of Mr John Farr Mr John Farr , Harborough

What will be the position of a public undertaking such as British Railways which already has substantial assets in another applicant country, namely, the Republic of Ireland?

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

I am not sure about railways. I suspect that, in the drafting of the Treaty of Rome, an attempt was made to exclude what could be called public utility corporations from the operation of this Article. However, the point is well made. The Government should tell us whether such a public utility organisation and enterprise is within Articles 85 and 86.

Photo of Mr Peter Shore Mr Peter Shore , Stepney

My hon. Friend is making such a strong point that I should not like the reply to evade the substance of the point on a technicality. The technicality, as my hon. Friend will readily recall, is that steel would come under the equivalent provision—I think Article 65—of the ECSC Treaty. In the substance, my hon. Friend's remarks are correct.

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

I am obliged. I do not understand this either. I should have thought that, if we accede to the Rome Treaties, the articles of all the treaties will apply. The mere fact that the British Steel Corporation comes within the ambit of the European Coal and Steel Community does not exclude the operation of the Articles of the Treaty of Rome.

My point was that, certainly for the future, and possibly as regards existing public undertakings, there is a considerable danger. How do the Government see the Community and the Commission's policy developing in relation to public undertakings?

Second, Regulation 17 is horrifying to an English common lawyer. It gives extraordinary powers to a Commission of bureaucrats not responsible to anybody in particular, except possibly, ultimately, to the Council of Ministers. Article 14 of the regulation makes clear the powers with which the Commission is endowed:

  1. "(a) to examine the books and other business records;
  2. (b) to take copies of or extracts from the books and business records;
  3. (c) to ask for oral explanations on the spot;
  4. (d) to enter any premises, land and means of transport of undertakings."
I should not seek to deny it if it were said that, to operate anti-trust legislation, it is necessary to give a body of some sort some powers. In the United States, which is the only country which has the experience of operating such legislation on a large scale, this is done by the Justice Department. I would not seek to extol the virtues of the Justice Department, but it is at least a political department in the sense that it is ultimately responsible to the Senate. Indeed, not long ago a United States Attorney-General in charge of anti-trust law had a difficult time on the floor of the Senate.

These powers are being given to a Commission which is not subject to that kind of control. The Commission not only makes up a case, as do the United States authorities, for presentation to a court, but it determines it. It acts not only as policeman in collating the evidence and examining witnesses but as judge as well.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

It also acts as the legislature, because it makes the laws in the first place before it starts to apply them and then judges them.

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

Indeed. The Continental Can case has decided that a dominant position means 50 per cent. to 55 per cent. of the market and that Germany is a substantial part of the Common Market for this purpose. The Commission makes law, it acts as policeman, and it acts as judge in its own cause. This is contrary to some of our basic principles, but possibly is not contrary to continental principles based on the inquisitorial system of investigation.

6.45 p.m.

Conceding that some kind of body is needed, once that body has reached a decision, the matter should be taken to the Court of Justice. But not a bit of it. The Commission has the power to fine. Only when the company has refused to pay the fine can the Commission take the matter to the Court of Justice.

It is disturbing that major decisions affecting not only great companies but also millions of work people should lie ultimately in the hands of a Commission, however respectable and eminent its members might be. What do the Government think about this? Do they think that there should be some modification of the procedure? Are they happy with this situation? Do they intend to suggest to our future European partners that this is not in accord with some of our basic principles and that we should like to see some of the procedures changed.

Article 86 is supposed to stimulate competition. Neither of these articles will have that effect. Their effect will be, as has happened in the United States, that in major sectors of industry the market will be carved up by two or three companies. The whole of the Common Market area will be covered by two companies owning 50 per cent.; both will fall within Article 86; neither of the companies will be caught by the Commission. As I say, the market will be carved up between one or two large undertakings which are careful to ensure that they do not transgress the 50 per cent. rule.

The Government owe us an explanation as to what they think about the Community legislation in this respect, how it interacts with domestic legislation, and what they foresee will be the effect on British industry of the implementation of these articles.

Photo of Mr Trevor Skeet Mr Trevor Skeet , Bedford

I apologise to the right hon. Member for Stepney (Mr. Shore) and to my right hon. Friend the Member for Thirsk and Malton (Sir Robin Turton) for not having heard their speeches, as I was occupied elsewhere.

The hon. Member for Llanelly (Mr. Denzil Davies) referred to the Continental Can case and to Article 86 of the Treaty. Many of the hon. Gentleman's anxieties are groundless. There have been only three interpretations under Article 86 so far—the Gema case in Western Germany, which concerned performing rights of musical composers, performers, authors and editors; the Continental Can Company, which covered metal containers; and Saint-Gobain, which concerned glass. Insufficient case law has been built up to justify any conclusive conclusion as to how British companies will be judged.

The point of the hon. Gentleman's argument was that Europe has one set of laws and that the United Kingdom has another, and that it is very much better here. In the Financial Times of 19th April, 1972, Mr. Graham Bannock, the research director for the Bolton Committee and author of "The Juggernauts", stated: I estimate that in 1969, the top 100 industrial companies acounted for roughly half the pre-tax profits of all industrial and commercial companies in the U.K. In 1949, the share of the top companies was about 25 per cent. In other words, concentration has doubled over the past 20 years. So concentration has doubled here over the past 20 years, even in the context of the legislation we have had operating. If there has been less concentration on the Continent of Europe, European monopolies legislation must have been a little more effective.

I want to refer to the Continental Can Company and study some of the details and background. In 1969 the turnover of the West German subsidiary was 193 million dollars, and the estimated share of the West German market in meat cans was between 70 and 80 per cent., in fish cans between 80 and 90 per cent. and in tin plate caps between 50 and 55 per cent. So it will be conceded that it had a dominant position in the West German market The law came in when it attempted to buy into a Dutch company, Thomassem and Drijver (TDV), which is the largest metal packaging manufacturer in Benelux.

Certain factors must be taken into account. One has to consider whether the company has a dominant position in the relevant market. Certainly in packaging materials made out of tin or steel it had a dominant position. But there were competitors in the glass industry in which the company did not operate, and that factor has to be considered. Another factor is that the company achieved its eminence largely because of its technological developments. It also had the ability to raise funds on the international market which a number of other companies had not. Of course, other companies could form an international cartel in Europe and rival this one, but they could themselves be caught by Article 86.

Before we become too excited about Article 86, would it not be wise to allow the Commission first to develop a fairly considerable case law and find out how it will interpret the article?

Photo of Mr Brynmor John Mr Brynmor John , Pontypridd

It would be too late.

Photo of Mr Trevor Skeet Mr Trevor Skeet , Bedford

If only three cases have been referred to the organs of the Community, we are not too late. We are only in the elementary stages where policy is being formulated and the terms of Article 86 are being interpreted.

