HC Deb 25 March 1964 vol 692 cc520-626

Again considered in Committee.


Amendment proposed: In page 3, line 20, at end insert: (4) Nothing in this section shall make it unlawful for a supplier to refuse to supply goods to any dealer otherwise than on terms that cash or the equivalent of cash shall be paid with the order for the goods.

Question again proposed, That those words be there inserted.

6.16 p.m.

Mr. H. Lever

What I wanted to put to my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman) was this, that contrary to what he has said, this Amendment is not intended to transfer the onus of proof but to restore, categorically and unconditionally, the right of any manufacturer, in any circumstances and for any reason whatsoever, not to grant credit where he does not want to grant it.

The second point I want to put is, that surely there is a difference between making retail price maintenance illegal or void and forcing one to grant credit to people in the course of that purpose.

Mr. S. Silverman

My hon. Friend is in many ways perfectly right, but if we are to preserve freedom of contract in every respect uninfluenced and unembarrassed and uninhibited by the House of Commons we shall have to defeat the Bill or persuade the Government to withdraw it. The point that I am making is not an academic one; it is quite simple. The whole purpose of the Bill is to interfere with freedom of contract. That is what it is for. If we object to a particular provision, the way is not to undo it because it interferes with freedom of contract—

Mr. H. Lever

There are degrees of freedom.

Mr. Silverman

We shall come to degrees of freedom in a moment. Do not let us base ourselves on the question of freedom of contract, because the purpose of the Bill is to prevent in certain respects and for certain purposes the freedom of people to contract with one another. That is what it is for.

The question is whether we should pass an Amendment which would restore—if it is taken away, which is not quite clear; but if it is taken away—to the supplier complete freedom to contract in one respect. It would restore him complete freedom to fix, at his own absolute discretion, on what terms, cash terms or credit terms, he will supply goods. That is what my hon. Friend says is the purpose of the Amendment. Am I right?

Mr. Lever


Mr. Silverman

All I am saying is that, if we do that, then we are enabling in this respect the supplier to do in any circumstances at his own discretion what the Bill forbids him to do. In effect, by insisting on cash where he knows that cash is not available, the supplier is preventing the retailer from getting supplies.

I shall not split hairs about the difference between preventing him from getting supplies and withholding supplies from him. For all practical purposes they are the same thing. I agree that, if the supplier is imposing a cash condition by reason of a careful and fair assessment of the financial risk, he should not be prevented from doing so and nothing in the Bill prevents him from doing so.

If, on the other hand, there is no unreasonable financial risk, but he is withholding credit under the guise or pretence of preserving his freedom of contract about cash or credit payments, then what he is really doing is to prevent a cut price seller from getting supplies. That achieves the very thing which is defined in the Clause as being an unlawful withholding of supplies.

Mr. Graham Page

I am sure that the hon. Member can see where his argument is leading. The effect would be that a supplier could be forced to finance a retailer for a period by giving him credit. The alternative would be civil action for damages.

Mr. Silverman

Only where the supplier has been in the habit of financing the retailer in question. [HON. MEMBERS: "No."] Yes.

Mr. Page

The hon. Member should look at Clause 4(4,b).

Mr. Silverman

All this interchange only reinforces what I said at the beginning—that the proper time to discuss all these matters is when we consider the Clause as a whole.

Suppose there is such a design. Suppose a supplier has reason to believe that there is a cut price seller whom he has been in the habit of financing to the extent suggested by the hon. Member for Crosby (Mr. Graham Page). Suppose he is looking around for a way of doing what the Bill says that he must not do—withhold supplies. This Amendment would give him the golden opportunity to do what he will not be able to do if the Bill remains as it is.

The Amendment goes too far for the genuine purpose behind it. It is not unreasonable for a manufacturer to choose for himself to whom he will give credit and to whom he will not. The Amendment goes too far in that it would enable him to withhold credit, perhaps from an old customer who has always had it, for reasons that the Bill would make unlawful reasons.

Dr. Alan Glyn (Clapham)

I wonder whether this Amendment achieves what we want. We want to preserve the right of any manufacturer to refuse to supply a retailer who he does not consider creditworthy. If the Amendment would achieve that, then it would go a long way towards allaying many fears among retailers who consider that they would be obliged, if the Bill went through unamended, to supply people even though those persons were not creditworthy.

I am also not clear about the words …on terms that cash or the equivalent of cash… What does this mean? What is the equivalent of cash? Is it a cheque or a banker's order? The legal interpretation of these words should be made clear.

Mr. George Darling (Sheffield, Hillsborough)

I hope that the Minister will accept the Amendment, although I share the doubts expressed by the hon. Member for Nelson and Colne (Mr. S. Silverman). When the hon. Member for Harrow, Central (Sir P. Bishop) anticipated this Amendment, he said that it would deal with this point. I thought that he meant that it would deal clearly with the issue. I am a layman in these matters and it took me a considerable time to understand what these words mean. Even then, only with the help of my hon. and learned Friend the Member for Walsall, North (Mr. W. Wells) did I get it right.

Nowhere does the Amendment mention credit. Certainly, a supplier should be in a position to withhold supplies from a person to whom he does not wish to grant credit and from whom he wishes to insist on cash payments. Like my hon. Friend the Member for Ebbw Vale (Mr. M. Foot), I approach this with an open mind. My fears on this occasion are for the small shopkeeper, for the little grocer in the backstreet.

My hon. Friend the Member for Ebbw Vale and I both represent steel constituencies. Where there are steel works there are shift workers and the little shops in the back streets of indus- trial areas provide a great deal of service to these workers who, because of their hours of work—many of the wives are also on shift work—cannot get to the main shopping centre. Obviously, these small shops have not a great deal of financial substance behind them. They may be inefficient if one measures costs against the way they operate.

But they provide a social service to some extent. In addition, many of them are run by injured workers who put their compensation payments into them. I am one of those who will be lining up with my hon. Friend to fight for them in our consideration of the Bill.

Sir P. Bishop

The hon. Member perhaps does not realise that the Clause would work both ways. Supposing a supplier wanted to give extended special credit to a small shopkeeper like those he is referring to, the supplier would be debarred by the Clause from doing so unless he was prepared to give the same credit to all his customers.

Mr. Darling

I was coming to that point. I understand that, if the Amendment were accepted, it would work as I think both the hon. Member for Harrow, Central and I want it to work. The supplier would be in a position to refuse to supply on credit terms a person he did not think credit worthy.

Mr. H. Lever

The Amendment clearly says that he would be able to refuse to supply on credit whether the man was credit-worthy or not, withiut giving any reason.

Mr. Darling

That is obviously true, but in reasonable practice the supplier would refuse credit to the person he thinks is not credit-worthy. It is true that the Amendment would allow him to refuse credit terms to anybody, but, in practice, he would refuse it only to persons he regarded as being not creditworthy.

Mr. S. Silverman

It would enable him to refuse credit for reasons which the Bill makes unlawful.

6.30 p.m.

Mr. Darling

I want to get rid of this problem by putting a question to the Minister. I am merely leading up to it. In practice, what will happen is that the manufacturer will refuse to supply goods on credit terms to a person who, he thinks, is not credit-worthy. He can refuse others if he wants. At the same time, he can also refuse to help my small shopkeepers. I do not know how we can deal with this in the Bill, but I should like to make sure that my small shopkeepers are not to be handicapped, any more than they already are in the Bill, by the inclusion of this Amendment.

I began by saying that I was not a lawyer. I have approached this with an open mind. The arguments of the hon. Member for Crosby (Mr. Graham Page) confirmed what my hon. and learned Friend the Member for Walsall, North told me and I now know where I am. What I am asking is whether there is any way when we have accepted the Amendment of making sure that my small shopkeepers will not be harmed by the Amendment. However, I accept the general terms of the Amendment.

Mr. Ronald Bell

I want to speak partly because of something the hon. Member for Nelson and Colne (Mr. S. Silverman) said and partly because of something which the hon. Member for Sheffield, Hillsborough (Mr. Darling) said. I start with the latter.

Was not the hon. Gentleman overlooking that the supplier might want to refuse credit not because the dealer was not credit-worthy, but because the supplier could not afford any more credit? Might he not have been supplying a number of dealers on credit for a number of years, but then find a new demand, which might be on a large scale, which might put him in difficulty? Might he not just happen to be in difficulty? Is it not a great hardship for him to have to go before the Restrictive Practices Court and publicise his financial embarrassment before all the trade? That is the kind of position to which provisions of this sort lead.

Mr. Paget

Is it not the more vicious as his inability to give credit might well result from the fact that his business has been disrupted by the Bill?

Mr. Bell

I shall not rise to that particular fly, skilfully though it was cast across the Chamber. I turn to what was said by the hon. Member for Nelson and Colne, who is quite a formidable person in himself.

Was not the hon. Gentleman overlooking that giving credit is always a favour and that on the face of things one is always entitled to be paid cash? Ought we to formulise the giving of credit which may have been customary in the business? Are we to make it a statutory duty on the supplier always to give it? It seems to be very harsh if he does not want to do so. After all, the considerations which move him to give credit in other cases may be very diverse. There may be a blood relationship, or an old association, or all sorts of other things. It seems very unreasonable that he should have to trot all this out before the Court and explain his state of mind and justify his refusing to a new customer, who may never have been to him before, what after all is a credit.

I appreciate the argument of the hon. Member for Manchester, Cheetham (Mr. H. Lever). The Amendment covers not only the new, but the old customer. Incidentally, in relation to the old customer we get back to the point I was making, which was that the supplier may have been granting him credit, but may want to stop it. I realise that that is a difficult point. However, it seems to me that the hon. Member for Nelson and Colne was overlooking the fact that, basically, one is entitled to demand cash and might grant credit for all sorts of diverse reasons which are very difficult to mention in a court of law.

Mr. S. Silverman

I have great sympathy with what the hon. Member for Buckinghamshire, South (Mr. Ronald Bell) has been saying. Hon. Members have been talking about having open minds as though lawyers never have them. The only thing lawyers insist upon is that whereas a good judge ought to have an open mind at the beginning of an argument, it is a poor judge who has a mind still open at the end of it. One cannot have an open mind for ever. At some stage one has to give a judgment.

What I object to in the Amendment is not any of the things in it which have been defended. I see the point of all this and I respectfully support these things; but I am saying that the Amendment goes too far for that purpose, because it would enable a supplier, without any ostensible reason, effectively to withhold supplies because he suspected that a retailer was selling cut price.

If the sponsors of the Amendment could devise some form of words to integrate this perfectly reasonable Amendment with the purpose of the Bill and not make it an offence to that purpose and in breach of the Bill, I would think that it was a good Amendment. I say that even without prejudice to my own personal view that the Clause and the Bill are both bad and that we would all be much better off if they had never been introduced.

Sir P. Bishop

Unlike the hon. Member for Nelson and Colne (Mr. S. Silverman), I think that the Amendment does not go far enough. I apologise to the hon. Member for Sheffield, Hillsborough (Mr. Darling) if I misled him about it when we referred to this matter earlier. I was under the impression that we might be able to discuss the whole subject of credit, but it may be that we shall have to leave that until we debate the Question, That the Clause stand part of the Bill.

But that does not alter the fact that this is a very good Amendment. It does not seem to go a step beyond what is one of the most natural and obvious rights which any trader going into business should possess—the right to say to a man who wants to do business with him and to buy his goods, "I will sell you these goods; you give me cash over the counter for them". How it could be proposed to take that right from a trader is inexplicable. I know that it is meant to take that right away only when the supplier intends to use it, or does use it, for the wrong reasons, but the effect of the Clause as it stands would be quite different and would debar the supplier from what is surely a natural right, and it would do so even when he had perfectly legitimate reasons.

I hope to hear from my hon. Friend that the Government are prepared to consider this matter in the light of our debate on this subject of the obligation of a supplier to give credit, and that they will consider whether some Amendment is required. However, this Amendment would not affect that issue one way or the other and I support it.

Mr. R. E. Winterbottom (Sheffield, Brightside)

I should like to get this issue of cash and credit clear in my mind. Subsection (3,a) deals with conditions as to credit. At first glance, it would appear that if the Amendment were accepted it would undermine the conditions under which credit is given.

Mr. H. Lever

There is no doubt about that.

Mr. Winterbottom

My hon. Friend says that there is no doubt about that, but all the conditions of credit are not confined to cash or to the period in which repayment has to be made.

From my experience of the retail and wholesale trades, I know that very often special conditions have to be laid down to meet special cases. Those special conditions may be called conditions as to credit to one special customer, and they cannot be applied in general. I should therefore like a better definition of this condition as to credit.

It seems to me that a little practical experience would enable hon. Members to understand the relationship between a wholesaler and a retailer. My hon. Friend the Member for Sheffield, Hillsborough (Mr. Darling) referred to small shops in Sheffield. Most of those small shops exist by credit, and most of them find that their credit is cut if they do not pay within the specified time. Furthermore, most of them, in turn, exist by granting credit and there is nothing in the Bill to say that the retail shopkeeper shall have the right to get cash from his customers. Very often the relationship between a retailer and a wholesaler is controlled by the amount of cash that the wholesaler has received from the credit that he has allowed, and it appears to me that those conditions ought to be clarified in the Clause.

From a practical point of view there is one thing that the Government could do. They could redraft the Clause, because one thing that is certain is that if it is accepted there will be more confusion in the wholesale and retail trades than there has been since this House—I think that it was in 1916—passed an Act saying that butter had to be weighed unwrapped. Unfortunately, that Act came into force on 1st July during a very hot summer, and nobody could sell butter for 16 hours until the Government issued an edict enabling retailers to wrap the butter in paper before weighing it, provided that paper did not exceed a certain weight.

The Deputy-Chairman (Sir Robert Grimston)

Order. The hon. Gentleman is going a little wide of the Amendment.

Mr. Winterbottom

The moral of that ancient story applies to this Clause and it is—

The Deputy-Chairman

We are not dealing with the Clause. We are dealing with the Amendment. I think that the hon. Gentleman's remarks would be better addressed to the Question, That the Clause stand part of the Bill.

6.45 p.m.

Mr. Winterbottom

I have been engaged for many years in narrowing down from the bulk to the unit. It is part of the knowledge of distribution. I have, therefore, moved from the Clause to the specific Amendment before us, and to the Amendment in relation to the Clause, which I submit will cause more confusion in the distributive trades than I have known during the last 14 years.

I suggest that the Clause, or the Amendment in relation to the Clause, should be reconsidered, and that the Government should bring in a provision which is more practical and sensible, and which can be understood both by the wholesaler and by the retailer. I think that the Clause must have been drafted by someone who did not know the difference between production and distribution and did not appreciate the difficulties which the hon. Member for Crosby (Mr. Graham Page) has appreciated.

If the Amendment were not accepted and this Clause became part of the law of the land, wholesalers would face ruin because of the amount of credit which they have allowed their retail customers. If they have to increase that credit, they will have to borrow money outside the distributive trades, probably at extremely high rates of interest. These are practical issues, and if the Government are not prepared to consider the matter, shall give my wholehearted support to the Amendment.

