§ 4.19 p.m.
§ Report received.
§ Clause 2 [General functions of Director]:
LORD JACQUES moved Amendment No. 1:
Page 2, line 30, leave out ("economic")
§ The noble Lord said: My Lords, friends of consumers on all sides of the House have for many years lamented the fragmentation of consumer affairs over so many different Ministries. They welcome the appointment of a Minister of 545 Consumer Affairs, because here was promise of some co-ordination. The purpose of this Amendment is to ensure that there is effective co-ordination. If the Secretary of State is to be an effective co-ordination it is essential that he should be informed, and in this he will rely heavily upon the Director General of Fair Trading. The Director, in the Bill as it stands now, is somewhat inhibited. In matters economic he is charged with the responsibility of putting himself into the position of being aware of and having knowledge of the circumstances of economic practices that may be adversely affecting the interests of consumers. But when it comes to the other interests of consumers he is severely restricted. He can only receive and collate information; he has a purely passive role. We believe that if the Secretary of State is to be a successful co-ordinator the Director must be in a stronger position for keeping him informed. We believe that the Director should be required by Statute to put himself in the position of being aware of and knowing the circumstances of any practice, not only economic, which would adversely affect the interests of consumers.
§ When we were in Committee, Members on both sides who had a very active part to play in consumer affairs, told us that according to their experience matters of health and safety had been more significant than economic matters and that was likely to be the pattern for the future. The burden of the Minister's case against the Amendment which was proposed in Committee was that it would result in some duplication and waste. We on this side of the House are equally opposed to duplication and waste; and if we thought that the Amendment now being proposed would result in substantial waste we should not move it. We believe that the waste will be minimal, and for this reason: the Government have made it clear that they regard the post of Director as a very important one and we therefore assume that they will be seeking to appoint to the position a man or women of knowledge, but knowledge tempered by judgment. We also know, according to the figures given in the preface to the Bill, that the Director will be severely restricted in the resources that will be available to him or her, and we believe that the kind of person who is 546 likely to be appointed is not going to use his or her scarce resources on doing things which they can get done elsewhere without a charge against the budget. We therefore believe that the overlapping will be minimal.
§ At the Committee stage the Committee was evenly divided. We have had another look at the Bill and the Amendment, and we have come to the conclusion that the easiest and perhaps best way of dealing with this matter is not to make reference to economic, health or safety matters in the Bill but simply leave it that the Director should put himself in the position of being aware of and knowing the circumstances of any practice affecting the interests of consumers. Accordingly, we have put down an Amendment which is somewhat different from the Amendment moved in Committee. I beg to move.
§ 4.24 p.m.
§ THE MINISTER WITHOUT PORTFOLIO (LORD DRUMALBYN)
My Lords, this is an Amendment which, as the noble Lord says, is slightly different from the one moved in Committee; but it is nevertheless on a subject which has been debated very fully in another place and here. It is fair to recall to your Lordships that it was in response to arguments from the Opposition that the Government broadened the functions of the Director General by adding paragraph (b) to enable him to deal with evidence of practices which may adversely affect the interests of consumers other than economic interests, which are to be his primary function and indeed the reason why the Government decided to invest the Director General. Having gone so far to meet the wishes of the Opposition, we had hoped that the Opposition would welcome or at least be satisfied with this compromise. However, I agreed in Committee to reexamine the issue, and I can assure the noble Lord that I have done so with the utmost care. I must tell him, however, that we still do not see our way to go any further than we have gone already. The reason is, quite simply, that whether this is a minor matter or a major matter—and we think it is a major matter, while the noble Lord thinks it is a minor matter—if we did so, we should simply be duplicating the existing responsibilities of Ministers and Government Departments 547 to protect the consumer in non-economic fields, and duplicating the efforts and the resources which they devote to the discharge of their responsibilities.
Another thing that noble Lords do not quite recognise, as they might, is that the Amendments that we have already made serve to add a new dimension to the work of Departments by giving them access to a new source of evidence, information and advice about practices adversely affecting consumers' health and safety, and other non-economic matters, and they will enable the Director General to make recommendations to the Secretary of State and, through him, to the Ministers concerned about them. Here is at least part of the co-ordination to which the noble Lord, Lord Jacques, is aspiring. I mentioned at an earlier stage that there is a Ministerial Committee on consumer affairs chaired by my right honourable friend the Minister of Trade and Consumer Affairs. The noble Lord is underestimating the degree of co-ordination that will now take place, and I hope he will give due weight to this because the Director General will be able to receive and collate such evidence as comes his way, whether from sources such as consumer bodies, weights and measures inspectors, the courts, or any other individual, firm or body, or from his own observations in the course of discharging his duty to watch for and act upon practices which adversely affect the economic interests of consumers. But he will not be equipped, and it would be wrong to equip him, with the means to make the detailed assessment that is needed for the preparation of measures to deal with health and safety and other non-economic matters. It is not possible to reach conclusions, or keep yourself informed on such matters of health and safety, unless you are in a position to make these detailed assessments. We believe that the detailed assessments ought to be left to the bodies that have been established for that purpose.
Let me take the example of food standards. I am sure that noble Lords are well aware of the existence of the independent advisory committees, the Food Standards Committee, the Committee on Medical Aspects of Food Policy and its sub-committees dealing with 548 nutritional questions; and of the Committee on Medical Aspects of Chemicals in Food and the Environment and its sub-committees dealing with subjects such as toxicity, carcinogenicity and other matters. These committees and subcommittees are manned by the country's leading experts in medical and allied problems. The Food Standards Committee and Food Additives and Contaminants Committee also have experts on food science and technology, and the practical aspects of food production and distribution, and on enforcement, as well as consumer representation.
But what noble Lords seem to be overlooking is that nearly 300 people—expert advisers to the Department of Agriculture, Fisheries and Food, the Department's own officials and the Department of Social Security—are involved in this work. The majority are highly qualified in medicine or science. It is unthinkable that we should seek to duplicate their work by equipping the Director General—as we should have to do—with a comparable array of experts or even with a smaller and less effective body of experts. I am bound to repeat that that would be a prescription for waste. The noble Lord said that it would be only a little waste, but it would also be a prescription for conflict and confusion. It would also dilute the effort that the Director General can make in those areas where there is at present no machinery. As I said before, we are seeking here to fill the gap, and the gap is on the economic side. The other services exist already.
I do not want to detain your Lordships unduly, but I think it is important that we should recognise that the mere fact—and I refer here to something that the noble Lord, Lord Sainsbury, said during the Committee stage—that the number of orders made is fairly modest is not an indication of the activity or inactivity of these bodies. An example is the work of the Home Office in connection with the Consumer Protection Act. The mere fact that the Home Office has powers to make regulations relating to any prescribed class of goods on such matters as composition, content, design, construction, finish or packing and may require such goods to be accompanied by the prescribed warning or instructions—the mere fact that those powers exist 549 gives the Government the necessary leverage and influence to improve standards through voluntary agreement. When these powers exist and are properly administered by their appropriate Departments there is no point in seeking to duplicate them or to pass the whole or part of the responsibility on to somebody else.
When the Home Office receives a complaint about consumer goods which are alleged to he unsafe—and they receive a considerable number of such complaints each year—they investigate it and if on investigation it is confirmed that a hazard does exist they do not immediately rush off and make an order. Generally they approach the manufacturers or importers concerned. Almost invariably the manufacturers or importers are prepared to withdraw the goods if the hazard is at all serious, and to arrange for them to be modified so as to eliminate the hazard. At the same time, the Home Office issues a public warning in the form of a Press notice and sometimes it advertises this warning. If the approach to the manufacturer or the importer proves ineffectual then an order can be made. If the Director General were to be given a share in the responsibility for the safety of consumer goods he could do no more. Indeed in practice it is unlikely that he could do as much. He certainly could not do as much unless the goods had been thoroughly tested and ways of reducing the hazard tried out, and for that expert advice is essential.
When one thinks of the safety of consumers, accidents in the home spring to mind. To deal with them both the systematic gathering of case histories and the analysis and interpretation of such information are needed. This means research. The safety research section of the Scientific Advisory Branch of the Home Office has recently put forward proposals for various research policy projects to be undertaken in 1973–74. An example of the kind of research project is that now being undertaken by the Rubber and Plastic Research Association into the burning behaviour of plastic materials used in the manufacture of furniture. Of course it is proper that these should be allocated to specific Departments where the responsibility should lie.
550 I hope that I have said enough to convince your Lordships that this is not the kind of work that the Director General should undertake. The Amendments already incorporated into the Bill will ensure that the Director General will not ignore non-economic practices which adversely affect the consumer. If he comes across them his right course is to pass them to the Departments concerned to be handled by the appropriate experts and not to recruit experts of his own. He must discharge his own primary responsibilities. We shall give him plenty to do. To overload him would be no service to the consumer. We do not want him to be a faceless factotum; we want him to be a live and very human force in the service of the economic interests of the consumer.
I hope the noble Lord will appreciate this argument. I understand the desire that one should have one person or one body—and it would have to be a very large body (if we were to expand it so far) to be responsible for all consumer affairs. Obviously this subject was looked at by the Government at the time of the preparation of this Bill but we wanted to make the best use of the resources we already had deployed and at the same time to fill the gap that is acknowledged to exist. I urge the noble Lord not to press his Amendment because I really think it would—I was going to say almost destroy the Bill, but it would certainly drive a very deep hole in it. In point of fact, I do not think it would do much more than distract the Director General from his main functions. It would cause him to look into a great many things on which he has no power to act. We think that he should concentrate on the functions that we are giving him to perform.
§ LORD JACQUES
My Lords, I would compliment the Minister on the case he has put forward. He has put forward a very good case, but in so doing I think he has grossly exaggerated what we are seeking to do. We have sufficient knowledge of the ramifications of consumer affairs and the machinery of government to know that centralisation is not realistic and not practicable. All that we are trying to do is to ensure that the Secretary of State, who is chairman of the Ministerial committee to secure coordination, is adequately informed. As 551 chairman of that committee, he is in a very authoritative position and he should be more fully informed on consumer affairs in general than anybody else on the committee. We should like the Director General to be in a position where he could keep the Secretary of State fully informed.
I am wondering whether what we really want could not be achieved by some modification to paragraph (b). Clause 2(1)(b) at present says, "to receive and collate evidence". Would the Minister consider the possibility of putting in one further word, "to seek, receive and collate evidence", so that if the Director General had a suspicion that there were practices which were against the consumers' interests he could at least seek evidence to show whether there was or was not.
§ LORD DRUMALBYN
My Lords, the noble Lord has made a reasonable suggestion, but it overlooks the fact that the various Departments already have their officers seeking this evidence. What we are doing is to provide a further channel of evidence. I do not think we want to provide any further body to seek the evidence. I can assure the noble Lord that this was one of the things that was considered but it was resisted on these grounds, and I think they are cogent grounds.
§ Amendment, by leave, withdrawn.
§ LORD JACQUES had given Notice of his intention to move Amendment No. 3:
Page 3, line 22, at end insert—
("( ) It shall he the duty of the Director to encourage trade associations and similar bodies to establish codes of practice designed to maintain fair trading and protect the interests of consumers.")
§ The noble Lord said: At this stage I wish to thank the Minister for Amendment No. 46 and in view of that Amendment I shall not move this Amendment.
§ Clause 3 [Consumer Protection Advisory Committee]:
§ 4.40 p.m.
§ The noble Lord said: My Lords, in our view this is a crucial Amendment. As the Bill is drafted at the moment, the Consumer Protection Advisory Committee has a merely passive role. It can consider and advise only on matters which have been referred to it. We put down an Amendment in Committee to give the Advisory Committee a more positive role. The Minister's case against it was that it involved duplication. He told us that the Government had considered what machinery was required, whether it was a Consumer Council, a Consumer Institute or a Director, and then had come to the conclusion it should be a Director. If we were going so to amend the Bill as to convert the Consumer Protection Advisory Committee into a Consumer Council with a staff of its own, then we were going to duplicate. We have taken notice of that point and have now put forward an Amendment which in our view entirely overcomes the objection of the Minister. The Amendment which was put at the Committee stage gave the Committee authority to investigate, consider and recommend. The Amendment which is now before the House gives the Committee authority merely to recommend. Clearly, the key word which has been eliminated is "investigate". That is what would give rise to duplication and expense.
My Lords, there is a further change in the Amendment. In the Amendment proposed at the Committee stage, the Consumer Protection Advisory Committee could
recommend to the Secretary of State or another Minister or the Director".
The Amendment has been modified, and what we are asking is that the Committee should have authority to recommend only to the Director. It should be able to say to the Director, "From our observation this or that is going on; would you kindly have a look at it to see whether any action is necessary". We believe that this very slightly positive role on the part of the Committee would involve no duplication. It would enable the Committee to prod the Director if need be. We are putting forward what we believe is the very minimum to give this Committee some positive role, and
in view of the way in which the Amendment has been severely modified we hope it will be acceptable to the Minister.
§ 4.44 p.m.
§ LORD DRUMALBYN
My Lords, this Amendment seems a very simple one, but I am afraid there are objections to it. May I just state the case as I see it, because perhaps again noble Lords have not quite taken on board what the function of the Consumer Protection Advisory Committee is, what its role is, and what its duties are going to be. What the Amendment proposes in effect is that the Committee should be empowered to make recommendations to the Director General on its own initiative—I think that is the point—on matters affecting consumers' interests, whether economic or not. The Bill envisages that its prime function is to assess proposals submitted to it by the Director General for Statutory Orders regulating consumer trade practices which appear to him to have an adverse effect on the economic interests of consumers. The Amendment is not limited, as I understand it, to the economic interests; but that is the role which the Committee is to be constituted to fulfil. Its members will be chosen for their ability to assess the need for the orders and whether the orders are likely to be effective and equitable.
May I draw the noble Lord's attention—I am sure he is aware of this—to the fact that the Bill also envisages in Clause 14 that references will be made by the Secretary of State, by any other Minister or by the Director General Ito the Committee, and that the Committee is to consider and report on the references. In considering these references it will have access to the information which the Director General will have already compiled. He could not ask the question unless he had done some research into the matter first. The Director General has also to help it in any other way he can, but the Committee is not intended to have the means of carrying out investigations. The noble Lord says quite rightly that he does not mention investigations here, but the fact remains that it is a little difficult to make valid recommendations unless you have made some investigations first. It is the duty of the Director General to keep under review and to investigate. It would be quite 554 pointless to equip the Committee to do the work the Director General is given a duty to do. It is the Director General who is the watchdog; it is he who has to accumulate evidence—it is not for the Consumer Protection Advisory Committee to do that. It is for the C.P.A.C. to consider matters referred to it.