Photo of Mr Brynmor John Mr Brynmor John , Pontypridd

We are trying to pass the European Communities Bill. Once it becomes an Act, it will be too late to effect an improvement to the terms of the Bill.

Photo of Mr Trevor Skeet Mr Trevor Skeet , Bedford

As hon. Members on both sides of the Committee have said, we cannot put everything in a Statute. The Bill gives the general position, and it is liable to interpretation, as is case law. In the United Kingdom we legislate in Parliament, but the courts also legislate. Similarly, Article 86 will be interpreted and through the vast complex of case law there will be interpretations which will become extremely useful.

When we move to the exclusive agreements which are granted to distributors, a vast amount of complex case law has already been developed inside the Common Market.

Photo of Mr John Mendelson Mr John Mendelson , Penistone

The hon. Gentleman has said that the courts in this country also legislate, but does he not accept—and this is common ground—that when the courts legislate Parliament overrides them and says "We mean A to be A and not B."? When we pass this Bill we shall have no such power left in the House of Commons.

Photo of Mr Trevor Skeet Mr Trevor Skeet , Bedford

I do not agree with the hon. Gentleman. We shall be on the Council of Ministers and able to say what we do not like. That is the body which will make legislative provision, and we shall be able to lay down to the Council of Ministers precisely what we want. I look forward to the day when we shall have a European Parliament. The hon. Gentleman himself may be there to put forward the United Kingdom claims. We are looking for quality, and I hope that the hon. Gentleman will be able to live up to our expectations.

There are one or two points which I should like to ask the Minister. In the exclusive dealings which are granted we may find ourselves in difficulty with patents. Does an English patent grant the exclusiveness it purports to maintain in a stated area once we are in the Common Market? Secondly, can patent rights be legitimately used to restrict intra-EEC trade in products covered by patents in all EEC countries? The third point, which is linked with that, is: will the efficacy of international property rights pass with the enlargement of the Community so far as the United Kingdom is concerned?

When exclusive arrangements are granted there is a proprietory right within a defined area. We in the United Kingdom have one conception, and the case law in Europe is developing the other way. One commentator has said: …the Court's decision was based on Article 36 of the Rome Treaty, which stipulates that trade restrictions which are justified to protect industrial and commercial property rights cannot be used as a means of 'arbitrary discrimination or disguised restraint on trade between member States'. The Court reasoned that it would run counter to the very aim of forging national markets into an integrated economic bloc if companies were permitted to split up the Common Market through the artificial use of industrial property rights. That is quite distinct from our view of patents in the United Kingdom.

On the other hand, we have the views of Dr. Groapner on the law of restrictive practices and the EEC given in St. Andrews on 26th March. There had been a case before the organs of the Common Market—the Parke Davis and Company case, where the exclusiveness of a patent was maintained. However, it was indicated that there were certain problems. Dr. Groapner came to this conclusion: Whereas it was generally assumed that the owner of a patent was free to grant an exclusive licence for the exploitation of the patent because such grant remained within the scope of the patent right, the Commission seems to be inclined to consider it as a violation of Article 85 if the patent owner grants an exclusive licence only to one enterprise in one separate territory because such a restriction might prevent the patent owner from entering into patent licence contracts with any other enterprise. It may be asked whether this interpretation will not ultimately lead to the end of the grant of exclusive licences generally. From our angle, bearing in mind that the new patent office will be in Munich and not in London and that there may be a vast qualification of the law of patents, exclusivity may go. I think I am entitled to ask the Minister what his view is likely to be on that.

So far as the EEC legislation is concerned, there seems to be an area of parallel jurisdiction in respect of national and Community cartels. I refer specifically to the dyestuffs and quinine cases. Clause 10 will not help to resolve the conflict. In procedural matters the member States may apply both the national and the Community law. When it comes to the substantive law where the settled facts may in a particular case disclose a quasi-criminal offence, can the proceedings be instituted in member States as well as in the Community, and to what extent is the national law applied if it happens to conflict with the Community law? It may be that the dominance of the Community law will be such as to overrule all local considerations, but what will be the rôle of the criminal law in the United Kingdom in this connection?

I refer again to Dr. Groapner: …it nevertheless affirmed the lawfulness of the institution of proceedings in Germany because the violation of both German and Community cartel law could not be dealt with by one court only as the German courts had no power to adjudicate on an infringement of Community law while the Commission and the European court were lacking jurisdiction in respect of offences against German law. What has been clearly laid down here is parallel jurisdiction. It is assumed that if a fine is imposed by a domestic court it will be taken into account by the Community organ, and vice versa, but if the Community stated that a practice was valid, it would still be open to a State to declare it invalid according to its own law. I do not think for one moment that these two points will be doubted.

I want now to refer to one or two points which have been raised. Exclusive selling rights which have been granted to distributors take on various forms. One form is when the purchaser agrees to buy from one seller and to distribute within certain areas and the supplier agrees not to serve anyone else in that defined area. There have been considerable modifications of Community law and up to date about 30,000 notifications to the Commission.

The point has already been made that this is a judicial as well as a legislative body with all the difficulties that that entails. We in the United Kingdom have the advantage of having separated our judiciary from executive functions. This may well happen in the Community: we are in its early stages and are in a position to reform it. I suggest that hon. Members should wait and be patient. Let us enter Europe on 1st January, 1973, and then try to bring about the changes which we require.

[Sir ROBERT GRANT-FERRIS in the Chair.]

7.0 p.m.

Photo of Mr Trevor Skeet Mr Trevor Skeet , Bedford

Of course, there will be changes and this is why we are going in at an early stage to bring about these changes. What should be made clear with regard to exclusive dealing arrangements which have been negotiated is that British companies have nine months to make notifications to the Community from 1st January, 1973.

Agreement which do not affect Community interests significantly, those falling under the well known case of Riechermann v. A.E.G.-Elotherm, will be outside and will not be liable to notification. This applies to goods, say which are exported to Japan specifically for the Japanese market and which may be unsuitable if re-exported to the United Kingdom or any of the Six countries. It is unlikely they will be taken up by any member State, and so it cannot be said that they would have an adverse effect on the market. The liberalising of exclusive dealing has gone on consistently for a number of years. Rightly, the Council has had regulations in 1962 and in 1965, and the Commission produced a regulation in 1967 in which numerous exceptions from notifications were made.

My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) mentioned small firms. There was a notice concerning agreements, decisions and concerted remedies in the field of co-operation between enterprises, and a large block of small firms and medium-sized firms were freed from notification—namely, if the companies involved had an aggregate turnover not exceeding 15 million dollars per annum and if production did not account for more than 5 per cent. of the relevant market. These arrangements have been going on for some time, and most of the exclusive selling arrangements in the Common Market are outside the net unless they have a distinctive impact on the flow of trade between Community States.

