Restrictive Trade Practices (Confirmation of Order) Bill, 1955—Second and Subsequent Stages.

Minister for Industry and Commerce (Mr. Norton):

I move that the Bill be now read a Second Time. The object of this Bill is to confirm and give the force of law to an Order which I have made under Section 9 of the Restrictive Trade Practices Act, 1953, relating to trade practices affecting the supply and distribution of radio sets and accessories. As Deputies are aware, the Fair Trade Commission undertook as its first statutory inquiry an inquiry into the conditions which obtain in regard to the supply and distribution of radio sets and accessories. Having completed the inquiry, the commission duly furnished a report of the inquiry to me, describing the conditions which obtain in the radio trade and indicating whether, in the view of the commission, certain practices which exist and which interfere with competition are unfair or operate against the public interest. The commission's report has been published, and Deputies have had an opportunity to study the report and recommendations of the commission.

Having received the commission's report, I gave very careful and detailed consideration to the many difficult and complex issues which arise. Many of the considerations to which the commission direct attention in the report are ones of great importance, not only to the distributive trade but to manufacturers and the public as well. I also consulted the Minister for Finance, the Minister for Local Government and the Minister for Posts and Telegraphs in order to obtain the views of these Ministers on the commission's report. In this connection, Deputies will be aware that there is a statutory obligation on me under Section 9 of the Restrictive Trade Practices Act, 1953, to consult any other Minister who may be concerned before I proceed to the making of an Order prohibiting specified arrangements, practices or arrangements in a trade.

It may facilitate Deputies if, at this stage, I give a résumé of the commission's report and of the recommendations which the commission make with a view to terminating restrictive trade practices which are considered to be unfair or to operate against the public interest. The retail trade in radio sets is regulated by agreement between two trade associations—the Federation of Irish Radio Manufacturers, which is an unregistered trade union composed of manufacturers, distributors and wholesalers, and the Wireless Dealers' Association, which is a registered trade union composed of manufacturers, distributors, wholesalers and retailers. More than 90 per cent. of the radio sets marketed are handled by manufacturers and distributors who are members of either of these two associations.

Entry to the retail trade is controlled by the Wireless Dealers' Association by means of the maintenance of a list of approved retailers to whom the manufacturers of radio sets agree to confine distribution. It is virtually impossible for a trader whose name is not on the approved list to engage regularly and openly in the sale of radio sets. Application for admission to the list of approved dealers must be made to the Wireless Dealers' Association. Certain conditions as to premises and the stocking and display of radio sets must be complied with by an applicant and, in addition, an applicant must maintain a repair department in his premises, and, if he is not technically qualified himself, he must employ at least one service mechanic on a whole-time basis. An applicant must undertake not to supply radio sets for resale to any person whose name is not on the list of approved retailers, and he must undertake also not to sell radio sets at prices lower than the retail prices specified in the manufacturer's list of prices. These requirements are enforced rigorously by the association. Breaches of the requirements may result in fines, or suspension or deletion of the retailer's name from the approved list.

Assessing the actual and potential effects of the approved list system, the Fair Trade Commission have expressed the view that the system prevents or restricts competition and restrains trade. They consider that such interference with competition and trade is unfair and operates against the public interest. The commission point out that the system places in the hands of an association composed largely of radio traders the power to determine whether these traders should allow other traders to enter into the radio business.

The commission indicate also that the existing arrangements provide a means of organising boycotts of manufacturers whose discount rates or list of customers are not acceptable to the Wireless Dealers' Association; that private enterprise in distribution is stultified and as a result the public is deprived of the benefits of healthy competition. The commission have also adverted to the fact that the emphasis in the operation of the approved list of retailers is in favour of retailers resident in the larger towns and cities and that the restriction of business opportunities to the larger centres of population is not in accordance with public policy.

The view has been widely expressed that if the approved list system is abolished, everyone would be entitled to engage in the sale of radio sets. The commission do not, however, accept the contention that the only alternative to the approved list system is widespread and uneconomic proliferation of retail outlets.

They take the view that it is for individual manufacturers to determine the economics of distribution so far as the number of outlets is concerned; and they point out that, in the absence of collective restrictions, competition between manufacturers may be expected to serve as a deterrent to distributional arrangements which are irrational and uneconomic from a manufacturer's point of view.

The commission consider that, in the case of any individual manufacturer, the objective of achieving efficiency and economy in distribution justifies the making of conditions by that manufacturer, if he so wishes, as to the volume and frequency of orders, or as to the provision of service to the public, provided such conditions are reasonable and are not designed or likely to restrain trade or limit competition unfairly. It is the considered view of the commission that individual manufacturers, acting in this way, can ensure the avoidance of an undue proliferation of outlets while at the same time preserving fair and equitable methods of distribution.

The retail prices of radio sets to the public are fixed by the manufacturers, and sets are sold to the retailer at the retail price, less a discount of 33? per cent., giving the retailer a gross profit of 50 per cent. on the cost price. This rate of profit is substantial, and it will be observed from the commission's report that, even though retailers might be satisfied to accept a lower rate of profit, they are obliged to adhere strictly to the retail prices fixed by the manufacturers.

The practical result of this arrangement is the establishment and enforcement of minimum selling prices in respect of all radio sets sold in the Irish market. In normal conditions, enforcement of a fixed retail margin results in prices being higher than they would be in the absence of a fixed margin. The purchase of a radio set involves the purchaser in a relatively substantial outlay, and the retailer's profit margin represents a large portion of that outlay. An arrangement which deprives the public of the benefit of competition in respect of one-third of the retail price of a radio set is clearly a matter which affects the public interest in a very direct way.

The commission have expressed the view that resale price maintenance, to which all approved radio retailers are required to adhere, is a practice which is contrary to the public interest. The commission see no valid reason why retailers, wherever located and whatever their operating expenses and efficiency, should be compelled, regardless of their own wishes, to accept a margin of gross profit as high as 50 per cent. on the cost of radio sets. The commission are of opinion that it is contrary to the public interest that retailers should be put out of business, if they choose to operate on the basis of a profit margin which, though less than the prescribed margin, is sufficiently remunerative in their own particular circumstances. The view of the commission is that resale price maintenance, whether enforced by an association or by an individual manufacturer, should be abolished, and they consider that the abolition of this practice in the radio trade would be to the advantage of the consumer, would lead to increased efficiency in retailing and would not detract from efficiency in production.

The argument most commonly advanced against the abolition of resale price maintenance is that such a step would lead to extreme price competition, with consequent instability in the trade. Radio sets would, it is feared, be used as loss leaders, that is to say, offered for sale at drastically reduced prices in order to induce customers to purchase other commodities, the price of which has not been reduced. A large concern, dealing in a wide range of goods, would be in a stronger position than a small retailer to make up for a reduction in the prices of radio sets by increased sales of other goods, and the consequence of this would be the large-scale elimination of the small retailer. Persons without any real interest in the trade, and without any intention of continuing in the business, might seek a quick profit by reducing prices in order to increase turnover and so disrupt the business of legitimate traders.

The commission consider that it is necessary to distinguish between price-cutting in circumstances where resale prices are fixed, though ineffectively or only partially maintained, and a situation where price competition is accepted as a normal condition of trading. The commission take the view that, in the latter circumstances, the opportunities for unscrupulous traders will be very limited, and regular retailers will be in a position to weigh the long-term consequences of a particular price policy in relation to other forms of competition. The commission do not accept the contention that price competition would lead to the elimination of numbers of small retailers. On the contrary, the commission consider that such competition would tend in some measure to favour the small retailer by providing him with a means of countering the attractions in the way of elaborate facilities offered by larger concerns.