Mr. Cole

The hon. Member for Sheffield, Brightside (Mr. Winterbottom), and the hon. Member for Nelson and Colne (Mr. S. Silverman) propose to say a few words on the Question, That the Clause stand part of the Bill, and if I catch your eye in due time I shall do so as well.

This Amendment is one more example of hon. Members being engaged on the herculean task of trying to make the Clause of practical value. I am sure that my hon. Friend the Member for Crosby (Mr. Graham Page) would be the first to admit that in an Amendment of two and a half lines he cannot cover all the possibilities that he would like to cover. Among other things, he seems to be trying to enshrine the existing practice in a particular trade. There are many trades in which cash is the order of the day. I can think of instances in which a wholesaler will not unload goods on to a retailer's property unless he is paid his money first. I shall not weary the Committee by going into details of that situation, but I understand that that happens in some of the larger businesses.

What the Amendment seeks to do is to say that the practice of the last 50 years shall continue, and that the man who follows it will not offend the dictat of Clause 2 and, therefore, will not offend against the purposes of he Bill. In short, this Amendment—and, indeed, some of the others to this Clause—is a clear and outstanding example of the difficulties with which we are trying to cope.

So far as it goes—even if it goes too far for some people—I support the Amendment, but I hope my hon. Friend the Member for Crosby will not mind my saying that this is not the end of the story. This does not cover all the complications which could arise; complications which will provide a real paradise for lawyers, let alone the Restrictive Practices Court.

For what it is worth, I fully support it. A man who has been carrying on a perfectly friendly business with people in the past and has always received cash will suddenly, under the terms of this Bill—without the Amendment—find himself breaking various of its provisions simply because he carries on his same old practice. In that case we shall have the extraordinary position of a supplier possibly having to refuse to accept cash in payment because to do so would immediately, bring him within the ambit of the prohibitions of the Bill.

The whole thing is quite ridiculous, in going too far in one direction, but not far enough in another. I hope that my hon. Friend will persuade the Government, who have many more resources to draw upon in framing Amendments even than has my hon. Friend the Member for Crosby, that they ought to make the Clause comprehensible.

What the Committee is really trying to do is to anticipate the job of the Restrictive Practices Court.

Mr. J. J. Mendelson (Penistone)

I should support the Amendment in the Division Lobby because it does a number of things that ought to be done and avoids a number of dangers. But my support would be somewhat reluctant, because I also believe that it does a number of things which it should not do. On the whole, I would prefer the Minister to accept the spirit of the Amendment and agree to bring in a similar Government Amendment at a later stage.

There are a number of aims which the Committee must have in mind in dealing with the Bill. The main difficulties are created by the nature of the Clause. I have much sympathy with the point of view expressed by my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman), who is not with us at the moment, but who, I thought, made an interesting and useful contribution to the debate. He pointed out, in reference to the claim made by the hon. Member for Crosby (Mr. Graham Page), that if the Amendment were not accepted it would be impossible for a supplier to refuse to grant credit either to an actual or a potential customer, that the refusal could not be narrowed down to reasons concerning credit-worthiness or lack of credit-worthiness.

I accept the logic of what my hon. Friend has said. That is precisely why I am reluctant to support the Amendment. Whether or not it was the intention of the hon. Member for Crosby—and I am not trying to open his heart and mind in such detail as to find whether or not it was—the Amendment would have the additional effect of allowing suppliers who wish to support resale price maintenance to continue to adopt practices which they have used in the past.

There is involved in our discussion what is called in American legislation the "most favoured customer condition," under which, to enforce certain monopoly positions, a firm or supplier, covering up his real intention, applies either to an actual customer or a potential customer whom he suspects of not maintaining the price that he wishes to see maintained—although that actual or potential customer remains as creditworthy as ever—an inhibiting condition, not allowing the customer to have goods on credit terms, simply because he wishes to apply a sanction, or a form of punishment, because he does not like what the retailer or customer is doing in selling his goods. I would not support that aim.

On the other hand, we are anxious to make this badly drafted Bill as well balanced as possible, and we do not want to impose unreasonable conditions upon a manufacturer or wholesaler. In the end, in the absence of any assurance from the Minister of State that he accepts the principle of the Amendment, I would go into the Division Lobby with the hon. Member for Crosby. But it is essential in approaching these matters that we should be careful not to throw out the baby with the bathwater by insisting that certain dangers should be prevented and certain improvements should be introduced, losing sight of the fact that it is not our purpose to make it easier for manufacturers to enforce conditions.

I support the principle of making it easier to pass on to the final customer any savings made in distribution. Because I support that principle I would not like to see any conditions introduced in future legislation which would give the manufacturer the whip hand and make it more and more difficult for the retailer to pass on any savings in distribution to the consumer.

Therefore, although, on this limited Amendment, it is difficult to go further into the background of the Clause without being out of order, I want it to be clearly understood that in supporting the Amendment, if we have to, we are not satisfied that it will guard against some of the dangers. It will put some matters right which should be put right and it will introduce better balancing features in what is an unbalanced part of the Bill. But it will also not be desirable legislation, because it will not make it easier to pass on savings in distribution.

Mr. du Cann

There is some support for the Amendment among some of my hon. Friends, and I appreciate their feelings. On the other hand, the Amendment has received somewhat qualified support from hon. Members opposite—from the hon. Member for Sheffield, Hillsborough (Mr. Darling), and particularly from the hon. Members for Nelson and Come (Mr. S. Silverman) and Penistone (Mr. Mendelson), who rightly pointed out that there are substantial objections to it as it stands.

During the last debate that we had, which dealt with a rather narrow but important point, I attempted to give my hon. Friends—and particularly those whom I knew to be bothered about the matter—some reassurance, although in doing so I went slightly beyond the rules of order. I had hoped that in this debate we might avoid the need for clarification and explanation of what the Clause does.

However, as that has not happened, I must repeat the explanation that I gave previously, namely, that under the Clause as drafted the supplier is entitled to impose whatever terms he wishes when he supplies his goods so long as he does not offer significantly less favourable terms to a retailer just because he is cutting prices, or is likely to do so.

In a very clear speech my hon. Friend the Member for Crosby (Mr. Graham Page) quoted a specific example, where supplier A supplies to B, who is a confectioner, and another confectioner, C, then asks A for supplies, and it so happens that A knows that C is a price cutter and is virtually insolvent—or there is some other reason why A does not wish to supply to C.

There is a dual position. He particularly quoted the instance of insolvency. But I think that he and other hon. Members who have taken part in the debate should consider a much wider range of choice of reasons why A might not wish to supply C.

7.0 p.m.

Mr. Cole

May I ask my hon. Friend whether has C been a purchaser from A before?

Mr. H. Lever

That does not matter.

Mr. Cole

I should particularly like my hon. Friend to address himself to that question.

Mr. du Cann

I do not want to mislead my hon. Friend the Member for Bedfordshire, South (Mr. Cole), but I do not think that that really matters in this instance. Let me go on with the point.

So we have a position when A should supply C and A does not want to. The fact that C is a price cutter is largely irrelevant if there are other good grounds existing which make A feel that it would be quite wrong, as a matter of ordinary commercial business prudence, to supply C, and he may justifiably withhold supplies.

Mr. Graham Page

My hon. Friend says that it is largely irrelevant, but it is not. Under Clause 4(4) he is then presumed to have unlawfully withheld goods.

Mr. du Cann

I realise that my hon. Friend the Member for Crosby is interested in the provisions of Clause 4. He did point out, when making his speech, that he could not, obviously, go into that matter in any detail and I am similarly inhibited from replying to him at any length. But I heard hon. Members say that the words unless the contrary is proved appear in Clause 4. That would cover the situation that my hon. Friend has in mind.

I am not talking about right or wrong or the burden of proof. I am merely saying that under the situation as it is in the Bill as drafted at present, the position about which my hon. Friends are so concerted is covered. Perhaps I may go a little further and say that the supplier is completely at liberty to insist on cash terms in all his agreements if he wishes. He is also completely at liberty to offer credit terms to some dealers and cash terms to others where there is some ground—other than price cutting—for doing so. But what the Clause says—and rightly, in the view of the Government—is that he must not offer credit terms to some dealers and insist on cash from others, merely because they are actual or likely price-cutters.

To continue. In so far as the Amendment permits supplies to be refused except on cash terms, on grounds not connected with price cutting, it is unnecessary. But the Amendment goes a good deal wider, as I have suggested and as has been pointed out by other hon. Members, particularly by the hon. Member for Nelson and Colne. In so far as it permits this to be done, even on prohibited grounds, it cannot be accepted by the Government, because it goes too wide. I am sure that my hon. Friend will understand that point.

To sum up what I have been attempting to say. I recognise the anxieties of my hon. Friends the Members for Crosby, Twickenham (Mr. Gresham Cooke), Bedfordshire, South, Harrow, Central (Sir P. Bishop) and Buckinghamshire, South (Mr. Ronald Bell). I can assure them that the points which they have made, if I have understood them correctly, are covered in the Clause. I realise that to some extent my hon. Friends would wish to discuss the matter further when we come to Clause 4, but I suggest that that is another subject.

I am prepared to go as far as this: we certainly should be willing, in the light of the discussion, to look at the Clause again with a view to tabling an Amendment. The object of the exercise, as I understand it, on the part of hon. Members on both sides of the Committee, is primarily to make sure that the Bill is clear.

My right hon. Friend the Secretary of State made clear during the Second Reading debate that the Government are always ready to look at constructive suggestions relating to this Measure and I have already accepted one Amendment today. If we table an Amendment we hope that nothing in the Clause would be construed as preventing a supplier of goods from withholding supplies, or offering supplies on different terms to different dealers, where the reason for doing so is not because a dealer has cut, or is threatening to cut, the price of the suppliers goods. In the light of what I have said, I hope that my hon. Friend will feel that we are anxious to meet him, but will understand that it is not possible for me to meet him in relation to the Amendment which he has tabled. I hope therefore that he will seek to withdraw his Amendment.

Mr. Jay

I do not feel that the answer of the Minister of State is good enough. He has not offered to amend the Bill in any way. He intends to reword it so as to make clear that it means what he thinks that it means already. The position will still be that the onus of proof will be on the manufacturer, if he withholds his supplies, to prove that he had some motive for so doing other than the fear of a price reduction by the retailer. In that case, he will still, so far as I can see be under a compulsion to give exactly the same terms of credit to that retailer, unless he can substantiate in court that his motives were something which somebody else says that they were not.

The Deputy-Chairman

Mr. Bell.

Mr. Maxwell-Hyslop

Before my hon. Friend continues—

The Deputy-Chairman

I did not call the hon. Member for Tiverton (Mr. Maxwell-Hyslop).

Mr. Ronald Bell

I think that my hon. Friend has slightly misunderstood some of the points which we put to him. I realise that the burden of proof is in Clause 4. If my hon. Friend will look at Clause 4(4), he will see that it is a definition Clause relating to Clause 2; or perhaps it would be more accurate to say that it relates to proceedings brought against the supplier of goods in respect of a contravention of the provisions of Clause 2. So the implications of Clause 4(4) have to be looked at in relation to the affirmative provisions of Clause 2.

We cannot merely pass Clause 2 in its present form and then deal with things like the burden of proof when we come to Clause 4. Then it will be too late to go back to Clause 2. I am sure that my hon. Friend the Member for Crosby (Mr. Graham Page) put down his Amendment to draw attention to the effect of the definition in Clause 4 on the operation of the provisions of Clause 2(3,a). I think that is the point at issue.

Of course, were we told that the Government were proposing a radical alteration to Clause 4 which would remove the fears we have about Clause 2, we should be happy about Clause 2. But at present we have to assume, in accordance with the rules of order, that Clause 4 will remain as it is and we have to look at Clause 2 in the light of Clause 4. That being so, what is troubling me—I must speak only for myself—is that a supplier is put in the position that he must supply credit, perhaps to a new customer, unless he can prove that he is not refusing it because of some price-cutting activities. I do not think that my hon. Friend was phrasing it quite correctly. He said it was crystal clear that a supplier could refuse supplies, or demand cash, provided that was not done because a man was price-cutting.

Mr. MacDermot

"Merely because".

Mr. Bell

It is not a question whether it was not done "merely because", but whether he can prove it. That is the point which is worrying us. It is not actually the Restrictive Practices Court which is concerned, that was a slip of the tongue on my part. It is the Queen's Bench, where he has to go as a defendant and affirmatively proved that it was not so. That is a point which is worrying us and I wonder whether my hon. Friend the Minister of State would address his mind to the question of the man having to give credit unless he could prove that he brings himself within Clause 2.

Mr. Paget

The point which the Minister of State seemed entirely to ignore is that either the abolition of r.p.m. has an effect or it has not. If it does, it changes to that extent the nature of the trade. It may change the nature of the trade by increasing the turnover, or in some other of a variety of ways, but by changing the nature of the trade it changes the credit-worthiness of the shopkeeper who is the buyer. It therefore makes the supplier offer credit when he is facing a changing trade with perhaps a much larger turnover.

This, to my mind, is fundamentally wrong, because if he withholds credit because the change of selling at cut prices has changed the credit situation that is caught precisely by the Clause. This is the very situation which the Minister says he will preserve. He has not met the case for the Amendment at all.

Mr. Maxwell-Hyslop

I want to remind my hon. Friend the Minister of State that I did not hear him deal with the point on export contracts signed in this country. The Amendment affects the whole of the Clause, of which this is a subsidiary part, and I was anxious that my hon. Friend should either confirm or deny that, to quote from Clause 2 …a dealer seeking to obtain them for resale in the United Kingdom… where an export contract is signed in the United Kingdom is covered by the Clause.

This is a point which exercises us considerably. I do not believe that it was in the minds of those who drafted the Clause but I believe that it would be a consequence of it. We must, therefore, bear in mind when considering the Amendment whether there will be complications there.

Mr. H. Lever

The Minister of State has said understandably that he desires to avoid clarification of the meaning of the Clause, but, happily, he has not succeeded in that object. He has made it crystal clear that any Amendment that he has in mind for the Clause will be one of clarification. What I seek, and hon. Members generally seek, is not that he should make the mischief clearer legislatively speaking, but that he should abolish it by accepting the Amendment which has had almost universal sympathy on both sides of the Committee. The hon. Gentleman has given no assurance which comforts in any way any fear expressed from any quarter of the Committee. If the Committee does not support the Amendment, any trader can be or may be required in practice to give credit to any dealer whom he has never seen before and who comes along and demands credit.

Mr. A. Bourne-Arton (Darlington)

Surely that can apply only to a dealer who has cut the price of those goods.

Mr. Lever

All that the dealer has to do is to go to the supplier and put him in an embarrassing position by telling him, if he did not already know, "I am the man who has been cutting the price of your goods in the last few months." Apart from establishing this bad relationship between the supplier and the client, the Clause will enable a complete stranger to the supplier to insist upon a most favourable position in regard to credit and everything else.

Sir D. Glover

How can a person who has been obtaining goods for some months be a total stranger to him?