I would instance the Grundig Consten case in which a trade mark was called into question. This involved a proprietary industrial right and related to the decision that the trade mark should not be used as a method of forcing a division of trade. The case involved the manufacture of tapes in Germany which were exported to a French subsidiary. They carried the trade mark Gint. Independently, a West German wholesaler secured certain of these goods from Grundig and exported them to UNEF in France, which started to sell them. It was claimed that the trade mark gave protection to the German company. It was held that this could not be the case because the proprietary industrial right was being used to interfere with intra-EEC marketing, and the case was held against the Grundig company.

I have come to the conclusion in regard to trade marks and the copyright law that the position in the United Kingdom may be a little different from that in the Common Market, but we have to recognise that since we are entering a Community we shall have to make certain sacrifices. It is a fairly early stage to say what will happen, but it looks as if things may be moving in the right direction. There seems to be a reasonable policy in regard to exclusive agreements. The Commission seems to have adopted a reasonable policy in operating the articles, and this is of great concern to Clause 10 of the Bill. I have no doubt that, with the modification which will take place in the building up of case law, these matters will be carefully considered by those concerned.

Photo of Mr John Farr Mr John Farr , Harborough

I hope my hon. Friend the Member for Bedford (Mr. Skeet) will forgive me if I do not deal too closely with the matters with which he dealt in his remarks. He made a most interesting speech, but I wish chiefly to refer to the remarks of my right hon. Friend the Member for Thirsk and Malton (Sir Robin Turton).

I say at once to the Committee that I am in an unusual position because I think nothing at all of this Bill; I think the whole of the Bill is disastrous. But I felt that there was one chance that by harmonising our legislation completely with the Community in respect of the type of legislation about which we are talking we could have done a certain amount of good in this rather narrow field.

A tremendous amount of discussion is taking place in the industry about restrictive trade practices in terms of agriculture and horticulture. There is concern about the difficult position which the industry faces with regard to existing United Kingdom law. Here was an opportunity—one ray of sunshine in an otherwise gloomy Bill—in which we could have had full harmonisation to enable British producers, if and when we go into the Community, to compete fully with their Continental counterparts in marketing agricultural and horticultural produce.

The sort of legislation which is defective in this country is that which is enforced at the moment. Unfortunately, Clause 10 does not provide for full harmonisation of United Kingdom legislation in this respect. If it had done so, things would not have been so bad. But it does nothing in this respect, and this has made the situation very difficult indeed. If and when we go into the Community, agricultural and horticultural producers will be faced with certain discriminatory factors which will not apply in other member countries.

I wish to remind the Committee of what was said last year by the three National Farmers Unions about the situation. They then said: As far as agriculture is concerned the existing situation perpetuates the inherently weak bargaining position of the 200,000 small producers vis-à-vis a handful of large buyers or processors. The defences permitted under the Acts have little relevance. The cost of defence is prohibitive. Many harmless agreements cannot, therefore, be risked. Many agreements or recommendations clearly in line with Government policy cannot be made. That was the view of the National Fanners Unions last year and is still their view today. I know that my right hon. Friend the Minister of Agriculture is seized of the position. It was an opportunity for the Government when introducing the Bill fully to rectify the position for the NFUs.

Efficient marketing has been held up for several years because of restrictive practices. In 1967 the then Prime Minister emphasised in the Common Market debate that restrictive trade practices were one of the areas in which there would need to be harmonisation of practice if the United Kingdom's bid for entry was to succeed. Unfortunately, full harmonisation has not taken place. It will not take place when this Bill reaches the Statute Book. Certain discriminatory powers will exist and will apply to marketing bodies in this country. It is for that reason that I feel that I cannot support this Clause.

As hon. Members know, I have opposed this Bill all along. However I oppose this Clause not because the Government have gone too full-heartedly into Europe but because in this instance they do not intend fully to harmonise our marketing laws and thus free agricultural marketing bodies from the restrictions which hamstring them now and which, if this Clause is enacted, will tend to hamstring them even more for many years ahead.

Photo of Mr George Proudfoot Mr George Proudfoot , Brighouse and Spenborough

I am disappointed to see that the hon. Member for Llanelly (Mr. Denzil Davies) has left the Chamber, because he made some remarks which have become part of the mythology of this Committee. What he said implied that we were going into a Europe where the Commission had made up its mind completely and for ever on everything that was likely to happen in the future. But, of course, that is not the case. When we get into Europe we shall be represented there, and we shall be able to help mould the future changes in the competition policy.

The hon. Member for Llanelly spoke about the anti-trust laws in America. If the hon. Gentleman feels as he seems to, he has misunderstood how those antitrust laws have grown up. They are about 70 years old. They are changing all the time, just as our own anti-monopoly laws change all the time. The reason is that we are, to use the words of the Leader of the Opposition, in the middle of a technological revolution. That is why the whole system is for ever changing.

I can claim some consistency on these matters. When I was the Member for Cleveland, I introduced on 6th February, 1962, a Private Member's Motion on competition. I am delighted to read that I said at that time: …the Common Market Treaty—and I sincerely hope that we join the Common Market—has anti-trust law provisions built into it."—[Official Report, 16th February, 1962; Vol. 653, c. 1668.] Being a consistent man, I am delighted to support this Clause and to oppose the Amendments. I hope that those right hon. and hon. Members who have tabled the Amendments will withdraw them.

It is even more interesting to see that in that same week the right hon. Member for Battersea, North (Mr. Jay) also had a debate on competition. He was then claiming that private monopolies were evil. When he comes to vote on this set of Amendments, I hope that he will find himself in the Lobby that I intend to enter, because he and I appear to espouse the same ethic.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

On the contrary. I shall vote in favour of keeping our own monopolies and restrictive practices legislation and not having it interfered with by the Commission.

Photo of Mr George Proudfoot Mr George Proudfoot , Brighouse and Spenborough

I cannot accept that. There is no little difference in practice between the law in the EEC countries and our own law.

My hon. Friend the Member for Bedford (Mr. Skeet) also intervened in the 1962 debate and quoted Article 85. He went on to say that each country could have anti-monopoly legislation. My hon. Friend was correct then, as he is today.

Even more interesting still, my hon. Friend the Under-Secretary also got into the act in that debate. At that time, he was worried about private monopolies and also about what was to happen as we went into Europe. He talked about the growth of international cartels.

What was said in 1962 fits this present debate perfectly, and it is interesting to see almost the same cast present.

I want to take to task my right hon. Friend the Member for Thirsk and Malton (Sir Robin Turton). Article 85 talks about price fixing. I remember that shortly after the debate to which I have referred I was pressing the Government to get rid of resale price maintenance. My right hon. Friend fought against the Government of the day, wanting to keep resale price maintenance. It was a form of restrictive practice that I hated. However. I see nothing offensive in Article 86. It helps towards one of my cherished ambitions, since I believe completely in competition.