As regards the practice of loss leader selling, the commission's view is that having regard to the substantial cost, radio sets are much less likely to be used as loss leaders than are other commodities which are low-priced and have a high rate of turnover. In any case, the loss leader device derives much of its sustenance from the prescription of fixed prices. The fact that a very high proportion of radio sets is sold under hire purchase arrangements further reduces the possibility of extreme price-cutting. In such cases, the customer is concerned with the size of the monthly instalment, which is governed by the duration of payments and the specific terms of hire purchase, as well as by the price of the radio set. The impact of price competition is much less direct in such circumstances than in the case of cash sales.

It is unreasonable, in the view of the commission, that the consumer should have to forego the benefits of price competition in order that retailers might be protected against the contingency that competition might at some time become excessive. It is preferable to try to meet the risk of the emergence of such competition, not by eliminating all price competition, but by devising a method of checking excessive competition should it appear. The commission consider, therefore, that in two sets of circumstances, the general prohibition against enforcement of resale price maintenance should be modified. Firstly, if a retailer offers or sells a particular brand of radio set at a price less than or equal to the price at which he originally purchased it from the manufacturer, unfair trading might legitimately be alleged, and the supplier should not be prevented from withholding further supplies. Secondly, if the goods are offered or sold at a price so little exceeding the purchase price as materially to injure the legitimate business interests of a supplier, the supplier should be at liberty to withhold further supplies, provided that he informs the commission of his intention. If, in the latter case, the commission, having examined the matter, notify the supplier that, in their opinion, the circumstances do not justify the continued withholding of supplies, the supplier would be obliged to continue to supply the trader in question.

I have given careful thought to the recommendations of the Fair Trade Commission, and my view is that the commission are fully justified in making the recommendations which are contained in their report. I agree with these recommendations, and I am satisfied that it is unfair that radio manufacturers who have the benefit of tariff protection should discriminate against dealers by refusing to supply them on the grounds that the dealers are not approved by a particular trade association. I am of opinion also that it is wrong that it should be within the competence of vested retail interests to restrict the right of new retailers to enter into the radio trade.

I consider also that a number of the conditions imposed by the Wireless Dealers' Association on new entrants to the retail trade are unduly onerous. I refer, in particular, to the obligation that a new dealer must maintain a repair department and, if he is not technically qualified himself, must employ at least one service mechanic on a whole-time basis. This obligation, which, it may be noted, does not apply to firms which, prior to 1946, were on the approved list maintained by the Wireless Dealers' Association, bears with severity on the retailer in rural areas where the volume of repair work would not be sufficient to justify the employment of a service mechanic on a whole-time basis. I am satisfied that it is contrary to the interests of the consumer that competition should be restricted both by the maintenance of a list of approved retailers and by the enforcement of minimum resale prices for radios.

With the object of removing the abuses which exist and restoring conditions of free and fair competition in the radio trade, the commission recommend in their report that an Order should be made prohibiting the particular practices which are considered to be harmful to the public interest. The commission recommend for instance that, subject to the adoption of safeguards against the contingency of excessive price competition, resale price maintenance should be prohibited and that it should be possible for retailers to determine their own selling prices in the light of their own operating costs.

Dealing with the withholding of radio sets from retailers who have not complied with the rules of the Wireless Dealers' Association, the commission recommend that it should be made unlawful for a manufacturer or wholesaler to discontinue supplies of radios to a retailer on the grounds that the retailer has not observed minimum resale prices. As regards restraint of trade which arises from the exclusion from supplies of retailers who are not on an approved list, the commission recommend that it should be made unlawful for a manufacturer to withhold radio sets from a retailer on the grounds that the retailer is or is not a member of a particular organisation or association or because the retailer's name does not appear on an approved list. The commission recommend that no manufacturer, trade association or organisation should be permitted to publish lists of approved or non-approved persons which are likely to restrict entry to the retail trade or to be used as a basis for regulating the supply and distribution of radio sets. The commission recommend also that it should be made unlawful for any person to secure a boycott of any manufacturer of radio sets on the grounds that the manufacturer has refused to do any act which would be contrary to the terms of the Order.

There are, finally, two recommendations by the commission regarding the imposition by individual manufacturers of terms and conditions for the acceptance of orders. Firstly, it is recommended that a manufacturer should be permitted to impose certain conditions including conditions as to the volume and frequency of orders, provided such conditions are reasonable, are equitably applied, and are notified to the commission, which may, if the circumstances at any time so require, make fair trading rules in relation thereto. Secondly, it is recommended that there should be a prohibition against a manufacturer differentiating between customers who should, in the normal way, be supplied on the same terms and conditions, having regard to the size and frequency of their orders. The commission do not consider that a manufacturer should be prevented from advertising or specifying a resale price which is a maximum price or from withholding supplies from a retailer if the maximum price is exceeded. Any such specified or recommended price will not, however, be binding on retailers as a minimum price.

As I indicated at an earlier stage, I have made an Order to give effect to the recommendations contained in the report of the Fair Trade Commission, and a copy of the Order has been circulated to Deputies. Section 9 (3) of 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 which I am sponsoring is the Confirmation Bill which is necessary to give the force of law to the Order. Deputies are probably aware that proceedings have been initiated in the High Court seeking, inter alia, a declaration that the Restrictive Trade Practices Act, 1953, the inquiry held by the Fair Trade Commission in regard to the supply and distribution of radio sets, and the Restrictive Trade Practices (Radio) Order, 1955, are unconstitutional. The hearing of the action has not yet commenced and I do not wish to say anything which might be regarded as prejudging the hearing, but I consider that, having regard to all the circumstances, it would be proper that the Oireachtas should proceed with its consideration of the Bill for the confirmation of 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 these proposals are set out fully in the commission's report. For my own part, I have given the whole matter my most careful consideration, and I commend to the Dáil this Confirmation Bill which, on enactment, will, I hope, put an end to unfair restrictive practices in the radio trade.

Mr. Lemass:

As this is the first Bill which has been submitted to the Dáil to confirm an Order made by the Minister for Industry and Commerce on the recommendation of the Fair Trade Commission in relation to restrictive trade practices, it affords to the Dáil the first opportunity of considering the working of the Fair Trade Commission since its establishment and, in a more particular way, the principles upon which it has based the recommendations made to date.

This particular Order relating to the radio trade aroused a great deal of public interest and discussion. I think that was due to the fact that there was a general assumption that other Orders, which might be made later on the recommendation of the commission, would be similar in character, differing no doubt in matters of detail, but based on the same principles.

Because of the fact that this is the first Order, and because of the assumption that subsequent Orders will be similar in principle, it is clearly desirable that we should give careful consideration to this Order and debate in full the principles enshrined in it. I am sure every Deputy in the House has been approached by parties interested in the Order, either because they were engaged in the radio trade or engaged in trades in respect of which Orders might be made at some future date; representations were made against the Order, against the whole operations of the Fair Trade Commission, in some instances, and against particular details of the present Order. The reception which the Dáil gives to the present Order, because of all these assumptions, because it is the first Order and because other Orders may be similar, is likely to be of general interest also. There is, as the House knows, a particular problem in that regard.

The Restrictive Trade Practices Act was introduced by the previous Fianna Fáil Government. That Government also set up the Fair Trade Commission and gave it its terms of reference. The first Bill to confirm an Order is submitted by their successors and there is generally an assumption that the whole operation from the enactment of the Restrictive Trade Practices Act to the establishment of the commission and the making of these Orders is not a matter upon which there is any difference of opinion in this House. Because of that, it is possible that persons or interests opposed to the Order, or critical of the working of the Fair Trade Commission, may have difficulty in getting their views expressed here; or, if they could find expression, they may have difficulty in getting them accepted.