Mr. Lever

He may be a total stranger, because he may have been getting the goods from somebody else. It is enough that he tells the manufacturer that he intends to sell the goods below price to put the supplier in great difficulty. Until the onus of proof is decisively shifted it means that every supplier who wants to refuse supplies to a cut-price trader must see his lawyer, because the dice would be loaded by statute hopelessly against him once the man who gets credit takes the elementary precaution of telling him that he is a price-cutter.

How can the Committee pass a Clause, not on the assurance that the Minister will look at it and put a mischief right, but in the knowledge that he will repeat the mischief and if we give him a little time he will tighten the Clause and make clear that this extraordinary monstrosity will continue?

7.15 p.m.

Mr. du Cann

The hon. Member appreciates that the point which he is making relates to Clause 4. I appreciate the connection between Clauses 4 and 2 and, as the right hon. Member for Battersea, North (Mr. Jay) has said, we have not yet reached Clause 4. On the other hand, the hon. Member talks about the monstrous position in which the dealer is put. Would he not agree that the first thing that has to happen in an action of this sort is that either the dealer or the Crown has to prove that supplies have been withheld? That is the first burden. The supplier would be required to show that supplies were not withheld simply on the ground of price-cutting, which is very different from the suggestion, which I think the hon. Member is making, that the burden on the supplier is intolerable.

Mr. H. Lever

The whole debate has been heard by the Committee and the hon. Gentleman omits to mention that the Government provides in the Bill a definition of what amounts to withholding supplies and that a supplier can be held to be guilty of withholding supplies even if he has actually supplied the goods. This is part of the meaning of the Clause.

I should like to make one comment to hon. Members, and particularly my hon. Friends who feel that somehow or other the purpose of the Bill is frustrated if we do not legislate quite uniquely this novelty that the supplier must grant credit to all and sundry against his will, provided that he supplies some people. Let us suppose that we want to abolish discrimination against coloured people in public houses. I can well understand hon. Members, of whom I would be one, legislating that a publican must supply beer to a man whether he is coloured black, white or yellow. But I cannot see any hope of our enacting that he should supply the beer, whether he likes it or not, and give the man credit, whether he likes it or not, on the ground that he gives other people credit and that his failure to do this would be contrary to the purposes of the Bill.

The whole thing is preposterous nonsense. It is such an ill-considered novelty that I hope that the Committee will be rough, brutal and to the point when we come to vote on it.

Mr. R. H. Turton (Thirsk and Malton)

I cannot agree with the hon. Member for Manchester, Cheetham (Mr. H. Lever) that my hon. Friend the Minister of State has not given a concession. He has definitely given a concession which goes some way, but in my view not sufficiently near to what the Amendment purports to do. I gather that my hon. Friend proposes to insert at a later stage of the Bill a provision which will make clear that, if the goods are withheld on the ground merely that the dealer is not credit-worthy, that will take the supplier out of the mischief of the Clause. But it may well be that the reason for withholding the goods is a deduction from the price-cutting method of the dealer that he is not credit-worthy. Probably the Amendment is not entirely satisfactory as drafted, but this is a point which, it seems to me, ought to be met.

Some older hon. Members will recollect that before the war there was a chocolate price-cutting war. Many small dealers were cutting the price of chocolate and then, about three months later, going bankrupt. This was common throughout the country, and it was greatly to the detriment of the chocolate trade, because eventually it meant that prices went up. This is the kind of situation in which a manufacturer will say, "I shall not sell to dealers X, Y, Z, who are price-cutting people and who are breaking the chocolate trade". But the reasons for saying it would be, first, that they were not credit-worthy and, secondly, that their methods of price cutting were such as to lead to that conclusion.

I hope that in the interval between now and the Report stage my hon. Friend will try to make the Clause, which is not entirely satisfactory, deal with such a position as that. I gather that he is not completely satisfied with Clause 4 and that he will be receptive to the ideas which we put forward when we reach that Clause.

Mr. Graham Page

If I had to weigh the evils of the supplier using the refusal of credit for the ulterior motive of refusing supplies to an under-cutter against the evil of depriving the trader of his right to decide whether to sell his goods on cash, I should plump for the former evil.

My hon. Friend said, in effect, that we must wait for Clause 4 and do something about it then. I cannot be put off like that. I am presented with the case in which the price-cutter goes to the supplier and says, "I am a price-cutter and I want goods on credit because you have been supplying another dealer on credit". Surely there are two grounds. The supplier says, "The fact that this man is an under-cutter, of course, affects my mind. I cannot honestly say that it does not. But the main point is that I want cash for the goods from a man like that".

Clause 4(4) refers to the ground for refusing supplies. My hon. Friend said that he might consider a provision which said that it shall not be unlawful withholding if it is merely on the grounds of credit. But if there are these two factors, even though credit may be the major factor, a man may say, "Under-cutting affected my mind". He then comes under Clause 4(4) and has to go to the Court and possibly has to defend a claim for demages by the under-cutter who has been unable to obtain his goods.

I want a much better assurance from my hon. Friend than he has given us so far. I am glad to see my right hon. and learned Friend the Attorney-General on the Front Bench, because he will appreciate the legal points involved. I do not want to go over the arguments all over again, but it is a very serious matter to set out in the Bill that there will be occasions on which a man cannot freely decide whether he shall require cash for his goods and that he can decide it only by going to his solicitor, who will obtain counsel's opinion, and then fighting it out in the Court. This is not what we should impose on people by the Bill, and before I ask the Committee to give me leave to do anything I hope that my hon. Friend will rise again and give us a far better assurance.

Mr. Cole

My hon. Friend the Minister of State is always so courteous that it is difficult to criticise him, but I understand the position to be this: there may be four or five reasons, all of them good, including the possibility of price cutting or the fact of past price cutting, for which a supplier does not supply goods to a dealer, and in that event either the dealer or the Crown can take him into the Queen's Bench Division and start an action. It was not clear to me that the Crown has the onus to prove that withholding—not unlawful withholding but withholding of goods—has taken place between the supplier and the dealer.

Mr. Graham Page

The Crown does not come into this. There are no criminal proceedings. These are civil proceedings by the person who says that he has been injured by the goods being withheld.

The Attorney-General (Sir John Hobson)

Clause 4 provides that either the dealer or the Crown can bring proceedings. There may be a situation in which the Crown has decided to bring proceedings when the individual dealer is a person who could not possibly face proceedings of this nature.

Mr. Cole

I see that I am in good company in my remarks. But I am not so much worried about that as about the supplier finding himself in the Queen's Bench Division facing a charge. Whoever has initiated the prosecution must prove that there has been withholding of supplies, which I imagine would not be too difficult. I want the Committee to use its imagination and to imagine that the court has accepted this fact: not simply that there has been no delivery or that deliveries have been banned or that there has been slackness, but that there has been a deliberate action of withholding delivery. That must be a problem for the court.

There may be four or five different reasons why the dealer has withheld the supplies. Let us be frank: one reason may be that the goods have been cut in price in the past or that there is good reason to believe that they will be cut in selling price by the dealer in future. There may be other reasons, not only credit-worthiness but the number of outlets in the town and the fact that it is an area in which the supplier prefers not to sell his goods as it may be unsuitable. There may be a hundred and one reasons, including that in the Amendment.

The onus of proof is on the supplier to prove his motive, and it is almost the most difficult thing in the world to prove in any court the motive that someone had. Someone said in my company the other day, "Some of the greatest errors are committed with the best of intentions." This may well be true in this case. First, there is the withholding of supplies, and then the Crown has as one of its causes—otherwise it would not have brought the case—the fact that the dealer has been selling goods below price or attempting to do so and that this is the reason why the supplier will not supply him.

The supplier must first eliminate the charge on the basis of cut prices. Having proved that that was not the motive for his action, he must prove that one or two of half-a-dozen reasons was the motive for his action. I do not know who will decide—either the dealer or the Crown—whether it is worth while bringing a case. But let us assume that the Crown or the dealer has proved that there has been a physical withholding—or, in deference to the hon. Member for Manchester, Cheetham (Mr. H. Lever), a theoretical withholding—of supplies within the confines of the Act. When all that has been finished and there is an admission on both sides that the dealer has been dealing in cut-price goods, or was about to do so, the supplier must prove to the satisfaction of the Court that his action was taken for other motives.

This is an impossible situation. I am not a lawyer, but I can see that it would be a paradise for lawyers arguing on both sides. I do not know whether the Amendment would go far enough, but it might at least help a little. The very fact that we have gone so far as to invite the attention of the judges of the Queen's Bench Division to other causes seems to be a good reason for adding as many reasons as we can for their consideration.

7.30 p.m.

Mr. du Cann

First, I am grateful to my right hon. Friend the Member for Thirsk and Malton (Mr. Turton) for what he said. I think that the point he had in mind would be covered, but we will certainly look at it specifically.

Secondly, I do not want to "pull the leg" of my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) too hard, particularly as our constituencies are neighbouring. The point he raised about exports really concerned the last Amendment. I considered it then, but it did not seem to me to be fully relevant, even on that Amendment. I appreciate that my hon. Friend raised a serious point. I do not believe that the point is of particular relevance to this matter. I think the anxieties he expressed are largely unfounded.

Thirdly, I have been asked to go a little further. I have given a very clear undertaking, but my right hon. Friend the Secretary of State has now authorised me to say that, as we come to have our discussion on Clause 4, which we all agree has a bearing on the matter, we shall certainly consider what has been said now and what is said on Clause 4 when considering the question of this Clause and the decisions that we have come to about it.

I hope that is clear. I hope, also, that it takes account of the points which have been made and which we recognise are important, particularly in the minds of my hon. Friends.

Mr. Graham Page

My hon. Friend the Minister of State has, to put it vulgarly, got me scared now, because I know that, if I called a Division now, I could probably defeat the Government. This has been made clear by what has been said by my hon. Friends and by the support the Amendment has received from hon. Members opposite. I do not want to do that. It is the last thing I want to do, but my hon. Friend is driving me to put the Amendment to a Division.

Hardly a speaker has opposed the Amendment. Those who have not supported it wholeheartedly have finished by saying that they support it with qualifications. I am not one of those who are modest about drafting. I think that the Amendment says what I intended it to say. I think that it is a good one. It may need provisos. Those can go in later. We do not know how hurried we shall be over later stages. If I get this into the Bill now, someone else can put the provisos in later. If I do not get this in now, I do not know whether I shall be steam-rollered later.

I am placed in the most difficult position, as practically the whole Committee has supported the Amendment and I believe would support it on a Division. Again, I press my hon. Friend the Minister of State, my right hon. Friend the Secretary of State, and my right hon. and learned Friend the Attorney-General to see the points which have been made during the debate and give us a better assurance than we have been given so far.

Mr. Cole

Would it help my hon. Friend—if it does not, he will not do it—[Laughter.] I am trying to be fair; I can do no more. Will my hon. Friend ask my right hon. Friend to give an undertaking that he will consider redrafting the Clause?

Sir D. Glover

My right hon. Friend knows that I am broadly in favour of the abolition of resale price maintenance and that I have gone out of my way to support him on numerous occasions. I have not heard the whole debate but I am not satisfied with the assurances given by my hon. Friend the Minister of State. If we cannot be given better assurances, I shall be in great difficulty if the Amendment is pressed to a Division.

It appears clear from listening to all the lawyers who have spoken that, as the Clause is drafted, it will be a lawyers' paradise. If that happens, the Bill will fail in its purpose. Any manufacturer or supplier has an enormous responsibility to safeguard his shareholders' money. The only person who can make a decision about credit-worthiness is the manufacturer or supplier. There should not be overriding conditions weighting his judgment.

I know of cases in my practical experience when we have restricted credit to a firm which may have been paying our accounts promptly when we have received information that others were not receiving quick settlements of their accounts. As the Clause is drafted, I would have no right to restrict credit if my account was being paid promptly, despite the fact that I was receiving information which made me very dubious indeed about the customer's creditworthiness.

I do not think that anything said by my right hon. and hon. Friends so far has removed the fear that many of us have about what will happen if the Clause as drafted goes on to the Statute Book. I hope that my right hon. Friend will give an assurance to my hon. Friend the Member for Crosby (Mr. Graham Page), who moved the Amendment with great ability, that the spirit of the Amendment, if not its exact words, will be incorporated in the Bill before it leaves this place.

The Secretary of State for Industry, Trade and Regional Development and President of the Board of Trade (Mr. Edward Heath)

I must apologise to the Committee for the fact that I have not been able to hear the whole of the debate, but I am aware of the context of the Amendment. My hon. Friend the Minister of State has given an undertaking to my hon. Friend the Member for Crosby (Mr. Graham Page). I do not wish to go into the merits of the argument on the Amendment. Broadly speaking, we believed that the point raised by my hon. Friend was satisfactorily covered by the Bill. My hon. Friend and some hon. Members opposite do not believe this to be the case.

My hon. Friend the Minister of State has given a firm undertaking that we will, therefore, look at the matter again. This is a normal thing during a Committee stage. I am quite prepared, as always, to say that we will study every word which has been said in the debate. We will then have the opportunity of taking action upon it, because our objective is the same. As I understand it, my hon. Friend is not asking that the supplier should have the right to withhold supplies purely because the dealer is a price cutter. That is what we are concerned with.

My hon. Friend is concerned with other aspects of that—the difficulties which arise because the supplier wants to withhold supplies on other grounds, including, as I understand it, the ground that the man might not be creditworthy because he was cutting prices. He has given that specific example.

The firm undertaking I am giving to the Committee is that we are now quite prepared to look at the whole of this matter again. I believe that that is a reasonable thing for my hon. Friend the Member for Crosby to have asked and a reasonable thing for me, as Minister in charge of the Bill, to say. We have listened with great care and attention to all the arguments put forward. I hope that we can agree that we are honourable people who want to deal with this problem satisfactorily.

Mr. Graham Page

I feel that we are now making some progress. If my right hon. Friend will say that in looking at the matter again he will look at the question of putting this in Clause 2, I am sure that the fears of many hon. Members will be allayed. The Minister of State referred to our having to wait until we got to Clause 4. If my right hon. Friend will think about this in the context of revising Clause 2, I think that that would satisfy my hon. Friends and me.

Mr. Heath

The Minister of State dealt with this matter and pointed out that there were obviously separate problems concerning Clause 4 which hon. Members would want to discuss, because this deals with the question of the onus of proof, how an action is to be brought and so on. On this matter of Clause 2, my hon. Friend has given an undertaking on my behalf—an honourable undertaking—that we will consider every word that has been said and that we will look at the matter from this point of view because our objectives are the same. I do not think that, in Committee, I can be asked to give a firmer or clearer undertaking.

Mr. Jay

Will the right hon. Gentleman say what he is undertaking? Is he undertaking to amend the Bill in the sense that the hon. Member for Crosby (Mr. Graham Page) is asking?

Hon. Members


Mr. Ronald Bell

I apologise for speaking again, but a few words might be helpful in the interest of clarity. My right hon. Friend referred to a clear undertaking which, I admit, seemed to be clear to me. However, he also referred to an undertaking which had been given by the Minister of State. The undertaking we were given until the point when my right hon. Friend rose was simply that everything that had been said would be carefully borne in mind when we came to Clause 4. That was the only undertaking we had been given, and I want that to be clear.