Again I must remind the Committee that the competition policy is still being built up in Europe. I for one want to see Britain in there so that we can take part in creating better and ever-changing rules for competition. They do not stand still.

In the last nine years the Commission has banned only five cartel agreements. Again, the figure is misleading. Our own Monopolies Commission has built up a quantity of case law, and a number of agreements have been found to be restrictive. In Europe 36 agreements have been dissolved voluntarily, and another 589 have been modified to secure the approval of the Commission. I believe that that is the correct way for Europe to go. When one looks at the American experience and sees what anti-trust laws and competition laws have done to the economy there, one can only welcome this Clause and ask those who have tabled Amendments to it to withdraw them.

7.15 p.m.

Photo of Sir Peter Emery Sir Peter Emery , Honiton

We have had a very wide-ranging debate not only on restrictive trade practices and other aspects of this Clause but dealing with the problem of competition policy and competition generally within the Community. Therefore it is right to begin by trying to state how the Government see the general application of the Community's competition policy. Following that, I shall deal specifically with the Amendments and, in the course of that, deal with many of the individual points which have been raised during the debate. Then I shall try to answer as many as I can of the individual points which have not been covered in dealing with the Amendments.

The objective of the EEC policy on competition is to abolish restrictive trade practices and the abuse of dominant positions which are inconsistent with the establishment of the Common Market. The purpose is to ensure that tariff, fiscal and other public trade barriers which have been dismantled by the treaty are not replaced by private trade barriers and that markets are not insulated from competition along national boundaries. I think that that is a matter about which all right hon. and hon. Members will be in agreement, since it will benefit not only the United Kingdom but Europe generally.

The EEC provisions leave room, however, for the simultaneous operation of national rules on competition in so far as they affect internal domestic trade or trade with non-Community countries.

The British Government firmly believe in competition because it has the effect of increasing efficiency in industry and commerce to the benefit of consumers and of the nation as a whole. The United Kingdom has had legislation on this subject for a number of years. Generally, the direction of the European Community's approach on restrictive trading agreements is not out of line with our own. In recent years there has been a notable convergence of approach between United Kingdom legislation and policy and practices in the EEC in relation to beneficial types of restrictive agreements. The Community has adopted a non-doctrinaire approach towards restrictive agreements. Although agreements which prevent or restrict trade between member States are generally prohibited, they may exempt agreements which improve production or distribution or promote progress. Surely there is nothing in that with which any hon. Member would want to disagree.

Article 85 of the Treaty of Rome prohibits much the same kind of agreement as those controlled in the United Kingdom, except that it relates only to agreements which are likely to have a perceptible effect upon trade between member States. Article 85 resembles Part I of the Restrictive Trade Practices Act, 1956, in that there is a presumption that collusive restrictions on competition should be forbidden except in exceptional cases. Although the criteria for exemption are different—I will deal with that later—there is no conflict of principle between the Restrictive Trade Practices Act and Article 85.

None the less, there could be an overlap in a few cases between the jurisdiction of the Community, on the one hand, and the Restrictive Practices Court, on the other. Therefore, Clause 10 provides the necessary measures to avoid this overlap.

The problem of overlap does not arise in our legislation on monopolies and mergers. This is of great importance as it touches on a number of points which have been raised. Action under that legislation is at ministerial discretion. There is nothing strange in that. The right hon. Member for Stepney (Mr. Shore) suggested that there was something very strange in that this matter should rely on having to see into a Minister's mind. But the Labour Government's Act dealing with monopolies and mergers reinforced this position by including a provision for references to be made by the Minister. None of that is altered. Indeed, his whole argument falls absolutely. Action under that legislation is as it was. I am pleased to confirm this, as a number of hon. Members suggested that we should be in a terrifying position because our monopoly legislation would be ruined by entry into the Common Market.

Some firms may need to modify or abandon certain practices to which Community rules apply. I should make it clear that they will not be at a disadvantage compared with firms elsewhere in the Community. Firms in member States are complying with the rules and, although they may find competition keener as a result, there is no reason to believe that they have been harmed by them. British firms should not find it difficult to adapt their business arrangements to comply with these rules. That is what competition is about.

I reject the view put forward by the hon. Member for Walthamstow, West (Mr. Deakins) that small firms would be dying to get together to have restrictive arrangements so that they could carve out the market. I do not believe that that is the view of the small firms. Nor do I believe that it is what the Committee would want us to encourage.

Photo of Mr Anthony Fell Mr Anthony Fell , Yarmouth

I apologise to my hon. Friend for not raising this matter when he mentioned it, but, frankly, I was speechless. The point occurred at the beginning of his speech. It seemed so categorical—if I have misunderstood my hon. Friend, I am sure he will correct me—and was to the effect that one of the aims of the EEC was to promote trade and to cut tariffs. I know my right hon. and learned Friend thinks it is. I know that perfectly well. However, it is the reverse of what will happen because, immediately we go in, we shall have tariffs round this island, as are round the Six, against all the world.

Photo of Sir Peter Emery Sir Peter Emery , Honiton

I always enjoy my hon. Friend's speeches. I have seldom known him speechless. His interjection proved it did not last long. The external tariffs which would be applicable would, on the whole, be lower than those that we have now in many areas. We must work towards a freeing of trade. This is what our arrangements in GATT and most of our trading policies have been directed towards. Therefore, this is nothing new. I am sorry that my categorical assertion should, for a short time, have left my hon. Friend without the power of voice.

The purpose of subsection (1) is to give the Registrar and the court a discretion to determine whether to proceed under the restrictive trade practices legislation regarding an agreement to which both that legislation and a provision of Community law apply and, in exercising that discretion, to take into account the purpose and effect of the Community provision.

Our legislation is concerned with the effects on the domestic market and public interest of a particular agreement. However, after accession it will be necessary, where an agreement is authorised or prohibited under or by virtue of a Community provision, to take into account that authorisation or prohibition for two reasons—first, to avoid decisions being reached under our legislation which conflict with any authorisation which has been granted under or by virtue of a Community provision; and, secondly, to obviate the need to bring proceedings under our legislation where the decision is likely to be to the same effect as an authorisation or prohibition granted in respect of the agreement in question under or by virtue of a Community provision.

Photo of Sir Peter Emery Sir Peter Emery , Honiton

When I have finished this aspect, I will give way to the right hon. Gentleman. I should think that hon. Members would want parties to an agreement, which the Registrar or the court decides not to deal with, to be saved the time and expense incurred in court proceedings where it has been considered by the Community and a decision has been taken.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

To be quite clear, may I ask whether the Clause gives power to the Restrictive Practices Court to disregard a directly applicable Community provision? The hon. Gentleman seems to be saying that it does not. All it will be doing will be determining whether such directly applicable provision is in force in the case in question.

