I move: "That the Bill be now read a Second Time."
In June of this year I addressed the House at the same stage of the Restrictive Practices (Confirmation of Order) Bill, 1978, which confirmed the Restrictive Practices (Groceries) (Amendment) Order, 1978. In the course of the House's discussion on that Bill reference was made to an ongoing boycott of the products of a company by a group representing wholesaling and retailing interests. I acknowledged then that the boycott was a matter of concern to me and indicated that I was having the matter urgently examined to identify any remedial action that might be taken.
The Examiner of Restrictive Practices, whose function it is to monitor the operation of orders made under the Act, was subsequently requested to intervene in the dispute in an attempt to bring together both parties and seek a termination on mutually acceptable terms. Under the chairmanship of the examiner an agreement was concluded to suspend boycott action for a three-month period to the end of November on the understanding that suppliers would withhold supplies from retailers who sold under cost. It was clear, however, that the dispute ran deeper than the under-cost selling issue which was the immediate occasion of the boycott and, also, that the provision in the agreement concluded under the examiner's chairmanship relating to withdrawal of supplies had implications for existing restrictive practices legislation.
It is, perhaps, opportune at this point to refer to the legislative background in so far as it affects the present difficulties. The first Restrictive Practices (Groceries) Order made in 1956 provided, inter alia, that suppliers could withhold supplies of goods from a retailer if the later resold at or below wholesale price and refused to give an undertaking that he would desist from doing so. The amending order made in 1973, however, repealed this provision in so far as it applied to grocery foodstuffs.
One of the main considerations behind this amendment was the connection which was then seen to exist between advertising of below-cost sales and the practice of below-cost selling itself. Without widespread advertising, much of the impact of below-cost sales tended to be lost. The advertising of such sales had, moreover, undesirable features notably that it served to give to the buying public a misleading impression of the entire range of prices being charged in the outlet or outlets concerned. The bulk of prices must, of course, reflect a margin covering retailing costs and yielding a profit and advertising of this nature creates an unfavourable impression of the prices in independent or small retail outlets, resulting in serious losses in sales, thereby accentuating the tendency to domination of the trade by multiple organisations. In sum, therefore, it was considered that the prohibition of a practice which was seen to have a number of undesirable features, would also have the effect of eliminating the actual practice of selling below purchase price.
Reverting to the events of last summer the agreement concluded under the chairmanship of the Examiner of Restrictive Practices had implications for existing legislation. In view of this, and also of the temporary nature of the agreement, the Restrictive Practices Commission were requested by me to engage in discussion with all parties involved in the supply and distribution of grocery goods with a view to finding, if possible, a more enduring solution. In short, the Examiner having negotiated a truce, I was anxious that the Commission should then try to find the basis for a permanent peace.
A situation in which manufacturers were, on the one hand, threatened by a boycott from one group of customers and, on the other, were having to give to another group the sort of terms that enabled them to indulge in below-cost selling, would, if it were to persist, most assuredly not be in the economic interests of the country. In the short-term perhaps it might serve to make certain products available at lower prices for some consumers, but this would be on a very limited scale. In the long term it would almost certainly lead to the loss of jobs in manufacturing industry and the substitution of imported goods for the products of the firms which would have had to close. And concurrent with such adverse developments, that minority of consumers who had earlier benefited from below-cost selling would be likely to find themselves paying higher prices for their groceries.
The commission held a series of meetings with representatives of the suppliers, wholesalers, multiple and independent retail outlets. It soon became apparent in the discussions that some months would be required to attempt to resolve the issues. These issues centred around the terms of supply and they are the subject of ongoing discussion between the parties immediately involved in the sector.
In view of the need for time to facilitate conclusion of these negotiations, the commission concentrated their efforts on getting an extension beyond end of November of the moratorium on boycott activity. This they were successful in doing and the moratorium has now been extended to the end of March 1979. The agreement was concluded on the basis that certain action of a legislative nature would be undertaken. In their report to me, the commission recommended that the Restrictive Practices (Groceries) Orders should be amended to reapply, in relation to all grocery goods the provision in the 1956 order enabling suppliers to withhold supplies from persons who engage in below cost selling. The commission also recommended that the prohibition on the advertising for sale of goods below cost should be restated so to apply this prohibition to the advertising of all grocery goods.
I have accepted the commission's recommendations and an order giving them effect has been made and published. As regards the various regulations relating to the supply and distribution of grocery goods, it is my intention that these will be actively and comprehensively enforced. Future developments in the trade will also be closely monitored to ensure compliance with regulations. A further matter arising at this time which causes concern is the practice of multiple outlet traders advertising goods for sale at specially low prices when such low prices are not available at all outlets. This practice would appear to be in breach of the Consumer Information Act, 1978, and, accordingly, I propose to bring it to the notice of the Director of Consumer Affairs as soon as an appointment to this post is made.
The recent unrest in the grocery trade has been a matter of grave concern. I am confident, however, that compliance by the trade with the relevant regulations will serve to defuse the situation to an extent which will create a climate conducive to the early conclusion of negotiations on terms and conditions of supply. It is my earnest wish that these negotiations will be brought to a successful conclusion as early as possible and I trust that the House, in confirming this order, will share in these sentiments.