We felt that there were great difficulties about that, because if when we came to Clause 4, the Government were not convinced of the merits of our arguments, we could not go back to Clause 2. However, if my right hon. Friend is now giving an undertaking that we were not given before—and that everything which has been said this afternoon will be considered in relation to Clause 2 as well—then that is a different matter and I think that my hon. Friend the Member for Crosby (Mr. Graham Page) would feel differently about the issue. We have not had that undertaking and unless my right hon. Friend is meaning to give it I fear that things will be made very difficult.

Mr. Heath

This is an Amendment of my hon. Friend the Member for Crosby (Mr. Graham Page) to Clause 2 and what I said in my statement was that we will carefully study that Clause and his Amendment. If we are, as I believe we are, trying to reach the same objective, then if we have not already done that in the Bill as it is drafted I hope that we will be able to do it. That is a clear undertaking which I am giving.

Mr. Hirst

We are certainly making some progress now, although we must have the matter clear. I appreciate that my right hon. Friend is trying to be helpful and I agree that he has said that he will consider this matter, I hope in relation to both Clauses 2 and 4. I want to know whether my right hon. Friend accepts the principles which have been enunciated by my hon. Friend the Member for Crosby (Mr. Graham Page), because that is at the heart of the matter. We want to be assured that in considering the subject generally my right hon. Friend has the principles in mind.

7.45 p.m.

Mr. Heath

My hon. Friend is not being as fair as he usually is. I have said that we will take into account the whole of the situation described by my hon. Friend the Member for Crosby. I do not believe that it is reasonable, in Committee, to say that in taking into consideration everything that has been said in the debate I am, therefore, automatically committing myself to a particular course of action. It is not fair to ask, in Committee, that I should do that.

I am entitled to take everything stated by my hon. Friend the Member for Crosby into account. I believe, from my previous study of the Amendment and of the Bill, that we are trying to reach the same objective. If now my hon. Friends have shown that we have not reached that same objective, then there is very good reason for amending Clause 2—and I must now be given the opportunity to consider the matter and deal with it at another stage of the Bill, because that is what the other stages are for.

Mr. Paget

What is the objective? As I understand it, the objective of the hon. Member for Crosby (Mr. Graham Page) is simply that suppliers should not be compelled to grant credit unless they want to; whatever their reasons for demanding cash they should be entitled to demand it unconditionally. That being the objective of the hon. Member for Crosby, is it the objective of the right hon. Gentleman?

Hon. Members


Mr. Hirst

I am trying to be fair. I can assure my right hon. Friend that whenever I have spoken on this subject I have been absolutely fair. My right hon. Friend considers that we have a common objective, but have we? I do not think that we have. I do not wish to be unfair but, honestly, we would not have tabled the Amendment and this whole debate, for all these hours, would not have taken place and the principles of the matter would not have been discussed at such length if we had a common objective.

I am sorry, and I say this with regret, but it appears that a large number of hon. Members feel that this common objective does not exist; or should I say that the Government do not appear to have the common objective of a large number of hon. Members? I appreciate that we are in Committee. I know all about Committee stage work and I am aware of our procedures, but my right hon. Friend surely accents that it is normal in Committee, on Finance Bills and other Measures, for Ministers to say that they accept the principle of the point being raised and will find words to put it into effect. If that is not forthcoming I am sorry to say that my right hon. Friend must see that we have a suspicion that our common objective is not there.

Mr. MacDermot

I must press the right hon. Gentleman to make exactly clear just what is this common objective. He himself said that he has not been present throughout the debate. He appears—at least, the Minister of State appeared—to assume that if a supplier withholds supplies there must be only one motive activating him in that decision. The Bill appears to be drafted with that assumption in mind because it talks about a supplier withholding supplies in that way.

The basis of the argument adduced in support of the Amendment is that one will frequently get a situation where a supplier is acting from mixed motives. If he is honest he will say that one of his motives is that the dealer is likely to be engaged in price cutting. Another is that he suspects the credit-worthiness of the dealer. The right hon. Gentleman and the Government must face up to this situation. What is their intention in this situation? Is it that the supplier shall be entitled to say, "Because one of my motives is genuinely that I suspect this man's credit-worthiness, I am insisting on cash?" Will a supplier be allowed to say that? If not, what is the common objective?

Mr. Heath

Perhaps I might try again to help the Committee, I asked my hon. Friend the Member for Crosby (Mr. Graham Page) if he wished to create a position in which a supplier could withhold goods from a dealer solely on the ground that he was selling below the recommended price, to which my hon. Friend replied, "No." That was not the situation he wished to create and, therefore, we have a common objective. I said, as I understood it, that the discussion had been about the circumstances in which other factors arose, including that he might wish to take into account the fact that the man had been selling below the recommended price as a factor in deciding his credit-worthiness.

I said that our objective was the same. We also wish to meet that situation. I am advised on this matter that, legally, the position is that if there are other reasons, then that is sufficient, because there are other reasons by which the man is making his decision. He is doing it on that basis and I believe, therefore, that we have the same objective in trying to get the Clause clear.

It has been suggested that in Committee one must always accept the principle involved. With respect, that is not the case. On innumerable occasions Ministers, in Committee, say that they will thoroughly examine everything that has been said and will if they can, assist the Committee in reaching a proper solution. The Minister in charge of a Bill is entitled to say that, and that is the undertaking I have given.

Mr. Hirst

I did not mean "always" when I referred to the acceptance of principles in Committee stages, but it is not unusual or exceptional for a Minister to accept the principle and then try to find words to put it into practice.

Mr. Heath

I have tried to show the objectives we are trying to reach in the Bill and to give my hon. Friend the Member for Crosby the clearest and firmest undertaking. I will study everything he has said and try to reach the objective we have outlined. That is the sort of undertaking, as Minister in charge of the Bill, I can and should give.

Mr. H. Lever

We have to get this clear. The objective that the hon. Member for Crosby (Mr. Graham Page) was to see that manufacturers and suppliers had the unconditional and unqualified right not to give credit on the sale of their goods. That was what the debate was about. Are we to understand that the Secretary of State is to consider sympathetically restoring to the suppliers the unconditional right to withhold credit on any grounds that they like, including that of price cutting? If he is not giving that undertaking, then he is giving no undertaking at all.

Mr. Cole

I am prepared to accept my right hon. Friend's undertaking. I believe that he is seized of the point made not only by my hon. Friend the Member for Crosby (Mr. Graham Page), but of a variety of other cases which ought to be within the right of the manufacturer, even if the question of price cutting does not exist at all. I am quite sure that my right hon. Friend will take consideration of that. What was frightening me and, I believe, frightening many hon. Members on both sides of the Committee was that whatever is in Clause 2, either now or on Report, it will be viable once it is passed.

Clause 4 has a bearing on it, because it will look like a contradiction of what is laid down in Clause 2. That is what was worrying us. If we get Clause 2 right, I do not think that there will be much to worry about on Clause 4.

Sir Stephen McAdden

I am sure that my hon. Friends have been much encouraged by the attitude of my right hon. Friend, and that we appreciate the way he has proceeded on this issue. We also appreciate the very ready way in which he has given a commitment that he will study this matter most carefully. I only hope that, after due consideration, if he finds it necessary to amend Clause 2, he will bear very clearly in mind that there are Members on both sides of the Committee who will take the strongest possible exception to any legislation being enacted which laid it down that the manufacturer had to allow credit to people even if he did not think that they were credit-worthy. As long as my right hon. Friend is considering legislation in that form, he will satisfy his hon. Friends on this side of the Committee.

Mr. Winterbottom

In view of the fact that in this Clause equality between retailers and wholesalers on conditions of credit is already provided for, may I point out to the Minister that the only issue he has to decide is the simple principle that everybody accepts in this country—the right of anyone to refuse to give credit? That is a principle that ought never to have been introduced into the question of resale price maintenance. It is confusing the issue and making it much more difficult not only for wholesalers and retailers, but, seemingly, also for hon. Members.

I want the Minister to face that simple issue and give us the assurance here and now that he will give an undertaking that in no way, shape or form will he, through the Bill, interfere with the inalienable right of a person to refuse to give credit.

Mr. William Shepherd (Cheadle)

Under the law, as I understand it, I, as a supplier of goods, can refuse to supply anybody even on the ground that I do not like the look of his face. I imagine that, apart from the restrictions imposed upon me by the Bill, I shall be able to continue to refuse to

supply goods to Mr. Jones because I do not like the look of his face.

I am very anxious that my right hon. Friend should not widen the provisions of the Bill so that evasion becomes possible. I have some reservations about the Bill in general terms, but I am more concerned that we do not launch ourselves once more into anti-monopoly legislation which becomes abortive. Starting with the Act introduced by the Labour Government in 1948, we have had a string of Measures which have not been properly effective. I hope that my right hon. Friend, in considering all aspects of the question, will bear in mind the absolute necessity of not providing loopholes whereby people can evade the purpose of Parliament.

Mr. Graham Page

I accept entirely my right hon. Friend's statement that he believes that our objectives are the same. On that basis, I beg to ask leave to withdraw the Amendment.

Hon. Members


Question put, That those words be there inserted:—

The Committee divided: Ayes 164, Noes 244.