Photo of Sir Peter Emery Sir Peter Emery , Honiton

I am sure the right hon. Gentleman is wise enough to know that the answer may affect two parts of a Community decision. First, the Community decision can be made only on agreements restricting trade between member States. Where a decision has been made on intra-European Community trade, the decision on international European competition stands. Where a decision could be considered to be applicable internally in the United Kingdom, the Registrar decides whether it is necessary or contrary to the legislation of the United Kingdom. The provision leaves the control of international European competition with the Commission and the Registrar is left, as is the case within the Community, to decide on internal restrictive practices legislation and the provisions within that legislation for British companies concerning trade within the United Kingdom.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

What would be the position if the Commission, on the one hand, and the Restrictive Practices Court, on the other, disagreed whether a provision was applicable?

Photo of Sir Peter Emery Sir Peter Emery , Honiton

I do not see how that arises. The Registrar is attempting to deal with restrictions on trade within this country. What the Commission is attempting to do is to control agreements restricting intra-European Community trade. It is not attempting to control the internal restrictive practices of any of the Community countries. It seems to me that the situation is quite clear, and that is why I come specifically to the points raised by my right hon. Friend the Member for Thirsk and Malton (Sir Robin Turton).

7.30 p.m.

[Sir MYER GALFERN in the Chair]

I know and accept immediately that the NFU has made representations for the amendment of the restrictive trade practices legislation as it applies to agriculture. The union's long and detailed memorandum is being considered most carefully by my Department in conjunction with the Ministry of Agriculture. The basis of the criticism is the existing legislation in the United Kingdom. There is no concern about the Community provisions for restrictive practices. The Registrar has a complete discretion not to institute proceedings, and it was the institution of proceedings about which my right hon. Friend was concerned. This provision allows the Registrar not to institute proceedings in respect of any agreements—including agreements between farmers—which are subject to Community provisions, whether or not EEC Regulation 26/62 applies.

Photo of Mr Robin Turton Mr Robin Turton , Thirsk and Malton

What the NFU is arguing is that if we are in the Community and there is a CAP the whole system for agriculture and agricultural products should be applied directly to British agriculture and should not be left to the discretion of the RPC. That is the point.

Photo of Sir Peter Emery Sir Peter Emery , Honiton

I see that immediately, and I had hoped that I was giving the kind of answer which would help my right hon. Friend. What the NFU wants is an alteration of our internal legislation. This is not the responsibility of the Commission. If my right hon. Friend wants to make that change he can introduce a Private Member's Bill to do that, and he will be able to do that even when we are in the Community. I cannot see why there should be concern, because the point about which the NFU is concerned and worried concerns restrictive trade practices within the United Kingdom.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

What my right hon. Friend is saying is that, as he understands it, the CAP will excuse these agreements from being put before the Registrar. My right hon. Friend wants to know whether in this instance Community law will override domestic law, and I think that it would be helpful if my hon. Friend were to clear that up.

Photo of Sir Peter Emery Sir Peter Emery , Honiton

The answer is that British internal law holds good. I am sorry if that does not please my hon. Friend. In this instance he would like Community law to apply. That is an unusual view for my hon. Friend to take, because I should have thought that he wanted British law to apply.

The second Amendment deals specifically with the dominant position. Under Article 85 of the Treaty and Article 65 of the ECSC Treaty—and I was asked not to avoid dealing with the latter—agreements which restrict or prevent trade between member States are prohibited and void, and this applies irrespective of whether a firm which is a party to an agreement has and abuses a dominant position. If Part I of the 1956 Act applies to the agreement, Clause 10 as now drafted provides that it will continue to apply notwithstanding the prohibition under Community provision.

Article 86 of the EEC Treaty prohibits the abuse of a dominant position within the Common Market which affects trade between member States. It does not declare agreements void, and it does not refer to agreements. Part I of the 1956 Act applies only where there are agreements between two or more firms, and not to the actions of a single firm. Monopoly situations in this country are dealt with under the monopolies legislation.

A number of important points have been raised during the debate. The right hon. Member for Stepney said that the problems relating to competition policy were being clarified by the Amendment, but that is not so. It is making clear that discretion can be exercised by the Registrar. What we are attempting to ensure, if I may use an Americanism, is that firms will not be put in a position of double jeopardy. When a decision has been taken by the Community court, the Registrar will be able to ensure that no action is taken a second time in this country.

The right hon. Gentleman said that the British Government's right to intervene was being threatened. I deny that. Nor do I find that the position about monopoly legislation being left entirely in the hands of Ministers is any different from what it was before. The right hon. Gentleman was a Member of the Government which, in the last Parlaiment, dealt with the monopolies legislation and retained the provision for references to be made by Ministers. The right hon. Gentleman made a big point about "understanding the ministerial mind", but that was the position before, and that is the position as it will be in relation to monopoly powers after the Bill has been passed.

Photo of Mr Peter Shore Mr Peter Shore , Stepney

There is one important difference. The discretion which used to lie with Ministers, and will continue to lie with them, about using the powers under the monopolies mergers legislation remains, but today, as distinct from in the past or in the future, the exercise of those powers will not be, as it were, in relation to the facts of the matter and general policy as announced in this House, but will be taken against the obligations which Ministers feel they have accepted under the Treaty of Accession and under the basic rules and regulations of the Common Market.

Photo of Sir Peter Emery Sir Peter Emery , Honiton

The right hon. Gentleman is suggesting that this is a limitation on the discretion of Ministers.

Photo of Mr Peter Shore Mr Peter Shore , Stepney

No. I am saying that it is confusing.

Photo of Sir Peter Emery Sir Peter Emery , Honiton

I am not confused about it, and I do not think that the Government are, either. On the whole, the monopolies legislation is probably stronger in this country than it is in certain member States of the Community. I am delighted that perhaps when we are in the Community we shall be able to strengthen the position there. I do not see any difficulties preventing British Ministers, from whichever party they come, from making the same kind of decision as has been made before, and with the same degree of clarity. I therefore find the position clear.

I hope that I have dealt with the dominant position issue. The situation under Article 37 of the EEC Treaty does not apply to any of the United Kingdom State trading enterprises. We do not have a State monopoly of the kind referred to and applying under that Article. Much has been said about the fact that the Industry Bill will expire in 1977. But it was made clear by the Government that that Bill was introduced to do a specific job, as other legislation has been introduced by previous Governments to do specific jobs, for a limited time. It was argued in that case that we needed a set period, and that period was set for just five years. No objection to the Industry Bill was raised by the Commission.

I was asked another question about ICL and whether the statement made yesterday by my right hon. Friend the Minister for Industrial Development, concerning the computer industry and ICL, was made after consultation with the Commission. The Commission was not consulted about the assistance to ICL which was announced yesterday, but the Commission was advised about this when the announcement was made—as a matter of common courtesy, I suppose.

I turn to the very helpful speech of my hon. Friend the Member for Bolton, West (Mr. Redmond). He has been known for many years as a defender of the smaller firms, but I underline his main point, that the CBI Small Firms Council had thought it right and proper that we should have exactly the sort of protection that could be given under the Clause and had raised no objection whatsoever.