For myself, I found it impossible to undertake to bring before the House some of the views regarding this Order which were expressed to me because I felt that that might result in some misunderstanding of my attitude towards it. I want, however, to take advantage of this Second Reading discussion to state in a general way the views of the Party on this side of the House regarding this legislation and regarding also the operations and procedures adopted by the Fair Trade Commission. It seems to me the most important point to stress in connection with this whole matter of restrictive trade practices and the action which the Dáil should take regarding it is that there are two main divisions of it.

First of all, there is the matter of collective agreements and arrangements comprehending manufacturers, suppliers generally and retailers to enforce restrictive trade practices by collective action. And then there is the further question of those trade practices, admittedly restrictive, which are enforced by individual manufacturers or individual suppliers upon retailers.

The Act which we passed here in 1953—the Restrictive Trade Practices Act—was directed against all trade practices, whether enforced collectively or individually, which were found on investigation to be inimical to the public interest. But when that Act was being framed the Government of the day—certainly I as the Minister who was acting in the matter—recognised that the main source of public harm was to be found in collective action to enforce restrictive trade practices. We did not preclude the Fair Trade Commission from examining all restrictive trade practices, no matter how enforced, but the problem that the legislation was designed to deal with was created by the coming into existence of trade associations through which restrictive practices were enforced collectively.

In that regard the position here is different from the position in Britain and different from the position that appears likely to continue to develop in Britain. The British Monopolies Commission, which has published a number of reports dealing with restrictive practices in Britain and which has made certain recommendations which have been in the main accepted by the British Government and embodied in legislation which is now before the British Parliament, was limited by its terms of reference to the examination of collective agreements and problems caused by collective action in trades to enforce restrictive practices. They were precluded from examining and did not examine the merits or demerits of those practices in themselves.

The whole work of the commission was directed against the matter of collective action rather than against the nature of the practices which that collective action was designed to enforce. The commission recommended that collective agreements to enforce restrictive practices should be made illegal, with some minor exceptions, but they did not deal with the merits of these practices when enforced by individual suppliers.

It appears that the British Government is adopting that principle also and the legislation which is being discussed there is mainly aimed against collective action to enforce trade practices rather than the restrictive practices in themselves, and that very considerable liberty is being left to individual manufacturers in imposing conditions upon their retailers' outlets.

As I said our Act was so framed that the Fair Trade Commission could deal with all types of practices, no matter how enforced, but as I stated in the Dáil when introducing it, the main problem was the development of these trade associations and the enforcement of restrictive practices through them and that the object was to end trade rings as the public ordinarily understands that term.

It seems to me that the case being made against this Bill—against the Radio Trade Order which is being confirmed in this Bill—by those who are interested in that trade, or those spokesmen of other trades who have spoken about it in the expectation that similar Orders would be made in relation to their trades, is based very largely on confusion of thought between those two main divisions of the problem—between the issue of collective enforcement of trade practices and the issue of restrictions imposed by individual suppliers upon their retailers.

There is a case for some restrictions when imposed by individual manufacturers or individual suppliers upon retailers which can be fairly defended when it is based on the rights of the individual manufacturer or the individual supplier. Action such as might be taken by a manufacturer to prevent, for example, the unauthorised adulteration of his product would certainly be accepted as reasonable. No Deputy would seek to prevent a beer manufacturer withholding supplies from a retailer who, he found, was selling an inferior product in a bottle bearing his brand or was in some other way interfering with the quality of his product. Action taken by a manufacturer to prevent or to minimise the risk of faulty installation of equipment would also be regarded as reasonable because, apart from any public damage that might result from such faulty installation, it could well operate to give the products of that manufacturer an undeservedly bad reputation.

Similarly, some manufacturers enforce conditions upon retailers designed to ensure the due fulfilment of commitments into which they have entered with the public regarding after-sales service. Where a manufacturer has committed himself to give after-sales service and distributes his product through retailers, then he naturally and reasonably must make it a condition of supply to these retailers that they give the service he has contracted to give. All these regulations, arrangements and restrictions which an individual manufacturer imposes upon retailers to ensure proper standards of service and proper standards of maintenance and to maintain the quality of his products, cannot be regarded as contrary to the public interest nor fundamentally objectionable. But a case made for restrictions imposed upon retailers on any of these grounds takes an entirely different aspect when it is used to defend collective action taken by all manufacturers or all suppliers or all manufacturers in conjunction with all retailers to enforce them.

The examination of the problem here by the Fair Trade Commission, and, prior to the establishment of this commission, in the Department of Industry and Commerce, and the examination which was also proceeding in Great Britain, proves that in all these cases collective action of that kind affects the public interest unfairly. In most cases, if not all cases, the disadvantages of such collective action far outweigh any advantages that may result.

Our position, therefore—the position of the Fianna Fáil Party—in relation to this and in relation to any similar Bill that may be submitted to the Dáil to confirm other Orders made on the recommendation of the Fair Trade Commission is that we will support generally action taken to prevent groups and associations enforcing restrictive trade practices collectively, but we will examine far more critically any proposals which may be made to prevent individual suppliers enforcing conditions upon retailers. We will examine such proposals for the purpose of satisfying ourselves that they are reasonable in all the circumstances of the trade.

It is important that the Fair Trade Commission, the Department of Industry and Commerce, the Dáil and the public should appreciate that collective action, the combination of manufacturers amongst themselves or with retailers to enforce trade practices, is the main enemy, that practices which are reasonable when applied by an individual manufacturer to his retailers, take an entirely different aspect when they are enforced by boycotts, penalties and exclusions through the medium of trade associations. It is entirely wrong that these trade associations should arbitrarily determine for themselves the arrangements which are in the public interest, and enforce those arrangements by such methods as I have described, whether the arrangements relate to the matters which the Minister has mentioned, trading only with persons whose names are upon some approved list or some list of members, or trading with persons who are defined according to qualifications or status, the maintenance of minimum prices or of fixed profit margins.

There are disadvantages in every case where restrictive practices are enforced collectively. I know it has been argued, and will be argued, that there are some cases where the need for regulation is such that it has to be secured and that it is impracticable to secure regulation without some collective action. In many trades there is, no doubt, a case for prescribing qualifications of knowledge or skill to be held by those who engage in the trade and a requirement of some safeguards against fraudulent misrepresentation. But our view is that it should be possible for manufacturers to enforce these regulations and safeguards where they are necessary without having to combine in an association with other manufacturers for that purpose. If there are trades in which it is not practicable for an individual manufacturer to enforce necessary regulations and necessary restrictions without combining with other manufacturers and other suppliers, then in our view there is a case for legislation and for the enforcement of these safeguards and regulations by a public authority, not by a voluntary and, in the correct meaning of that term, irresponsible trade association.

The Minister was, I think, quite right in putting the main emphasis upon the most objectionable practice of all and that is the operation of exclusive producer-dealer agreements designed to secure that goods will be supplied only to retailers who are upon some approved list, some list drawn up by trade associations of persons approved by them. Any such arrangement can result in conditions being imposed in a trade which could never be adopted in circumstances of competition. It means, as is apparent in the case of the radio trade, that applications for admission to the trade by new firms or individuals wishing to engage in the trade are determined by potential competitiors of the applicants. In the case of the radio trade it is clear from the evidence that the main concern of the members of the association, when considering applications for admission to membership, was to keep down the number of retailers to the minimum, to prevent any development of competition with themselves.

As has been pointed out also in the report, the operation of these restrictions tends to discourage if not prevent experimentation in new methods of trading. They often involve the maintenance of standards of service which are higher than the public desire or more costly than the public need and they are nearly always associated with arrangements for maintaining fixed prices or profit margins. The enforcement of these collective agreements places in the hands of these associations powers over individual traders which are often excessive and which are always dangerous. Where resale price maintenance is included they go far beyond anything required to maintain stable market conditions or to eliminate undue competition, and they result in a waste of economic sources.