Division No. 54.] AYES [7.57 p.m.
Ainsley, William Edwards, Walter (Stepney) Irving, Sydney (Dartford)
Allen, Soholefield (Crewe) Evans, Albert Jay, Rt. Hon. Douglas
Awbery, Stan (Bristol, Central) Finch, Harold Jenkins, Roy (Stechford)
Barnett, Guy Fitch, Alan Jones, Dan (Burnley)
Bence, Cyril Foot, Michael (Ebbw Vale) Jones, Elwyn (West Ham, S.)
Benn, Anthony Wedgwood Forman, J. C. Kenyon, Clifford
Benson, Sir George Fraser, Thomas (Hamilton) Lawson, George
Blackburn, F. Galpern, Sir Myer Lee, Frederick (Newton)
Blyton, William George, Lady Megan Lloyd (Crmrthn) Lee, Miss Jennie (Cannock[...])
Bottomley, Rt. Hon. A. G. Ginsburg, David Lever, Harold (Cheetham)
Bowen, Roderic (Cardigan) Gordon Walker, Rt. Hon. P. C. Lewis, Arthur (West Ham, N.)
Bowles, Frank Greenwood, Anthony Lipton, Marcus
Braddock, Mrs. E. M. Griffiths, David (Rother Valley) Loughlin, Charles
Bradley, Tom Griffiths, Rt. Hon. James (Llanelly) Lubbock, Eric
Bray, Dr. Jeremy Griffiths, W. (Exchange) Mabon, Dr. J. Dickson
Broughton, Dr. A. D. D. Grimond, Rt. Hon. J. McBride, N.
Brown, Rt. Hon. George (Belper) Hale, Leslie (Oldham, W.) MacDermot, Niall
Butler, Herbert (Hackney, C.) Hamilton, William (West Fife)[...] McLeavy, Frank
Butler, Mrs. Joyce (Wood Green) Harper, Joseph MacPherson, Malcolm
Carmichael, Neil Hart, Mrs. Judith Mallalieu, J.P.W. (Huddersfield, E.)
Castle, Mrs. Barbara Hayman, F. H. Manuel, Archie
Chapman, Donald Henderson, Rt. Hn. Arthur (Rwly Regis) Mapp, Charles
Corbet, Mrs. Freda Herbison, Miss Margaret Mellish, R. J.
Craddock, George (Bradford, S.) Hill, J. (Midlothian) Mendelson, J. J.
Crosland, Anthony Hilton, A. V. Millan, Bruce
Crossman, R. H. S. Holman, Percy Milne, Edward
Cullen, Mrs. Allce Holt, Arthur Monslow, Walter
Darling, George Houghton, Douglas Morris, Charles (Openshaw)
Davies, Harold (Leek) Howell, Charles A. (Perry Barr) Moyle, Arthur
Davies, S. O. (Merthyr) Howie, W. Mulley, Frederick
Deer, George Hughes, Cledwyn (Anglesey) Neal, Harold
Dempsey, James Hughes, Emrys (S. Ayrshire) Noel-Baker, Francis (Swindon)
Diamond, John Hughes, Hector (Aberdeen, N.) Oliver, G. H.
Dodds, Norman Hunter, A. E. O'Malley, B. K.
Doig, Peter Hynd, H. (Accrington) Oram, A. E.
Driberg, Tom Hynd, John (Attercliffe) Oswald, Thomas
Duffy, A. E. P. (Colne Valley) Irvine, A. J. (Edge Hill) Padley, W. E.
Paget, R. T.
Pannell, Charles (Leeds, W.) Silkin, John Tomney, Frank
Parker, John Silverman, Sydney (Nelson) Wade, Donald
Pavitt, Laurence Skeffington, Arthur Wainwright, Edwin
Peart, Frederick Slater, Mrs. Harriet (Stoke, N.) Warbey, William
Pentland, Norman Slater, Joseph (Sedgefield) Weitzman, David
Prentice, R. E. Small, William Wells, William (Walsall, N.)
Price, J. T. (Westhoughton) Smith, Ellis (Stoke, S.) White, Mrs. Eirene
Probert, Arthur Sorensen, R. W. Whitlock, William
Pursey, Cmdr. Harry Soskice, Rt. Hon. Sir Frank Wigg, George
Randall, Harry Spriggs, Leslie Wilkins, W. A.
Rankin, John Steele, Thomas Williams, W. T. (Warrington)
Redhead, E. C. Stones, William Willis, E. G. (Edinburgh, E.)
Rees, Merlyn (Leeds, S.) Strauss, Rt. Hn. G. R. (Vauxhall) Winterbottom, R. E.
Robinson, Kenneth (St. Pancras, N.) Swain, Thomas Woof, Robert
Rodgers, W. T. (Stockton) Swingler, Stephen Wyatt, Woodrow
Rogers, G. H. R. (Kensington, N.) Symonds, J. B.
Ross, William Taverne, D. TELLERS FOR THE AYES:
Royle, Charles (Salford, West) Thompson, Dr. Alan (Dunfermline) Mr. Grey and Mr. Ifor Davies.
Amery, Rt. Hon. Julian Emery, Peter Kitson, Timothy
Arbuthnot, Sir John Emmet, Hon. Mrs. Evelyn Langford-Holt, Sir John
Ashton, Sir Hubert Errington, Sir Eric Leather, Sir Edwin
Atkins, Humphrey Erroll, Rt. Hon. F. J. Legge-Bourke, Sir Harry
Awdry, Daniel (Chippenham) Farr, John Lewis, Kenneth (Rutland)
Barber, Rt. Hon. Anthony Fell, Anthony Linstead, Sir Hugh
Barlow, Sir John Finlay, Graeme Litchfield, Capt. John
Batsford, Brian Fisher, Nigel Lloyd, Rt. Hon. Selwyn (Wirral)
Bevins, Rt. Hon. Reginald Fraser, Rt. Hon. Hugh (Stafford & Stone) Longbottom, Charles
Biffen, John Fraser, Ian (Plymouth, Sutton) Loveys, Walter H.
Biggs-Davison, John Freeth, Denzil Lucas, Sir Jocelyn
Bingham, R. M. Galbraith, Hon. T. G. D. Lucas-Tooth, Sir Hugh
Birch, Rt. Hon. Nigel Gammans, Lady McAdden, Sir Stephen
Black, Sir Cyril Gardner, Edward MacArthur, Ian
Bossom, Hon. Clive Gilmour, Ian (Norfolk, Central) McLaren, Martin
Bourne-Arton, A. Gilmour, Sir John (East Fife) Maclean, Sir Fitzroy (Bute & N. Ayrs)
Box, Donald Glover, Sir Douglas Macleod, Rt. Hn. Iain (Enfield, W.)
Boyd-Carpenter, Rt. Hon. John Glyn, Dr. Alan (Clapham) McMaster, Stanley R.
Boyle, Rt. Hon. Sir Edward Godber, Rt. Hon. J. B. Macmillan, Maurice (Halifax)
Braine, Bernard Goodhart, Philip Maitland, Sir John
Brewis, John Gower, Raymond Markham, Major Sir Frank
Brooke, Rt. Hon. Henry Grant-Ferris, R. Marples, Rt. Hon. Ernest
Brown, Alan (Tottenham) Green, Alan Marshall, Sir Douglas
Bryan, Paul Gresham Cooke, R. Marten, Neil
Buck, Antony Gurden, Harold Mathew, Robert (Honiton)
Bullard, Denys Hall, John (Wycombe) Matthews, Gordon (Meriden)
Bullus, Wing Commander Eric Hamilton, Michael (Wellingborough) Maude, Angus (Stratford-on-Avon)
Butcher, Sir Herbert Harrison, Brian (Maldon) Maudling, Rt. Hon. Reginald
Campbell, Gordon Harrison, Col. Sir Harwood (Eye) Mawby, Ray
Carr, Compton (Barons Court) Harvey, John (Walthamstow, E.) Maxwell-Hyslop, R. J.
Carr, Rt. Hon. Robert (Mitcham) Harvie Anderson, Miss Maydon, Lt.-Cmdr, S. L. C.
Cary, Sir Robert Hastings, Stephen Mills, Stratton
Channon, H. P. G. Hay, John Miscampbell, Norman
Chataway, Christopher Heald, Rt. Hon. Sir Lionel Montgomery, Fergus
Chichester-Clark, B.[...] Heath, Rt. Hon. Edward Morgan, William
Clark, Henry (Antrim, N.) Henderson, John (Cathcart) Mott-Radclyffe, Sir Charles
Clark, William (Nottingham, S.) Hiley, Joseph Neave, Alrey[...]
Clarke, Brig. Terence (Portsmth, W.) Hill, Mrs. Eveline (Wythenshawe) Nicholson, Sir Godfrey
Cole, Norman Hill, J. E. B. (S. Norfolk) Noble, Rt. Hon. Michael
Cooke, Robert Hobson, Rt. Hon. Sir John Nugent, Rt. Hon. Sir Richard
Cooper, A. E. Hocking, Philip N. Orr, Capt. L. P. S.
Cooper-Key, Sir Neill Hogg, Rt. Hon. Quintin Orr-Ewing, Sir Ian (Hendon, North)
Cordeaux, Lt.-Col. J. K. Holland, Philip Osborn, John (Hallam)
Corfield, F. V. Hopkins, Alan Page, John (Harrow, West)
Courtney, Cdr. Anthony Hornby, R. P. Pannell, Norman (Kirkdale)
Craddock, Sir Beresford (Spelthorne) Hornsby-Smith, Rt. Hon. Dame P. Partridge, E.
Crawley, Aidan Howard, Hon. G. R. (St. Ives) Pearson, Frank (Clitheroe)
Crosthwaite-Eyre, Col. Sir Oliver Hughes Hallett, Vice-Admiral John Peel, John
Curran, Charles Hughes-Young, Michael Percival, Ian
Currie, G. B. H. Hulbert, Sir Norman Peyton, John
Dalkeith, Earl of Iremonger, T. L. Pickthorn, Sir Kenneth
Dance, James Irvine, Bryant Godman (Rye) Pike, Miss Mervyn
d'Avigdor-Goldsmid, Sir Henry Johnson, Eric (Blackley) Pitman, Sir James
Deedes, Rt. Hon. W. F. Johnson Smith, Geoffrey Pitt, Dame Edith
Digby, Simon Wingfield Jones, Arthur (Northants, S.) Pounder, Rafton
Doughty, Charles Joseph, Rt. Hon. Sir Keith Powell, Rt. Hon. J. Enoch
Douglas-Home, Rt. Hon. Sir Alec Kaberry, Sir Donald Price, David (Eastleigh)
Drayson, G. B. Kerans, Cdr. J. S. Price, H. A. (Lewisham, W.)
du Cann, Edward Kerby, Capt. Henry Prior, J. M. L.
Duncan, Sir James Kershaw, Anthony Prior-Palmer, Brig. Sir Otho
Eden, Sir John Kimball, Marcus Proudfoot, Wilfred
Elliot, Capt. Walter (Carshalton) Kirk, Peter Quennell, Miss J. M.
Elliott, R. W. (Newc'tle-upon-Tyne, N.)
Ramsden, Rt. Hon. James Spearman, Sir Alexander Vaughan-Morgan, Rt. Hon. Sir John
Rawlinson, Rt. Hon. Sir Peter Speir, Rupert Vickers, Miss Joan
Redmayne, Rt. Hon. Martin Stevens, Geoffrey Vosper, Rt. Hon. Dennis
Rees-Davies, W. R. (Isle of Thanet) Stoddard-Scott, Col. Sir Malcolm Walder, David
Renton, Rt. Hon. David Studholme, Sir Henry Walker, Peter
Ridsdale, Julian Summers, Sir Spencer Walker-Smith, Rt. Hon. Sir Derek
Rippon, Rt. Hon. Geoffrey Tapsell, Peter Ward, Dame Irene
Roberts, Sir Peter (Heeley) Taylor, Sir Charles (Eastbourne) Watkinson, Rt. Hon. Harold
Rodgers, John (Sevenoaks) Taylor, Frank (M'ch'st'r, Moss Side) Webster, David
Roots, William Temple, John M. Whitelaw, William
Russell, Sir Ronald Thatcher, Mrs. Margaret Williams, Dudley (Exeter)
Sandys, Rt. Hon. Duncan Thompson, Sir Richard (Croydon, S.) Williams, Paul (Sunderland, S.)
Scott-Hopkins, James Thorneycroft, Rt. Hon. Peter Wilson, Geoffrey (Truro)
Sharples, Richard Thornton-Kemsley, Sir Colin Wolrige Gordon, Patrick
Shaw, M. Tilney, John (Wavertree) Wood, Rt. Hon. Richard
Shepherd, William Touche, Rt. Hon. Sir Gordon Woodhouse, C. M.
Skeet, T. H. H. Turner, Colin Worsley, Marcus
Smith, Dudley (Br'ntf'd & Chiswick) Turton, Rt. Hon. R. H.
Smyth, Rt. Hon. Brig. Sir John Tweedsmuir, Lady TELLERS FOR THE NOES:
Soames, Rt. Hon. Christopher van Straubenzee, W. R. Mr. Hugh Rees and Mr. More.
Mr. Hirst

I beg to move Amendment No. 26, in page 3, line 20, at the end to insert: (4) For the purposes of the foregoing subsection a dealer shall be deemed not to be carrying on business in similar circumstances to other dealers in relation to any goods, if the supplier can require the dealer to purchase such goods from the supplier or his nominee. This Amendment deals with a situation very different from that which we have just been discussing. I think that it will be a little easier to deal with and will, I trust, engender rather less heat and allow people to recover a little. The Amendment raises a quite separate issue. I shall be reasonably happy, because it is a rather difficult point, if the Minister who is to reply will, at least, agree to have some discussion with me between now and Report if he finds that the Amendment is not acceptable at present.

It is a separate issue, and, as I see it, the Amendment does not invalidate the principles of the Bill. As I understand it—I suppose that I do understand a bit about it by now—this Resale Prices Bill is put forward with the intention that there should be action to ensure that, as far as is conceivably possible, apart from unfair practices, there will be free or substantially more competition. This is the basis of what we have been discussing. It is laid down perfectly clearly in the Explanatory Memorandum.

In the lawyers' battle we have had for the past two hours, some of us may have forgotten what the actual meaning is. I have enjoyed the battle, of course; these things are always instructive. However, I am not a lawyer. I am a simple soul who is now bringing forward a point which affects quite a number of people who have special forms of trading. We are not trying in any way to circumvent the Bill or its objects, but it has seemed for a long time that there are various advantages in arranging one's business in different ways. There are several trades concerned here.

I have been very frank with hon. Members at all times—I think that both sides of the Committee will agree with that—in indicating any interests which I may have in the subject under discussion. I do not have very great interests, but I should like to make it clear that I have a modest interest in some items concerning resale price maintenance. Some of the firms with which I am connected, although in a very non-executive capacity, have an interest in this matter, and I wish to make, that clear.

There is a reasonable purpose behind the Amendment. People may provide certain services or capital for development or other facilities and, therefore, by reason of that their trade is not quite similar—in other words, they are not trading in entirely similar circumstances. I see the validity—and whether I like it or not has not very much to do with it—of the phrases which have been used about trading in similar circumstances and provisions, as under Clause 2, for other measures for maintaining resale prices. People who are not carrying on business in similar circumstances, while in no way desiring to do anything which is irregular or which is against the spirit of the Bill, could be carrying on a practice which might be unlawful, because in its wisdom the Board of Trade has not, perhaps, had time to consider every peculiarity of every form of trading.

I do not think the Amendment needs much explanation. Anyone can understand its wording without much trouble. Therefore, I do not want to labour the point. I will explain it at greater length if necessary, but I think that my hon. Friend the Minister of State is seized of the point and of the unusual situation that certain traders are in. They are not trying to do anything irregular. For many years they have found it convenient to trade in such a way that certain advantages are given on one side in return for advantages created on the other side. The public has been the gainer in many ways by reason of this sort of relationship. No one desires to do anything which is against the spirit of the Bill.

Mr. Maxwell-Hyslop

The Amendment does not commend itself to me. I can see that there may be circumstances such as those to which my hon. Friend the Member for Shipley (Mr. Hirst) alluded in which it might serve a useful function. But there is certainly one function which it could perform and with which I have very little sympathy. It would enable breweries, for instance, to charge their tenants in tied houses higher prices for liquor supplied to them than they charge to other retailers—for instance, those in free houses or off-licence premises. The balance of advantage as between the owners of public houses and the tenants of public houses should be struck in a different way from making the tenant, who has many statutory conditions to meet and very long hours to work, pay more for the liquor which he cannot buy anywhere else except from the owner of the public house unless the brewery gives him permission to do so.

We should be careful to examine the implications of this and to make sure that they are implications with which we want to live. I am not sure that they are implications with which I want to live. The off-licence merely has to suit its own commercial advantage. People in off-licences have no obligation to be open for a certain number of hours a day, although there is a limit to the number of hours that they can be open. The free house—that is, a house which is not owned by a brewery—can purchase its liquor where it is most advantageous, which the tenant of a public house cannot do.

8.15 p.m.

There is an increasing tendency in the licensed trade, which I deplore, even though economic circumstances may tend to advance it, for the individual landlord to be replaced by a manager. There is often a great loss of atmosphere when this happens. One way to squeeze tenants out and to replace them with managers is to make the economic conditions under which they operate quite intolerable. One way of doing that is to make the tenant pay an unreasonable additional amount for his supplies than his competitors so that he cannot meet his rent and provide himself with a reasonable living, so that he throws in his hand and is replaced by a manager.

I do not suggest that this is a universal trend, but it is, unfortunately, a practice which there is reason to suppose exists.

Mr. R. J. Mellish (Bermondsey)

Is it not a fact that if a tenant works extremely hard and pushes up the sales in his public house, instead of getting a letter from the brewers saying, "Well done, faithful servant", he gets his rent increased?

Mr. Maxwell-Hyslop

That may be the case, but I have not come across examples of it.

Mr. Mellish

It happens in London all the time.

Mr. Maxwell-Hyslop

I have come across the opposite case, namely, of tenants giving up because they are not able to conduct the business profitably and thus to give the service which they should give to the public.

Because I think that the Amendment would tend to accelerate that process rather than to discourage it, I could not give it my support. I recognise, however, that there might be many other trades in which considerations of this kind could legitimately be encompassed. For instance, if a manufacturer supplies equipment to test and service the machines which he makes, I suppose that it might be reasonable that a person, when buying in supplies, should pay a bit more. It would be much more reasonable to say that if the retailer wanted facilities provided by the manufacturer he should pay directly rather than in a peculiar side way. This would seem to be more logical.

Mr. J. Hynd

I have no prejudice one way or another on this Amendment. I want to ask one or two questions for clarification and to ask the hon. Member for Tiverton (Mr. Maxwell-Hyslop) whether there is not another side to the coin.

I accept the abuses of the tied house system to which he referred and recognise that they exist, but are there not many examples, not only in the licensing trade but concerning petrol stations and things of that kind, where this system permits of people being able to run these stations and to make a profit out of them, or out of the pub, as the case may be, who would not be able to do so, not having the capital, but this being provided by the parent concern on conditions which would necessarily provide for the benefit thus given?

As to the terms of the Amendment, I am in the same difficulty as on the previous one, which achieved nothing. As the mover or seconder of that Amendment admitted, a further Amendment was necessary to achieve what was desired. This Amendment seems to me to be completely redundant.

Subsection (3,a) of the Clause refers to people carrying on business in similar circumstances". If the circumstances were so dissimilar as in the case of tied public houses, petrol stations or other instances, I should think that the situation would be covered by subsection (3,b). That is my interpretation. If that is not the case, I should like to have the difference explained and to know whether there is any purpose in the Amendment.

Mr. du Cann

I was interested to hear what my hon. Friend the Member for Shipley (Mr. Hirst) said in moving the Amendment. If its wording is to indicate one relevant factor which would be ground for saying that one dealer was not carrying on business in similar circumstances to another, the Amendment is not strictly necessary. Clearly, any special relationship between a dealer and a supplier would be a good reason for saying that a dealer was not carrying on business in similar circumstances to other dealers. The Amendment, however, goes a good deal beyond that, as my hon. Friend will recognise, and, therefore, for that reason, I cannot accept it.

My hon. Friend, who is a very old friend of mine in many ways, always tries to be frank with the House of Commons. Perhaps I can try to be frank with him and say that whether he and I disagree, as we obviously do substantially on certain occasions, plainly we do not disagree in the context of this matter.

As to the Amendment, my hon. Friend said that it[...] was not his intention in any way to invalidate the principles of the Bill, and I accept that from him at once. In those circumstances, and having regard to what I have said, if my hon. Friend would be good enough to withdraw the Amendment, which simply cannot be accepted—the hon. Member for Sheffield, Attercliffe (Mr. J. Hynd) was quite right about that—I shall be ready to agree to discuss it with him in the context of the discussion that we have had today, in which my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) has also joined. I note what he, too, has said.

Mr. Hirst

I am grateful to my hon. Friend for giving me what I asked. I will be grateful to have those conversations with him, because this is a matter which needs careful study. With that assurance, I should like to ask leave to withdraw the Amendment.