There is no provision in the Bill empowering it to employ staff. It is intended to be an advisory body. There is a dilemma here. On the one hand, if it is going to make valid recommendations, it needs to make investigations. On the other hand, it cannot easily or sensibly make recommendations as it is at present constituted. If the Committee were simply to deliberate at large and make recommendations without having any staff of its own to carry out research and investigation, it is difficult to see what action the Director General would take on those recommendations or what weight he would give to them. If the subject on which the recommendation was made was within his scope of action—as affecting the economic interests of consumers—no doubt he would look into the matter closely, but the Amendment is not confined to the economic interests.
If the recommendation related to non-economic matters, all he could do if he thought fit would be to treat it as evidence which he might take into account with a view to making a recommendation himself to the Secretary of State. There is nothing to prevent individual members of the Committee from drawing the attention of the Director General to practices which seem to them to be adversely affecting the interests of consumers. Indeed, they would be particularly well placed to do so as individuals. But I suggest to the noble Lord that to formalise this in the Bill and to provide that they should be able to make collective recommendations is a very different matter. I suggest that such a provision would be liable to give rise to friction and misunderstanding rather than to help the Director General, and if it did raise these difficulties it would impair the relationship we are seeking to establish between them. That is why I say that on the face of it this appears to be a sensible Amendment, but the fact is that the Committee is not constituted to initiate in this way and unless it has the power to initiate, its recommendations are not likely to be 555 very well founded. The Consumer Protection Advisory Committee is conceived as a body designed to give advice on the matters referred to it; it is not conceived as a pressure group. So I am sorry, but I feel unable to accept this Amendment.
§ BARONESS BURTON OF COVENTRY
My Lords, I think and I hope that there is a gulf between us on this particular matter. I shall not repeat what I want to say on the next Amendment, but it seems to me that one of the great drawbacks of this Consumer Protection Advisory Committee is that it is to have no powers whatsoever in respect of initiation. I have listened carefully to what the Minister has said and I took down what he said last time, and I appreciate the points he has made; but I would have thought that if the Government hope to get on this Committee really first-class people they know what should be looked at without having to undertake research on the matter. I am not convinced by their argument. I think the Minister probably understands what we are getting at, but I am very doubtful whether the Department understands this. I am not being offensive, but there really exists the feeling that this Committee—I do not know whether one would call it a rubber stamp, but it is not really going to have anything to do except what the Minister admits it is only going to have to do, and that is solely to consider matters referred to it. I for one (and I understand this is what my noble friend Lord Jacques was saying) do not agree that the Committee should have powers only to deal with what is referred to it. I would support the Amendment and I hope my noble friend will press it to a Division.
§ BARONESS PHILLIPS
My Lords, I too would like to support my noble friends here, even though the Minister has made this very reasonable explanation. There was one argument I could not follow. The Minister suggested that it would be necessary to have extra staff. Since the Director General must obviously have a back-up of staff, this would be merely a committee which would be utilising the staff already in existence. It did not seem to me that that argument was valid at all. One of the things that a committee manned by able people always ask is, "Are we to be merely a committee to give a rubber stamp to 556 everything put forward, or a body which can really bring to light some of the practices the consumer does not like? "At the moment we have not got such a body. We have only the ad hoc bodies, like the food standards body to which the Minister referred, or the Consumers Association, which again is nothing to do with the Government. So many of us saw this as an opportunity to create a committee which could really take the initiative. I hope that the Minister will find some way round the difficulty, even if he does not like our wording. I cannot see why the Director General should object to having a lively and able committee rather than a committee which merely accepts what he cares to bring before them. They may meet every month and he might not have anything to bring to them. I feel that he will certainly not get the quality of people that are needed to serve on this Committee.
§ 5.2 p.m.
§ LORD DRUMALBYN
My Lords, if I may speak again with the leave of the House, the noble Baroness wonders why the Director General should object. I do not think that this is quite the point. The Director General has not yet been appointed, and of course he has not been able yet to object. We in this House are saying what are to be his functions and what are to be the functions of the Consumer Protection Advisory Committee. I think perhaps we are apt to personalise this matter too much at times. This is going to be an organisation, and the Director General is going to be the head of it. He is going to be at the head of the body to bring to light practices adverse to the consumer. That is what he is being set up to do. The Consumer Protection Advisory Committee can make recommendations only if they have the means to investigate. I do not think one can say that they could use the Director General's facilities to investigate.
I think this will work out quite well, because we shall be appointing very intelligent and experienced people to the Consumer Protection Advisory Committee. The mere fact that they are members of the Committee will orient them towards observation of consumer practices. They, individually, at least, will constantly be in touch, I have no doubt, with the Director General and will be able to bring matters to his attention. All the 557 noble Baroness and the noble Lord, Lord Jacques, are asking is that this should be formalised and that the Committee should make their recommendations as a body. I am saying that I do not think this would work, because the Director General would say to them, "You have not investigated this. You are coming along with ideas, and I am very glad to have your views". To formalise that into the position of recommendations seems to me to be dangerous. I think it could be the cause of friction. I really do not think this would improve the Bill or improve the kind of relationship that we want to see with the Director General and the C.P.A.C. He wants to be able to rely upon it as a body of assessors that will keep him on the right lines. They are going to keep him on the right lines in this way. He is not going to keep them on the right lines by seeking recommendations from them. As the noble Baroness says, there is a difference of approach here, and one has to make up one's mind what one wants this body to do. I think one ought to start in the way we are doing. It could be that this might evolve; we do not see it evolving yet, but it could. We believe that the right thing to do is to treat the Committee as a jury of assessors in the first place and see how that works out.
§ BARONESS PHILLIPS
My Lords, can the noble Lord say what is the difference between a Mrs. Brown as a consumer writing to the Director General and a group of Mrs. Browns who make up a committee approaching the Director General? The Minister described the operation as a formalising one. I think that it has been formalised the other way, that if they want to approach him they have to do it as individuals.
§ LORD DRUMALBYN
My Lords, officially as a body the Consumer Protection Advisory Committee will not be given the function of making recommendations to the Director General. We think this would be unwise at the present stage. If they like to give their views, whether individually or two or three together, I am sure that in view of their personal qualities and their experience on the Committee the Director General will be more willing to listen to them than to other people.
§ LORD JACQUES
My Lords, the difference between us seems to be very clear. The Government's attitude to this Committee is that it should merely advise on matters submitted to it, and that would largely be to give its views on proposed Statutory Orders. We are suggesting that the Committee should have a second function, that it should be able to make recommendations to the Director General. On this Committee will be representatives with knowledge or experience of work in consumer organisations. They may come from organisations which have recently done the necessary research work and found that this or that practice is going on. Surely they should have the right to raise it in the Consumer Protection Advisory Committee, having regard to the name of the Committee, and say that this is going on and would the Director General kindly have a look at it to see whether anything needs to be done. That is the minimum of positive role that we should expect this Committee to have. We have come down so far and minimised its role so much that we think it should be acceptable to the Minister.
§ 4.58 p.m.
§ On Question, Whether the said Amendment (No. 5) shall be agreed to?
§ Their Lordships divided: Contents, 55; Not-contents, 72.559
|Airedale, L.||Diamond, L.||Leatherland, L.|
|Amherst, E.||Donaldson of Kingsbridge, L.||Llewelyn-Davies of Hastoe, B.|
|Amulree, L.||Douglas of Barloch, L.||Lloyd of Kilgerran, L.|
|Archibald, L.||Evans of Hungershall, L.||Maelor, L.|
|Bernstein, L.||Gaitskell, B.||Meston, L.|
|Beswick, L.||Gardiner, L.||Nathan, L.|
|Blyton, L.||Garnsworthy, L. [Teller.]||Ogmore, L.|
|Brockway, L.||George-Brown, L.||Phillips, B.|
|Buckinghamshire, E.||Granville of Eye, L.||Platt, L.|
|Burton of Coventry, B.||Hale, L.||Redcliffe-Maud, L.|
|Byers, L.||Henderson, L||Sainsbury, L.|
|Champion, L.||Hoy, L.||St. Davids, V.|
|Cooper of Stockton Heath, L.||Hurcomb, L.||Samuel, V.|
|Davies of Leek, L.||Jacques, L.||Shinwell, L.|
|Slater, L.||Tanlaw, L.||Wise, L.|
|Stocks, B.||Taylor of Mansfield, L.||Wright of Ashton under Lyne, L.|
|Stow Hill, L.||White, B.|
|Strabolgi, L. [Teller.]||Williamson, L.||Wynne-Jones, L.|
|Summerskill, B.||Winterbottom, L.|
|Aberdare, L.||Elles, B.||Napier and Ettrick, L.|
|Alexander of Tunis, E.||Emmet of Amberley, E.||Nugent of Guildford, L.|
|Amory, V.||Exeter, M.||Oakshott, L.|
|Atholl, D.||Ferrers, E.||Orr-Ewing, L.|
|Balfour, E.||Fraser of Lonsdale, L.||Rankeillour, L.|
|Balfour of Inchyre, L.||Gainford, L.||St. Aldwyn, E.|
|Belhaven and Stenton, L.||Gowrie, E.||St. Helens, L.|
|Berkeley, B.||Greenway, L.||St. Just, L.|
|Brooke of Cumnor, L.||Grenfell, L.||Saint Oswald, L.|
|Brooke of Ystradfellte, B.||Grimston of Westbury, L.||Sandford, L.|
|Brougham and Vaux, L.||Hailes, L.||Selkirk, E.|
|Carrington, L||Hailsham of Saint Marylebone, L. [L. Chancellor.)||Sempill, Ly.|
|Cawley, L.||Somers, L.|
|Clwyd, L.||Hanworth, V.||Strathclyde, L.|
|Coleraine, L.||Jessel, L.||Strathcona and Mount Royal, L.|
|Conesford, L.||Killearn, L.|
|Courtown, E.||Limerick, E.||Strathspey, L.|
|Craigavon, V.||Long, V.||Tenby, V.|
|Crawshaw, L.||Lothian, M.||Teviot, L.|
|Daventry, V.||Merrivale, L.||Tweedsmuir, L.|
|de Clifford, L.||Milverton, L.||Tweedsmuir of Belhelvie, B.|
|Denham, L. [Teller.]||Monck, V.||Vivian, L.|
|Derwent, L.||Monckton of Brenchley, V.||Windlesham, L. (L. Privy Seal.)|
|Drumalbyn, L.||Mowbray and Stourton, L. [Teller.]||Wrottesley, L.|
|Dundonald, E.||Young, B.|
On Question, Motion agreed to.
§ 5.7 p.m.
BARONESS BURTON OF COVENTRY moved Amendment No. 4:
Page 3, line 1, leave out subsection (3).
§ The noble Baroness said: My Lords, I have no intention of asking the House to divide on this Amendment, and if I am given permission at the end I shall withdraw it. I have put it down for a specific purpose, because I wanted to test opinion in the House to find out whether other Members agreed with me or disagreed, and particularly to see if I can persuade the noble Lord, Lord Drumalbyn, to give just a little on this matter. Primarily I put it down because I am worried, and it seemed the best thing to put it down on this particular subsection empowering the Secretary of State to appoint full or part-time members.
§ At the Committee stage the noble Lord, Lord Drumalbyn, gave us some points about this Consumer Protection Advisory Committee, and he has repeated some of those points this afternoon.1 He told us that it will be a body of part-time people brought together from time to time. I do not know whether my noble friend Lady Phillips is always optimistic 560 —possibly she is—but I certainly thought that she was optimistic this afternoon because she spoke about monthly meetings of this Advisory Committee. As I understood the Minister when he answered me at the earlier stage, when I had the temerity to suggest that perhaps the Advisory Committee might meet weekly, I was assured that they certainly would not meet weekly, and that they would meet "from time to time as required". Therefore, I hope that my noble friend Lady Phillips is not being optimistic, because I should regard monthly as not being often enough. But perhaps we could leave that point for the moment.
§ The noble Lord, Lord Drumalbyn, went on to say that there is power for the members of this Committee to be paid, but he does not envisage that it will be necessary to pay them—certainly not in the initial stages. I should like to anticipate what the noble Lord may say in reply. We in this country have a great tradition of social service, and unpaid social service, which I think we would all wish to uphold. So I am not talking about cash value; I am talking about the status of the Committee which is not paid. If this Consumer Protection Advisory Committee are to be a Committee of the 561 status which I and the consumer organisations envisage, I certainly think that the members should be paid.
§ The next point which the noble Lord made was when I asked him whether the Committee would have the power or the authority to call on outside expertise, if it were necessary. The noble Lord said that they would not have the power, that it would not be necessary, and that if they required any outside expertise the Director General was there to supply it. He told us that the Committee would have no secretariat of their own, but would be staffed by the Department of Trade and Industry. He also told us that they would have no power to initiate inquiries. I just do not think this is good enough. We may not be able to do anything about it now, but if one feels strongly one can always hope that eventually, in time, something will get through.
§ I should like to say straight away that I have a great admiration and respect for our own Civil Service. I know that when one prefaces one's remarks with a statement like that, one is presumably going on to say something which might be derogatory to the organisation; but it is quite true that I have a great admiration and respect for it. I believe that this Committee will be run by civil servants and I can see no alternative to that from the facts given to me by the Minister. There is something which is worrying me very much indeed, and I hope that it is worrying other people who have not had either the good fortune or the bad fortune to be Ministers, or who are not members of the Civil Service.
§ I thought this afternoon that what the noble Lord said in reply to my noble friend Lord Jacques on Amendment No. 1 (and again I say this without wishing to give offence) was a typical Civil Service reply. It went on for ever; it went around every possible thing it could go around; it could have been much briefer. I am not trying to be rude, and I hope the noble Lord knows that I am not being rude. But my reaction was, "My goodness! This could have been said in half the time"; the reply just seemed to go on and on. I do not know whether I shall have any friends in the Department of Trade and Industry after this—or, indeed, whether I have any now; but I feel that 562 civil servants tend to live in an ivory tower. I cannot think of a better expression than that. There really is a gulf between people in the Civil Service and people not in it. It is probably unavoidable, but I think it is there. I believe that if one is in the Civil Service one tends to think as the Civil Service thinks. Of course if one is a high flyer and goes straight to the top that is splendid; and some people come out of the Civil Service. But there is a Civil Service-ese type of thinking.