Although the hon. Member for Walthamstow, West may think that it is strange, the answer to his first question is that there is nothing sinister in the position of the words "void" and "authorised". This is purely a matter of drafting and the use of the words, and there is nothing sinister about the variation to which he refers. It is also important that in dealing with this matter of the obligation to register the agreements, discretionary powers on which were of some concern to the hon. Gentlemen, he should know that this is the reason for the Clause. This I have attempted to argue when dealing with a few of the other points made by the hon. Gentleman in the general presentation of the defence of the Clause—but we are getting on to a "Clause stand part" debate rather than discussing the Amendment.

If the Registrar agrees with a Commission decision either against or in favour of a specific restrictive practice which has been registered with him, he is given discretion not to bring proceedings. This avoids the situation of double jeopardy. We shall not have a position in which an agreement has been accepted by the Commission with which the Registrar is in agreement being referred to the court. I should have thought that this was what the hon. Gentleman would have wanted.

Photo of Mr Eric Deakins Mr Eric Deakins , Walthamstow West

I could not understand the Under-Secretary's first explanation. I was certainly not implying anything sinister in the words "void" or "expressly authorised". I was merely concerned about the words "or exemption". Is the hon. Gentleman saying that the meaning of those words relates to exemption by the Registrar or by the British court, and not to exemption by the Community in any way?

7.45 p.m.

Photo of Sir Peter Emery Sir Peter Emery , Honiton

The exemption is as far as the British court is concerned. But, at the same time, the hon. Gentleman will realise that exemptions from all restrictive practices can be given by the Commission and that the exemption, when it has been given by the Commission, can be taken from the discretionary point of view of the Registrar. It is important that the hon. Gentleman should understand that.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

Do the words "authorisation or exemption" in line 2 on page 17 mean exemption by the Commission or by the Registrar?

Photo of Sir Peter Emery Sir Peter Emery , Honiton

In dealing with that, one has to go to the start of the sentence: the Restrictive Practices Court may decline or postpone the exercise of its jurisdiction under section 20 of the Act, or may (notwithstanding section 22(2)) exercise its jurisdiction under section 22, if and in so far as it appears to the court right so to do having regard to the operation of any such provision or to the purpose and effect of any authorisation or exemption granted in relation thereto. I think that that is quite clear, is it not? [Laughter.] Let me clarify it a little more. This is a golden opportunity for anyone replying to read out something like that and tell the Committee how clear it is. However, I should have made it clear that it means exemption by the Commission.

I turn to other questions put to me about regulation No. 17 of 6th February, 1962. I was asked about Article 4, paragraph 2, and whether the three sub-paragraphs were alternatives or additions. They are alternatives. That may clarify that particular point.

The hon. Member for Llanelly (Mr. Denzil Davies) raised specifically the position of the Continental Can case, where the Commission ruled last year that Continental Can's acquisition of a Dutch competitor constituted an abuse of a dominant position. As early as 1966 the Commission, in a memorandum on the problem of concentration, expressed the opinion that an attempt to monopolise a market could be an abuse in the sense of Article 86. It refuses to limit Article 86 only to cases of market behaviour as any action by the occupant of a dominant position may come under Article 86. Structural changes of the market are not excluded—not to the merger as such being criticised but the elimination of actual or potential competition in merging with a competitor. This is something which the right hon. Member for Battersea, North (Mr. Jay) understands only too well because it is the same sort of approach as we have had in our monopoly legislation regarding the elimination of competition within a market. Whilst I accept that there is a variation in the percentages accepted by the EEC on the degree of domination, I come back to the point I have already made, that we are stronger than the Community in this matter. With due co-operation within the Community, I would hope that we may be able in future to work more towards the British attitude towards this. Obviously, the situation is that our monopoly legislation is that much stronger in obtaining competition. I believe that that is the way that it ought to be.

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

May I follow on my points about nationalised corporations which, as far as I read Article 90, would come within Article 86 and therefore within the Continental Can type of case? Can the hon. Gentleman deal with that point?

Photo of Sir Peter Emery Sir Peter Emery , Honiton

I can say that there are exact provisions in the ECSC to deal specifically with coal and steel. I know that has already been accepted, but I must put it on one side so that I am not seen to be misleading the Committee. The second point about State trading positions is that, while I cannot say there would never be a problem, at the moment we do not see any problem affecting the nationalised corporations as a result of the legislation.

I will now return to the main points raised by my hon. Friend the Member for Bedford (Mr. Skeet). He was concerned particularly with patent rights, industrial property rights and sole distributor agreements. If I can answer these questions perhaps he will forgive me for not answering other questions which he raised. On sole distributor agreements the Community may grant exemption from the ban on restrictive agreements either to individual agreements or to particular categories of agreements. In the past the Community has granted a block exemption to sole distributor agreements which it considered were not harmful to the Community's aims.

The exemption does not extend to agreements where the dealer is granted absolute territorial protection by the supplier. Firms may apply to the European Commission for individual exemptions, and they have to show that the dividing of the market into watertight compartments is beneficial overall.

On patent rights, the Treaty of Rome does not prevent the acquisition of industrial or commercial property rights. It provides, however, that the exercise of these rights shall not be used as a disguised restriction on trade between member States. That is entirely in harmony with the objective of removing barriers to inter-State trade with a view to achieving a single integrated market. We have been invited to participate in further negotiations with the member States on a draft Community patent convention, and it was on this point that my hon. Friend asked me two questions. Under the proposed convention member States would be treated as a single country and the European patent for each of them would become a single Community patent effective throughout the Community territory. There are similar proposals for a Community trade mark. That is the aim of the draft Community patent convention, but it would be foolish of me to suggest that we have come to a finalisation of these matters.

My hon. Friend the Member for Har-borough (Mr. Farr) said that it would have been better for the Bill to have been a harmonisation of the legislation within the Community, when he might have been able to support the Clause. I only say to him that this is what we are trying to do throughout the whole of the Bill and in this Clause in particular. We are seeking to ensure that there can be a harmonisation of the position of restrictive practices and that we do not

bring extra cost and extra work or extra concern where decisions have already been made and where discretion can and should be exercised by our own Registrar on restrictive agreements. I therefore believe that the Amendments as they have been moved would not work towards those specific objects, and I must ask my hon. Friends to resist both of the Amendments should they be voted upon.

Photo of Mr Robin Turton Mr Robin Turton , Thirsk and Malton

I am most grateful to my hon. Friend the Under-Secretary for the care he has taken in replying to the debate. What he has said about agriculture will not please the farmers in this country, and I hope the Government will have second thoughts about the matter and, if necessary, bring in a Bill to put the position right. But at the request of my hon. Friend the Member for Brighouse and Spenborough (Mr. Proudfoot), and to save time for more important debates later, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Question put, That the Clause stand part of the Bill:—

The Committee divided: Ayes 222, Noes 210.