So far, therefore, as these collective agreements are concerned, it may be taken that we of the Opposition Party will, in every case, support action taken to prevent the enforcement of collective trade agreements. If there is any trade in which it is possible to say that some joint action is needed to impose safeguards necessary in the public interest, then we will argue in favour of legislation and supervision, legislation for the setting up of a public authority to do the regulating and supervising. But we are not nearly as opposed fundamentally to certain restrictions which individual manufacturers and suppliers impose upon their retailers. It may be that some of these restrictions or regulations are unduly severe or are undesirable from the public point of view, in which case there is power under the Restrictive Trade Practices Act to deal with them. In the ordinary course of events, however, we would urge that the effort of the Fair Trade Commission should be concentrated on the elimination of trade rings and of collective arrangements, and not so much to supervise or bring under control the arrangements of individual manufacturers.

Sole agency agreements between individual manufacturers and retailers are not uncommon. There is a number of trades in which these agreements are standard practice, and they may not be objectionable in operation or restrictive of competition. It is true that in this country, with our protected home market where the number of suppliers of any particular commodity to the market may be small, even these arrangements between individual suppliers and retailers may create difficulty, difficulty which may not be experienced at all in larger markets. But I want to urge that we should not allow our hostility to collective agreements to cause a swing to the other extreme of prohibiting individual suppliers making their own distribution arrangements, even to the extent of giving exclusive contracts where that course can be shown to be justifiable.

Of course, all this turns very largely on the modern development of selling goods under manufacturers' brands. All radio sets are sold under some trade name or brand. I doubt if there are any sold without such brands. This problem of branded goods is one on which we need to clear our minds.

In my view, the branding of goods by manufacturers is a practice to be encouraged. It is a practice which operates mainly to protect the public. Indeed, the public has come now to rely very much upon the manufacturer's brand as an assurance that he is getting goods of the quality he desires to obtain. I do not think anybody would dream of buying a bottle of stout or a bottle of beer that did not bear the brand or the trade name of the brewer; he would not accept the retailer's word for the contents of the bottle. Nobody would think of buying unbranded cigarettes. It is the manufacturer's brand which conveys to the customer the flavour, the quality of the product that he is buying. There are many other examples that could be given where the use of brands or trade names by manufacturers is not merely a public convenience but an assurance of quality which the public should have.

A manufacturer who uses a brand is, of course, committing himself to the maintenance of a standard of quality because, if his brand becomes associated in the public mind with poor quality, a bad article, he is out of business. The decision of the manufacturer to use a brand or trade name on his goods supplied to retailers is based upon his conviction that he can stand over the quality of his goods and can guarantee uniformity of quality.

Where there is a number of suppliers in the market, all selling goods under their own brands, and where there is clear competition between them, the greater the use of brands by manufacturers the better it will be from the public point of view. Where competition exists, particularly if there are also unbranded goods on sale, as there might be in some instances, I can see no great public disadvantage in the extended use of manufacturers' brands and many advantages.

Here we come up against the problem, to which the Minister has referred in his speech, that the branding of goods by a manufacturer almost necessarily involves the fixing of prices by manufacturers. Clearly, a manufacturer putting branded goods on the market will seek to secure public familiarity with his brand by advertising the goods and, of course, the advertisement is no assurance of value unless the price at which the customer can expect to get the goods carrying that brand is also advertised.

More particularly there is this problem of the use of branded goods as loss leaders, the specific problem to which the Minister referred in his speech. The loss leader technique, the practice of some traders of selling goods at much less than their normal rate of profit or even at a loss in order to give the public the impression that prices in their stores are lower than elsewhere or to bring in customers who, they hope, will buy other goods when they are there, operates to discourage the branding of goods by manufacturers, this desirable practice of getting manufacturers to stand over the quality of their products by putting their trade names on them.

It certainly does operate to discourage the use of brands by manufacturers if these manufacturers have not got the right to fix the price at which the goods will be sold or to refuse supplies to those retailers who sell them at a price to which other traders could not be expected to conform.

This was a very special problem here in the early days of our industrial revival. Our traders were at that time accustomed to having a very much larger number of separate suppliers seeking their custom when they were drawing goods from Britain. With the development of our own industries and the introduction of the protection policy, they found they had to deal with a smaller number of suppliers and found themselves in a difficulty in adjusting themselves to that new situation and in many cases the adoption of the loss leader technique by some stores created widespread problems which in a few instances very nearly put out of business the firms whose goods were being used for that purpose because nobody else would stock goods bearing their brand when they could not sell at the price publicised by the store using the loss leader device. Because they were so much smaller in size, because they had no alternative market to that available in the country, they often found themselves in very great difficulties.

Indeed, we must keep in mind that there are limits to which we want to allow competition to develop. Competition is a good thing within limits but unrestrained competition leads logically to monopoly and while, no doubt, there are various counteracting forces which will prevent the monopoly ever becoming absolute, the main aim of a large trader who adopts the loss leader technique is to put his competitors out of business and to get all the available trade for himself. That is why that technique, even though it is frequently adopted by traders in all countries, must on the whole be regarded as undesirable and particularly undesirable in our country where the number of individual suppliers of branded goods must necessarily be small and where there are not the same opportunities for gaining elsewhere trade that might be lost in one centre through that device.

I want to suggest that where competition is active, where there is no collective action, no collective arrangement amongst manufacturers for the maintenance of prices, for relating the price of their products one to the other or for the maintenance of fixed profit margins, then we do not have to condemn out of hand the practice of the individual manufacturer who fixes the price at which his brand of goods must be sold by the retailers to whom he gives them.

Mr. Norton:

Would the Deputy take the same view if there was only one supplier?

Mr. Lemass:

No, clearly not. I would put one supplier in much the same position as an association acting in conformity with uniform policy and I recognise that some of the theoretical arguments that may apply to larger markets would have much less force here because of the limited number of suppliers of some goods.

Mr. A. Barry:

Would the Deputy approve of a manufacturer withholding supplies?

Mr. Lemass:

I am completely opposed to the idea of manufacturers getting together and agreeing a price amongst themselves——

Mr. A. Barry:

I do not mean across. I mean vertically.

Mr. Lemass:

——and then refusing to supply customers on any other terms. My argument is that where there is a number of manufacturers—a dozen——

Mr. A. Barry:

One?

Mr. Lemass:

No. I am not talking of one. I am talking of a dozen at the moment. Where there are a dozen manufacturers acting collectively in competition with one another selling branded goods, I do not see there is much objection to one of them making it a condition on dealers that his goods must be sold at a certain price, so long as there is full and active competition between all the manufacturers selling goods of that kind.

The difficulty arises where the number of manufacturers is very small. If there is only one manufacturer the difficulty is obvious; there can be no question about the need for supervision in that case. Of course the need for legislation arose out of the fact that in our peculiar circumstances it became easy for manufacturers to prevent competition between themselves on price and on profit margins. That is not peculiar to this country alone; it is not a special kind of original sin of the Irish. It exists in every country but it developed here to a stage since the war which necessitated the Government taking action and that action was expressed in the Restrictive Trade Practices Act.

I still hold strongly that where there are a number of manufacturers in competition with each other there is no reason of public policy why they should be prevented from refusing to supply these goods to traders who sell them at unduly low margins of profit or at cost, because the sole purpose of these traders is to eliminate competition in their own immediate localities and to put themselves in the position where they are exercising a monopoly of supply. There is also another objection. Where, in the public interest, it becomes necessary that a trader should carry stocks of spare parts or should have facilities for executing repairs then the manufacturer who agrees with an individual trader that he will carry a certain stock of supplies, or to provide a repair service, should be allowed to give that trader a greater rate of discount, a price advantage, as against the trader who does not carry such a stock of spares or who does not execute repairs.