§ I do not believe that any of us in this House to-day—I may be proved wrong—who are interested in consumer affairs and who are not in the Civil Service could ever proffer terms of reference like this for the Consumer Protection Advisory Committee. It would never occur to us, and I do not think it would occur to members of consumer organisations, if we wished the Committee to be effective. It is this gulf that worries me. Every day we raise questions like this, and there is a gulf between the Civil Service type of thinking and—I say this with the best will in the world—the ordinary consumer. If somebody gets up and says, "But civil servants are consumers, too", I shall reply that I know that, but that does not bridge this gulf. We get this same putting-off, this same type of answer, which is rather like hitting a mattress with no rebound. With respect, it is something of which the Civil Service should be made aware.
§ I think my noble friend Lady Phillips raised my next point. To whom does one write if one wishes a matter to be raised? It is not the slightest use writing to the Consumer Protection Advisory Committee. They have no powers of initiation, so we are stumped there. Presumably one can write to the Minister; but one can write to the Minister now. If the Committee have no powers to initiate, and can only deal with points referred to them, I should like to ask whether the Minister agrees with me—I do not suppose he does—if I say that, really and truly, as matters are at the moment we do not need the Consumer Protection Advisory Committee. The Director General will do the work; and good luck to him! I hope that we get a first-class person. But this Advisory Committee is a smokescreen. I do not believe that the large body of consumers in this country 563 have any idea that the Consumer Protection Advisory Committee, on which we set so many hopes, will be no more than a rubber stamp to deal with what is referred to them; to meet from time to time as and when necessary; unpaid and without staff of their own, but staffed by the Department of Trade and Industry. This worries me very much. I hope that I have not been rude. My Lords, I beg to move.
§ VISCOUNT HANWORTH
My Lords, I am afraid that I disagree somewhat with the noble Baroness. Lady Burton. It is important that the Director General is strong and well advised. I should hate to see a clash between him and the Committee, and I believe that if one takes the word "advisory" in its broadest sense the Committee are perfectly capable of putting forward their own ideas. It would be the greatest pity, however, if they were made so strong that a clash could occur. The Government have decided that the Director General should have the power in this case, and it would be a great mistake to make a change.
§ 5.19 p.m.
§ LORD DRUMALBYN
My Lords, I have been most interested, as always, to listen to the observations of the noble Baroness. Lady Burton. I do not know what will happen to her the next time she climbs up the ivory tower and meets a few civil servants. I was also glad to hear what the noble Viscount, Lord Hanworth, had to say on this matter. Probably the best way of looking at this point is to consider what would happen if we did not have a Consumer Protection Advisory Committee in the Bill. It would have been quite possible to let the Director General get on with the job. As the noble Viscount said, he is the man who will have the power, the means and the resources. But, as I said at an earlier stage, it is just because he has such considerable power, and because the Secretary of State is to receive proposals from him, that we thought it right that people drawn from the public should be involved and should have a look at the proposals for orders which the Director General makes from time to time, and that he should submit questions to the Committee as to whether a practice is 564 contrary to the interests of consumers, and should ask for their advice in the form of a report. I think we should have been criticised if we had not put in a body like this.
The question is whether, admitting that we need a body drawn from the public to look at what the Director General is proposing, we should then extend its functions further. I think this is the point. We have been pressed to extend them further. I have been maintaining that on the whole this would be a mistake because it would be duplicating the Committee's functions. If we extend them further—and the noble Baroness is right to attach her remarks to this particular provision—what she is moving to do is to leave out the words:The Secretary of State may appoint persons to the Advisory Committee either as full-time members or as part-time members.She is right in what she says. We do not believe that for the ordinary members of the Advisory Committee there will be more than a part-time job. I think that it would be only right that they should sometimes sit in panels—and this would still further reduce the number of times that they gather as a body. This is inherent in the nature of the task; for they are here as a jury of assessors.
My own feeling is that the Secretary of State will have no difficulty in getting people to perform this kind of task. It will be a very responsible job because in effect what they will be doing is coming in on legislation. They will be taking part in the preparation of orders, sifting them, assessing them and so on. This is a very responsible task. We shall need people of high calibre to do it, people who would not be able to afford the time to serve full-time. We shall get a higher calibre of people in asking them to devote their time only periodically. I think this is the right way to deal with it. I hope that the House will agree that there should be no difficulty in getting people to take on a very responsible task of this kind. There are many other Committees of various kinds carrying on responsible jobs of this kind in one way or another, Departmental Committees, Royal Commissions and so on, whose members are not paid. I do not think that the status of a body depends on the amount its 565 members are paid. I find myself disagreeing with the noble Baroness on these matters. The noble Baroness is right in thinking that we are not going to encourage people to write to the C.P.A.C.; that the C.P.A.C. is not going to advertise "Write to us!" This is not its function. There are proper channels established for communication from the consumer, and I hope we shall be fostering these channels. There is a great deal that the Director General can do about it. We hope that letters will come ultimately to the Director General.
I hope that I have dispersed the "smokescreen" that the noble Baroness talked about. So far from being a smokescreen, this was a logical step in the argument. The Director General's power is so great that he needed—and I expressed it in a way that was not very much to the liking of the noble Lord, Lord Diamond—a sounding board or touchstone. This is the function. The Advisory Committee will not be meeting until the Director General gets into his stride. The Director General will have to get together his machinery and his staff and get down to the job and see what has to be done by way of orders. Once he gets into his stride, some of them will be kept pretty busy. I hope I have described adequately, though perhaps loosely, the way in which we look at the duty of the Consumer Protection Advisory Committee. Given this point of approach, I think we have got this matter in the right perspective. I know that it does not go as far as noble Lords would like it to go; but as a body it was not envisaged in this light at all. I hope that, on consideration, noble Lords will feel rather less dissatisfied with the concept now than was perhaps the case when we began the discussion.
§ BARONESS BURTON OF COVENTRY
My Lords, I do not agree with the noble Lord, but I thank him for his reply. I am sure the Advisory Committee will have the good wishes of everyone in this House. In hoping that they will be considerably overworked, may I ask the leave of the House to withdraw my Amendment.
§ Amendment, by leave, withdrawn.
§ 5.27 p.m.
§ LORD JACQUES moved Amendment No. 6:566
Page 4, line 19, at end insert—
("( ) At least sixty per cent. of the members of the Advisory Committee shall be persons described in paragraphs (b) and (c) of subsection (5)").
§ The noble Lord said: My Lords, this Amendment is concerned with the composition of the Advisory Committee. The Committee will consist of at least three elements: those who have had knowledge or experience in the supply of goods; those who have had knowledge or experience in enforcement; and those who have had knowledge or experience in consumer organisations. There is nothing in the Bill as it stands which would prevent those who have had knowledge or experience in the supply of goods from being in a majority. We think that in a Consumers' Protection Advisory Committee those with knowledge or experience in consumer organisations should be in a majority. However, the Amendment does not go so far as to insist on that. What we are asking is that those with knowledge and experience in enforcement and those with knowledge and experience in consumer organisations should together form 60 per cent. of the Committee.
At the Committee stage, the Minister pointed out that in addition to the three categories which I have mentioned, other people would probably be appointed. He mentioned, in particular, lawyers and accountants. I should have thought that a lawyer or an accountant should have been appointed to this Committee because he specialised in a certain way; because he specialised in advising suppliers, or in advising enforcement authorities and in advising consumer organisations; so that in one way or another he could have been put in one of the three categories. Furthermore, the Minister said at the Committee stage:
I cannot believe that the Secretary of State will appoint a majority of traders; that is, persons with a knowledge of or experience in supply.
He went on to say that he was prepared to look at the Amendment to see,
if we can make it clear that our object is to get the best possible balance in this Committee".
§ The real purpose of this Amendment is to get from the Minister the results of the thought that he promised he would give to this question. If he is not prepared to accept this Amendment on the 567 Marshalled List, I would ask whether there is any other Amendment that he will accept. Would he, for example, accept a straightforward Amendment which limited the proportion of those who have knowledge or experience as suppliers? If so, we should be pleased to withdraw this Amendment and put down a different Amendment at the next stage. I beg to move.
§ LORD DRUMALBYN
My Lords, the noble Lord is indefatigable in trying to get the right form of constitution for this Committee. I do not complain about it, but in a way his approach is negative. He wants to make certain that it is not overridden by one section or another. I think he made a slip of the tongue in saying the Committee will consist of three groups. It will not. Subsection (5) makes it quite clear that those appointed are to have knowledge or experience of the three sections here: first, experience in the supply of goods; secondly, experience in the enforcement of weights and measures legislation; and, thirdly,experience in organisation, established, or activities carried on, for the protection of consumers".But there need not be more than one of each, so it would be quite wrong to say that the Committee, which is to have a minimum of 10 and a maximum of 15, will consist of these three groups.
It is the intention of the Secretary of State that there should be independents. I said that there might be a lawyer or an accountant because there generally is on such committees. I did not mean to imply that they were going to be appointed because they were lawyers or because they were accountants. They would be appointed for their knowledge of and experience in consumer affairs, their interest in consumer affairs, and their general ability to perform the function of an assessor on this Committee. I think it would be a mistake to try to tie down the proportion in any particular way. It might well be that 50 per cent. will be independents, not in any of these three categories; I do not know. The Secretary of State will have to find the best people he can get. What the clause sets out to secure is that there should be at least some people with this specialised experience; but there will be others with 568 more general experience—and, of course, the groups will not necessarily be mutually exclusive. The noble Lord, with his own particular experience, might easily qualify under more than one of the groups, I think. I just say this by way of illustration.
It is not intended that people should be appointed from particular callings or bodies, or anything like that, and then be representative of those callings, vocations or whatever. They will be appointed on their own merits for what they can contribute to the Committee, and, so to speak, while their ticket of entry may be that they fall into group (a), (b) or (c), on entering the Committee they will, as it were, hand up their ticket of entry and just come in as members of the group to give it the benefit of their accumulated wisdom and experience. My Lords, I hesitate to say this, but I have a particular experience of this in the Advertising Standards Authority. In that case, I was immensely impressed that, whatever the background from which people were appointed to that committee, once they got on to the committee one hardly knew from what background they came. They contributed their views without reference to their backgrounds at all, and never was there a division on such grounds between the independents and those who came from the Press, and so on—never. I would imagine that exactly the same situation would apply here. I do not think it is a good thing to try to lay down particular provisions of this kind—limiting provisions. But I can say to the noble Lord that what he is out to achieve is fully understood and appreciated by my right honourable friend, and I am quite certain that when these appointments come to be made he will not have cause to complain that the Committee will be dominated from any particular quarter.
§ On Question, Amendment negatived.
§ Clause 15 [Exclusion from s. 14 in respect of certain services]:
§ 5.35 p.m.
BARONESS PHILLIPS moved Amendment No. 7:
Leave out Clause 15.
§ The noble Baroness said: My Lords, we now return to a point which I raised at Committee stage. It refers to the 569 clause in the Bill dealing with the professions; and, with permission, I would also speak to Amendment No. 48, because that refers to the same point. At Committee stage I made the point, which I believe to be true, that in these days people do not spend their money only on goods; they also spend it on the services of professional people. I noticed that the Consumer Information Bulletin, which is a document that comes to me from the Department from time to time as it is issued and which I find a splendid little piece of information, made reference to the reply which the Minister had given in another place but which was in substance what the noble Lord, Lord Drumalbyn, had said when replying to me in Committee.
§ He said that the Commission (we are now talking about the Monopolies Commission) would look at the practice of barristers and advocates in the United Kingdom (these were practices which are known as the two-counsel rule) and the regulation of charges by scale fees by architects and surveyors.
The Bulletin then goes on to say:
There will also be scrutiny by the Commission of certain restrictions on advertising by barristers, solicitors, accountants and veterinary surgeons.
My Lords, this is splendid, and I should be the last to say that this is not right and valuable. But it does not go far enough. Since the Committee stage I have had a number of letters from professionals urging me to press this point again. I noted from one Sunday paper that certain dentists were actually conducting sessions on how to brush your teeth, and were charging £18 a session for this privilege. I would not say that one needs to protect fools who spend £18 on such a foolish enterprise; nevertheless, I would suggest to your Lordships that if it were a trader who was engaged in this sort of thing it would be called an undesirable trading practice.
§ The point I am making is that I feel that, so far as the professions are concerned, occasionally—I say "occasionally" because we know that, by and large, the professions give good service—the ordinary customer feels that some of their practices need investigation. In one letter my attention was drawn to a group practice of doctors, where one of their 570 patients had approached them at 1 p.m. one day seeking treatment for a child who had had a minor accident to its hand. Not one of these doctors was available from one to three o'clock on any day of the week, so the parents took the child to the hospital. The hospital, not unnaturally, asked why the matter had not been dealt with by the doctors, and then suggested that the woman should complain. When she telephoned to talk about this and to put in a complaint, one of the doctors said, "Of course, if you put in a complaint one of us will be struck off". Now this is a form of social blackmail; and perhaps naturally, the woman did not pursue the matter. But more and more one comes to realise that on many occasions the ordinary person feels that the professions do not necessarily give them the service to which they are entitled, and that some of their practices come very near to something which should be under scrutiny in connection with this Bill.
§ My Lords, I am not attacking the professionals generally. I am saying, as I said in Committee, that if a man is doing his job well, whether he is a trader or a professional man, he has nothing to fear. This type of legislation is aimed at dealing with the undesirable, and I feel that this Bill provides an opportunity to include a group of people in the community who in fact are receiving much more money than others from the ordinary person. Nowadays, very few people go through life without engaging a solicitor, an architect or a veterinary surgeon, or without going to a doctor or a dentist; and I would suggest to your Lordships that there is nothing unreasonable in including them in this very useful piece of legislation which we are now discussing. I beg to move.
§ VISCOUNT HANWORTH
My Lords, this Amendment has had quite a long history. It was started off successfully at Committee stage in another place but was opposed by the Government and deleted at Report. It was raised again here at Committee stage but was not pressed to a Division. First of all, what are the Government's reasons for opposing this Amendment? In the first place, they say that the professions have their own organisations to look after these matters, and I should be the last to think that the professions did not have a very high standard of ethics. That is not in dispute, 571 although occasionally they may fail; but, my Lords, it is very seldom that one allows, without some check, an organisation completely to run its own affairs. After all, that is what Parliament is about; it is a check on the Executive. One knows that professions tend to be notoriously reactionary, so far as change is concerned, and sometimes tend to obscure matters. So I think it is a good thing if there is somebody who can occasionally look at matters from outside.
