No. I mention that not for the purpose of expressing a personal view upon the merits of that practice but as an indication of the many variations of the practice of exclusive dealing which are possible.
There is also a volume of complaint concerning the unreasonable limitation of wholesale channels so as to give a virtual monopoly in the supply of some goods to a limited number of firms. That limitation of wholesale channels can be and is sometimes secured without the intervention of any trade association. I have referred earlier to the restrictive practices applied by trade associations but it will be clear that there does not have to be an association in order to bring a restrictive practice into operation. The allegation that there is an unreasonable limitation of wholesale channels, designed to keep trade in the hands of a limited number of firms, has been made in respect of hides, rubber, footwear, sheet glass, screws, nails and tacks. Similar to that restriction, but operating in a somewhat different way, there is the practice of excluding new entrants from a trade either by overt action, point-blank refusal of supplies, or by imposing onerous conditions either as to dimensions of the trader's premises, the technical qualifications which he should possess or the staff that he should employ, or simply by the imposition of unreasonable conditions or qualifications for trade discounts. That practice has been alleged to exist in the case of many of the goods I have already mentioned, to petrol, batteries, radios, pottery, cutlery and so forth. These are the restrictive practices that have been most frequently complained of in representations to the Department or by Deputies in the Dáil.
There is, however, in addition, the very important matter of resale price maintenance arrangements. That term is applied to agreements made between manufacturers or wholesale suppliers and retailers under which the supply of goods is made conditional on the retailer charging for these goods a prescribed minimum price. As the House is aware from Press comments on the matter in recent times, it has been alleged that these resale price maintenance arrangements are not infrequently supported by boycotts or threats of boycotts of traders who depart from the minimum price condition imposed. The boycott, or threat of the boycott is sometimes extended not merely to the supplies of goods in respect to which the trader is alleged to have charged less than the fixed price but also to all goods manufactured by the members of some association and normally required by the trader for the conduct of his business. The operation of a resale price arrangement has been alleged to exist in relation to many classes of grocery goods, drapery goods, agricultural machinery, veterinary preparations, radios and distempers and, of course, as the House will remember from debates a long time back, to cigarettes and tobacco.
I should, perhaps, at this stage, make it clear that the complaints which have been made to me and expressed in this House are not solely directed against manufacturers of these goods here. In some cases manufacturers are the victims of these restrictive practices. It has been stated that some manufacturers have been forced, against their will, to confine supplies on wholesale terms to the members of some wholesalers' association or to a limited number of firms and coerced or restrained from extending their distribution arrangements. Nor are these complaints confined to protected industries. It is, as the House knows, sometimes alleged that exclusive dealing arrangements or other restrictive practices operate in relation to imported commodities. It was alleged, for example, in the case of timber that agreements exist between members of a trade association here and suppliers of timber in other countries, under which these suppliers undertake not to give delivery to persons who are not members of that association. There have also been complaints of similar agreements between importers and distributors.
On the other hand, there have been complaints of restrictive practices affecting our exporters who, it is stated, have been coerced or restrained by combinations between other exporters and external importers, practices designed to channel trade through the members of some external trade association.
In view of the volume of complaint which has reached the Department of Industry and Commerce, and which has occasionally been expressed in the Dáil, I think that the need for legislation is obvious. It is true that it is contended that the scale and operation of restrictive practices here is not very great or, at any rate, is not as great as in some other countries. The important fact for us to note, however, is that it is growing and it is the growth of these restrictive practices which, I think, emphasises the need for investigating the position and the taking of means to control it before it goes too far.
The Associated Chambers of Commerce in their circular to Deputies expressed the view that conditions here do not justify the introduction of drastic legislation as is proposed. I quarrel with the adjective in that phrase. I would not describe the Bill before the House as "drastic" in any way and when I bear in mind the alternative forms which the Bill might have taken, forms that we had under consideration before reaching a final decision, then I repeat that the adjective used by the Associated Chambers of Commerce is completely unjustified. I want to make it clear that the purpose of this Bill is to provide a means of investigation and a means of action, if investigation should show that action is needed. I do not want to prejudge the outcome of the investigation in any case. I want to smash trade rings and I use that term in the sense in which the average man understands it—a combination of traders designed to confine trade to themselves, to eliminate competition between themselves and to exploit that position to their own benefit and the public detriment. I am asking the Dáil to forge an instrument to smash rings.