Division No. 261.]AYES[7.55 p.m.
Adley, RobertCostain, A. P.Gurden, Harold
Alison, Michael (Barkston Ash)Critchley, JulianHall, Miss Joan (Keighley)
Allason, James (Hemel Hempstead)Crouch, DavidHall, John (Wycombe)
Astor, JohnDalkeith, Earl ofHall-Davis, A. G. F.
Atkins, Humphreyd'Avigdor-Goldsmid, Sir HenryHamilton, Michael (Salisbury)
Awdry, DanielDean, PaulHannam, John (Exeter)
Balniel, Rt. Hn. LordDeedes, Rt. Hn. W. FHarrison, Brian (Maldon)
Batsford, BrianDigby, Simon WingfieldHastings, Stephen
Beamish, Col. Sir TuftonDodds-Parker, DouglasHavers, Michael
Bennett, Dr. Reginald (Gosport)Drayson, G. B.Hawkins, Paul
Benyon, W.Eden, Rt. Hn. Sir JohnHayhoe, Barney
Biggs-Davison, JohnEdwards, Nicholas (Pembroke)Higgins, Terence L.
Blaker, PeterElliot, Capt. Walter (Carshalton)Hiley, Joseph
Boscawen, RobertEmery, PeterHill, James (Southampton, Test)
Bossom, Sir CliveEyre, ReginaldHolland, Philip
Bowden, AndrewFenner, Mrs. PeggyHolt, Miss Mary
Bray, RonaldFidler, MichaelHordern, Peter
Brinton, Sir TattonFinsberg, Geoffrey (Hampstead)Hornby, Richard
Brocklebank-Fowler, ChristopherFletcher-Cooke, CharlesHornsby-Smith.Rt.Hn.Dame Patricia
Brown, Sir Edward (Bath)Fookes, Miss JanetHowe, Hn. Sir Geoffrey (Reigate)
Bruce-Gardyne, J.Fortescue, TimHowell, David (Guildford)
Bryan, Sir PaulFowler, NormanHowell, Ralph (Norfolk, N.)
Buchanan-Smith, Alick(Angus,N&M)Fox, MarcusIremonger, T. L.
Carlisle, MarkFry, PeterJames, David
Carr, Rt. Hn. RobertGardner, EdwardJessel, Toby
Cary, Sir RobertGibson-Watt, DavidJohnson Smith, G. (E. Grinstead)
Chapman, SydneyGilmour, Ian (Norfolk, C.)Johnston, Russell (Inverness)
Chataway, Rt. Hn. ChristopherGlyn, Dr. AlanJopling, Michael
Churchill, W. S.Goodhart, PhilipKellett-Bowman, Mrs. Elaine
Clark, William (Surrey, E.)Gower, RaymondKershaw, Anthony
Clegg, WalterGrant, Anthony (Harrow, C.)Kimball, Marcus
Cockeram, EricGray, HamishKing, Evelyn (Dorset, S.)
Cooke, RobertGreen, AlanKing, Tom (Bridgwater)
Coombs, DerekGrieve, PercyKinsey, J. R.
Cooper, A. E.Griffiths, Eldon (Bury St. Edmunds)Kirk, Peter
Corfield, Rt. Hn. Sir FrederickGrylls, MichaelKitson, Timothy
Cormack, PatrickGummer, SelwynKnight, Mrs. Jill
Lamont, NormanOsborn, JohnStainton, Keith
Lane, DavidOwen, Idris (Stockport, N.)Stanbrook, Ivor
Langford-Holt, Sir JohnPage, Graham (Crosby)Stewart-Smith, Geoffrey (Belper)
Legge-Bourke, Sir HarryPage, John (Harrow, W.)Stokes, John
Le Merchant, SpencerPardoe, JohnStuttaford, Dr. Tom
Lewis, Kenneth (Rutland)Parkinson, CecilTapseil, Peter
Longden, Sir GilbertPeel, JohnTaylor, Sir Charles (Eastbourne)
Loveridge, JohnPercival, IanTaylor, Frank (Moss Side)
Luce, R. N.Pike, Miss MervynTaylor, Robert (Croydon, N.W.)
McAdden, Sir StephenPink, R. BonnerTebbit, Norman
McCrindle, R. A.Pounder, RaftonTemple, John M.
Maclean, Sir FitzroyProudfoot, WilfredThomas, John Stradling (Monmouth)
McNair-Wilson, MichaelPym, Rt. Hn. FrancisThompson, Sir Richard (Croydon, S.)
Mather, CarolQuennell, Miss J. M.Trafford, Dr. Anthony
Maude, AngusRawlinson, Rt. Hn. Sir PeterTrew, Peter
Maudling, Rt. Hn. ReginaldRedmond, RobertTugendhat, Christopher
Mawby, RayReeds, Laurance (Bolton, E.)Vaughan, Dr. Gerard
Maxwell-Hyslop, R. J.Rees, Peter (Dover)Vickers, Dame Joan
Meyer, Sir AnthonyRenton, Rt. Hn. Sir DavidWaddington, David
Mills, Peter (Torrington)Rhys Williams, Sir BrandonWalder, David (Clitheroe)
Mills, Stratton (Belfast, N.)Ridley, Hn. NicholasWall, Patrick
Miscampbell, NormanRippon, Rt. Hn. GeoffreyWeatherill, Bernard
Mitchell,Lt.-Col.C.(Aberdeenshire,W)Roberts, Michael (Cardiff, N.)Wells, John (Maidstone)
Mitchell, David (Basingstoke)Roberts, Wyn (Conway)Wiggin, Jerry
Money, ErnleRossi, Hugh (Hornsey)Wilkinson, John
Monks, Mrs. ConnieRost, PeterWinterton, Nicholas
Monro, HectorScott, NicholasWolrige-Gordon, Patrick
Montgomery, FergusScott-Hopkins, JamesWood, Rt. Hn. Richard
More, JasperSharples, RichardWoodhouse, Hn. Christopher
Morgan-Giles, Rear-Adm.Shaw, Michael (Sc'b'gh & Whitby)Woodnutt, Mark
Morrison, CharlesShelton, William (Clapham)Worsley, Marcus
Mudd, DavidSimeons, CharlesWylie, Rt. Hn. N. R.
Murton, OscarSinclair, Sir GeorgeYounger, Hn. George
Neave, AireySkeet, T. H. H.
Nicholls, Sir HarmarSmith, Dudley (W'wick & L'mington)TELLERS FOR THE AYES:
Noble, Rt. Hn. MichaelSoref, HaroldMr. Victor Goodhew and
Normanton, TomSpeed, KeithMr. Kenneth Clarke.
Nott, JohnSpence, John
Oppenheim, Mrs. SallySproat, Iain
NOES