The second argument of the Government is that the Bill is not really applicable. If it is not applicable, then why worry and why take the trouble to put in a Schedule and eliminate the professions? The Schedule may well be anomalous. The truth, of course, is rather otherwise; the Bill can impinge on the sort of thing that I should like to see the Director able to examine in the occasional case when a profession as a whole is not acting completely in the consumers' interests. There is a third Government argument which is that the whole matter can be examined by the Monopolies Commission. This is a very blunt and large weapon to deal with matters of this sort, unless something is going very seriously wrong; and of course there is a considerable delay.
Fourthly—though they have not said so—it is quite clear that there is a very strong lobby from the professions themselves. It is understandable that if a profession can govern its own affairs without being beholden to anybody else, or without anybody else looking at it, that is the sort of thing usually preferred. I think there are a number of instances in which one might want to look at what the professions were doing and which would in fact come under the Bill. First of all (and I am quoting these examples not because I think that anything necessarily needs to be done but because they are the sort of areas which might conceivably be looked at) there is the procedure for dealing with complaints. This might be misleading and confusing and come under Clause 17(2)(b) of the Bill. Again, taking the architects' field, it could be that there is confusion as to what responsibility an architect has for supervising the builder. There certainly is this confusion in the minds of many people and it could be that some improvement might 572 be made there; but I am not saying definitely that there should be. Methods of charging professional fees may also sometimes be obscure, unintelligible and misleading.
I want to make absolutely clear, my Lords—and this unfortunately got confused at Committee stage—that there is no question of this part of the Bill dealing with negligence or individual mistakes made by professionals. The only area which it would cover is the general rules covering the whole of a profession which might be looked at. If we can improve the professionals' rules I think it would be useful. We shall have a very powerful and reasonable Director General and I can hardly conceive that there would be an attempt to do anything which was unreasonable.
§ LORD FRASER OF LONSDALE
My Lords, can the noble Viscount tell me whether his Amendment would include a trade union secretary? It might be a good thing to have a look at him occasionally to see whether he treats his members properly.
§ 5.45 p.m.
§ THE PARLIAMENTARY UNDERSECRETARY OF STATE, DEPARTMENT OF TRADE AND INDUSTRY (THE EARL OF LIMERICK)
My Lords, without wishing in any way to curtail any debate which may follow, I think it might be for the convenience of the House if I were to intervene, not at any great length but to give some new emphasis to the very careful explanation which has already been given to the policy of the Bill. My noble friend Lord Drumalbyn explained very fully in Committee why the Government considered it inappropriate to ask the Consumer Protection Advisory Committee to investigate specifically professional practices. This is not because the Government believe that the professions should, be above the law or immune from scrutiny. On the contrary, the conduct of individual professional practitioners is already subject to rules and regulations, in many cases under the authority of Parliament, to a far greater extent than is the case in other fields of business 573 activity. The Government have also made it clear that they do not intend to shield the professions from appropriate forms of external inquiry in appropriate cases. The professions have already been the subject of very thorough preliminary survey by the Monopolies Commission. Further references to the Monopolies Commission are now being prepared, and, as the noble Baroness, Lady Phillips, mentioned a moment ago, the Commission are to investigate that practice of barristers and advocates in the United Kingdom known as the "two counsel" rule, the regulation of charges by scale fees on the part of architects and surveyors and certain restrictions relating to advertising by barristers, solicitors, accountants and vets.
I might perhaps stress that it is only by virtue of the provisions of the present Bill that one of these references can be proceeded with. The provision in the Monopolies Act 1948 makes it impossible, as things stand at present, to ask the Monopolies Commission to investigate monopoly conditions which are expressly authorised by or under any enactment. This limitation is to be found in Section 2 of the Monopolies Act 1948. The rules about advertising by solicitors have a statutory basis in Section 28 of the Solicitors Act 1957, and cannot be investigated by the Monopolies Commission until the law has been changed. Once the 1948 Act has been replaced by the provisions of the present Bill, that particular limitation will cease to apply.
This change in the law underlines the Government's commitment to see that professional problems can be the subject of external scrutiny in appropriate cases. That is not to say that the same procedures are necessarily apt to professional practices which are suitable for other forms of industrial and commercial activity. The extent to which professions are already regulated and have their disciplinary procedures, as referred to by the noble Viscount, Lord Hanworth, should not he overlooked. There are many professions besides that of solicitor which are regulated under Statute; their rules and regulations are subject to approval by the Privy Council. It must be assumed that Parliament has given its general approval to the procedures which operate. This, in short, is why the Government do not consider it appropriate 574 to provide for the possibility that specifically professional practices might be made criminal through the procedure described in Part II of the Bill. I should emphasise, as was clearly recognised by the noble Viscount, Lord Hanworth, that Clause 15 applies only to procedures in Part II of the Bill, and these procedures are intended to deal with practices of a general class.
If your Lordships are concerned about the standard of service offered by individual professional practitioners, as appeared to be the case from some of the/ examples cited in the debate, I should draw attention to the provisions of Part III, where the Director is empowered to take action against persons who persist in a course of conduct which is detrimental to the interests of consumers and unfair to them. Hence, there is here no question of exemption, and these powers are exercisable against professional practitioners on exactly the same basis as against anyone else. The special provision which Clause 15 makes for the professions is the outcome of careful consideration. I hope that what I have said will underline the extent to which the professions are already subject to examination. The Government believe that it would be thoroughly unsatisfactory to provide in addition for investigation by the Consumer Protection Advisory Committee and the possibility of criminal Orders. I hope that the House will accept the force of these considerations and will leave Clause 15 as it stands.
§ LORD PLATT
My Lords, I am very grateful to the noble Earl, Lord Limerick, for having intervened. His intervention makes it unnecessary for me to say anything more at length. The medical profession has been instanced by the noble Viscount, Lord Hanworth, and by the noble Baroness, Lady Phillips. I cannot speak for any other profession but I should like to point out, particularly to the noble Viscount, that it is not merely that the profession regulates itself, though to a very large extent it does and should continue to do so, in my opinion. That is one of the things which distinguishes a profession from a trade. After all, my Lords, a general practitioner is responsible to his Executive Committee, or he will be responsible to his Family Practitioner Committee 575 which has disciplinary powers. He is responsible to the Ethical Code of his own profession or a particular body of the profession to which he belongs, possibly a Royal College. He is under the General Medical Council, which has quite fierce disciplinary powers. If he is working in a hospital he is going to be scrutinised by the Hospital Commissioner. As the noble Earl has explained, there are other parts of the Bill from which the professions will not be exempt and I should not like to think that we were going to accept this Amendment.
§ BARONESS PHILLIPS
My Lords, there is only one point that I should like to pick up. Some confusion seems to have arisen because I gave individual examples. I think it is possible to determine what I call trade practices only by the way in which individuals behave. I do not think that individual dentists would have these brush teeth sessions, but so far as I can gather it is a general trade practice. I appreciate that one does not deal with individual complaints, and I know exactly what we are talking about, but I find it a little disturbing that we tend to exclude certain protected groups.
I recall the shock I felt when I spoke to public health officers and discovered that Crown premises were exempt from public health regulations. This seemed to me to be an anomaly. When I put down a Question I was told by the Minister that the voluntary system worked very well. I am sure that is true. But what I say to your Lordships is that most of the trades and professions have voluntary groups, yet this was not held to be enough to exclude them from the provisions of this Part of the Bill. Since the professions are in the market collecting money for services given I feel that they are on the same level as a trader who sells goods. We have moved away from the old idea that one or two people may have been concerned with the professions. Now we all call upon professional services at some time, and sometimes quite often during a lifetime. I do not see the reason for the exclusion, despite the explanation which I have been given. The question of the Monopolies Commission is one point, but it still does not cover the other professions, 576 many of which are getting more and more opportunities to provide services. On the other hand, I see that I am not going to get very far with this point and therefore I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Clause 16 [Restriction on references under section 14 in respect of certain goods and services]:
§ 5.56 p.m.
LORD DRUMALBYN moved Amendment No. 8:
Page 13, line 3, after ("section") insert (""Minister" includes a Minister of the Government of Northern Ireland, and").
§ The noble Lord said: My Lords, this Amendment relates to a fairly simple point. It is essentially a technical and drafting Amendment. Clause 16 provides that, before referring to the Consumer Protection Advisory Committee, the trading practices of certain nationalised industry bodies carried on only in connection with the supply of goods and services listed in Schedule 5, the Director General must first secure the consent of the Minister with sponsoring responsibility for that industry. The definition of "Minister" in Clause 135(2) excludes Northern Ireland Ministers from the scope of this clause unless a contrary provision is provided, and the Amendment is designed to deal with a case where a Northern Ireland Minister is responsible for a statutory body. It is necessary to cover the Northern Ireland Electricity Service which came into operation on April 1, 1973, and whose members are appointed by the Northern Ireland Minister of Commerce. I beg to move.
§ Clause 19 [Scope of recommendation proposed in reference to which section 17 applies]:
LORD DRUMALBYN moved Amendment No. 9:
Page 14, line 18, leave out ("or classes").
§ The noble Lord said: My Lords, with this Amendment I should like to discuss Amendments 10, 11 and 12 and Amendment No. 49. These Amendments are intended to broaden the scope of Clause 19 to ensure that there is no undesirable restriction in the scope of Orders made under Part II 577 of the Bill. There has been some doubt whether the reference in Clause 19(1)(b) to the class or classes of consumer transactions in relation to which practices may affect consumers could narrow the Director General's power to make recommendations or Orders covering, for example, practices relating to the sale of goods generally. The Amendments are self-explanatory and they remove this doubt. I hope that they will be acceptable to your Lordships.
§ BARONESS PHILLIPS
My Lords, it may assist the Minister if I say that by his courtesy in sending me copies of the majority of these drafting Amendments we have been able to study them and are not likely to be raising any points.
Page 14, line 41, leave out from ("proposals") to ("and") in line 42.—(Lord Dramalbyn.)
Page 14, line 31, leave out from ("order") to ("of") in line 32.—(Lord Drumalbyn.)
Page 14, line 41, leave out from "proposals") to ("and") in line 42.—(Lord Drumalbyn.)
§ Clause 29 [Power to enter premises and inspect and seize goods and documents]:
§ 5.59 p.m.
LORD AIREDALE moved Amendment No. 13:
Page 18, line 31, leave out ("only").
§ The noble Lord said: My Lords, I gave due notice in Committee that I should be moving this Amendment, so I trust that nobody has been taken by surprise and I hope that we may have a fruitful discussion. This is an Amendment to one of the enforcement clauses which permit a weights and measures inspector to inspect goods, purely at random and not when his suspicions have been roused and for this purpose to enter 578 any premises, save only "premises used only as a dwelling". I underline the word "only". In Committee I drew attention to the instance, which must exist in hundreds and thousands of cases all over the country, of small shopkeepers who live in the flat above the shop, or perhaps in a house adjoining the shop and annexed to it.
In thousands of cases these shopkeepers must have spare rooms in their flat or their adjoining house, and they use the spare room as a stockroom for the shop. This must be a very common practice. This clause, as drafted, gives the weights and measures inspector access to the dwelling house for the purpose of going into the stockroom and examining the stock purely at random, without any question of suspicion having been aroused; and he is enabled to do this because of the wording, which says,
other than premises used only as a dwelling house".
The inspector who is challenged by a shopkeeper is able to say: "This may be your flat, or your house, but if you have a spare room in it used as a stockroom you are not using it only as a dwelling and I therefore am given a right under the Act to enter your dwelling to inspect those goods."
The issue is: Is it right that the privacy which we allow private citizens in this country, including shopkeepers and everybody else, to enjoy, should be invaded by an inspector who has no suspicion against the shopkeeper, but is entering purely to make a random check? In Committee, in answer to an argument from me rather similar to this one, on an Amendment rather similar to this, the Minister said:
The inspector could not be found wandering around without the knowledge of the shopkeeper who lived in the flat above as he would have to apply to the shopkeeper for admission.
If I thought that those words were true, I should be perfectly happy and should not now be taking up the time of the House. But, far from a shopkeeper having to give his permission to the inspector in such a case, if the shopkeeper dares to challenge the inspector's right to enter his dwelling in these circumstances, the shopkeeper commits a criminal offence under the next clause of the Bill. Clause 30, which makes it a criminal offence to
obstruct an officer in the course of his duty.
§ I was told that these words appear in the corresponding section of the Trade Descriptions Act 1968: and so they do. I remember that section very well indeed. It was highly unsatisfactory. There was a letter about it in The Times. In Committee in this House we amended that section considerably, but unfortunately we missed this particular point. Even Parliament cannot pick out every single point in every Bill, and we missed this point. If we had been as conscious then as we are now of this issue of privacy, with the recent Report of the Younger Committee on Privacy before us, I do not suppose we should have missed this point. But we did, and it was a blot on the 1968 Trade Descriptions Act. If these words are left in this Bill, it will be a blot on this Bill when it becomes an Act.
§ I was then told: "No complaints have been forthcoming since the 1968 Act was passed." I can well believe that; and for two reasons. First, I believe that, in practice, inspectors of weights and measures are far too busy to do very much random checking. They have complaints to follow up, and they have multifarious other duties to perform. Secondly, weights and measures inspectors act with common sense, and any sensible inspector would know perfectly well that if he started walking into shopkeepers' flats and dwellings in order to carry out random inspections his reputation would fall like a stone; he would cease to get any co-operation from shopkeepers, and his work among shopkeepers would be quickly frustrated altogether.
§ My Lords, that is where the matter rests. What one has to judge is: is it right to allow an inspector to enter a shopkeeper's private dwelling purely to go in there to make random checks? Is it not worth while preserving the wellknown axiom, that "An Englishman's home is his castle", including shopkeepers' houses, and saying that it is simply not worth while allowing that privacy to be invaded purely for random checks where no suspicion has been aroused? If we exclude the word "only" from this paragraph we shall achieve the end that I seek. I beg to move.
§ LORD SOMERS
My Lords, I should like to support this Amendment. I have 580 a cousin who is a chartered accountant. He lives in his own house, two rooms of which he uses for office purposes, but the rest is a very nice dwelling house. One can carry it even further than that. If I were to take piano pupils into my house (not that I ever would, because I am no pianist) and were to teach them there professionally, would that constitute not using the house only as a dwelling? One can think of a good many cases where a house is partly used for professional purposes, but is mainly used for dwelling purposes.