I do not know whether there is need for an arrangement of that kind in the radio trade. It seems that manufacturers are not precluded by the Order from dealing with suppliers on that basis—giving some larger discount to traders who give a better service to the public or who contract to carry certain stocks of spare parts and to execute repairs. There is also need, I think, to recognise the limit of practicability of this matter of limiting price arrangements. The British Monopoly Commission published a report some months ago in which it condemned the price fixing arrangements of British motor-car type manufacturers. That arrangement produced a rather interesting discussion in the British Press when the motor-tyre manufacturers replied to the condemnatory report of the commission. They pointed out that a firm in a dominating position can effectively fix the price at which all goods of the same class are sold, that other firms cannot sell higher even though their production costs might be higher, and could not sell at a lower price either, because if they offered the goods at a lower price, they would be giving the public the impression that their commodities were inferior in quality.

You can have the situation where prices can be very effectively regulated by a firm in a dominating position without any trade association, though it is not unreasonable to assume that where such conditions exist there will be consultation on prices. Where no association exists such consultation cannot be regarded as objectionable. In this country, if ever a situation arises in which the price of stout or beer has to be changed, all the smaller breweries will await the decision of the one main supplier and relate their prices to that decision, and anybody who knows that trade will realise that no other course is open to them.

The same is true of profit margins. Here I speak with some personal knowledge, because I had to deal with problems which arose. A manufacturer has to retain the good-will of his retailers whether he is dealing with some retailers who are his exclusive agents or supplying to all retailers, and in practice he cannot afford to throw away that good-will by giving a profit margin lower than other manufacturers are allowing. So you will find the arrangement where one dominant supplier will determine the conditions under which other suppliers must trade. The others cannot afford to lose the good-will of the retailers by trying to get them to sell their products at a lower margin than the principal supplier fixes. And so, apart altogether from any legislation we may pass here, there are frequently circumstances in trade which will effectively determine price levels and profit margins and in a way which may or may not be objectionable but about which we can do very little.

Paragraph 3 of the Draft Order has some relevance to that situation. There is a reference in it to "requiring or inducing". I do not know whether the Minister hopes to make it illegal for traders, retailers, wholesalers and manufacturers, to consult with one another as to what the market conditions are likely to be and to relate their trading policies. I do not think that is undesirable, unless there is a trade association determining some action arbitrarily, and enforcing it by boycotting or cutting off supplies from retailers who may not be on an approved list or who do not conform.

I turn now to the Order which this Bill is to confirm. I must say that, having read the Report of the Fair Trade Commission I was forced to the conclusion that the practices in the radio trade stand to be condemned on every ground that I have mentioned and that legislation relating to that trade is consequently fully justified. The evidence produced and quoted by the commission showed that there existed in the trade all the objectionable things that the Restrictive Trade Practices Act was intended to eliminate —exclusive dealing, price maintenance, restriction of competition, restraint of trade by limiting the number of retailers, refusal to supply traders not on a list approved by the association and the determination of applications for admission to the trade by existing retailer interests.

I know the Wireless Dealers' Association allege that the Report of the Fair Trade Commission on those matters is not correct. Documents have been circulated to Deputies in which it is alleged that the conclusions of the Fair Trade Commission were against the weight of evidence given at the hearings and that the members of the association were impeded from making their case against the recommendations of the Fair Trade Commission by reason of the refusal of the commission to give them a transcript of the evidence submitted. It is not possible for an individual Deputy to decide the merits of that case. No substantial case against the recommendations of the Fair Trade Commission has, that I am aware of, been made. So far as the Dáil is concerned we must act on the facts before us and I may say I approve of the decisions of the Minister and the Government to proceed with this legislation notwithstanding the High Court action to which he referred.

As to the Order which this Bill confirms, I may say that in so far as it is directed against joint or collective action to maintain prices or profit margins or to withhold supplies or to impose terms and conditions for the acceptance of orders I am completely in favour of the Order. I find much less convincing the case—in so far as a case was made—for restrictions on individual manufacturers acting individually and trading in competition with one another, but because of the conditions in this trade, because of the strong tendencies towards formation of rings which have shown up over many years I believe this Order should be made. I framed the Restrictive Trade Practices Act deliberately so as to require the Dáil to accept or reject an Order of this character in toto without having power to amend it. There is, therefore, no possibility of any Deputy moving to amend the Order in any detail, but I think we could say that later on as the reform of conditions in the trade is effected by means of the Order, at some future time we might consider modifying it in some of its provisions affecting restrictions imposed by individual manufacturers.

I do not in any circumstances contemplate modifying the Order in so far as it is directed against collective action by manufacturers or by manufacturers in conjunction with retailers. Therefore, I can tell the Minister that we are supporting this particular Order for the reasons I have given and so far as we are concerned he can have the Bill in all stages to-day.

Mr. A. Barry:

I find myself agreeing to a considerable extent with everything Deputy Lemass has said. We are doing something this evening that follows a trend which is obvious in many parts of the world. The Americans have been worrying for many years about the kind of process we are now attempting to deal with here. The British are now thinking very deeply, and I hope they will think effectively, about this problem.

The interest that Deputy Lemass referred to as having been taken by the members of the radio trade in this Order struck me as a little smug. They did not seem to stand back and look at what the people whom we represent here were trying to do and are quite entitled to do. When one analyses what we are trying to do here, one finds that we are trying to preserve the capitalist system, because the essential of the capitalist system is that there should be a free-for-all. In the curious way in which a wheel could go full circle, those industrialists, manufacturers, distributors and retailers could find they wanted to arrive at a stage where there was a completely organised system which could be justified in another country some thousands of miles from here.

I think this is a very important debate, and I believe the public have had the benefit of the considerable hearing which it had in commission, of a report having been made, of the Minister's contribution this evening and of the contribution which Deputy Lemass has made to this debate. I think the type of principles we are trying to set out are worth all that public attention. It is a curious thing that, in this peculiar instance of the radio trade, I want to confess that I could have a mixed mind about how far we should go in prohibiting what I would call vertical organisation because the radio trade, particularly the manufacturing end of it, has a particularly good record in this country. It is outstanding, I think, in that it has justified the protective measures taken by the people here, and the prices charged for the products have shown that the people are getting extremely good value, compared with pre-war price levels. The fact that an export trade has been built up is proof that prices compare very favourably with prices abroad. Of the radio trade, we could say the situation is good.

The public is getting good articles at reasonable prices and if the radio trade organises itself in a particularly detailed manner, the net result to the consumer seems to be a good one. Of course, we are not talking about that particular case, but about general principles, and I think it is a good thing to see that a number of manufacturers making similar, competitive articles should not so combine as to injure the public wellbeing. I think the confining of entry to the trade to certain people was madness. It was a very wrong way to go about it. If a man wants to get into the radio trade, he should get into it and either succeed or "go bust" and get out, but nobody should say that he cannot do this or that. It is a free country and I think this Order is assisting in maintaining that freedom.

Deputy Lemass referred to the wrongs of what I would describe as horizontal organisation and he did make a case, with which I substantially agree, about the right the manufacturer should have to control his products from his factory into the hands of the consumers, and even after the consumers get them. I asked Deputy Lemass if he felt that price control in a case like that would be justified, and, frankly, I think it would, provided, of course, that a number of manufacturers were making similar types of articles, such as radio sets. He might want to adjust profits so as to give the retailer different margins—I must say the profits in the radio trade make my mouth water as a grocer and I hope these will be remembered, if the grocery trade ever comes into this business. That, however, is another matter.

