I move that the Bill be now read a Second Time.
The object of this Bill is to confirm an Order which I have made under the Restrictive Trade Practices Act, 1953, on the recommendation of the Fair Trade Commission, relating to trade practices affecting the supply and distribution of carpets, carpeting and floor rugs.
There are three principal manufacturers of machine-made woollen carpets: Navan Carpets Ltd., who are the largest manufacturers, make Axminster carpets; Youghal Carpets Ltd. who also manufacture Axminster carpeting; and Kincora Carpets Ltd. who produce Wilton carpeting as well as Axminster and Brussels carpets. The Navan company's policy has been to distribute direct to the retail trade where it is economic to do so and to supply the balance of the retail trade through their wholesalers. Up to 1958, Kincora Carpets Ltd. supplied wholesalers but in April of that year, they decided to distribute exclusively to the retail trade. Youghal Carpets Ltd. adopted a distribution system similar to that of the Navan company. Total sales through wholesalers have been somewhat less than 50% of the total.
In 1954, the Fair Trade Commission made fair trading rules relating to the supply and distribution of carpets. These rules provided, inter alia, that in the application of his conditions of supply, a manufacturer should not discriminate between traders in the same class and that the conditions should not be unreasonable or be operated in such a way as unjustly to exclude new entrants to the trade. After the coming into operation of the rules, certain firms engaged in the wholesale trade in floor coverings represented to the Commission that the conditions of Navan Carpets Ltd., particularly those relating to the size of orders, were beyond the competence of prospective new entrants. To facilitate all parties, the Commission subsequently made revised fair trading rules which came into operation on 1st April, 1958.
The new rules provided, inter alia, for quantitative limits to the purchases which a manufacturer might require a wholesaler to make as a condition of supply. However, renewed representations were made to the Commission by the complainant wholesalers that they were still unable to obtain supplies of carpets from the Navan company. Subsequently, this company filed with the Commission a statement of terms and conditions which, though showing a considerable relaxation in requirements concerning the size of orders, retained a number of other conditions which seemed to be in defiance of the rules.
About the same time, Kincora Carpets Ltd. decided to withdraw the wholesalers' discount and the established wholesalers represented to the Commission that, as the Kincora firm were the sole manufacturers in this country of Wilton carpeting, their action was a breach of the rules in that it unreasonably and unjustly eliminated wholesalers from the trade in this type of carpet.
The Commission decided that the appropriate way of dealing with these representations was to hold a public inquiry.
At the inquiry, a number of wholesalers stated that they were unable to enter the wholesale trade in home-produced carpets because of unreasonable conditions prescribed by the largest manufacturer. One of the wholesalers considered it unfair that they should be excluded from the carpet trade because they handled other products. The complainant wholesalers agreed that it was reasonable for a manufacturer to specify that a wholesaler should have a showroom but they regarded it as unwarranted interference for him to prescribe minimum showroom space and to indicate the details of fittings and shelves.
The condition requiring wholesalers to employ fitters and sewers was thought to be unreasonable on the ground that the retailer is the obvious person to provide this service for the consumer. The requirements to give an initial order of 10,000 sq. yards, valued at from £12,000 to £15,000, and to guarantee an annual intake of 20,000 sq. yards, valued at from £24,000 to £30,000, were considered to be not alone unreasonable but impossible for a wholesaler since he would have to test the market and build up his trade gradually.
The wholesalers accepted that it was reasonable to insist that orders should be of a certain minimum size but they considered that the requirements should not exceed 1,500 sq. yards for an initial order and 6,000 sq. yards for the annual intake. It was the view of the wholesalers that it was unreasonable to require that all orders should each be equal in size to the initial order.
In their report of the inquiry, the Fair Trade Commission express the view that a manufacturer is not justified in specifying that a wholesaler must deal exclusively in carpets nor is he justified in denying supplies to a wholesaler firm which has only a remote connection with a retailer of carpets. In the Commission's opinion a manufacturer may legitimately require a wholesaler to have a showroom but it is not necessary that he should specify a minimum size or any other minimum requirements. The Commission consider that a manufacturer should not insist on the provision of making-up facilities as a condition of entry to the wholesale trade. It is the view of the Commission that the requirement imposed by Navan Carpets Ltd., to place an initial order costing about £15,000 and guarantee an annual intake costting £30,000 is unreasonably onerous.
The terms and conditions of Youghal Carpets Ltd. were regarded as reasonable by the complainant wholesalers and the Commission agree with that view.
At the time of the public inquiry, Kincora Carpets Ltd. were no longer supplying wholesalers and marketed their products exclusively through retailers. As the purchases of the three established wholesalers from this manufacturer in recent years did not come anywhere near the requirements specified in the manufacturers' conditions, the Commission consider that the company's decision to supply exclusively to the retail trade was not unreasonable.
The Commission consider that the conditions perscribed by one of the manufacturers has the effect of excluding, without good reason, new entrants to the wholesale trade in carpets. They recommend, therefore, that an Order should be made requiring a manufacturer to lodge with the Commission a statement of his terms and conditions of supply and providing that, if a prospective wholesaler does not agree that the conditions are reasonable, the Commission should examine the position and should have power to require the manufacturer to make whatever alterations in the conditions may be prescribed by the Commission. The Commission also recommend that a manufacturer should be required to apply his terms and conditions in an equitable manner to all wholesalers seeking supplies.
As Deputies will be aware, I have made an Order to give effect to the recommendations contained in the Commission's report. The Restrictive Trade Practices Act, 1953 provides that an Order of this kind shall not have effect unless it is confirmed by an Act of the Oireachtas. The Bill now before the House is the Confirmation Bill which is necessary to give the force of law to the Order.
In the case of Confirmation Bills of this kind, the arrangement is that the Order which it is proposed to confirm would not be capable of being amended by the House but would be accepted or rejected as it stands. The matters dealt with in the Order have been the subject of a detailed public inquiry by the Fair Trade Commission and the arguments in favour of adopting the provisions embodied in the Order are set out in the Commission's report. I have no hesitation in commending to the House this Confirmation Bill which, on enactment, will, I hope, put an end to unfair restrictive practices in the trade in carpets.