§ BARONESS PHILLIPS
My Lords, I intervene merely to say to the noble Lord, Lord Airedale, that, far from not noticing it in the Trade Descriptions Act, as I recall, the noble Lord put up a very strong plea on the same lines that he has pursued now, and I had the duty of having to reply to him on behalf of the Government. I did not satisfy the noble Lord, but he did put in a strong plea, to which we were hard-hearted enough not to give way.
§ THE EARL OF LIMERICK
My Lords, I am certain that that tribute to the consistency of the noble Lord, Lord Airedale, is well merited. One must have sympathy with his purpose in putting down this Amendment, but I believe the point is mis-taken and that this Amendment, whatever purpose it would achieve, would not achieve the purpose the noble Lord has in mind. I would say, first, that it is clear that if this part of the Bill is to be properly enforced the duly authorised enforcement officers must be free to make routine checks in any premises, including those used in a dwelling where a trade or business is carried on. There are many businesses—and some have been in the news recently—which are carried on from private premises which may be such that we should all be happy to think there were inspectors who were going to concern themselves with what was going on there.
I can indeed appreciate the noble Lord's anxiety that an enforcement officer should not invade the private accommodation of a shopkeeper. But the effect of the Amendment would be that if the shopkeeper lived on the premises the enforcement officer would have no right of entry to any part of the premises; he could not walk into the shop for the 581 purpose of carrying out an inspection. This would be quite intolerable for the proper enforcement of the Bill, given the large number of shopkeepers who live on the premises from which they trade. To take another case, if there is a factory in one part of which a caretaker lives, the wordsany premises other than premises used as a dwellingwould preclude any right of inspection of goods in the factory. Therefore I think we should consider rather carefully why we are concerned.
The noble Lord has stressed the question of the invasion of the privacy which derives, as was pointed out, in parallel with the provisions of the Trade Descriptions Act 1968 and the Weights and Measures Act 1963. My remarks may have been taken possibly a little out of context, but the inspector of course can enter the premises for the purposes of Section 29. If the shopkeeper seeks to prevent him from going into a private part of the premises, he has of course no power to force entry, though he would be entitled to point out, if he has reason to suspect that there are goods he might wish to inspect, that this would be preventing him from carrying out his duty. But beyond that he would have to apply for an order from the magistrates under the conditions in terms of subsection (3).
I think we are entitled to point out here that we have five years of experience. I know that the noble Lord is not happy about this point, but there has not been a single complaint of abuse of powers, to the best of our knowledge, under these conditions—and people in these circumstances are not usually slow to complain if they believe that they have been badly treated by inspectors. I believe, for those reasons, that the provisions of the Bill as they stand are the provisions that should be included.
§ LORD AIREDALE
My Lords, we are altogether bogged down in a drafting problem, are we not? The Minister said at the beginning of his observations that my Amendment was defective because it would have effects which are more far reaching then I intended. Of course, I accept that there will always be drafting defects, but if we could get together and draft something between us, or if the Minister could himself have something 582 drafted independently of any help from me which would deal with the privacy point—and I think the Minister is well seized of it—given that undertaking about the possibility of something being done on the redrafting, I should be very pleased now to withdraw this Amendment: otherwise, I think not. It was said in Committee, and it was said again just now, that the inspector cannot force an entry. I know that perfectly well, but my complaint is that he could enter without forcing, and in most cases it would be quite unnecessary for him to have to force an entry because the door between the shop and the dwelling, nine times out of ten, will not be locked, so the inspector can just walk in. I think that is wrong. However, if we could clear up this drafting difficulty I should be very pleased to withdraw this Amendment.
§ THE EARL OF LIMERICK
My Lords, with the leave of the House, I think I could say this: it would be quite wrong for me to undertake to amend the Bill as time between now and next stage is very short. What I am quite prepared to do is to talk to the noble Lord and see whether there is some form of words which would meet his point without sacrificing mine. But beyond that I am afraid I cannot go.
§ Amendment, by leave, withdrawn.
§ Clause 51 [Monopoly reference by Ministers]:
§ 6.14 p.m.
THE EARL OF LIMERICK moved Amendment No. 14:
Page 37, line 2, after ("Scotland") insert ("the Secretary of State for Wales, the Secretary of State for Northern Ireland").
§ The noble Earl said: My Lords, I think it would be for the convenience of the House to take Amendment No. 14 with Amendment No. 15. These Amendments follow closely the line which was explained by my noble friend in proposing earlier Amendments. If it would be for the convenience of the House, I would formally move these Amendments.583
Page 37, line 4, after ("Ireland") insert ("the Minister of Commerce for Northern Ireland")—(The Earl of Limerick.)
§ Clause 52 [Variation of monopoly reference]:
§ THE EARL OF LIMERICK
My Lords, I beg to move Amendment No. 16. This Amendment is again for the same purpose.
Page 38, line 3, at end insert ("and the Minister of Commerce for Northern Ireland.") —(The Earl of Limerick.)
§ On Question, Amendment agreed to. 6.16 p.m.
LORD STOW HILL moved Amendment No. 17:
After Clause 52 insert the following new clause.
§ Change in circumstances after monopoly reference
§ ". If it appears to the Director in respect of a monopoly reference made by him, or if it appears to the Secretary of State (or in the case of a monopoly reference made by the Secretary of State jointly with one or more other Ministers, the Secretary of State and that Minister or those Ministers acting jointly) in respect of a monopoly reference made by him or them, whether in any case upon the representation of the Commission or otherwise, that since the making of the reference there has been a material change in the relevant circumstances, the Director or the Secretary of State or the Secretary of State and the Minister or Ministers concerned acting jointly, as the case may be, may direct the Commission to lay aside the reference."
§ The noble and learned Lord said: My Lords, the object of this Amendment is to fill in what seems to me to be a lacuna in the text of the Bill. It arises in the following way. The Director General can refer a situation to the Monopolies and Mergers Commission and so can the Secretary of State. The Secretary of State can also do so, in circumstances which are prescribed in the Bill, of his own accord or in consultation or joint action with other Ministers. Under the text of the Bill and under existing legislation in the 1948 Act, unless there is some provision in that legislation or this Bill which I have missed, once the Director General, the Secretary of State or the Secretary of State in conjunction with another Minister has referred a situation to the Monopolies and Mergers 584 Commission, the Commission have to go—indeed are inexorably bound to go—right through the whole of this procedure and to come to the conclusion which the Bill requires them to reach after investigation. That can take a long time and, as one realises from the recent inquiry we have had into the pharmaceutical industry, months may elapse before those concerned will know whether the Commission think that there is a monopoly situation and whether, if so, this is against the public interest.
§ Under the existing legislation there is, unless I am mistaken, no provision to enable either the Director General, the Secretary of State or the Secretary of State together with any other Minister to indicate to the Commission that a new situation has arisen which has made it quite unnecessary for the Commission to proceed with their work. Therefore, although even a completely new factor may have intervened which makes it an absolute waste of time for the Commission to go on with their inquiry, under existing legislation they are bound to go on. In the meantime, those concerned do not know where they stand and the Commission have to do a great deal of unnecessary work. They have to assemble evidence, to consider that evidence and to arrive at conclusions on the two issues to which I have just referred. All that the new clause is designed to do is to provide for the following. After a situation has been referred to the Commission, should some new relevant material change intervene which makes the work of the Commission on that reference utterly useless or pointless, then the Commission can be told they need not proceed with the inquiry on which they have embarked. That is all it does; and I would submit, having been advised by persons who are very experienced in this class of situation, that all I seek to do is to enable it to come about that the Director General or the Ministers concerned can say to the Commission, "Do not go any further with this inquiry: it is not necessary to do so."
§ The words that we have used to bring this about are, "material change in the relevant circumstances". There could be many such material changes. Again if I may refer to our recent inquiry into the pharmaceutical industry, there was 585 a widespread voluntary price arrangement. After an inquiry has been started by the Commission that situation might emerge. All those concerned might agree to limit their prices with the result that further inquiry by the Commission would be useless and a waste of time. Another commodity might have come upon the market which would render it impossible for the Commission to hold that there was a monopoly situation. One answer might be: "In that event, the Monopolies Commission would say ' No ' in answer to the question whether a monopoly situation had been disclosed." But it is pointless to have to go so far as that if the situation has radically changed in the sense that I have indicated.
§ This is no great change of principle; it is a minor change in the provisions of the Bill as they stand at present. Under the existing provisions of the Bill there can be, if one looks at Clause 48, a limited reference to the Commission, a reference purely on facts. Under the existing Bill there does not have to be an all-out inquiry; it can be limited in its terms. Under Clause 52, the terms of the inquiry can be varied by those who have brought it about, by the Director or Secretary of State, so the Bill comes near to doing what I seek to do. All I ask the Government to do is to go a little further and say that not only can they vary the terms of reference, but they can, in a suitable case, say, "Do not proceed any further with it". It would be an immense saving of unnecessary time and labour; it would eliminate uncertainty in situations in which as things stand at the moment uncertainty may continue for months. It would be in everybody's interest, it would save time and enable those affected to get on knowing where they stood instead of having to wait for the result of the inquiry. The Commission will be heavily occupied and it cannot be in anybody's interest to put on their shoulders work which can he removed from them.
§ My Lords, that is the object of this Amendment. It is a modest change; it is not a change of principle but simply pushes one aspect of the Bill a little further in order to achieve a useful result. I beg to move.
§ LORD CAWLEY
My Lords, I rise to support the noble and learned Lord, 586 Lord Stow Hill. In a lawsuit the plaintiff can discontinue, and I see no reason why in a reference to the Monopolies Commission the Director or Minister should not be allowed to discontinue if the Report of the Commission would be absolutely irrelevant and useless. If, as the noble and learned Lord said, there is no provision in this Bill for cancelling the reference in midstream, I suggest that there ought to be one, and that is why I support this Amendment.
§ 6.25 p.m.
§ THE EARL OF LIMERICK
My Lords, the noble and learned Lord, Lord Stow Hill, as always, explained the purpose of this Amendment with great lucidity and no one could be in any doubt what its object is. I have listened carefully to him and I should like to make a preliminary point to be sure that there is no misconception about the basis on which monopoly references are initiated. The relevant circumstances in which monopoly references are made are simply those in which there are grounds for believing that a monopoly situation, as defined in Clauses 6 to 9 of the Bill, exists; that is, where a company or separate companies have at least one quarter of the relevant market, so as to inhibit competition in one quarter of the market. There is no presumption, as there is in the case of restrictive practices legislation, that monopoly as such operates against public interest, and the Monopolies Commission start any investigation from a completely neutral position.
Monopoly references are not made indiscriminately and, given the wide range of situations which potentially fall within the scope of the legislation—particularly since the monopoly test is to be widened by the Bill—it can reasonably be expected that the Director General will not usually make references unless there is some reason, because of behaviour or performance by the firm concerned, to believe that the monopoly may be being or could be abused. This is a very different circumstance from the situation where a reference can be made only on evidence of abuse. Once a monopoly reference has been made, the Commission's first task is to establish whether monopoly conditions exist in relation to the supply of goods or services in question. If they find that they do not, that is an end of 587 the matter; the Commission would then report their finding and in effect would lay aside the reference. If the Commission find that a monopoly situation exists they are required to go on to assemble all the relevant factual material, and, in cases where the reference is not limited to the facts, to consider whether monopoly considerations operate against the public interest.
If during the course of the Commission's investigations it emerges, to take an example, that there has been a significant change in the conduct of the monopolist, this would naturally be taken into account by the Commission in framing their report and conclusions. But I do not see the justification for simply abandoning an inquiry in such circumstances. It seems to me just as important in the case postulated by the noble and learned Lord, as in any other case, that the Commission should go on to prepare their report and findings. This in those circumstances would be unlikely to be unduly burdensome, either to the Commission or to the company or companies concerned, because in those circumstances the Commission could reasonably be expected to bring their work to a quick conclusion. There might be a particular value of a report in such circumstances: it would enable the facts about that particular monopoly situation in practice to be publicly available. If it were found a monopoly situation was not against the public interest, this would be made clear and would be in the interests of all the parties concerned.
If the Commission reached a finding that the previous conduct of the monopolist or monopolists had operated against the public interest and might do so again, it would provide a basis for action through seeking undertakings or, if necessary, by order, to prevent a recurrence. It could add to the sum of our knowledge about these situations. The noble and learned Lord, Lord Stow Hill, produced circumstances in which there would be a material change. There could of course be others. The monopolist might sell or close down so much of his business to remove from him the 25 per cent. criterion, or the market could expand to a point where his production no longer accounted for that 588 percentage. But either would lead to a quick conclusion in the report and that information might well be of value. Equally, the fact that a monopolist had changed his conduct during the course of an inquiry might be significant, and the availability of a report to that effect could influence other people in the future.
My last point is that we should beware because the existence of a material change is a somewhat subjective criterion. There is a lot to be said, once prima facie evidence has been adduced, for accepting the reference and continuing the reference that there is in existence a monopoly situation. There is also a lot to be said for letting the reference run its course. When we start talking about what is a material change, there could be suspicions about the circumstances in which such a judgment was given hypothetically. For all these reasons, while quite appreciating the points made by the noble and learned Lord who was looking for simplicity, backed up by my noble friend Lord Cawley, because there should be a right to terminate as there is in other cases of action, we nevertheless believe that on balance it is right to leave the Bill as it stands.
§ LORD DIAMOND
My Lords, before the noble Earl sits down, could he explain one point on which I am not quite clear? He speaks about the inadequacy of a subjective judgment. Supposing the judgment is completely subjective; namely, that the Department takes the view that the new information becoming available to it is such that if it knew it at the time it would not have made the reference. Is the reference still to continue, and is there any value in that?
§ THE EARL OF LIMERICK
My Lords, I quite take the point made by the noble Lord, Lord Diamond. I think there could still be value, for the reasons I have given.
§ LORD STOW HILL
My Lords, I think it is in order for me to reply shortly, and I do so simply to thank the noble Earl for his answer. I listened carefully to what he said, and, if I may say so with respect, the point which he raised which slightly troubled me also was whether it might not 589 be invidious for the Minister or the Director, once a reference had been made, to withdraw it. Could his motives be misunderstood? The Minister founded the latter part of his argument on that consideration. May I say that I accept that, if I may say so without impertinence, as an argument of weight. The Minister says on balance he feels the Amendment should be rejected. Having considered that argument on balance, I thought it ought to be proposed. But this is a matter of judgment and, while I am disappointed, nevertheless I should like to thank him for his consideration, and in the circumstances do not think it would be right to press the Amendment.