Allen, Scholefieldde Freitas, Rt. Hn. Sir GeoffreyHeffer, Eric S.
Archer, Peter (Rowley Regis)Dempsey, JamesHooson, Emlyn
Ashley, JackDoig, PeterHoram, John
Ashton, JoeDormand, J. D.Houghton, Rt. Hn. Douglas
Atkinson, NormanDouglas, Dick (Stirlingshire, E.)Howell, Denis (Small Heath)
Bagier, Gordon A. T.Douglas-Mann, BruceHughes, Rt. Hn. Cledwyn (Anglesey)
Barnett, Guy (Greenwich)Driberg, TomHughes, Robert (Aberdeen, N.)
Baxter, WilliamDuffy, A. E. P.Hughes, Roy (Newport)
Benn, Rt. Hn. Anthony WedgwoodDunn, James A.Janner, Greville
Bennett, James (Glasgow, Bridgeton)Dunnett, JackJay, Rt. Hn. Douglas
Biffen, JohnEdelman, MauriceJenkins, Rt. Hn. Roy (Stechford)
Bishop, E. S.Edwards, Robert (Bilston)John, Brynmor
Boardman, H. (Leigh)Edwards, William (Merioneth)Johnson, James (K'ston-on-Hull, W.)
Booth, AlbertEllis, TomJohnson, Walter (Derby, S.)
Bottomley, Rt. Hn. ArthurEnglish, MichaelJones, Gwynoro (Carmarthen)
Bradley, TomEvans, FredJudd, Frank
Brown, Robert C. (N'c'tle-u-Tyne, W.)Ewing, HenryKaufman, Gerald
Buchanan, Richard (G'gow, Sp'burn)Faulds, AndrewKelley, Richard
Butler, Mrs. Joyce (Wood Green)Fell, AnthonyKerr, Russell
Campbell, I. (Dunbartonshire, W.)Fisher,Mrs.Doris (B'ham, Ladywood)Kilfedder, James
Cant, R. B.Fitch, Alan (Wigan)Kinnock, Neil
Carmichael, NeilFletcher, Raymond (Ilkestone)Lambie, David
Carter,Ray (Birmingh'm, Northfield)Fletcher, Ted (Darlington)Lamborn, Harry
Carter-Jones, Lewis (Eccles)Foley, MauriceLamond, James
Castle, Rt. Hn. BarbaraFoot, MichaelLatham, Arthur
Clark, David (Colne Valley)Fraser, John (Norwood)Leadbitter, Ted
Cocks, Michael (Bristol, S.)Gilbert, Dr. JohnLee, Rt. Hn. Frederick
Cohen, StanleyGinsburg, David (Dewsbury)Lestor, Miss Joan
Coleman, DonaldGolding, JohnLewis, Arthur (W. Ham, N.)
Concannon, J. D.Gordon Walker, Rt. Hn. P. C.Lewis, Ron (Carlisle)
Cox, Thomas (Wandsworth, C.)Gourlay, HarryLipton, Marcus
Crawshaw, RichardGrant, George (Morpeth)Lomas, Kenneth
Crossman, Rt. Hn. RichardGrant, John D. (Islington, E.)Loughlin, Charles
Cunningham, Dr. J. A. (Whitehaven)Griffiths, Eddie (Brightside)Lyon, Alexander W. (York)
Dalyell, TamGriffiths, Will (Exchange)Lyons, Edward (Bradford, E.)
Darling, Rt. Hn. GeorgeHamilton, William (Fife, W.)Mabon, Dr. J. Dickson
Davidson, ArthurHamling, WilliamMcBride, Neil
Davies, Denzil (Llanelly)Hardy, PeterMcCartney, Hugh
Davis, Clinton (Hackney, C.)Harper, JosephMcElhone, Frank
Davis, Terry (Bromsgrove)Harrison, Walter (Wakefield)Mackenzie, Gregor
Deakins, EricHart, Rt. Hn. JudithMcMaster, Stanley
McMillan, Tom (Glasgow, C.)Palmer, ArthurStallard, A. W.
McNamara, J. KevinParker, John (Dagenham)Stewart, Donald (Western Isles)
Maginnis, John E.Parry, Robert (Liverpool, Exchange)Stoddart, David (Swindon)
Mahon, Simon (Bootle)Pavitt, LaurieStrang, Gavin
Marquand, DavidPeart, Rt. Hn. FredSummerskill, Hn. Dr. Shirley
Marsden, F.Pendry, TomSwain, Thomas
Marshall, Dr. EdmundPentland, NormanTaverne, Dick
Mason, Rt. Hn. RoyPerry, Ernest G.Thomas, Jeffrey (Abertillery)
Mellish, Rt. Hn. RobertPowell, Rt. Hn. J. EnochTorney, Tom
Mendelson, JohnPrentice, Rt. Hn. Reg.Turton, Rt. Hn. Robin
Mikardo, IanPrescott, JohnUrwin, T. W.
Millan, BrucePrice, J. T. (Westhoughton)Varley, Eric G.
Miller, Dr. M. S.Price, William (Rugby)Walker, Harold (Doncaster)
Milne, EdwardProbert, ArthurWalker-Smith, Rt. Hn. Sir Derek
Mitchell, R. C. (S'hampton, Itchen)Reed, D. (Sedgefield)Wallace, George
Moate, RogerRhodes, GeoffreyWatkins, David
Molloy, WilliamRoberts,Rt.Hn.Goronwy (Caernarvon)Weitzman, David
Molyneaux, JamesRodgers, William (Stockton-on-Tees)Wellbeloved, James
Morris, Alfred (Wythenshawe)Rose, Paul B.White, James (Glasgow, Pollok)
Morris, Charles R. (Openshaw)Ross, Rt. Hn. William (Kilmarnock)Whitlock, William
Mulley, Rt. Hn. FrederickRowlands, TedWilliams, Alan (Swansea, W.)
Murray, Ronald KingShore, Rt. Hn. Peter (Stepney)Wilson, Alexander (Hamilton)
Oakes, GordonShort, Rt.Hn.Edward(N'c'tle-u-Tyne)Wilson, Rt. Hn. Harold (Huyton)
Ogden, EricSilkin, Rt. Hn. John (Deptford)Wilson, William (Coventry, S.)
O'Halloran, MichaelSilkin, Hn. S. C. (Dulwich)Woof, Robert
O'Malley, BrianSilverman, Julius
Orbach, MauriceSkinner, DennisTELLERS FOR THE NOES:
Orme, StanleySmall, WilliamMr. Ernest Armstrong and
Oswald, ThomasSmith, John (Lanarkshire, N.)Mr. James Hamilton.
Padley, WalterSpearing, Nigel
Paget, R. T.Spriggs, Leslie

Question accordingly agreed to.

Clause 10 ordered to stand part of the Bill.