Mr. W. Wells

I should like to add a word before the Amendment is withdrawn. It was by no means as clear in its wording as the hon. Member for Shipley (Mr. Hirst) said. It is sometimes said that these proceedings are a lawyer's paradise. From the point of view of one lawyer at least, they are purgatory.

Mr. Cyril Bence (Dunbartonshire, East)

It is a lawyer's jungle.

Mr. Wells

I accept that, too.

What is clear from this debate, and what I suspected before it began, was that whether or not the form of words was clear in itself, the types of transaction to which the Amendment is intended to apply are far from clear. Nor did the hon. Member for Shipley make clear to the Committee how his Amendment would affect the types of transaction which he did not describe.

It is clear, as my hon. Friend the Member for Sheffield, Attercliffe (Mr. J. Hynd) said, that the Amendment relates to many transactions right outside the scope of the licensed trade, and my hon. Friend gave a number of examples. During the course of the Bill, there have been many conversations, upstairs, downstairs and nearly everywhere except on the Floor of the House of Commons. My eyes are not impious to peer behind the curtains which hide the transactions of the party opposite—

Mr. Hirst

The Amendment relates to a wide form of trading. I have not tried to bring the matter down to a detailed argument. My hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) mentioned one industry which is affected. The hon. and learned Member for Walsall, North (Mr. W. Wells) realises, I trust, that the field is a wide one and that the circumstances in each case are somewhat dissimilar, but that all of them would, possibly, be considered to be affected by the term "similar circumstances".

Mr. Wells

My difficulty is to understand what the commercial purpose behind the hon. Member's Amendment might be. Therefore, my hope is that if an Amendment to this effect is put down at a later stage of the Bill—although I hope that it will not be—there will be a full explanation of the intended purport of these transactions and that the House, as it will then be, will be informed fully of the scope and commercial purpose of what the hon. Member for Shipley is seeking to achieve. We on this side will not oppose the withdrawal of the Amendment and are inclined to hope that it will disappear once and for all.

Mr. Arthur Lewis (West Ham, North)

When the Minister replied, he suggested to his hon. Friend the Member for Shipley (Mr. Hirst) and, I think, to his hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) that he would be prepared to discuss the matter with them. I should like to make a suggestion. Why cannot the Minister discuss it with my hon. Friend the Member for Ebbw Vale (Mr. M. Foot) and with my hon. and learned Friend the Member for Walsall, North (Mr. W. Wells)? If there is an interest in the matter and if any of my hon. Friends wants to be sure that the Amendment is a good one, before anything is done for the Report stage the Minister could do no better than discuss the matter with the legal brains on this side of the Committee—they are very much lacking on his own side—and then we might make progress.

Mr. du Cann

I am obliged to the hon. Member for giving way. All I was going to say was that it is generally known and understood, I think, that the Minister is always ready to see hon. Members who wish to put points to him. Certainly, I shall be very happy to accept the hon. Member's suggestion and see him any time.

Mr. Lewis

I was only trying to help the Minister, because there is a lack of legal knowledge on that side of the Committee, whereas on this side we have an abundance of it. I thought that I would help the Government with the suggestion that they should come to see some of my legal hon. Friends to get out of some of their difficulties.

8.30 p.m.

Mr. Charles Loughlin (Gloucestershire, West)

It is the common practice in Committee, when an Amendment has been submitted and the Minister has a degree of sympathy with it, for the Minister to agree to discuss it generally with the Member on the Opposition side of the Committee responsible for it; and he is usually the one who is leading for the Opposition. But when an Amendment comes before the Committee then it becomes the Committee's property, if my contention is right, and not the property of the Member who moved it. It is reasonable for the Committee to give its blessing—I nearly said its permission, but that is, perhaps, too strong a word—to discussions, if the Committee knows precisely what the Amendment seeks to do.

The hon. Member for Shipley (Mr. Hirst) said that he is always straight with the Committee, always explains himself in clear language so that we know what he means. I will accept that, but in putting forward this Amendment he has, if I may respectfully suggest it to him, fallen a little short of his practice, because he said afterwards—he subsequently intervened to say the same thing—that there were a whole host of trades where these practices obtain, where, in addition to ordinary trade practices, certain services were provided by the manufacturer to the retailer.

Then another Member on that side of the Committee helped the hon. Gentleman by pointing to the question of tied public houses. Then an hon. Member on this side helped a little further by talking about the question of petrol stations and the provision of capital—by agreement, perhaps, with the landowners—for the development of petrol stations when the petrol owners did not have the capital so to develop. My hon. and learned Friend the Member for Walsall, North (Mr. W. Wells), speaking from our Front Bench, thought there had been a host of trades mentioned in the debate. Frankly, I must have dozed off to sleep, because I heard no more than those two instances which were given. The hon. Member for Shipley, in his intervention, talked about a host of people.

I do not know how my hon. Friends stand in relation to the Amendment. It may be that I am not too bright, and that they all understand precisely what this is about and how far it will have any ramifications at all in distribution. They may not. I do not know. I am, at least, a member of the Committee, and I think that I ought to know, if someone is asking me either to support a proposal, or alternatively—

Mr. Bence

Acquiesce or withdraw.

Mr. Loughlin

I am very sorry that my hon. Friends wish to make the speech for me. I can assure them I shall not be more than a minute or two, and then they can carry on their argument.

However, before these proposed discussions take place with the approval of myself, I think that we ought to hear from the mover of the Amendment precisely what it is all about, because if we do not, we shall have some discussions, and then at a subsequent stage we shall have the mover of the Amendment coming along and putting an equally vague and indistinct case, and the Minister will say, "The House will remember that on a night when we were in Committee we discussed this matter and I offered to discuss it with my hon. Friend, and having done so, I hope that the House will agree to its being accepted."

Many hon. Members—I include myself in this—are perhaps a little modest and rather afraid of saying, "We do not know what this is all about; please tell us." It would be wrong for the Committee to agree to the withdrawal of the Amendment before we have a fuller explanation of it.

Mr. Leslie Hale (Oldham, West)

I greatly regret intervening in a fairly able speech, but my hon. Friend the Member for Gloucestershire, West (Mr. Loughlin) should bear in mind that the Bill was presented by the party opposite as one of the great reforms of the final Session of this Parliament. There are seven Conservatives present at the moment and when the hon. Member for Shipley (Mr. Hirst) comes to ask our leave to withdraw the Amendment perhaps he will be able to tell us whether or not he has consulted his 320 other colleagues, some of whom support the Bill and many of whom do not. They were not in the Chamber while he made his important contribution and they are not here now.

Mr. Loughlin

That is a point of some substance, but my hon. Friend the Member for Oldham, West (Mr. Hale) overlooks the fact that there have been other consultations among the colleagues of the hon. Member for Shipley (Mr. Hirst). Before the last Division there were some very strong consultations indeed between the Patronage Secretary and those likely to vote against the Government.

We should hear a little more from the hon. Member for Shipley about this. I appreciate that, on other occasions, he always completely "comes clean" with the Committee. If I admire him for nothing else it is that he has a little more courage than many of his colleagues.

Amendment negatived.

Question proposed, That the Clause, as amended, stand part of the Bill.

Mr. Douglas Jay (Battersea, North)

We now come to discuss the main issue at stake in this Clause. It is, perhaps, a pity that we have been attempting, on and off, to discuss it in relation to certain detailed points which have arisen on the various Amendments. However, that was possibly inevitable. The discussions have shown the difficulties we get into when we try to enact by legislation that certain people shall trade with other people with whom they do not wish to trade, which is what we are doing in Clause 2.

This Clause substantially prevents a supplier from withholding supplies in certain circumstances from a dealer. One can express that either in the form of preventing supplies from reaching a dealer, or of withholding supplies, or of forcing the supplier to provide supplies to somebody with whom he does not wish to trade.

Mr. A. Lewis

My hon. Friend the Member for Oldham, West (Mr. Hale) drew attention to the fact that only seven hon. Members opposite were present when he was speaking. Will my right hon. Friend the Member for Battersea, North (Mr. Jay) mention that there are now only three, which shows the interest in the Bill of the party opposite?

Mr. Jay

On the whole, I would rather not waste time doing that. I was trying to explain, to such Members as are present, what the Clause means.

Mr. Hale

On the whole, we are discussing a Measure which has occupied the time of the House of Commons for 2½ days. With great respect, my right hon. Friend should not dismiss the fact that there are now only four Tory back benchers present at twenty minutes to nine when we are discussing the most important Clause of the Bill. I do not think that it is right to discuss it with such attendance. It would be open to call for a Count, but that would be futile, as hon. Members would come back into the Chamber.

Surely we should not make light of the fact that on a Bill which has attracted so much attention throughout the country—I have never thought that it was so important and do not suggest that I do now, but the Committee has been asked to regard it as important and has been asked to spend 2½ days on it—there are only four Tory Members of Parliament present on the back benches and three who are here in pursuance of offices to which an absentee Prime Minister has appointed them.

Mr. Jay

I assure you, Sir Samuel, that I do not dismiss it, but I thought that it was more likely to be obvious to our eyes than to our ears.

Mr. A. Lewis

But that is not much good to HANSARD.

Mr. Jay

I return to the Bill and draw attention to the fact that what the Clause asks us to do is to forbid a manufacturer to withhold supplies from a dealer in certain circumstances. That is to say, it forces a manufacturer or wholesaler in these circumstances to trade with people with whom he does not wish to trade. In the nature of the case, that is a fairly drastic thing to do and not something which we would often do by legislation.

The second point to which I draw attention is that it forces him to supply goods not merely to someone with whom he does not wish to do business, but also to somebody with whom he has never before done business. When I said this on Second Reading, the Secretary of State shook his head and appeared to deny that this was the case, but I am glad to find that it is now generally admitted that it is. It follows from the wording of Clause 4(4,a)—which I cannot discuss now, but which we are compelled to mention so as to understand this Clause—that Clause 2 says that a supplier must not withhold goods on the ground that a dealer has been cutting prices—to put it in crude terminology—or is likely to do so.

When we reach Clause 4, we will find that he is presumed to have acted from this motive when two conditions are satisfied. The first, which appears in Clause 4(4,a), is that down to the time when supplies were withheld the supplier was doing business with the dealer, or, was supplying goods of the same description to other dealers. That word "or" makes it plain that by Clause 2 we compel people in certain circumstances to trade with some retailer of whom they may never have heard until this moment and with whom he has never before done business. Whether this is right or not, that is what we are being asked to do.

To see this in perspective, one must set it against the background. Until 1956, it was the law that a manufacturer could withdraw his supplies from a retailer either through the collective boycott, in company with other manufacturers, or individually on his own initiative, if he so chose. In the 1956 legislation it was thought right that the collective boycott should be abolished. Since that legislation, although the manufacturer could no longer apply the collective boycott, he has been at perfect liberty to withhold his supplies as he chose, and could not be compelled to trade with a retailer with whom he had no wish to trade.

8.45 p.m.

We on this side of the Committee have no objection to abrogating the other part of the 1956 Act which gave the manufacturer power to enforce his prices on a retailer against the retailer's will. In our view that went much too far in interfering with the freedom of choice both of the retailer and of the consumer. But that we are, in effect, reversing in Clause 1. I was going to say that that is what we are repealing in Clause 1, but that is not strictly correct.

Let us be clear what the 1956 Act gave the manufacturer, so that we can understand what we are doing. It gave him the right to enforce his prices on a retailer, whatever those prices were, without any authority having control over those prices.

Mr. H. Lever

And whether the retailer had bought them direct from him or had given an undertaking in relation to himself or not.

Mr. Jay


I think that it was my hon. Friend the Member for Manchester, Cheetham (Mr. H. Lever) who, in our earlier debates, said something about his being against nineteenth century Liberalism. I do not think that one has to be against that to agree at least with this part of the Bill, so far as it goes in reversing Section 25 of the 1956 Act, for this reason, that whether or not one believes in price competition, I cannot think that it is right to forbid price competition by law. That is really what the previous Act did, and what we are doing now is to remove from the Statute Book the provision which forbade price competition.

When we come to Clause 2, I think that it is essential to make a distinction between the procedure of establishing the onus of proof which applies to Clause 1, and the procedure for establishing the onus of proof in Clause 2 where we are laying on the manufacturer this new obligation to supply people whom he does not want to supply.

I hope that hon. Gentlemen realise that throughout the Bill as it stands the onus of proof is still emphatically on the manufacturer, and not on the Registrar, the public authority, to prove that he is acting in the public interest. That has not in any way been altered by the Amendments that we have made to the Bill.

I think that one can make a case for that when what the manufacturer is asking—and this is what he is primarily asking when he asks for exemption—is to retain the power that he previously had under Section 25 of the 1956 Act to enforce his price on a retailer against the retailer's will. If the manufacturer is asking for that, I think that a strong case can be made for saying that the onus of proof should be on him.

The Minister is going further. First, he is taking away the manufacturer's right to invoke the law on his side and to enforce his prices. But—and this is where all the trouble arises in our debates—he is also imposing a new obligation upon the manufacturer or wholesaler to supply retailers whom he does not wish to supply, and whom he may never have supplied before. He can be compelled to do this if it is held that his motive for not doing it is a fear of price cutting on the part of the retailer.

The Bill goes even further than that. Here again, I must refer to Clause 4, which states that the manufacturer shall be presumed to be acting in this way—that is to say, his motive shall be presumed to be the fear of price-cutting—if two conditions are satisfied: first, that he was previously doing business with the dealer, or was supplying similar traders; and, secondly, that the trader who wishes to do business with him has in the recent past been cutting prices.

It therefore follows that a retailer can say to a manufacturer, "You have never done business with me and you do not want to do business with me—and, by the way, you may like to know that I am in the habit of making large cuts in prices below the recommended prices," and if the necessary conditions are satisfied the manufacturer can be compelled to do business with that retailer, even if he does not wish to do so. The only way of his avoiding it—and here we must look at the end of Clause 4(4)—is for the manufacturer to prove to the contrary. The words unless the contrary is proved mean that the onus is thrown upon the manufacturer to prove that this was not his motive, or not one of his motives.

My hon. and learned Friend asked the Minister exactly what the situation would be when the manufacturer had more than one motive. We may all have more than one motive for a given action.

Mr. Shepherd

There may be more than one motive for this speech.

Mr. Jay

First, he may consider the retailer to be untrustworthy and not wish to trade with him. Secondly, he may think that the retailer is likely to treat his goods as a loss leader. I hope that the Minister will be able to clear up the question of what happens when several motives are operating at the same time. What is quite clear is that we are now asked to enact legislation which compels a manufacturer to trade with a retailer unless that manufacturer can prove that his motives were of a certain kind.

As the Bill stands, however, the onus of proof is now on the manufacturer in another sense. Nobody has pointed this out, so far. If the manufacturer or wholesaler wishes to obtain exemption for the class of goods in which he deals he has to prove, according to the gateways of Clause 5, that it is in the public interest, for some special reason, that he should be allowed to maintain a certain price for his goods. The onus of proof is upon him. It may be that some case can be made out for the arrangement.