§ Amendment, by leave, withdrawn.
§ Clause 69 [Different kinds of merger references]:
§ 6.32 p.m.
§ THE EARL OF LIMERICK moved Amendment No. 18:
Page 51, line 4, at end insert—
("(2A) In relation to the question whether any such result as is mentioned in section 64(1)(a) of this Act has arisen, a merger reference may be so framed as to require the Commission to confine their investigation to the supply of goods or services in a specified part of the United Kingdom.")
§ The noble Earl said: My Lords, I think it would be convenient if we were to consider Amendments Nos. 18, 19, 20 and 21 together. The Government's attention has been drawn to the fact that the merger provisions of the Bill fail to reproduce one of the effects of Section 6(4) of the Monopolies and Mergers Act 1965. Amendment No. 18 is designed to restore the position, It will provide in cases where a merger reference is made under Clause 64(1)(a)—that is, on the grounds that the merger in question creates or strengthens a monopoly situation—for the reference to specify which part of the United Kingdom is relevant. This is desirable in order to avoid a situation in which the Monopolies and Mergers Commission might be thought bound to consider the supply situation in every part of the United Kingdom before going on to consider the public interest aspects of the merger. Amendments Nos. 19, 20 and 21 are purely consequential Amendments to the provision in Clause 75, to references made in anticipation of a merger. I beg to move.590
§ Clause 75 [Reference in anticipation of merger]:
§ THE EARL OF LIMERICK
My Lords, I have already explained them, and with the leave of the House, I would suggest that we take Amendments Nos. 19, 20 and 21 en bloc. I beg to move.
§ Amendments moved—
§ Page 55, line 10, leave out ("subsection (2) the") and insert ("subsections (2) and (2A) any");
§ Page 55, line 12, at end insert ("or whether a result mentioned in section 64(1)(a) of this Act has arisen");
§ Page 55, line 14, after ("created") insert ("or such a result will arise").—(The Earl of Limerick.)
§ Clause 86 [Director to receive copies of reports]:
§ THE EARL OF LIMERICK
My Lords, this is another Amendment consequential upon the addition by Amendment No. 15 of powers to Ministers. I beg to move.
Page 63, line 42, at end insert ("and the Minister of Commerce for Northern Ireland"). —(The Earl of Limerick.)
§ 6.36 p.m.
THE EARL OF LIMERICK moved Amendment No. 23:
After Clause 98, insert the following new clause:
§ Agreements relating to coal or steel
§ ". In section 7 of the Act of 1956, before subsection (2) there shall be inserted the following subsections:—
§ "(1A) In determining whether an agreement is an agreement to which this Part of this Act applies, where—
- (a) the parties to the agreement are or include two or more bodies to which this subsection applies, and
- (b) restrictions relating to coal or steel, or relating to both coal and steel, are accepted under the agreement by two or more such bodies, whether the restrictions so accepted by those bodies are the same restrictions or different restrictions,
§ (1B) Subsection (1A) of this section applies to any body which, in accordance with Article 80 of the E.C.S.C. Treaty, constitutes an undertaking for the purposes of Articles 65 and 66 of that Treaty, and in that subsection "coal" and "steel" have the mean- 591 ings assigned to them respectively by Annex I to that Treaty."
§ The noble Earl said: My Lords, this Amendment will remove from the scope of the restrictive practices legislation agreements to which two or more coal, iron or steel undertakings are party and in which restrictions are accepted by two or more such undertakings relating to coal or steel products as defined in the Treaty of Paris. The coal and steel producers of this country may be placed at a competitive disadvantage compared with their European counterparts because of the difference of approach to restrictive agreements in the Treaty of Paris, on the one hand, and in the United Kingdom's restrictive practices legislation, on the other. Your Lordships will be aware that under the provisions of the Treaty of Paris the European Commission may by an administrative procedure authorise certain kinds of restrictive agreements relating to coal and steel. In most cases it is quite clear whether an agreement would prevent, restrict or distort normal competition within the Common Market, which is the criterion by which the Commission assesses them. In some cases, however, the matter is uncertain and in these areas of doubt there may be little case law which is of assistance.
§ The Treaty of Paris is drafted in more general terms than the restrictive practices legislation in this country where there is seldom much doubt about whether or not an agreement is registrable. There is thus an area of uncertainty in which the steel producers in both public and private sectors consider they may be subject to restraints which are not imposed on their European competitors. The Government have accepted the force of this argument in the special case of coal and steel, and have therefore introduced this Amendment. I beg to move.
§ Clause 100 [Patent or design pooling agreements]:
§ LORD CAWLEY moved Amendment No. 24:
Page 72, line 38, after ("8A.") insert—
("(1) This section shall only apply to any particular form of patent or registered design pooling agreement or of any licence, assignment or agreement granted or made in pursuance of a patent or registered design pooling agreement in respect of which the Secretary
of State shall have made an order by statutory instrument bringing such agreements, licences or assignments within the provisions of this section.").
§ The noble Lord said: My Lords, with the permission of the House I would wish to speak upon Amendment No. 24, and formally move that Amendment, and on Amendments Nos. 25 to 31. Clause 100 is a very important clause indeed. It concerns patent licences; it concerns patents, and we all know that our intellectual property in this country is worth a lot more than our material property. We are always told that this country lives by its brains. This clause, as it stands, produces a startling effect: that almost every patent licence would become registrable in the Register of Restrictive Practices. It is an extraordinary fact but that is so.
§ The Government, equally, have not told Parliament in either House what this clause is all about. It may be of course that nobody has asked them, but at any rate in the Second Reading in this House just two lines of Hansard are devoted to this clause. The clause has had the minimum of publicity and most of the interested parties do not seem to have woken up until this very late date. It is true that in Committee in another place the Minister gave an assurance that he would introduce Amendments at the Report stage—that was on April 5—but he certainly did not do so.
§ I want to ask the Minister now: What is the evil it is sought to avoid? This clause seeks to put patent pooling arrangements in the role of "naughty agreements", one might say. It seeks to have them registered. Secondly, I want to ask the Minister why there is such a tremendous hurry to pass this clause when we know that a Patents Bill is coming forward in the near future in order to implement the recommendations of the Banks Committee, which the D.T.I. set up themselves. Thirdly, I wish to ask the Minister what bodies were consulted before this clause was put forward? These patent pooling arrangements have been in existence for at least forty years to my knowledge and there seems to be an extraordinary sense of immediacy about getting down to this business. For example, were the Chartered Institute of Patent Agents consulted? Was the Law 593 Society consulted? Who else was consulted? I can only surmise that the Department of Trade and Industry decided that patent pooling agreements are naughty and ought to be suppressed. They did not really know what these comprised. In my view it is similar to the attitude of the late Lord Brentford when he was Home Secretary, when he was all out to suppress night clubs. He did not really know what happened there, but they were naughty and had to be suppressed. This is certainly borne out by the fact that the draftsman at the D.T.I. certainly did not know what he was suppressing in this case, because as I said before, the drafting of the clause as originally put forward covered almost every form of patent licence. I am glad to say that now the D.T.I. have seen the error of their ways and I fully support Amendments Nos. 25 to 31 inclusive which at any rate cut down the scope of this clause to a reasonable degree.
§ But the C.B.I., who have recently "come to life", let us say, now consider that my noble friend's Amendments do not go quite far enough, and this Amendment is put forward so that there shall be further consultation and then, if the Minister thought that other forms of agreement were objectionable, he could use his powers under Clause 132 of the Bill to make orders prescribing these agreements. Since it was quite clear that when the clause was drafted the nature of patent pooling agreements was not understood, I should have thought that this Amendment would have given the necessary time for the Department of Trade and Industry to put the matter right. I realise that the Third Reading of this Bill will come shortly. I can understand that the Amendment which I put forward is unlikely to commend itself to the Ministry, but I ask them to have another look at it. I beg to move.
§ LORD STOW HILL
My Lords, I should like to support the argument so powerfully put forward by the noble Lord who has just resumed his seat. The provisions of the existing legislation, I should have thought, as amended by Clause 100, will really produce a most unfortunate result in many cases unless there is some provision, as it were, for a "let out" such as the noble Lord, Lord Cawley, has suggested in the Amendment to which 594 he has put his name. If one looks to see what the provisions of the existing legislation are one finds that they are as follows: under Section 6 of the Restrictive Practices Act 1956 agreements which contain certain restrictions are brought within the scope of the sections which require registration under the 1956 Act and may result in the agreement being referred to the Restrictive Practices Court. It was realised that that was far too wide a provision in scope and accordingly Section 8(4) of that Act provided a "let out" for a large number of agreements. Now it is proposed to limit the "let out" introduced by that subsection by saying that it shall not apply to patent pooling agreements.
Then one looks to see what is a patent pooling agreement, and one finds that it is defined in subsection (2) of Clause 100 of this Bill. That definition is so wide (as I am advised) that it really will bring into the scope of the 1956 Act and this Bill hundreds of agreements—agreements really which operate in the public interest; agreements which are not entered into in order to elbow people out of the competitive market; agreements which are completely beneficial in their scope and purpose so far as the public interest is concerned. That is the effect of the definition of the pooling agreement.
It would take time to give many examples, but if we take the ordinary licensing agreement, whereby a patentee licenses the use of his patent to a licensee, over and over again the licensee voluntarily enters into certain restrictions because he does not want to pay for the use of the advantage which the patent confers out and out; he only wants to make a restricted use of it. There are cases in which patents overlap and the holders of the respective patents, instead of going to law on the matter, agree that each shall have a licence to use the other's patent. so that dispute and litigation is avoided. Case after case of that sort of situation can be instanced, in which it really could not conceivably be said that the mischief which is aimed at by the 1956 Act, and by this Bill, is present. Those agreements will be brought within the scope of Clause 100 because of the definition of a patent pooling arrangement.
595 The noble Lord, Lord Cawley, has already reminded your Lordships that a new Patent Bill is on the way. Already those agreements would be affected by Section 57 of the existing Act. He reminded your Lordships of that, but apart from that, if you have a patent pooling arrangement which does or may militate against the public interest there is always the Monopolies Commission, or the Monopolies and Merger Commission as it is now called, to which the matter can be referred and the agreement can be declared by the Commission to be wholly invalid. So it is not as if there is not ample protection for the public interest in the existing legislation. The existing legislation bristles with protection. Therefore, I respectfully submit that by tabling the Amendments which follow the Amendment proposed by the noble Lord, Lord Cawley, they have gone much too far and (as the noble Lord has reminded your Lordships) they have tabled—and I very much hope that the House will carry—Amendments which will have the effect of excluding what I may describe as bipartite arrangements between two persons, two bodies, two companies. That is all to the good; that will then place outside the scope of the Act many agreements which are extremely useful—ordinary licensing agreements, joint venture agreements and similar agreements.
That is all to the good; but even if, as I hope it will, the House accepts these Amendments, thereby greatly improving and limiting the scope of Clause 100, nevertheless there will be many cases which are not taken out of the scope of the clause by those Amendments, cases in which three or more principal parties are involved and cases in which, if no change is made, the agreement will necessarily come within the scope of subsection (2). I should have thought that the noble Lord, Lord Cawley, has in point of fact hit upon exactly the right remedy. What has he done? What he proposes in his Amendment is that if one gets an agreement which is one of a category which falls within the scope of subsection (2) of the Bill, it should not automatically be deprived of the effect of Section 8 of the 1956 Act. It should not automatically come within the scope of Clause 100. 596 It should come within the scope of Clause 100 only if the Secretary of State, having considered that type of agreement—for example, the types of agreement to which I have referred—and having formed his judgment upon it thinks that that type of agreement or particular agreement of that type should be brought within the scope of Clause 100 of this Bill.
If that is what the noble Lord proposes, I submit to the House that that is a sensible and businesslike way of dealing with a problem which may bring an enormous amount of inconvenience and uncertainty in its train and a great deal of quite unnecessary work. It is for that reason, which he has explained so clearly and forcibly, that I hope the House will accept it, or that the Minister, if he cannot accept it, will at any rate recognise that there is great force in the argument of the noble Lord, Lord Cawley, and will say that between now and the Third Reading of the Bill he will introduce some further Amendments in order to give effect, either in terms to what the noble Lord, Lord Cawley, proposes, or to the purpose which the noble Lord, Lord Cawley, is seeking by his Amendment to encompass.
§ 6.52 p.m.
§ THE EARL OF LIMERICK
My Lords, my noble friend has developed a closely reasoned case for his Amendment and I listened with great interest to him and to what the noble and learned Lord, Lord Stow Hill, had to say about Amendment No. 24. I have sympathy with his arguments that certain kinds of bilateral cross-licensing agreements cannot be presumed to be against the public interest and indeed, as my noble friend recognised, we have ourselves put down an Amendment about which I shall say something in a moment, Amendment No. 25.
Before listening to this debate I was firmly of the opinion, and I would not like to be on record as saying I have changed my mind, that pooling agreements with three or more parties should be subject to registration in those cases where the parties accept any of the restrictions set out in Section 6(1) of the 1956 Act. This point is well understood, I know, by the two noble Lords who have just spoken, that it is only agreements which do accept these restrictions that are so subject. My noble friend Lord 597 Cawley asked a number of questions which I should like to try to answer. He asked first of all what the Department was worried about. I can tell him that four cases have come to light. The first of these related to the agreements which collectively formed the patent pool of the members of the Electric Lamp Manufacturers Association, one of the first industries to be investigated by the Monopolies Commission, and that perhaps is a classic example of what can be done with a sufficient array of patents. The pool grouped together most of the electric lamp manufacturers in the United Kingdom and a large foreign parent company of some British firms and related to the working of patents in the United Kingdom and most Commonwealth countries.
There were three agreements involving pooling or exchange of patent rights dealt with already under the Restrictive Trade Practices Act, Section 8(4) not being applicable because some restrictions related to non-patented goods. In the first of these, two companies agreed to grant exclusive licences of their traffic signal patents to each other. The home market then was divided territorially by specifying for each area prices below which the company to be excluded therefrom should not sell. The Registrar here was able to establish the existence of provisions relating to non-patented goods; the agreement was then determined. The agreement for the Permanent Magnet Association included provisions for patent pooling. The main provisions of the scheme, which dealt with research and development of magnetic materials irrespective of their patentability and fixed prices for them, were found consistent with the public interest, but a restriction that members would withhold from the market new magnetic materials except on terms and conditions provided by the Association was condemned by the Restrictive Practices Court. Then there was the agreement between the members of the Flushing Cistern Makers Limited dated 1957, a year after the restrictive practices legislation came into effect. The main object set out in the memorandum of the Association was to find, apply for, register, purchase and protect patents in relation to flushing cisterns and to grant licences in respect of same. The licences were subject to the condition that the price at which any 598 patented goods were sold should not be less than those agreed by the members. This was clearly a price-fixing agreement based on a patent pool. This agreement came to light only recently and was condemned by the Restrictive Practices Court this year.