I think that, although chaotic conditions or a free-for-all would probably be undesirable, it is still the essential of the system. The chaotic conditions that could come with unlimited entry into the trade, unlimited practising of a trade, unlimited price control would probably injure the small but good retailer. I am not talking about the man at the top, the big distributor, but about the small dealer who would probably be injured, but would survive, as the price cutter would take his business from him.

The price cutter might become a more profit conscious retailer. Some of the men who came to me about this particular Order were men who were able to enter the radio trade when there was no control in the matter of entry and who, to my knowledge, entered the trade successfully because they indulged in the practice of price cutting.

Mr. M.E. Dockrell:

I am afraid that I am not quite as much in favour of this matter as the previous speaker although I find myself in agreement with him on some points. I am also in agreement with Deputy Lemass on some points. None of us really wants a free-for-all and no interest would be served by such a situation. I cannot see how the interests of organised labour would be served by a situation in which the great majority of the firms in the retail trade or distributive trade were forced, by virtue of extreme price cutting, to a point at which they could not pay adequate wages. That is one matter present in the minds of retailers and of all those engaged in the distributive trade generally when they look at the Restrictive Trade Practices Act.

Many sections of the business community are afraid that they will not be able to earn sufficient profits to carry on their business. Apropos of profits, it is sometimes forgotten that a very small proportion of the money invested in industry represents profits. Recently I saw a break-down in regard to moneys employed in industry on the basis of units of £1. For every £1 paid for goods or services, the amount paid in dividends amounted to 1½d. Yet that particular firm paid quite a respectable dividend—a dividend of over 5 per cent. Sometimes, when we speak of profits, we are apt to forget that profit is a very relative thing and bears an exact relationship to the turnover and various other factors.

Mr. A. Barry:

In this case it was 50 per cent.

Mr. M.E. Dockrell:

I do not know what the profit would be. I am not speaking of the wireless traders. Actually, I was not thinking of that at all. I was not discussing that particular point and I do not know exactly what profits they make but I am of the opinion that they have a case and I think we should let it go to the courts. Unfortunately, however, that does not appear to be the view of the majority of the people in this House.

With regard to the Fair Trade Commission, I should not like anything I said to be taken as in any way reflecting personally upon anybody who took part in that commission. I think the officers carried out their work very fairly, but I am not too happy about the fact that this was thought to be the best method to arrive at the results desired, nor am I of the opinion that it was fair to the business community.

I saw business men there and they inevitably felt, when being questioned by the commission, that they were almost in the dock. I am sure that was not in any way intended, either by the members of the commission or by this House. Nevertheless, I think a different set-up would have achieved the objects desired and in a way which would ensure better results for the business community.

When we consider this question of restrictive practices and fair trade generally, I think we all must agree that up to a certain point men are entitled to protect themselves from what I might describe as the "rogue elephant" in the trade. That is what the business community are afraid of. They are afraid lest this Bill will give the Government or any Minister who may occupy the position of the present Minister opportunities for encouraging wholesale competition and price cutting of a type which would result in the closing down of business, a depression with regard to the earnings of the labour corps engaged in industry and the total extinction of whatever profits there might be.

Speaking some time ago, I said that we had here a delicate structure which was built up over a long period and that inside the framework of that structure there were trades which had a series of price gradations, interference with which could lead to very serious results. I am still of the opinion that that is so. After all, the wireless dealers, to take one case mentioned here, sell a series of articles, carry out work and attain a certain degree of skill in the maintenance and in the selling of these particular articles and everything to do with them. They also maintain special types of premises which will sell these articles effectively and will show them off to the best advantage. Is it really to the advantage of this community that anybody should be able to get such an article and sell it at any price they like? It eventually gets down to that.

I am quite prepared to say that it is wrong for any group of people to band together and demand from the public prices over which they cannot stand, prices which are too high. It is also wrong, I think, for any group of people to band themselves together and to say that they will not allow certain people into the trade. But on the other hand, is it right that I, who have nothing to do with the motor trade beyond the fact that I can, and do, drive a car, should be able to buy a motor-car at the same price or sell it at a price below that of a man who maintains a motor salesroom and maintains behind that the whole equipment of a service garage and also, perhaps, a sales organisation to buy and sell secondhand cars which are being traded in? I would say that it would not be in the public interest that I, as an ordinary individual, should be placed in that position. I would also say that it would not be right that I, who am not a grocer, should be able to buy various articles of grocery, as my friend here behind me, and sell them if I like to the public at the same price as he does, or perhaps a cheaper price, when he has to maintain a shop and a premises and pay wages.

Mr. A. Barry:

The Deputy can start in the morning.

Mr. M.E. Dockrell:

That may be, but still perhaps too many people have started in the morning and that is what is wrong. We all want to see free competition maintained. Competition is the life of trade and, as the Deputy said, is one of the essences of the capitalistic system. But, on the other hand, where nowadays you have the organised labour demand—and I am not saying that in any way against labour; do not think that for one moment—practically every reputable firm in this country—I was going to say operating in a large way, but it even applies to very small firms—knows that they must pay any of their porters such and such a wage. They must pay their shop assistants such and such a wage, either exactly defined or roughly laid down. There is no possibility nowadays of people being engaged in retail business and paid slave wages. That day is long gone. It is right and fitting that that should be so. The person who is running the business finds his labour costs are an exact amount. There is no way, even if he wanted to, of lowering them.

Then he finds that he is paying what amounts to a fixed price for most of what he buys. It is not always possible for him to buy in markets where he can import and sell cheaply. He may now and again, but, as a rule, the greater part of his business will go through recognised channels from recognised and well-known manufacturers or perhaps wholesalers and if he is a small man he certainly will work in that way. His taxes are uniform, his rates are uniform, he pays at the same rate as anybody else, and he finds probably owing to the high rate of taxation and so on, a very large strain from the point of view of liquid assets.

Suddenly into this somewhat restricted and tightly bound pool comes, I was going to say a rogue elephant, but perhaps I should better say a wild hippopotamus who starts threshing about. Nobody quite knows why that particular firm comes in and does that, but they may create a tremendous amount of difficulty, chaos and hardship, cause bankruptcies, and cause credit restrictions to be enforced, and at the end of it all, the trade is not any better by virtue of that, nor is the public getting their goods any cheaper than they would if the way had not been open to that particular type of attack on the existing commercial circumstances of that trade. That is a situation which the commercial community is very afraid will develop.

While I speak as a person who has some experience of business and would not for a moment advocate some of the practices which have gone on, at the same time I do think that there should be a degree of sympathy and understanding of the difficulties of business which is trying to carry on surrounded by very stringent restrictions, and which perhaps has to cope with a situation where prices have been wantonly cut down for the benefit of nobody.

I should like this House to recognise the difficulties which firms are up against and which various types of trades are up against. I should like the House to recognise that all restrictive practices do not necessarily work to the hardship of the general community, and that, when legislation attempts to interfere with what is a fair and just and equitable arrangement, it is venturing into a field where there is great difficulty. Therefore, I appeal to the Minister and to the House to exercise moderation in this respect. The business community generally do not in any way wish to see either manufacturers, wholesalers or retailers in a position to charge the public exorbitant prices and to give a poor return. At the same time, they do not want to see the trade handed over to perhaps the unrestricted competition of somebody who only wants to get in for a short time and then clean the thing up and make as big a profit as possible.