But the onus of proof is also upon him in a further sense. If he fails to obtain exemption under Clause 5, unless he is to be under an obligation to supply people whom he does not wish to supply he must prove that his primary motive was not a fear of price-cutting. When the matter is argued out to this point, it seems to us that it is a little harsh to lay upon the manufacturer an obligation of this kind.

I do not know whether the Committee has realised—I have not heard it pointed out—that there is no reciprocal obligation on the retailer. Some hon. Members may feel inclined at first sight to say that that is all right. They may think in terms of a large monopoly manufacturer—perhaps the Imperial Tobacco Company—and of a small tobacconist with premises in a village street.

In such a case it may be that there would be no great hardship. But all manufacturers are not large and all retailers are not small. There are plenty of retail combines in this country which are large, wealthy and powerful. Surely, when we are legislating we should not think in terms of favouring the manufacturer against the retailer, or vice versa, but about being fair to all British subjects living in the United Kingdom.

Mr. J. Hynd

Will my right hon. Friend clarify that point? Is not the retailer in relation to the supplier in the same position as a consumer in relation to a retailer? Is not there a legal compulsion on a retailer to sell to the public but no compulsion on a member of the public to buy from a particular retailer?

Mr. Jay

If that is so I should like to be shown chapter and verse where it says so.

As I understand the Bill, at present it merely places an obligation on the supplier, the wholesaler or manufacturer to trade in these circumstances against his will with the retailer. It places no similar obligation on the retailer to trade in comparable circumstances—or, indeed, in any circumstances at all—with the manufacturer.

There may be many cases, though, admittedly, not a majority of cases, where a manufacturer is small and a retailer large; and I find it difficult to believe that a case has yet been made out for imposing such a sweeping obligation as this on the manufacturer—to trade in the circumstances with someone with whom he does not wish to do business and with whom he has never done business—unless he can go to the Court and prove that his motives were such-and-such to the satisfaction of the Court. Therefore, we find it very difficult to support the substance of the Clause.

With the Bill in the condition in which it is at present, our difficulty about procedure is that, in seeking to shift the onus of proof in the matter of Clause 2 and the imposing of an obligation on a manufacturer not to withhold his supplies, we are forced, owing to the peculiarities of the Bill, to amend not Clause 2, but Clause 4. I cannot, therefore, go on to suggest in detail ways in which this must be done. We are in a situation where the Committee has to take a decision on Clause 2—this difficulty has been troubling us all the afternoon—without knowing whether Clause 4 will be amended or not.

This being the position, it is certainly my view at this time that the only sensible course which the Committee can take is to conclude that the Government have not made out their case for Clause 2 at this stage in this form, in view of the harsh and sweeping obligation which it places on a number of traders. Though we shall certainly seek at a later stage in our discussions on the Bill—and when it is in order to do so—to ameliorate the situation and seek to ensure that in this matter the onus of proof is the other way round—that is to say, the onus of proof is on those who argue that some trader should do business with those with whom he does not wish to do business—we are certainly not satisfied that this Clause in its present form ought to be approved by the Committee.

9.0 p.m.

Sir James Pitman (Bath)

I have a quite minor point on the Clause, to which I hope my hon. Friend the Minister of State will pay attention because rather than speak to the two Amendments which could have been called and might have kept the Committee and my hon. Friend at them for a long time, and since they are merely exploratory at the moment, I thought it better to raise this point on the present Motion.

I refer particularly to line 14 of subsection (3,a) where it is stated that the terms will not be significantly less favourable than those available to other dealers carrying on business in similar circumstances". This is a question of interpretation, because in many trades there are three different terms. There are what are known as occasional discount, bulk discount and personal discount. In the book trade the traveller who comes round for a subscription gives the bookseller what is known as an occasional discount. This is not by any means the usual discount. This is why I wished to insert the words to make the terms not less favourable than "those usually available from him". If that is not the interpretation of the Clause as it stands, or if it may not safely be so, I hope that the Government will consider putting it right on a suitable occasion later on.

Equally, there is the question of supplying books in bulk. There are normally higher rates of discount if three hooks are ordered than there are when the order is for a single copy. In these circumstances, shall we be involved in an argument as to which discount represents the normal terms? Will it be said that the discount given for a single copy should be applicable? Finally, there is the special arrangement which one makes with a special customer who gives special displays, who is one's special agent and who enjoys what may be called a personal discount. It is important that these questions should be considered in connection with the last three lines of subsection (3,a) where it is stated that the terms must not be significantly less favourable than those available to other dealers… and I would suggest that the word generally" might be added at the end.

Mr. Paget

It seems to me that one has only to understand what the Bill does in order to appreciate the real absurdity of Clause 2. Clause 1 simply makes contracts, including a resale price maintenance clause, void. It does no more than that. It goes on to state that it shall be unlawful to make these contracts, but "unlawful" is there used simply in the sense that they would be void. It goes no further. It does not say, and it does not provide, that to make these contracts shall be a crime. Indeed, Clause 4(1) makes this quite clear.

It is no crime to make resale price maintenance contracts, nor is it a civil wrong. If it were a civil wrong, then the agreement to do so would be a conspiracy in the same way as it is a conspiracy to slander or to work a boycott, for example; they are criminal offences because the boycott or the slander, although not a crime, is a civil wrong. But a resale price maintenance contract is not a civil wrong and is not made a civil wrong. It is not unlawful even in the sense of being immoral. If one makes a contract which has an immoral purpose, whether to take a house for a mistress or a house from which to carry out a train robbery, for example, the whole contract is void because of the immorality of the contract. But as Clause 1(3) points out, only the resale price maintenance law is void; the rest of the contract is valid and enforceable.

May I take a parallel? A resale price maintenance contract is today in exactly the same position as a betting or gambling contract; it cannot be enforced by the courts and it is only an obligation in honour. I have no objection to that. Before the Bill, as a result of Section 25 of the 1956 Act, resale price maintenance agreements were put in a specially privileged position. They were enforceable not as between the parties by the civil law but by criminal sanctions of the criminal law, and they were enforceable not only as between the parties to the contract but even where the goods came into the hands of a third party who was not a party to the contract. I think that that went very much too far.

We opposed Section 25 of the 1956 Act, and I think that we were right to do so. Now we have lurched rather the other way. We say about these price maintenance contracts that not only shall they not be enforceable by means of the criminal law but that they shall not be enforceable by means of the civil law. But we have gone no further than that. There is nothing wrong with these contracts save that they are unenforceable.

It is the same position as a betting or gambling transaction. They are obligations in honour, and they remain obligations in honour. By Clause 2 we proceed to say that we shall compel people to deal with the customers whom they have found dishonourable. Let us take the position of a bookmaker. We are not merely saying to the bookmaker, "You cannot enforce this bet in the courts." We are saying to him, "Pro- vided only that your customer turns out to be a defaulter, we shall compel you to go on betting with him—and not only if he is simply your defaulter. If he can prove that he is a defaulter with any other bookmaker, we shall compel you to lay bets with him."

One has only to put it in terms of another contract made void by the law to show how absurd, and indeed immoral, this provision is which requires a man to sell further goods to a man who has defaulted upon an honourable obligation of the trade, no longer enforceable by the law but still there, not forbidden. Is it just to force someone to supply further goods to a man whom he can no longer trust because he has proved himself to be untrustworthy? Is it sensible to force someone to supply goods to a customer whom he has never met, with whom he has had no dealings, if only the customer is in a position to prove that he has been similarly untrustworthy with another supplier? Such business dealings have only to be stated for their absurdity to become apparent.

Not only is a supplier compelled to deal with these people who are the last people, because they are untrustworthy, with whom he would choose to deal, but he is compelled to give them credit, to make deliveries to them and to do a whole series of things. Over and above this, there is a provision in Clause 4 that this can be enforced upon a man by injunction to be sought by the Attorney-General. I do not imagine that anybody really thinks anything like that will conceivably happen. Does anyone imagine circumstances in which the Attorney-General would go to the Court and demand an injunction that somebody shall supply goods to a third party, with whom he does not want to deal, on credit terms? This has no connection with reality.

Mr. H. Lever

Why does my hon. and learned Friend suggest that it is inconceivable that this will happen if the Committee is foolish enough to agree to the Clause in its present form?

Mr. Paget

Merely because, as a matter of practice, I do not believe there ever would be such an occasion. The process of pushing through that sort of proceeding in a court of law would simply break down. Somebody might be foolish enough to try it at some point, but I cannot believe that any part of the Clause will work in practice.

I do not think, in terms of ordinary trade and business, that the obligation to supply a customer whom he does not want to supply can be imposed upon a manufacturer. If a manufacturer applied his mind to seeing how awkward he could make himself to a customer whom he did not want, it would not require much ingenuity to make the position intolerable. This is the sort of doctrinaire essay in unreality which can have no effectiveness on a Statute Book and which makes our whole position absurd even by the effort of putting it there.

9.15 p.m.

I sincerely hope that the Clause will be rejected. I dislike the Bill as a whole and would, therefore, like to see the Clause rejected. Other hon. Members may like the Bill in principle, but, whether or not they like it in principle, this kind of invasion of the freedom of choice of people running their own businesses is wholly inconsistent with a free enterprise system.

As a Socialist, I probably believe in far more regulation than hon. Members opposite, but any form of regulation of a free enterprise system must at least leave an entrepreneur with the freedom to run his business and at least to choose his customers. If one tries to impose certain conditions such as saying, "We order you to deal with certain people you do not like, you do not want to sell to, you do not trust, and to whom you are reluctant to deal in every other way, or you are committing an offence", one is equally committing the offence of being utterly inconsistent with the system one is trying to create. I therefore urge that the Clause be rejected.

Mr. Ronald Bell

I find myself in the unusual and not likely to be frequently repeated position of agreeing with the hon. and learned Member for Northampton (Mr. Paget). When one remembers that the hon. and learned Member is one of the most well known dirigistes in the Committee, my right hon. Friend may think that if the hon. and learned Member feels that there is an encroachment of personal freedom here, then perhaps there is.

Mr. Ellis Smith (Stoke-on-Trent, South)

What did the hon. Member call my hon. and learned Friend?

Mr. Ronald Bell

A dirigiste. I am am glad to see from the knowledgeable looks on the faces of hon. Members that the word is generally known in the Committee. There is no definition of it in the Bill, but it is a good word.

I have doubts about the Clause for three reasons, or groups of reasons, the first being on the broad general principle involved. I am not aware of any provision in English law which compels any supplier or maker of goods to sell to anybody. I may be wrong, and there may be one tucked away somewhere, but, generally speaking, the principle on which we conduct our affairs is that if somebody makes an article he is able to sell it or not to sell it as he wishes and thinks fit.

Mr. Shepherd

Does my hon. Friend agree that, although that has been true since 1956, before that date there were vicious arrangements which restricted supply operated by private enterprise?

Mr. Ronald Bell

My hon. Friend has raised the point to which I was coming. That was done by the collective withholding of supplies, but the general principle of the law is that people are free to sell or not to sell as they wish to do.

We have always recognised in our law another principle, a well established one, that things which are perfectly lawful if done by one person may be unlawful if done by a number of people in collaboration, that being a conspiracy. The question of things being lawful and unlawful concerns a very sound and sensible disposition, because it is right that the individual should enjoy a wide freedom of action which it might be tyrannous for a combination of people to enjoy. That is why it was necessary to pass trade union legislation; to give trade unions a degree of freedom to act in collaboration as conspirators which is not enjoyed by other members of the community. It was this collective withholding of supplies, because it was collective, that we outlawed in the 1956 Act. I quite see that it had become oppressive with all the accoutrements of private tribunals and so on which we were familiar with at that time.

What we are dealing with now is the right of the individual, legal person or company to sell or not to sell as he or it, in its good discretion, thinks right. I am not saying that this is something that is outside the power of the State, because it is not. I am not saying that it is something about which Parliament ought not perhaps at some time to pass laws, but I am saying that this is a field in which Parliament ought to tread with the greatest circumspection and hesitation in considering whether it is not infringing fundamental human freedoms in imposing on the individual limitations of his right to dispose or not to dispose of the products of his labour.

A thing like this can be done if there is a compelling reason for doing it. I shall, therefore, examine quite soon whether I think that there is a compelling reason for doing it, granted for the moment the purpose which is the purpose of the Bill. For the moment, I accept the proposition that, unless there is a compelling reason made out, this is the sort of thing that the Legislature ought not to do.

I would then ask: is there a compelling reason why it should be done? I cannot see one. Let us assume that it is right that the practice of resale price maintenance ought to be stopped either altogether or in part. The practice of resale price maintenance depends not merely on the right of A to make a contract with B but on the right of A to make a contract with B and enforce it against C. That was the whole point of resale price maintenance. Without that we could not have resale price maintenance.

That was also the point of collective action and private tribunals. If A and B made a contract C could laugh at it, C being the actual retailer who finally bought the goods. The manufacturer sold to the wholesaler and the wholesaler sold to the retailer and the retailer could, if he wanted, snap his fingers at any bargain that the manufacturer had made with the wholesaler. Because that was the case, the apparatus of the collective withholding of supplies was brought into force. It was the only method by which resale price maintenance could be enforced. That method—the only method—was abolished in 1956. That was why Parliament, intending to preserve individual resale price maintenance, had to introduce into the 1956 Act Section 25, which gave a right, which never existed before, allowing A to enforce against C the contract which he had made with B. This exists by Section 25 of the Act and not otherwise.

The whole apparatus of individual resale price maintenance which exists now depends on the machinery and procedure which was created in Section 25 of the 1956 Act. Therefore, if we want to abolish or limit resale price maintenance, all we have to do is either to repeal Section 25 or to say that the procedure created by Section 25 shall be employed only by people who bring themselves within certain exempt categories. This Bill has these exempt categories, and if one brings oneself inside them through the machinery of the Restrictive Practices Court then one can go on practising individual price maintenance and using the machinery under Section 25 which is not repealed by the Bill.

Why not just say that if a person wishes to apply to the Restrictive Practices Court for exemption he may do so, as provided by the Bill, and may then use the machinery of Section 25, but if he does not do that he may not use it? That would be the end of it. We do not need all the complications of Clause 2, injunctions, arguments about credit, and all the rest.

If it is said that that would be all right in one context but it would still leave in existence the resale price maintenance contract which has only two parties—manufacturer supplying direct to retailer, or something of that kind—where no third party is brought in, my answer is that Clause 1 has dealt with that. Clause 1 lays down that any provision in a contract for resale price maintenance is void. The whole contract is not void but the resale price maintenance provision is. Therefore, it cannot even be enforced between A and B, as it could be at common law, because we have said that it is void. It cannot be enforced against C because we would say that Section 25 is not available to someone who does not bring himself within the exemptions.

Does not this cover the whole field? If it does, why do we want Clause 2 with all the complications, vexations, doubts and hesitations which hon. Members on both sides have expressed? Why are we castigating ourselves with this complicated business about withholding supplies when the whole thing can be done effectively without it? Some hon. Members may think that I am exaggerating a little when I call it an incursion upon human rights—it is not a phrase which I very much like or tend to use—but it is certainly an encroachment upon a valuable personal liberty.

