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, regarding the operation of resale price maintenance in the supply and distribution of hand knitting yarns.
I propose to give here a summary of the Commission's report of their inquiry into the matter, which has already been circulated to Deputies.
The Commission reported that by far the greatest share of the market was supplied by the three largest home manufacturers. Imports were relatively small, and were subject to 33? per cent customs duty, except in the case of some speciality yarns which are not produced in this country.
One of the larger manufacturers allowed wholesalers, through whom 95 per cent of their distribution was made a discount of 15 per cent off the price to retailers, who in turn received 23 per cent on cost if they adhered to the list price. A second manufacturer listed prices which allowed wholesalers a 17 per cent. margin and retailers 23 per cent. The third manufacturer distributed mainly through wholesalers, who marked-up 9 per cent for sale to retailers; this firm's suggested prices would give retailers a margin of 33? per cent. Settlement discounts of from 3¾ per cent to 5 per cent were also provided for by all three concerns.
At the inquiry, these three manufacturers testified that they supported the policy of resale price maintenance. At that time, however, none of them was enforcing such a policy, because they considered that as the bulk of their sales was through wholesalers, enforcement would not be practicable. Some of the wholesalers who gave evidence also expressed themselves in favour of resale price maintenance, although they stated that it would be very difficult to apply and enforce it.
It was disclosed at the inquiry that one of the largest manufacturers had introduced resale price maintenance in 1956, following representations by wholesalers. This firm applied the policy principally to the wholesale trade, through which they made the greater part of their distribution but also to some large retailers whom they supplied directly, and they enforced it to the extent of withholding supplies in a number of cases. In 1961, they announced their intention of abandoning the policy as its operation was not effective, due to the non-cooperation of some wholesalers. However, they still refused to accept orders from some traders from whom supplies had previously been withheld, and continued to advocate price maintenance at wholesale level. The firm also stated that they considered that if extreme price cutting were again to cause inconvenience to their trade they might have to take further action against it. As this firm was in a position of some dominance, and their products were stated to be in considerable popular demand, any trader who was refused supplies by them would be placed at a competitive disadvantage.
The Commission were of opinion that the operation of resale price maintenance by this firm unreasonably restricted competition in, and entry to, the trade in hand-knitting yarns and retarded the development of a competitive price structure; also, that the attitude of the firm concerned, and of other manufacturers and wholesalers, to the principle of resale price maintenance in this commodity could lead to an extension of the policy if suitable circumstances arose. The Commission accordingly recommended that individual resale price maintenance at all levels of the trade in hand-knitting yarns should be prohibited.
As there was no evidence of the operation of a collective system of price maintenance, the Commission made no recommendation in that regard.
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 confirming Bill which is necessary to give the force of law to the Order concerned.
The arrangement in the case of confirmation Bills is that the Order which it is proposed to confirm would not be subject to amendment by the House but would be accepted or rejected as it stands. The matters with which the Order deals have been the subject of a detailed public inquiry by the Fair Trade Commission, and their Report sets out the arguments in favour of adopting the provisions contained in the Order. I am satisfied that a statutory control is required to curb any tendencies towards actions which might be in restraint of reasonable competition in the trade in this commodity. Accordingly, I recommend this Bill to the House in the confidence that its enactment will prove beneficial both to the interests of traders, and to the general public.