It is argued, and I could not dispute the strength of the argument, that trade associations need not necessarily operate in a manner inimical to the public welfare. It is stated by some of these associations in justification of their existence and of the practices which they apply, that these practices are necessary to protect the public interest and that they operate to that end, that they are designed to maintain the standard of quality of the goods supplied and the standard of service given to customers or to reduce distribution costs. That may be so in some cases but I was struck by the number of trade associations which, when this Bill was published, rushed to draw on the cap and found that it fitted. If the practices which they are operating can be shown by them to be beneficial to the public, then nobody will want to interfere with these practices. If, on the other hand, they have the characteristic of a ring, if they are intended to restrict competition or to create a situation in which the public can be exploited to the particular interest of a limited number of firms or individuals, then I think we should have means to end that. Having regard to the volume of complaints that has been flowing in for some years past and to the degree of public uneasiness which exists about this matter, I think the time is overdue when something must be done, and I hope that the Dáil will examine the Bill with the idea only of securing that what we are proposing to do is fair and reasonable and is not prompted either by prejudice or by an undue desire to interfere with trade practices which are not contrary to the public interest.
I should, perhaps, say also that I am not opposed to trade associations. I think I can say that I have personally encouraged and assisted in the formation of many. The number of trade associations operating in this country expanded considerably during the war years because of the difficulty of arranging the distribution of scarce supplies, and the initiative in bringing about the formation of a trade organisation was often taken by me when Minister for Supplies, because it was much easier to effect regulation and distribution where there was a representative body that could speak with authority for the trade concerned. Many of these associations, which were brought into being by the requirements of the war years, continued in existence after the particular purpose which created them had ceased to operate and turned their attention, and directed their activities, to other matters designed to benefit their members.
I think it is also true to say that the number of trade associations has been increased by trade union pressure. When a trade was unorganised, it was not an unusual practice for a trade union seeking to improve the conditions of its members employed in that trade to concentrate upon individual firms in it, and that tactic produced the inevitable tendency to combine so that collective agreements, covering the whole trade, could be negotiated, and so that the employers in the trade would have equal bargaining power with the trade union representing their staffs. These trade associations, therefore, must be recognised as being often valuable and necessary and, in fact, sometimes indispensable. They have many legitimate fields for their activity, but the primary purpose of their existence is to protect the interests of their members, and that purpose often drives them into the operation of restrictive practices even though they were originally formed for a worthier purpose.
I am asking the House to agree that where a trade association takes power to exclude any citizen from any trade, or imposes restrictions which have the effect of excluding any citizen from any trade, then no matter what justification there may be for that course, and no matter what arguments can be advanced by the association in defence of these restrictions, that association is taking to itself functions which properly belong to the Oireachtas.
I am asking the Dáil also to accept the contention that agreements or combinations or conspiracies between producers and traders to monopolise a particular form of commerce, or to fix or maintain prices for any class of goods, because they involve the power to control a market, is clearly inimical to the public good. I recognise that there are many such agreements, combinations and associations between traders which are not monopolistic. They may even be beneficial in their effect, if confined to the elimination of trade abuses and the prevention of the sale of goods of sub-standard quality or to elevating the standard of service given to the public or to supervise the orderly distribution of goods. If there are such beneficial associations and arrangements, nobody wants to interfere with them, but we are proceeding on the assumption that, where a group of traders in any goods get together and start to make regulations applying to these goods, it is not unlikely that their preoccupation with their own interests may lead them into the adoption of practices which are contrary to the public welfare, and that we should have the power of investigation in such cases.
The claim that the regulation of distribution by trade associations ensures efficiency and economy in distribution is often spurious but there may be cases—and we recognise that there may be cases—where it does good. I have said that we are not prejudging, or asking the Dáil to prejudge, the outcome of the investigation in any case. If the claim made by some of these trade associations that the practices which they apply are designed and operate to protect the public interests can be sustained, then no action will follow on the investigation.
This Bill which I am asking the Dáil to approve is based on two principles. The first is, as a general rule and subject to public policy, to restrict imports by tariffs or quota arrangements in the interests of national economic development, with the fullest and freest competition, in any trade, is in the public interest. Secondly, where there are special conditions which may justify some form of regulation, then neither trade associations nor combinations of traders can be allowed to arrogate to themselves the right to impose these regulations or to limit competition. We are framing this Bill on the assumption that agreements between traders who should be in competition with one another must be treated with suspicion and that such agreements are an actual or a potential source of injury to the public as consumers.
There is, perhaps, a special need for care regarding these agreements and arrangements in this country. The policy of industrial protection on which we embarked in our efforts to build up increased economic activity in the country has had the effect of excluding external competition and thereby facilitating agreements between producers and distributors to limit internal competition or to facilitate price maintenance arrangements. I have emphasised that many of the complaints about the operation of restrictive trade practices which we have received did not apply to goods produced by protected industries, or even in this country, but we have always noted that the development of the protectionist policy, by excluding external competition, created a risk of arrangements being made to eliminate internal competition amongst the protected firms.
The aim of policy must be to foster competition wherever possible and to introduce that element of risk into every trade which will force those engaged in it to strive towards maximum efficiency at all times. If there is any evidence in regard to a protected industry that the persons engaged in it are also protecting themselves against internal competition after we have excluded external competition, then we must have power to break up that arrangement in the interests of the public and in the interests of the policy of industrial development.