On that aspect, I add this further thought, which was touched on by the hon. and learned Member for Northampton. To force people to sell their own goods is harsh anyway, but it is particularly harsh to force them to sell their goods to people with whom they have recently quarrelled, with whom they have recently quarrelled in accordance with the law as it has been and at this moment is, people whom they have taken to court under Section 25 of the Restrictive Trade Practices Act, an Act passed not so long ago and introduced by a Conservative Government.

Is it right to make such a somersault? I would not grumble at just limiting the application of Section 25. There is no reason why one should not move on to do that. But why strike in this rather savage way through Clause 2 at the suppliers who have done nothing whatever up to now except comply with the laws which we have laid down and take advantage of a law which we have specially created for their benefit? Suddenly, we are switching over 180 degrees and saying, "These people whom you have rightly taken to court up to the date of the Royal Assent shall be entitled to come to you the day after and require you to supply goods to them, on most favoured customer terms, or you will face an action for damages and, perhaps, an injunction".

Those are the three reasons why I have grave doubts about Clause 2. I do not see why it could not be dropped without any damage whatever to the structure of the Bill or to the intention in substance and in detail which is embodied in it.

9.30 p.m.

I do not understand why Clause 2 is in the Bill. I hope that the Government, who brought this Bill forward, will give mature consideration to all the complications which it brings in, the difficulties of enforcement which it brings into existence and the multiplication of injunctions to which it will give rise; and, be it borne in mind, the ever present likelihood of imprisonment for a breach of injunction, a most disagreeable consequence which we should seek to avoid wherever possible. If there are dozens or hundreds of injunctions throughout the country, somebody will break them fairly often. People will be put in prison for contempt of court. I should not like this procedure to be established on a wide scale, and I hope that second thoughts will come to the Government.

Mr. Winterbottom

I deeply appreciated the speech of the hon. Member for Buckinghamshire, South (Mr. Ronald Bell). It was the speech of a lawyer with something added to it, namely, a knowledge of human nature which gave it a greater value than it would have had if it had merely contained lawyer-like explanations. It was one of the best speeches that I have heard today.

I wish again to raise the question of cash, which was dealt with in the Amendment which was defeated. There was one point which I wanted to raise, but, because everybody seemed to be talking at length, I thought that I would leave it until we reached the Question, That the Clause stand part of the Bill. One of the problems in allowing credit from a supplier to a retailer or from a wholesaler to a retailer is, in many cases, the itinerant salesman, the man who is on one market day today and on another 50 miles away, tomorrow. Sometimes it is weeks before he gets back to the first market or district from which he has been supplied with goods.

I have many years experience of the butchery trade and, in particular, the grocery trade. In the old days, when the country was rotting in idleness and a start was made by the cut pricers, especially in the industrial districts of the North, we found this problem most marked among the itinerant salesmen. Very often we found it difficult to discover from where they got their supplies.

One thing has been forgotten in discussing resale price maintenance, and it is this. The Government might have done much more good to the country had they introduced a Bill to find out from where retailers' supplies came rather than a Bill to deal with resale price maintenance. With itinerant salesmen on the market, many so-called suppliers are very hard to find.

One problem arising from Clause 2 which perplexes me is how we are to draw the lines of demarcation between many of the practices which take place between the wholesaler and the retailer and sometimes between the wholesaler and the retailing staffs. For instance, how are we to deal with a cash discount which deals, not with individual items but with a number of commodities all ordered at once and which has been calculated on the cash value of the whole order?

How are we to deal with the question, which was not raised by the hon. Member but is on the same line of thought, of the wholesaler who gives cash discount gifts to the staff of the retailers concerned without their going through the books of the organisation? These are only two out of dozens of points of common practice in the world of distribution and two which have a bearing on either the overheads or the original cost of the goods. These things are forgotten. No provision is made for them except in generalities which do not deal with the complications of the practical life in distribution.

Let me give an illustration. How would one deal with the wholesaler of cigarettes who also retails them, who allows the usual about 9½ per cent. to the retailer and is dependent upon ½ per cent., or slightly less, with a 6½ per cent. cash discount? That man could meet the needs of the Bill and become the biggest price-cutter in the district. He could charge 5d. per packet less for 20 Player's cigarettes in competition with the retailer to whom he supplies goods at wholesale prices and take him out of business, because he is a wholesaler and a retailer. There is no provision for this in the Bill. There is no provision for the many complicated relationships which exist in the world of distribution.

What about substitution? From my knowledge of the distributive trades and with no illusion about what happens in distribution, I prophesy that if there is one Measure which has been introduced into the House of Commons in the last 50 years that will encourage the substitution of spurious second-class goods, it is this Bill. The substitution will not always be open and above board. It will be done from a knowledge of the trade which is not possessed by those who drafted the Bill.

I have had packets of tea from cheap, cut-price shops and tasted it as against the so-called same brand of tea at the proper advertised price, and found that it was a substitution of low-grade, cheap tea. That is something which the Bill will encourage and foster throughout the distributive trades. Whether in groceries, or in the world of women's fashions, children's outfitting, or boots and shoes, the world of substitution will be encouraged by this Bill. There is no provision in this Clause to provide check or hindrance to activity of that kind.

I suggest that the Bill should never have been introduced to apply only to the abolition of resale price maintenance unless, with its abolition, the Government began to deal with some of the difficulties in distribution, began to deal with the nature, substance and quality of consumer goods, began to deal with their standards and the recording of their standards. I can show them tins of fruit which differ in terms of the label on them. Sometimes they are called "super choice" but are of a standard make. This gives rise to all kinds of things, especially in the cut-price shops. It is the nature, substance and quality of goods which should be examined, to that consumers will know that that which is on the label is that which, in truth, they are purchasing. Till we deal with that we cannot deal with the problem of resale price maintenance.

The Government can only deal with resale price maintenance if and when they plan distribution, and, in the planning, eliminate most of the evils which are there. And after they have planned it, the paradox is that we shall have to come back to some kind of understanding as to what the margin should be between the wholesale and the retail side, and sometimes between the manufacturer and the wholesaler.

Can we hope that the Bill will be equitable throughout the length and breadth of the country when, in some places, there are shops each with only 30 customers and in other places there are shops serving about 100 customers each? It is inevitable that there will be inequity, and till we have dealt with the problem of inequity in the world of distribution, trying to deal with the abolition of resale price maintenance is premature.

Because of that I suggest that there are parts of the Bill which are so obnoxious to the world of distribution that it ought to be withdrawn; and the Government ought to do that as quickly as possible.

Mr. Shepherd

It is true that there are problems in distribution, as the hon. Member for Sheffield, Brightside (Mr. Winterbottom) has just said. It may even be true that the processes of competition may be capable of ironing out some of those problems rather more easily than precise forms of legislation. I do not propose to discuss that issue at present, because I want to address myself closely to the Clause.

I must say that I have found the speeches made by hon. Members opposite depressing. They showed the sort of attitude and mental approach which gave us the Monopolies and Restrictive Practices (Inquiry and Control) Act, 1948.

Mr. H. Lever

The 1956 Act.

Mr. Shepherd

The 1948 Act I said, an Act which had no teeth in it at all.

Mr. Ellis Smith

We admit that.

9.45 p.m.

Mr. Shepherd

It ssems to me that, many years afterwards, hon. Members opposite are still looking at the antimonopoly legislation in the flabby way they viewed it then.

Mr. Ellis Smith

We will soon have another chance.

Mr. Shepherd

I am prepared to admit that it would have been possible to achieve a good deal of the purpose of the Bill had Section 25 of the 1956 Act been rescinded, taking from the supplier the legal sanctions to deal with those cutting prices. But we have not chosen to do so as the method of dealing with competition in retail trading. We have said, instead, that price maintenance in retail trade is an undesirable practice.

If we accept the premise that, subject to certain exceptions, the maintenance of retail prices by the manufacturer or supplier is in itself a harmful practice, an anti-social practice, then we must seek methods of enforcing this concept on those who do not pass the exception provisions The Bill will be useless if that is not to be the attitude of mind of this Committee.

We say to certain individuals that they may appear before the Court, which, if it is satisfied that their practices are in the public interest, will, despite the general premise of the Bill, give an exemption. It would be foolish if we turned round and allowed other individuals who did not secure exemption to reach the same aim by restricting supplies to potential customers.

Let us have no doubt about the ability of traders, suppliers and manufacturers to stop supplies going to retailers. I do not know whether hon. Members remember the extraordinary efforts made by cigarette manufacturers in the 1930s to prevent supplies going to price cutters. Secret agents and secret markings on packings were used; indeed, a whole apparatus was devised to prevent a man selling goods more cheaply than his neighbour.

If we were not to provide something equal to the provisions of Clause 2, it would be pointless for anyone to go before the Court because he could obtain his objectives simply by the methods used in the 1930s. If anyone is naive enough to believe that the will of the House of Commons as expressed in these debates is sufficient to deter suppliers from working their own will upon the community, then he is more naive than one thought.

The record of anti-monopoly legislation since 1948 is a record of legislation rendered negative by the machinations of those engaged in trade and industry. If we want an effective policing of the policy of resale price maintenance then this Clause is the one.

Mrs. Harriet Slater (Stoke-on-Trent, North)

Is not the logic of what the hon. Member is saying that we are wasting our time with this Bill and that consumer protection means nothing at all, whatever shape or form in which we introduce it?

Mr. Shepherd

I am sorry that I did not make myself clear. I am saying that, unless there was a proviso which compels supply, disagreeable as it may be, it would be useless to declare in the Bill that r.p.m. was against public interest. All those who wished to avoid the obligations of the Bill would stop supplies as they did in the 1930s to those who wanted to cut prices.

Mr. Ronald Bell

Of course, in the 1930s it was done collectively; otherwise it could not have succeeded.

Mr. Shepherd

But there is no necessity to do it collectively. It was easier to do it collectively and the punishment was greater for the man who wanted to show enterprise by selling at lower prices, but it could have been done quite as effectively individually. The collective process was much simpler and much more punishing to the individual who was enterprising.

I want to refer to the continued repetition that the Clause compels people to supply goods to those whom they do not wish to supply on the ground that they are not creditworthy. I can see nothing in the Clause which would compel any supplier of goods to supply goods to an individual whom he thought to be not creditworthy. As a supplier of goods to wholesalers and retailers, I would have no hesitation, under the Bill as it now stands, in saying that I would withhold supplies from a man because I thought that he would not pay me. I can see nothing in the Clause which would prevent me from so doing. All I can see is that those individuals who want to broaden the loopholes in the Bill and who, under the pretext that a man might not pay, or some other pretext, would withhold goods, would be prevented from withholding goods; but there is nothing to prevent a manufacturer or supplier from withholding goods from a man he considers not to be creditworthy.

I agree that the Clause is extremely difficult and raises issues which are disagreeable, but if we are serious in our attempt to make this a truly competitive country, we have to face doing things which, on our past understanding, we regard as disagreeable. Unless we are prepared to do those things which are disagreeable, we will find that this country is left behind in the race for world trade. Hon. Members opposite, with their wishy-washy attitude towards these problems, will certainly not lead the country into a better world.

Mr. Bence

I agree with the hon. Member for Cheadle (Mr. Shepherd) about monopolies. Certainly the Monopolies Act, 1948, and later legislation were inadequate for bringing to the consumer rather than the shareholder whatever benefits there might have been in private monopolies and for protecting the consumer from whatever evils there might have been in monopolies. There may not be as much ruthless competition as there was a hundred years ago, but those of us who are of this generation can thank God for that.

Mr. Shepherd

If there is a low level of demand and large-scale unemployment, there may be some justification—although I doubt it—for restriction; but when the Government maintain a high and stable level of demand, is it not the duty of those in trade and industry to be truly competitive?

Mr. Bence

I agree. There is probably some justification in certain branches of industry and commerce for asking for more competition, but those points at which more competition is needed are not the final points of distribution. There are many professional services where a little price competition would be very good, indeed. There are many intellectuals and professional people who ask the little shopkeeper to be competitive but who might be a little more competitive among themselves in their professional fees. I know that the hon. Member for Cheadle is a trader and I am not throwing this at him, but, as someone who has been in industry all his life, I resent the expectation that a manufacturer of goods should be intensely competitive, irrespective of the effect on his standard of living, while the people who lecture him subscribe to and are members of professions. I have a great respect and admiration for them and I appreciate their position on their resale price maintenance, but I wish that when they justify their resale price maintenance, they would find some justification for the resale price maintenance of my product.

Mr. Ellis Smith

To make it quite plain to me, will my hon. Friend tell me who he means?

Mr. Bence

I want to make that point, and I think that I am justified in making it because I refuse to accept that people do not compete with each other. They do compete with each other in factories. They do not compete quite so ruthlessly as we do in the Palace of Westminster, but there is, nevertheless, competition between them. There is a great deal of competition in this country, and I wish that people would stop crowing that there is not. There is plenty of competition between manufacturers of different products.

I strongly object to the Clause. When I read it, I thought that I must have read it wrongly. I thought that it was impossible for a Government to insert a Clause like this in a Bill. That is how it struck me, having been in industry and business all my life.

The big institution in any manufacturing concern is its sales force. A big concern has its sales department, and its salesmen travel the country looking for customers to buy the firm's products. It seems to me that by the provisions of this Clause an industrial unit whose salesmen are travelling the country looking for desirable customers—and, naturally, one does not want undesirable ones—will have to supply people who apply for its goods whether it wants to or not.

Under the provisions of the Bill there will be set up a Restrictive Practices Court which will force the unit to which I have referred to accept a customer which its salesmen have said is undesirable. A manufacturing unit may be marketing its products all over the country. Its salesmen will visit Leicester, Nottingham, Stoke, Glasgow, Edinburgh—

Mr. Ellis Smith

Not Stoke.

Mr. Bence

All right, excluding Stoke.

A salesman may call on a potential customer, and, after making inquiries, may decide that he is not a desirable customer. That person may then apply direct to the salesman's firm to be supplied with its products, and the firm will have no option but to supply him if he goes to the Restrictive Practices Court ands obtains an order to compel the firm to do so.

Sir D. Glover

I appreciate the hon. Gentleman's giving way. He is always extremely courteous in the House. A lot of us are worried about this, but I think that he has got the position wrong. If I have never supplied you, then I am not affected by this Bill. It is only when I have supplied you—[HON. MEMBERS: "Not so."] That is the position under the Bill. A manufacturer has a right to decide where and how he will distribute his products. If I thought that you were a very nice customer—and I am sure that I always would—I would supply you with goods. But if, following that, you started to cut my prices, I might decide that because you are doing that I will cut off your water, and not supply you any more. Then you would go and say—

The Chairman

Order. I hope that the hon. Member will remember that he is addressing the Chair.

Mr. Bence

On a point of order. With due respect, Sir William, the hour is getting late, and I was wondering whether you had forgotten that I had the Floor.

It being, Ten o'clock, The CHAIRMAN left the Chair to Report progress and ask leave to sit again.

Committee report Progress.

  2. cc590-616
  3. RESALE PRICES BILL 9,575 words, 1 division
  4. cc616-26
  5. ROADS (M.4 ROUTE) 3,760 words