My Lords, these cases suggest there is something to worry about. My noble friend then asks why we are doing this in the Fair Trading Bill and not in any change in the Patent law flowing from the Banks Committee.The Banks Committee commented on the failure of many patentees to register their assignments and licences with the Patent Office, with the result that many agreements never appeared on the Patent Office register and public knowledge about the restrictions they might contain was incomplete. Two things may be done: first, sanctions could be imposed on the failure to register patent licences or assignments; and, secondly, the protection of the public from abuses arising from restrictions in patent licences should be considered in connection with changes in the restrictive practices legislation—paragraph 517 of the Banks Report. What we are doing in this Bill stems directly from the second of those points.
Then my noble friend asked about who was consulted. Over two years ago industry was aware that in the review of the restrictive practices legislation which was announced in December 1970 the exemption for patent pooling agreements in Section 8(4) of the 1956 Act was under consideration, and in that time there were several consultations in which this matter was among those discussed. Apart from the C.B.I., the Registrar of Restrictive Trade Agreements and the Patent Office were involved in discussions. This Bill was published in November 1972, which is nearly eight months ago, containing Clause 100 as it now stands. We received representations about it for the first time two days before the Committee proceedings on that clause in another place. That was on April 3. There have since been further consultations which have led to the Government Amendment. So I think I am entitled to point out that it can hardly be said this is a measure that has been slipped through The proposal to amend this area of the law has been known about in general terms since 1970. 599 The Bill was published eight months ago. If it has not been commented on before in Parliament, I think this is, if I may respectfully say so, not the fault of the Government. My noble friend Lord Cawley recognises the constraints imposed on us by time. Time before the next stage is very short, and it is in this connection a pity that this debate, which I think could usefully have taken place in Committee, is taking place now on the basis of a starred Amendment. Nevertheless, I should like to study very carefully what has been said. I think that substantial arguments have been raised by the two noble Lords who have spoken. I do not think it would be right to give any undertaking either to accept this Amendment or any variant of it, but I should like to consider it, and time being as short as it is, if my noble friend Lord Cawley would perhaps get in touch with me to-morrow I think we could pursue this point.
I think it would be convenient to go straight on and refer to Amendment No. 25. I can do that briefly by saying that it will make it a prerequisite of registrability that a patent or design pooling agreement must have at least three registrable parties. I understand from what has been said that this is acceptable to noble Lords who have spoken. This is because industry has represented that the clause as drafted would catch agreements which were beneficial and should not therefore be brought within the scope of legislation. They argued that Clause 100 would go beyond what the Government had intended, namely, to make registrable pooling agreements which restricted the free availability of patented inventions. They considered that it would also have the opposite, and undesired, effect of impeding full exploitation of improvements to existing patents. It has also been represented that cross-licensing of patents can arise when two companies have done research simultaneously in the same field. Their patents often overlap, and a cross-licensing agreement has the advantage of avoiding litigation and the ensuing expenses and delays.
After carefully considering these arguments, although as I explained earlier they came very late in the day, the Government have reached the conclusion that bilateral cross-licensing arrangements cannot as a class fairly be made subject 600 to the presumption in the restrictive practices legislation of being contrary to the public interest. This applies particularly where the licensee improves a patented invention and grants to the licensor the right to use the improved patent. This Amendment, therefore, keeps them outside the scope of the restrictive trade practices legislation. Clause 100 will still extend the legislation to cover patent pools which have three or more parties and which are therefore potentially capable of the more serious abuses. As we are dealing at this stage with Amendment No. 24, I will simply move that.
§ VISCOUNT AMORY
My Lords, I was very glad to hear my noble friend say that he would look sympathetically at the object behind my noble friend Lord Cawley's Amendment. I hasten to say that I have no erudition in the field of patent pooling; I might say I would not know how to pool a patent if my life depended on it. And similarly as regards flushing cisterns I am an absolute amateur. But I have a great deal of sympathy for one aspect of the Amendment, the one recently discussed by the noble and learned Lord, Lord Stow Hill, and this one. Every bit of legislation that is passed has the effect of piling new work on hard-pressed bodies, and if there are occasions when we can avoid that being done automatically I think it is a good thing. That aspect appeals to me. I was not altogether happy about the reasons of the noble and learned Lord, Lord Stow Hill, except for one aspect. I do not think it would be wholly good to make it too easy for a reference to be made and then withdrawn again, in case it might be made as a threat or to see what happens; that would be very easy if it could be withdrawn at any moment. This one seems to me to have no objection at all that I can see. All I wanted to say was how pleased I was to hear my noble friend say that he would look at the object behind the Amendment.
§ LORD CAWLEY
My Lords, I am most grateful to my noble friend for what he has said, and in particular that the reason for this clause has been brought to light. I feel it is a very good thing that Parliament should know what this is all about. The honourable Member in another place who moved the 601 Amendment in Committee said that this is a very complicated clause, and I think he was right. Now at any rate we have had a statement from the Minister as to what it is all about. My noble friend spoke of assignments and licences being registered in the Patent Office. Of course, there you cannot look at the terms of the licence; you merely see on the register that so-and-so has granted a licence to so-and-so. So it is not really very relevant to these points. I quite accept what my noble friend said, that it would be a good thing to look at this matter again and to see whether anything can be done. I cannot say that I have very much expectation that in three days he will be able to do anything, but I appreciate what he has said, and on that assurance I beg leave to withdraw my Amendment.
§ Amendment, by leave, withdrawn.
§ THE EARL OF LIMERICK
My Lords, these Amendments have been discussed. I beg to move Amendments Nos. 25 to 31.
§ Amendments moved—
§ Page 73, line 5, after ("include") insert ("at least three").
§ Page 73, line 12, leave out ("each such patent") and insert ("one or more such patents").
§ Page 73, line 13, leave out ("design to each") and insert ("designs to one or more").
§ Page 73, line 14, leave out ("each") and insert ("one or more").
§ Page 73, line 15, leave out ("each") and insert ("at least one").
§ Page 73, line 17, leave out ("each") and insert ("one or more").
§ Page 73, line 18, leave out ("each") and insert ("one or more").—(The Earl of Limerick.)
§ Clause 102 [Examination on oath of certain employees of bodies corporate and unincorporated trade associations]:
THE EARL OF LIMERICK moved Amendment No. 32:
Page 74, line 37, leave out ("subsection") and insert ("subsections").
§ The noble Earl said: My Lords, I am grateful to the noble and learned Lord, Lord Stow Hill, for raising this question during the Committee stage. As I said when the point was first raised, it is normally for the court to examine the merits of any claim for privilege and decide whether or not it should require disclosure 602 of particular information or documents. I do not think it is very probable that privileged information would be required by the Restrictive Practices Court. I accept, however, that a lawyer-employee should have the same right to refuse to disclose privileged information that lawyers in private practice have, and it seems right to put the question beyond doubt. It is, of course, for the court to decide in particular cases whether or not information is privileged.
§ I think I should have started off by suggesting that we should be considering Amendments Nos. 32 and 33 together. I beg to move Amendment No. 32.
§ LORD STOW HILL
My Lords, I rise only to thank the noble Earl very sincerely for putting these two Amendments on the Marshalled List. They entirely meet the anxiety I expressed. I am most indebted to him.
§ Amendment moved—
Page 74, line 41, at end insert—
("(3B) Nothing in this section shall be taken to compel the disclosure by a barrister, advocate or solicitor or any privileged communication made by or to him in that capacity, or the production by him of any document containing any such communication.").—(The Earl of Limerick.)
§ THE EARL OF LIMERICK moved Amendment No. 34:
Page 76, line 36, at end insert—
("( ) At any time when any such interim order is in force, the Court, on the application of the Director or of any person who is subject to or entitled to the benefit of any restriction specified in the order, may discharge the order and substitute for it any interim order which could have been made on the original application under this section.").
§ The noble Earl said: My Lords, I think we could take together Amendments No. 34, 35 and 55. The first two simply amplify Clause 104 in a way which makes complete the circumstances in which the Restrictive Practices Court may terminate interim orders. The Opposition drew attention to this point in another place. The Amendment to Schedule 12, Amendment No. 55, makes clear that the provisions of Section 22 of the 1956 Act do not apply to interim 603 orders. It is obviously right that the Restrictive Practices Court should be able to discharge or vary its own orders. I am advised that it has no inherent power to do so, and these Amendments will give it the necessary power. I beg to move.
§ Amendment moved—
Page 76, line 42, at end insert—
("( ) the discharge of the order by the Court."). —(The Earl of Limerick.)
§ Clause 111 [Provisions as to Certain Associations]:
§ THE EARL OF LIMERICK moved Amendments Nos. 36, 37, and 38.
§ Page 82, line 7, at beginning insert ("it")
§ Page 83, line 19, leave out ("were") and insert ("included")
§ Page 83, line 24, leave out ("were") and insert ("included").
§ The noble Earl said: My Lords, I think that we might take Amendments Nos. 36, 37, and 38 together. Amendment No. 36 is purely a drafting Amendment to make the sub-paragraph grammatically correct. Amendments Nos. 37 and 38 rectify an inadequacy in drafting. The object of Clause 98 is that the Secretary of State would be able to withdraw approval of an industrial or provident society if it entered into any agreement or made any recommendation which in his opinion should not be precluded from investigation by the Restrictive Practices Court. It appears, however, that as the words stand he could do so only if the agreement or recommendation in question related to the supply of services. These last two Amendments ensure that the provision operates equally if the agreement or recommendation relates to the supply of goods. I beg to move.
§ Clause 117 [Trading schemes to which Part XI applies]:
§ 7.12 p.m.
LORD DRUMALBYN moved Amendment No. 39:
Page 90, line 29, leave out from ("concert") to end of line 31 and insert ("in this Part of
this Act referred to as "the promoters"), are to be provided by one or more of those persons").
§ The noble Lord said: My Lords, I beg to move Amendment No. 39. This is rather more than a drafting Amendment. It makes clear that in this particular context the definition of "promoter" is to include not only persons who actually supply goods or services to participants but also persons who merely arrange for them to be supplied to a third party. I beg to move.
§ LORD STOW HILL
My Lords, I rise only to put one question to the Minister which has been suggested to me as being a question that should be asked, although of course I ask it entirely on my own responsibility. I put the question on the first of this series of Amendments which make some changes in Clause 117 and Clause 118 and which bring in what I concede at once are very necessary changes in the law relating to pyramid selling. That is a type of transaction which can do a great deal of harm, and I do not for a second, in putting this question, seek to raise any doubt as to the desirability of these new provisions.
As Clause 117 is drafted, and as it will read if the Amendments are parried, could it perchance by a side wind, and through inadvertence, relate to what is described as "mail order business", which I understand is extremely useful, serves a very real public need, and which should not, so it is submitted, be subjected to the limitations and prohibitions contained in Clause 118? I apologise to the Minister who I see is seeking information in order to furnish a reply, for not having given him notice of the question which I wanted to ask. I do so all the more because in May of this year the Department of Trade and Industry sent out a very full explanation of their purpose in introducing these two clauses into the Bill relating to pyramid selling, and asked for comments. I am not certain, but so far as I know they did not receive any comment to the effect that mail order business might, by accident, have been included in the provisions of Clauses 117 and 118. That is why I rise to ask the question, and I do not know whether the Minister can yet answer it.
The doubt which occurred to me as I studied this clause related to the rather general scope of the word "participant" 605 in Clause 117. A person who participates in the scheme is described as a "participant". That seems a rather natural appellation for a person who participates in a scheme, but when one examines the language it really is extremely wide. If I am supplied by post with goods under the system of mail order business I sup-in a sense, I participate in that scheme and would be a participant. I would be supplied with those goods not at premises at which I carry on business, so that part of the definition would be satisfied. The only question would be whether the supply of goods to me is made in circumstances in which it is intimated to me that I will receive some reward, whether in the form of a payment, a discount, or some extra goods, if I introduce some other person like myself who wants those goods supplied to him pursuant to the mail order business system which is the subject of inquiry.
I do not assert or deny, I just do not know. I ask the question whether this rather wide definition could be construed, if the Minister is so advised, to include a perfectly legitimate and useful mail order business system. I again apologise for not having given warning to the Minister that I proposed to put this question, but I would be most grateful if, before the House passes this Amendment, he would be so good as to give me any reply he is able to give.
§ LORD DRUMALBYN
My Lords, I thank the noble and learned Lord for what he has said. In point of fact, I think his question would perhaps be more appropriate on the next Amendment rather than this one. It is the intention that the mail order transactions should be included in the definition in Clause 117. This has been explained to the Mail Order Traders Association who have come to see the Minister concerned, Mr. Emery, and he has explained that they have to be included because this is the way in which it has been necessary to draft these provisions. The point here is that Clause 117 deals with,any trading scheme which includes the following elements…and Clause 118 empowers the Secretary of State to make regulations relating to such schemes. The non-objectionable schemes will not be caught by the regulations; schemes will be caught only if they 606 offend against the regulations. To the extent that we think that they will not give cause to offend against them, they will be excluded from the regulations.
I think that I should make it clear, as I did earlier when I introduced this Part of the Bill during the debate on the Committee stage, that pyramid selling has proved to be a very difficult problem, and I indicated that although we considered that the definition of trading schemes should be comprehensive, we would wish to give further thought to it before the Report stage. The Amendments are designed to make it more difficult for objectionable schemes to evade the definition, but non-objectionable schemes will of course, not be caught. What I understood the Mail Order Traders' Association to object to was being bracketed with the pyramid schemes, through being covered by the description in Clause 117. This, I am afraid, is unavoidable, but, as I have tried to make clear, it is only those who are guilty of the objectionable practices who will be caught and I think the Association are now satisfied on this point.
May I repeat what I said in Committee, that by no means all trading methods which fall within the scope of the definition are objectionable. It is no part of the Government's intention to criticise, to attack or to diminish the established marketing techniques of honest and reputable enterprises, which include companies subscribing to codes of good conduct such as those set out by the Direct Sales and Service Association and the Mail Order Traders' Association. I hope that the noble and learned Lord will rest on that assurance.