Mr. Childers:

I think Deputy Lemass set a very good headline when speaking on this Order. He pointed out that this is the first Order under the Restrictive Trade Practices Act and that we should consider it from the point of view of its general application to other trades. I do not think there is very much to add to what he and Deputy Dockrell and other speakers have said; they have covered the ground fairly well. I should like to put in just one plea, namely, that when the commission consider action taken by suppliers under Section 13—in which they are limited to make conditions of sale— they should bear in mind the necessity for establishing a good tradition of after-sale service in this country.

The maintenance of after-sale service applies possibly even more to other trades than to the wireless trade. We need to adopt a vast number of new techniques both in industry and agriculture. They involve a multifarious group of machines and different aids and scientific devices, all of which, if they are to operate efficiently, have to be properly maintained. If they are to operate efficiently, it is essential that the retailer (1) should have a reasonable profit on the sale of the commodity, and (2) that the supplier should be enabled to insist on reasonable conditions in regard to after-sale service. The same thing applies to even the demonstration of new scientific inventions and new machines. This, again, could apply perhaps more to other trades than to the wireless trade.

The cost of demonstrating new techniques and new inventions is extremely high, whether in connection with individual demonstrations, demonstrations at trade shows or fairs or under other circumstances. There is a very great element of conservatism, as the Minister knows, in regard to adopting new techniques, and, unless the margins of profit are sufficient, the supplier will find it difficult to get his accepted. He will find it difficult to get some new invention accepted and adopted by the community at large and, when he has sold the article or the machine, he will find dissatisfaction among the public that there is not a proper supply of spare parts widespread in the country and, equally, that there is not an adequate service.

Now that the Minister is going to have charge of this Order and that Section 13 may arise from time to time, in which individual suppliers are enabled to impose reasonable terms and conditions upon the retail trade, I hope he will see that a very sound tradition of after-sale service is insisted upon and that nothing he would do would prevent that developing in the community. I think the Minister will agree that there is a great deal lacking still in the community in regard to that.

I have had many complaints throughout the country in respect of a wide variety of articles that spare parts are not available and that after-sale service is not available. It is most discouraging for people who have purchased new machinery of a new quality or an invention in advance of the times, when they are unable to get the machine properly repaired and serviced. That is my main observation on this Order.

Deputy Lemass said he was rather more keen on the collective functions of the Order than on the functions of the Order which relate to individual suppliers. I hope the Minister will bear in mind the need for after-sale services so far as the Order and individual suppliers are concerned.

Mr. O'Hara:

Deputy Dockrell said he would request the Minister to be moderate in his application of this measure, particularly in regard to traders. I feel that that particular point involves a very wide principle. I was engaged in the radio trade myself for a number of years in a rural area. I am convinced that the city trader, for instance, has many advantages over the rural trader. That was particularly so when electricity was not available in the country. A high percentage of the radios sold and distributed there were of the battery type. I often experienced difficulties in the purchase of, for instance, a dozen battery radios. When you took them into stock, you found that, perhaps, due to damage in transportation, one or two were out of order. You were then faced with the problem either of having to get some competent mechanic to work on them or else, perhaps, of sending them back at your own expense to the manufacturers. It will be appreciated, furthermore, that the carriage on a radio is pretty high and that in many cases all these costs had to be borne by the individual trader. The costs in respect of battery radios had generally to be borne by the country trader.

The percentage of sales in small towns was very low. While the general public believed that radio dealers generally were making fortunes, I want to assure the Minister—I am not engaged in that trade now, so I can speak on the matter with an open mind—that the percentage of profit for the country trader was not as high as some people seemed to think. I agree with the point made by Deputy Childers that it is important, not alone in the radio trade, but in every other trade, to have after-sales service. Unfortunately, we do not seem to have that to the same degree here as they have it in other countries. That is due in the main, I think, to the fact that the best of our people emigrate and go across the water, because they are paid higher wages there; and we fail to induce the best people and the most skilled technicians to remain at home. For that reason, it is not easy to build up an efficient after-sales service.

I appreciate the position since I have had personal experience of it myself. I will relate that experience for the benefit of the Minister and the House. When I first entered into the radio trade, I wrote to a certain firm of manufacturers. Their representative duly called upon me in a week or so and put some questions to me. Like Deputy Barry, I was engaged in the grocery trade and other lines. I wanted to supplement my income. This particular representative asked me what lines I had. I pointed out the grocery; he asked me, if I was appointed as an agent, how many cycles and radios would I order from him there and then. I said about two dozen bicycles and two dozen radios. He said: "O.K; you have the agency." Evidently the other local man could not give an order for more than half-a-dozen bicycles and radios at that particular time.

Now I was a member of this organisation known as the Radio Traders' Association, or something like that, and I paid an annual fee of 5/- or 10/-. I continued in the trade for some time and I frankly admit I made no fortune in it: the 33? per cent., or, in some cases, the 50 per cent. is only so much profit on paper. By the time all the deductions are made, one does not have anything like that percentage profit at all. When my locality was pretty well supplied with radios and business in the radio line diminished somewhat, the particular firm evidently thought it would be no harm to move the agency in some other direction. Incidentally, I had forgotten to pay my 5/-, or whatever it was. That was overlooked and the next day I had a notice telling me I was out of the business, despite the fact that I had committed myself to the business, worked at it for quite a long period and had supplied a number of radios annually. Actually in one year, I had sold something like 300 radios, and that in a rural area. That created the situation that the people whom I had supplied had to look for service in another direction. Naturally enough, they were rather unwelcome when they arrived at another radio store and it was discovered there that they had purchased their radio sets from me. Had I wanted to dodge the red tape, I could have done so because relatives of mine in the motor business told me they could get me supplies. When all this talk was in the air about restrictive trade practices and inquiries and so forth, I felt there was need for a tightening up.

Mr. A. Barry:

A need for restriction?

Mr. O'Hara:

A need for an examination of the whole position and the introduction of legislation to improve the position as regards the radio trade generally. In the matter of radios, I think there should be less restriction. Reputable firms, either in the city or in the country, capable of handling such things as refrigerators and so forth should be at liberty to engage in that trade. I see nothing wrong in having such people supplied with these goods and it should not be necessary for such people to be members of any particular association in order to get supplies. If the radio traders have had to come before an inquiry and give evidence, they have brought quite a lot of that on their own heads, because —I have given my experience—some of them at any rate engaged in a type of practice in which no ordinary decent trader would like to engage. I sincerely hope that the measures which the Minister is adopting to improve this trade generally will be a success.

Mr. Norton:

This has, I think, been a very useful and a very fruitful discussion inasmuch as the Bill has provided the House with an opportunity of reviewing the pattern and the type of inquiry which followed the enactment of the Restrictive Trade Practices Act, 1953. The House has now before it two reports of the commission. It can see the pattern of the reports. It can see the manner in which the commission proceeds to take evidence. It has had an opportunity, as well, of examining the painstaking manner in which the commission has discharged its functions.

I think Deputy Lemass's contribution here this evening was a particularly valuable one, inasmuch as it showed, as far as it was possible to do so, a detached approach to a problem which he could not accurately appraise when he was asking the House to pass the 1953 Act. Generally speaking, I think he maintained here to-day the standpoint which he took then when the Act was being passed three years ago. To a great extent, I agree with his line of approach. I think, however, that some of his views would stand modification in the light of a closer examination of the report by himself; I think, too, that he would be well justified in re-reading the report of the commission in order to ensure that, in his desire not to go so far in one direction, he does not, in fact, open the door to a continuance of practices with which the commission was actually set up to deal.