If I have convinced the Dáil that legislation is necessary, the next matter we have to consider is the form that legislation should take. If a situation has developed in our economy which threatens the public welfare, what are we to do about it? The Federation of Irish Manufacturers summoned a conference of the various trade associations and chambers of commerce and passed a resolution at that conference in which they recognised that some legislation was required to deal with restrictive trade practices but contended that the present Bill is not satisfactory. The Associated Chambers of Commerce, in the course of their discussion with me, indicated that they would prefer a Bill which schedules and makes illegal clearly defined practices leaving the enforcement of that legislation to the courts.
All the possible alternative methods of tackling this problem were considered before the present Bill was approved. No doubt, it would be possible to legislate a general prohibition of unfair competition, of restrictive practices, of resale price agreements, and leave it to the courts to decide whether a particular action was contrary to law. In common law, agreements which are conceived to be contrary to the public interest are not enforceable in the courts, and it seems to me that the main objection to the course recommended by the Associated Chambers of Commerce is that it would not provide a much more satisfactory means of redress than exist at present.
The lawfulness of any practice could only be determined by litigation and only when some aggrieved citizen decided to put himself to the hazard of litigation in order to assert his rights. It is certain that in every case the proceedings would be long and costly, and the knowledge that they would be long and costly might easily deter many traders from asserting their rights, even though they were quite clear under the terms of the law. The more powerful the interests involved in maintaining restrictive trade practices, and the more profitable these restrictions were, the more certain it would be that the person who initiated litigation under such a law to secure his rights would be harassed by every legal device. A verdict in his favour would be appealed from court to court and, even if, when all legal processes had been exhausted, the individual secured a verdict, the law would be settled only in his particular case. I do not think that would be a desirable method of tackling this problem.
There was another alternative method considered by us. The first idea was to enact a general prohibition upon unfair trading practices and let the courts decide what practices were unfair. The second was to schedule and declare unlawful certain specific and clearly defined practices. I think that course would be favoured by the Associated Chambers of Commerce in preference to this Bill. But if we were to attempt to schedule and define certain practices and declare them unlawful for all trades in all circumstances, I think we would get ourselves into a position of danger and difficulty.
I doubt if even in this Dáil we could get agreement upon the practices that should be declared to be unlawful in all trades and in all circumstances. If we were to declare unlawful in that sweeping way any of these practices to which I have referred, they would be debated here with reference to the circumstances of a particular trade and Deputies might be convinced that there was some special circumstance in some trade which would justify exempting that trade from the prohibition. We would have real difficulty in getting a code of law that could safely be applied to all trades in all circumstances.
The determination of the practices to be prohibited would also offer difficulties. It would be dangerous to rely upon the experience of other countries because our conditions and our outlook are different from theirs and we would ultimately find ourselves with a very attenuated measure limited to those practices which we could confidently say should not be permitted in any circumstances or in any trade. That is the theoretical objection to that course.
There is another and a practical objection. I have a very high respect for the ingenuity of our traders and for the associations into which they organise themselves. If we confine ourselves to prohibiting certain defined practices set out in a schedule to an Act, I am quite certain that many of these traders or associations of traders would find ways of achieving the same results in a different manner and one which would evade successfully the strict application of the law. They would always be able to devise original methods of getting round the law and we could never contemplate continuous amendments of the Statute proceeding fast enough to catch up upon the new practices designed to achieve the effect of trade restrictions which traders and combinations of traders might be able to devise.
The conclusion I reached, and I hope the Dáil will agree with me, was that the measure now before the House offers the best solution to this problem. I admit that it is experimental. It is the first time we in this country ever attempted legislation of this character and experience of its operation over many years probably will show that it is capable of improvement. But it does create machinery by which conditions in individual trades can be examined and examined independently and objectively by a commission which will have no interest other than the protection of the public welfare.
It provides also that trade practices cannot be banned unless and until the Oireachtas is convinced that they are contrary to the public interest. The Associated Chambers of Commerce in their circular to Deputies said that they object to the Fair Trade Commission having power to declare illegal practices which have been established for many years. Deputies who have read the Bill will understand that the Fair Trade Commission will not have any power to declare any practice illegal. It will operate in the way laid down in the Bill, carry out an investigation of any trade practice and make a report upon that practice to the Minister for Industry and Commerce with recommendations. The Minister may or may not decide to act upon its recommendations. If he does so decide, he has to bring the report to the Dáil with a Bill to implement the Order made by him and that Order will have no legal force until it has been confirmed by an Act of the Oireachtas.
The procedure we contemplate is that which is now used in relation to harbour works Orders. When a harbour authority wants legal authority to extend the scope of its operations it seeks from the Minister for Industry and Commerce an Order authorising it to do so. The Minister makes that Order and then brings to the Dáil a short Bill to confirm it. The Order has no legal effect until that confirming Bill has been passed. That is the procedure in respect of Orders to be made under the authority of this Bill.