§ LORD STOW HILL
My Lords, with the permission of the House, may I rise once again to thank the noble Lord very much indeed for that answer? When I put the question I was not aware that the Association had approached the Department, and in those circumstances I apologise for having put the question. I am most grateful to the noble Lord.
§ 7.22 p.m.
§ LORD DRUMALBYN moved Amendment No. 40:
Page 90, line 42, leave out from ("of") to ("transactions") in line 2 of page 91 and insert ("any one or more of the matters specified in the next following subsection.
( ) The matters referred to in paragraph (d) of subsection (1) of this section are—
§ The noble Lord said: My Lords, this is a rather complicated matter and perhaps I may explain it in this way. If a trading scheme falls outside the description in subsection (1) of this clause, it will not be subject to regulations made by the Secretary of State under his powers in Clause 118 and any abuses it may cause cannot be stopped. It now appears that as this clause stands evasion would be possible. Objectionable schemes might be run on the basis of a recruit's being required to pay his recruiter, directly or indirectly, for training or other services. Or a recruit might be required to pay his recruiter a fee, not immediately when he joined the scheme but at a later stage, perhaps for promotion to a higher level in the organisation. Arrangements of these kinds, like those embraced by subsection (1)(d) of this clause as it stands, would allow participants the prospect of benefiting from their recruiting activities. The central abuses of pyramid selling might therefore continue unchecked, if such schemes fell outside the definition. There is, indeed, some evidence that pyramid selling organisations, instead of paying recruitment fees, are using both these methods of rewarding recruitment. The first proposed Amendment is designed to ensure that schemes using them are brought within the definition and will therefore be subject to regulations. Amendment No. 41 is consequential upon the introduction of the new subsection which is the subject of this Amendment. My Lords, I beg to move.
Page 91, line 7, leave out ("the preceding subsection") and insert ("subsection (1) of this section "). —(Lord Drumalbyn.)
§ LORD DRUMALBYN moved Amendment No. 42:
Page 91, line 28, leave out ("and") and insert—
("( ) In this section").
§ The noble Lord said: My Lords, this is a paving Amendment for the changes to be made to Clause 118. I beg to move.
§ Clause 118 [Regulations relating to such trading schemes]:
§ LORD DRUMALBYN moved Amendment No. 43:
§ Page 92, line 6, leave out from ("from") to second ("such") in line 8 and insert—
- ("(a) supplying any goods to a participant in the trading scheme, or
- (b) supplying any training facilities of other services for such a participant, or
- (c) providing any goods or services under a transaction effected by such a participant, or
- (d) being a party to any arrangements under which goods or services are supplied or provided as mentioned in any of the preceding paragraphs, or
- (e) accepting from any such participant any payment, or any undertaking to make a payment, in respect of any goods or services supplied or provided as mentioned in any of paragraphs (a) to (d) of this sub-section or in respect of any goods or services to be so supplied or provided,
§ The noble Lord said: My Lords, this Amendment extends the matters on which the Secretary of State may make regulations. As Clause 118(2) stands, regulations made under it to prevent participants in trading schemes within the definition from being unfairly treated can apply only when goods are actually supplied to participants or their customers. The Amendment ensures that if any one of a number of transactions takes place between promoters and participants, or between participants, the regulations must be observed if an offence is not to be committed. These transactions include supplying or arranging for the supply of goods, services or training to participants and taking payment for goods or services supplied, or to be supplied. My Lords, I beg to move.
LORD DRUMALBYN moved Amendment No. 44:
Page 92, line 27, leave out from ("of") to end of line 29 and insert ("any of the matters
mentioned in paragraphs (a) to (e) of subsection (2) of this section").
§ The noble Lord said: My Lords, Clause 118(3)(c), as it stands, provides that regulations may be made imposing limits on the liabilities to be incurred by participants in respect only of goods and services supplied by the promoters. The Amendment will make it clear that regulations may limit participants' liabilities in respect of all the transactions mentioned in subsection (2) as amended. There will then be no doubt that the regulations may limit payments to be made by participants for goods, training or any other services, whether these are supplied by promoters or other participants, or supplied under arrangements made by them. My Lords, I beg to move.
LORD DRUMALBYN moved Amendment No. 45:
After Clause 121 insert the following new clause:
§ Enforcement provision.
§ "—The provisions of sections 29 to 32 of this Act shall have effect for the purposes of this Part of this Act as if in those provisions—
- (a) references to a weights and measures authority or a duly authorised officer of such an authority were omitted, and
- (b) any reference to an offence under section 23 of this Act were a reference to an offence under this Part of this Act.
§ (2) For the purposes of the application to Northern Ireland of those provisions as applied by the preceding subsection—
- (a) any reference to the Secretary of State shall be construed as a reference to the Ministry of Commerce for Northern Ireland, and
- (b) paragraphs (c) and (d) of section 33(2) of this Act shall have effect as they have effect for the purposes of the application of Part II of this Act to Northern Ireland."
§ The noble Lord said: My Lords, when we discussed the Amendment of my noble friend Lord Hanworth on this subject in Committee, I undertook to look at the whole matter of enforcement of the provisions to deal with pyramid selling. As the Bill now stands, prweedings under this Part could be brought by anyone—the police, the Department, the Director General, local weights and measures authorities or even a private citizen. If it were left like that and no duty was laid upon any agency, responsibility for enforcement would rest generally with the police, and it would clearly be un- 610 necessary and inappropriate to place this as a special task upon them. We gave careful consideration to the possibility of placing the duty on local weights and measures authorities, which my noble friend proposed, but we came to the conclusion that to do so would widen considerably the scope of their present duties. They are now concerned with matters which are usually of importance to local consumers, whereas pyramid selling organisations are, by contrast, often nationwide and their objectionable practices do not generally injure consumers; it is usually the participants who suffer. Because they are organised on a national scale, investigations are likely to make a greater call on resources of both men and money than the usual run of cases, which are now dealt with by the weights and measures authorities. I am sure that local authorities would wish to examine this aspect of the matter closely before accepting this rather wider task.
§ What we need is early and vigorous enforcement of Part XI, and we have come to the conclusion that this can best be carried out by the Department. The organisation for this task already exists; its staff are experienced in investigating such matters and in bringing prosecutions over the whole field of company law. It seemed right to apply these resources to this purpose for the limited period which we hope it will take to get rid of the objectionable practices of pyramid selling. The Amendment would give the Department special powers to investigate pyramid selling organisations. Although the Department already has powers to investigate the affairs of registered companies under Section 109 of the Companies Act 1967, these do not extend to firms trading as partnerships. We have therefore thought it right to propose that, for the purpose of investigating pyramid selling, special powers should be available to range over the whole field of organisations, whether registered or unregistered. The powers which the Amendment would make available are a suitably adapted form of those which weights and measures authorities have for the purpose of enforcing orders made under Part II of the Bill. They would enable investigations to be initiated quickly and, where it was found that offences had been committed, for proceedings to be brought. I beg to move.611
§ VISCOUNT HANWORTH
My Lords, I should simply like to thank the Government for this Amendment, which seems to cover most of what I wanted.
§ Clause 122 [Publication of information and advice by Director]:
§ 7.30 p.m.
§ LORD DRUMALBYN moved Amendment No. 46:
Page 95, line 15, at end insert—
("( ) Without prejudice to the exercise of his powers under subsection (1) of this section, it shall be the duty of the Director to encourage relevant associations to prepare, and to disseminate to their members, codes of practice for guidance in safeguarding and promoting the interests of consumers in the United Kingdom.
( ) In this section "relevant association" means any association (whether incorporated or not) whose membership consists wholly or mainly of persons engaged in the production or supply of goods or in the supply of services or of persons employed by or representing persons so engaged and whose objects or activities include the promotion of the interest of persons so engaged.").
§ The noble Lord said: My Lords, this is an Amendment to meet a proposal by the noble Lord, Lord Jacques, and indeed one which is contained in an earlier part of the Bill. The reason why we did not accept the noble Lord's Amendment as it stood was because we thought it was better to include a definition of the type of association referred to because we feel this cannot be left at large, and it is important. For instance, there must be no doubt as to whether the provision might inadvertently bring in trade unions, and this Amendment will make certain of that. Secondly, the Government Amendment includes a reference to the dissemination of codes to members. This is an important part of the exercise. Thirdly, the Government Amendment, as the noble Lord will have observed, is strictly limited to codes designed to safeguard and promote the interests of consumers. Although the Bill is called the Fair Trading Bill, "fair trading" is not defined in the Bill—I am not sure it is even mentioned in the Bill—and it is probably better to deal with matters that we can fully understand, because "consumer" is defined in the Bill.
§ I hope this Amendment will be acceptable to the noble Lord. It is, I think, a useful Amendment. The Government 612 have been very ready to listen to constructive suggestions of this kind, and we believe that effective codes of voluntary conduct can be most helpful. We therefore think it right that the Director General should encourage these, but there is one word of warning that I should give. The recommendations that are made by trade associations to their members would give rise to registrable agreements if they dealt with the matters set out in Section 6 of the Restrictive Trade Practices Act 1956. Nothing in either the Amendment set down by the noble Lord, Lord Jacques, or in the Amendment we are now discussing will affect the obligation to register such agreements, but the Director General will be taking over the functions of the registrar of restrictive trading agreements, and he will be well placed to discuss with associations the implications of their proposals and the likelihood that particular agreements, although registered, might be the subject of representations made by the Director General to the Secretary of State under Section 9(2) of the Restrictive Trade Practices Act 1968. These are the representations on which the Secretary of State can rule that the agreement need not be referred to the Restrictive Practices Court. So it is well conceived that the Director General should assist in this way, in the formation of codes, and should encourage the formation of codes, although he will have to take cognisance of them later in his capacity of being in charge of the restrictive trade practices legislation. I thought I ought to make that plain, but, all the same, it is a very worthwhile thing to do. I beg to move.
§ LORD JACQUES
My Lords, I thank the noble Lord for an extremely useful Amendment. I could go on at length and point out all the advantages, but I think it would be most inappropriate.
§ Clause 135 [General interpretation provisions]:
THE EARL OF LIMERICK moved Amendment No. 47:
Page 103, line 15, after ("undertaking") insert ("which is carried on for gain or reward or which is an undertaking").
§ The noble Lord said: My Lords, to give credit where credit is due, this Amendment stems from a suggestion made 613 by the Law Society in correspondence with my right honourable friend the Minister for Trade and Consumer Affairs. The Law Society suggested that the definition of "business" might be regarded as excluding undertakings which do not charge consumers directly for their services but are recompensed by commission. This Amendment is designed to take account of the fact that some persons who provide services commercially to consumers do not charge the consumer, but live on commissions paid by the commercial undertakings. Insurance brokers would provide an obvious example. The purpose of this Amendment is to ensure that any practice adopted by such persons in dealing with members of the public may be examined as consumer trade practices notwithstanding that the services are provided without any charge; for example, to the motorist or the householder who wants to insure. I beg to move.
§ Schedule 6 [Matters falling within scope of proposals under section 17]:
Page 115, line 23, after ("practice") insert ("either generally or"). —(The Earl of Limerick.)
§ Schedule 7 [Goods and services (in addition to those in Schedule 5) wholly or partly excluded from section 50]:
§ THE EARL OF LIMERICK moved Amendment No. 50:
Page 116, line 8, at end insert—
§ The noble Earl said: My Lords, this Amendment is necessary to remedy an accidental omission. Schedule 7, together with Schedule 5, lists the goods and services supplied by undertakings which are nationalised or otherwise controlled by Statute and in respect of which only Ministers, and not the Director, will be able to make monopoly references. The statutory monopoly in the supply of water was overlooked when the Schedule was drawn up. I beg to move.614
§ Schedule 11 [Transitional provisions and savings]:
THE EARL OF LIMERICK moved Amendment No. 51:
Page 126, line 34, leave out from ("undertaking") to ("is") in line 35 and insert ("given to a Minister which").
§ The noble Earl said: My Lords, I think it might be convenient if I spoke to Nos. 51, 52, 53 and 54 together. These four Amendments are somewhat technical, and they all bear on the same point. Generally speaking, it is intended that the Director should take over the work, now handled by the Department of Trade and Industry, of policing undertakings and orders following Monopolies Commission reports. This is the point of Clause 88 of the Bill. Paragraph 9 of Schedule 11 extends the Director's follow-up functions under that clause to the follow-up of undertakings given before the Director takes over his duties. For the future, it will be for the Director himself, if so requested by Ministers, to enter into consultations with firms. He will himself negotiate undertakings. But transitionally, where undertakings have been given before the commencement of the Act, the position will have so to be certified to him by the Secretary of State. Amendments 51 and 52 deal with cases where negotiations may actually be in progress when the Director takes over. The other Amendments—that is, Nos. 53 and 54—make no change of substance. They are simply intended to clarify the procedures which will have to be carried out to ensure that the Director is au fait with past reports and undertakings. I beg to move.
§ THE EARL OF LIMERICK
My Lords, if it has the agreement of the House, I would propose Amendments Nos. 52, 53 and 54 en bloc. I beg to move.
§ Amendments moved—
§ Page 126, line 39, at end insert ("and which either—
- (a) was given before the commencement of this Act, or
- (b) is given after the commencement of this Act in a case where no request under subsection (1) of section 88 of this Act has been made to the Director to carry out consultations in accordance with that subsection.")
§ Page 126, Line 50, at end insert—
§ ("( ) The preceding provisions of this paragraph shall have effect without prejudice—
- (a) to the duty of the Commission under section 86 of this Act to transmit to the Director copies of reports which were made by the Commission before the commencement of this Act and which, by virtue of paragraphs 1 and 7 of this Schedule, have effect as if made under this Act, or
- (b) to any duty of the Director, where requested by the appropriate Minister or Ministers to do so with respect to any such report, to carry out such consultations as are mentioned in section 88(1) of this Act.")—(The Earl of Limerick.)
§ Schedule 12 [Enactments amended]:
§ THE EARL OF LIMERICK
My Lords, this Amendment was discussed with Amendments Nos. 34 and 35. I beg to move.
§ Amendment moved—
Page 128, line 42, column 2, at end insert—
("In section 22, after subsection (4) there shall be inserted the following subsection:—
(5) The foregoing provisions of this section shall not apply in relation to any order made under section 21A of this Act."."). —(The Earl of Limerick.)