Deputy Lemass this evening referred to practices which he thought it was undesirable to curb. I think at least one of these was an Aunt Sally put up by himself and knocked down by himself. He said nothing should prevent a manufacturer from supplying goods to a retailer who, for instance, does some processing on the goods subsequently which has the result of causing a deterioration in their value. He instanced the case of a person supplying beer to a retailer and the retailer watering that beer for his own benefit and supplying the customer presumably with a measure of beer which was not that of the quality prescribed by the manufacturer. There is nothing in this report which prevents a manufacturer of beer dealing with a gentleman of that kind. In fact, a gentleman of that kind ought not merely to be crossed off the list as an undesirable customer, but should be taken to the courts and made amenable there for actions of that kind.

The report, as I say, does not prevent the manufacturer dealing with such a gentleman. Neither does it prevent the manufacturer dealing with the person who will not pay his bills, or pay them promptly. Nor is the manufacturer obliged to have strapped on his back for the rest of his manufacturing life the type of customer, who, from a number of points of view, can be regarded as either personally objectionable or commercially undesirable; so that it is not fair to read into this report suggestions that it imposes restrictions which, in fact, are not in the report. Deputy Lemass's views, however, were more general in character in the main and, as I said, I think I could underwrite a lot of them as representing my approach to this problem as well.

I think some Deputies see in the Order which is being made difficulties which in fact are not there and have overlooked reading some articles in the Order which I think are specially designed to obviate the difficulties which they fear will arise. The possibility that the Order prohibited the continuation of certain after purchase service was mentioned by more than one Deputy but Article 13 of the Order provides in effect that it will authorise a manufacturer or a wholesaler to apply to the acceptance of orders for radios, conditions concerning the size and frequency of the order, the function of the retailer, the services to be rendered to the public, provided these conditions are reasonable in the interests of efficiency and economy in production and distribution or are necessary in the legitimate interests of the manufacturer's or wholesaler's business. Such terms and conditions will, however, have to be applied in a fair manner to all retailers placing orders for radios with the manufacturers and wholesalers concerned and no unfair discrimination will be permitted as between one retailer and another.

There would, however, under Article 14 be an obligation on manufacturers and wholesalers to impose conditions of the kind mentioned, to file a copy of those conditions with the Fair Trade Commission, and to furnish on request to any retailer a statement of the terms and conditions upon which radios would be supplied. So that, in effect, that article in the Order makes provision for the kind of services which Deputy Childers was anxious should be continued. If those who had been complaining about the report and complaining about the Order would ask either their legal advisers or the Department of Industry and Commerce for an explanation of what was intended under Article 14, I think they would have found that the Order, and the series of articles set out therein, need not have such a frightening effect upon them as they appear to have.

Deputy Lemass mentioned that the Monopolies Commission in Great Britain has been dealing only with collective arrangements for price maintenance and for the abolition generally of restrictive trade practices. I think that is not wholly so because, in the case of motor tyres, they recommended prohibition of price maintenance by an individual manufacturer. I understood from the case that Deputy Lemass was making this evening that he would not interfere with the practice imposed by one manufacturer on those with whom he was dealing.

Paragraph 111 of the Fair Trade Commission's report on radio sets and accessories is interesting in this respect. The paragraph says:—

"In their examination of the practice of re-sale price maintenance in the radio trade, the commission have considered the implications of collective enforcement as contrasted with enforcement by the individual manufacturer acting alone. It is their view that enforcement by the individual manufacturer does not alter the fundamental objections to the practice in its bearing on prices to the public and efficiency in the trade. Collective enforcement entails a system of private law and punishment under which a dealer may, because he has reduced the price of the product of one manufacturer, find himself deprived of supplies by all manufacturers who are parties to the arrangement. This method of enforcement tends to become increasingly thorough and more comprehensive in closing loopholes, reaching towards such matters as the allowances to be made for secondhand sets traded in, the prices of obsolete models, the supply of accessories, the use of canvassers and the terms of hire-purchase. The maintenance of re-sale prices by the individual manufacturer, who would be primarily concerned with the prices of his own products, could not be so extensive in scope or command the same means of enforcement, but it might result in an even greater enhancement of margins than would take place under collective enforcement."

And the Fair Trade Commission, which gave extensive consideration to this whole matter, warns about the danger of leaving that loophole unplugged, because of the dangers which are likely to arise if you ban restrictive practices when applied collectively, while, at the same time, permitting an individual manufacturer applying a similar type of restriction which, in its effect, may not only be unfair to the potential purchaser but may, in fact, also have its repercussions on the price level.

Deputy Lemass raised the question of the maintenance of after-sale service as well and I think my explanation of the significance and intention of Article 13 covers that matter. Again, he raised the question of a choice of customers. I have dealt with that matter, but for the purposes of the record, I would suggest that Deputy Lemass, or anybody else interested might peruse paragraph 85 of the report which deals with choice of customer.

Deputy Lemass dealt at some length with the branding of articles, but it seems to me that branding is beside the point here, as, in fact, all radios are branded and there can be no question of unbranded goods having any advantage in this respect. If all the manufacturers of branded radios are subject to the same law, none has any advantage over the other. The provision of Article 8 of the Order recognised the need to provide against excessive competition, and the remedying of it, should it arise, is set out in the Order.

I did not quite follow Deputy Lemass in his references to competition between manufacturers. He referred to the fact that branded goods were now coming on the market in greater volume and that he saw nothing wrong with manufacturers of branded goods imposing conditions in respect of the sale of these goods. But I think what he overlooked is that the branded manufacturer is competing only for trade—that is volume of trade in the particular line of goods—but the public seem to get no benefit from that competition and are not likely to get any benefit from that competition, if there is no price competition at the retail level.

As I said at the outset, this is the first Bill to give effect to a recommendation made by the Fair Trade Commission. I think it has been received in a friendly way by the House and I think there appears to be a substantial measure of agreement as to the policy to be pursued in this matter. I think one very valuable effect from the discussion is that, although the main Bill was passed three years ago and although a whole variety of things might explain differences of opinion between the atmosphere then and the atmosphere now, it is good in the public interest that, looking back on the Act three years after it was passed and looking back on the Act in the light of the hearings of the Fair Trade Commission, it is useful, and I hope it will have the salutary lesson in some quarters, that the main purpose of the House is the same to-day as it was three years ago, namely that the House abhors restrictive practices which detrimentally affect the community. There has been a reaffirmation here this evening that it is desirable to protect the public against restrictive practices which are unfair and which harm the public wellbeing. It may well happen that reaffirmation of these views from both sides of the House this evening may make it in many respects much easier to obviate other occurrences of new restrictive practices or the maintenance of present practices.

It has been a useful development from a community point of view that both sides of the House have indicated that the House regards itself as the custodian of the public interest, that the House will not stand for restrictive practices which are detrimental to the public interest. If that fact is deeply and widely appreciated in quarters where the Fair Trade Commission will look for evidence of restrictive trade practices, it might make the task of the commission, the task of the Department of Industry and Commerce and the task of the Legislature generally easier in its dealings with this problem.

In this Bill and in the Order, we are now setting our face against re-sale price maintenance in the circumstances presented to us by the report of the Fair Trade Commission. I think that is a good thing. It is a particularly good thing in the circumstances as reported on by the commission in respect of the radio trade. I hope that any other cases which come before the commission will be cases in which those concerned will recognise that there is a public interest in this whole question of re-sale price maintenance and restrictive practices, and that they will display before the commission, if the need to go there ever arises, a sense of responsibility of what they owe the community and above all a sense of responsibility of what they owe a community which in many cases has been responsible for the establishment of these industries in Ireland which it is now sought to surround with restrictive trade practices detrimental to the very public who, by its support, was responsible for making it possible to establish these industries in this country.

Question put and agreed to.

Agreed to take the remaining stages to-day.

Bill put through Committee, reported without amendment, received for final consideration and passed.

Dáil Éireann díospóireacht - Wednesday, 29 Feb 1956