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Friday, 6 July 1906

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) .- Now that this little dispute 1 124 Australian Industries [REPRESENTATIVES.] Preservation Bill. between the honorable member for Wentworth and the Attorney-General has been satisfactorily settled, perhaps I may direct a few remarks to the clause itself. It seems to me that the provision differs from previous clauses with which we have dealt, in that unfair competition is not required to establish the fact that a monopoly is detrimental to the public or to an Australian industry. The simple circumstance that a monopoly exists with the intent of controlling, to the detriment of the public, the supply or price of any wares or commodity makes an indictable offence. It has alreadybeen pointed out that the portion of the clause which refers to " a part of a trade," is very vague indeed, and the Attorney-General, in his replies, did not throw much light on the matter. For instance, the honorable and learned gentleman was asked whether if a particular portion of the boot trade was monopolized by one manufacturer, that would bring him under the penalties ofthe clause. His reply was that it would if the manufacture of workmen's boots was entirely monopolized byone maker, and he committed the offence of controlling the supply or price to the public.

Mr Isaacs - To the detriment of the public.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) -Just so, tothe detriment of the public. I will submit a further illustration. Parts of a trade are often controlled by brands. The tobacco monopoly, to which the honorable and learned member has alluded, is largely one of brands. Because of the superiority of the article, better advertising or greater enterprise in pushing of the goods, certain brands obtain a hold on the market, and the manufacturers who hold those brands become monopolists, not by any direct action of their own, but as the result, it may be, of superior business qualifications. They may raise the price of these goods, and the public may be prepared to pay the increased price, but the question is whether under this clause that would be considered a monopoly detrimental to the public.

Mr Isaacs - We should require more facts to decide that. I do not think it possible to imagine a case unless you have all the facts. This clause does not. of course deal with the monopoly of brands, but with the monopoly of goods - trade and commerce.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - Yes, but the tobacco monopoly is largely one of brands. The honorable and learned gentleman may be acquainted with the business.

Mr Isaacs - I have not much knowledge of the tobacco business.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - Not perhaps as a. consumer, but the AttorneyGeneral may have come in contact with the business, and may know that monopoly is largely secured in this trade by ownership of certainbrands which are popular with the public. In the majority report of the Tobacco Commission, we find the statement made that the most popular goods are in the handsof the trust.

Mr Isaacs - The honorable gentleman will see that there may be a rightful control of brands, which everybody who has a trade markhas, but if the trader uses that, and its popularity, and also endeavours to prevent other persons selling other goods of the same kind, though under a different name, it is clear that he is endeavouring to monopolize the trade in those goods.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - The words "part of the trade" in this clause introduce some very complicated questions.

Mr Isaacs - I may add, in answer to the honorable gentleman's question, that the very fact that a trader has got a particular brand, might be one of the instrumentalities by which he would be enabled to monopolize the trade in the goods. He would not know exactly whether his goods, orother people's goods, were being sold.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - Might I point out to the honorable and learned gentleman that this is a perfectly legitimate monopoly. In just the same way the Attorney-General, possessing certain high qualifications for the practice of his profession, may, at the Bar, by reason of these qualifications, monopolize a portion of the business or a particular branch of the business in which he is engaged.

Mr Isaacs - But I must not say to those who employ me - " You must not employ anybody else."

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - Certainly not. But if a brand obtains a reputation it does so because its quality suits the taste of those who use the goods, and if, owing to that reputation, it monopolizes a considerable share of the business, which is largely the case in the tobacco trade, that is not a monopoly, unless it is shown that' some action is taken by the trust or firm handling the article which prevents the competition of other brands, or which pre- vents the sellers of a particular brand giving the public an opportunity to obtain similar goods bearing that brand.

Mr Isaacs - All I can say is that you get the facts and apply the section. If there is a monopoly or an attempt to monopolize, or a combination to monopolize " any part of the trade on commerce," and so on with the intent to control " to the detriment of the public the supply or price," and so forth4 it comes within the section. I cannot say any more. We must apply the section to the facts. I should like to add that if the honorable member will look at the corresponding section of the Sherman Act, he will find that our clause is much milder. There is no reference to intent in the Sherman Act. There is a reference to a part of a trade, and. to attempts to monopolize, but our clause is much milder, because, I believe, as I said before, that there should be no criminal consequences without criminal intent.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - I might say, with reference to the honorable and learned gentleman's remarks in connexion with the tobacco monopoly, that the report from which he quoted was that of the majority of the Commission, and it is the report of the honorable members who were committed before they took their seats on the Commission to the nationalization of the industry.

Mr Isaacs - I can appeal to the honorable member, who speaks fairly on the subject, to do them the justice of saying that the question of remedy has nothing to do with the finding of the existence of any evil. The mere fact' that some honorable members thought that an industry should be nationalized would not influence their minds in such a way that they would be induced to find facts contrary to the evidence submitted to them.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - From the opportunities I have had to look through their report, I think that some of their findings are absolutely contrary to the evidence. I am not defending the operations of the tobacco firms. As a. matter of fact, when the Tariff was before us, I voted against the Attorney-General and others, and in favour of reducing the advantages proposed to be given them, and which largely enabled them to establish a partial monopoly. Had the duty been reduced as I desired, the combine would not have had the same opportunities to establish their partial monopoly, that they had in the high preference given to them under the Tariff. But if we are to have many Commissions like the Tobacco Commission, which, from one cause or another, dwindled down to four members-

Mr Isaacs - Five.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - Four committed to a certain view, and one only who was not committed to that view before the inquiry was started. Such Commissions must be not only expensive, but also valueless for the purpose for which they are appointed. There is another point to which I direct the attention of the AttorneyGeneral. It seems to me that the clause as it stands might interfere with the rights of a patentee under a patent. This will be the later legislation, and it distinctly provides that a person shall not monopolize or endeavour to control the supply or price of merchandise to the detriment of the public. Patentees, or those selling under patent rights, usually obtain large profits on the articles which they sell. That, of course, is, in one way, to the detriment of the public, and a reduction of those profits would be to their benefit. Is that to be considered wrong under this clause?

Mr Isaacs - It does not come under it. The honorable member must see that to monopolize in the sense implied by the use of the word in this clause, means to take away from somebody else what he has. If I have a patent and have the exclusive right to use it from the beginning, nobody can suffer loss who has never had that right. I cannot monopolize from any one else what he never had.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - But it would be possible to monopolize a trade or part of a trade in consequence of the possession of a patent right. As a safeguard against the difficulty I have pointed out. I suggest to the honorable member that it might be desirable to make it clear on the face of the clause, that operations under a patent right cannot come under it.

Mr Isaacs - If we put in patents we must put in trade marks and all sorts of things, and we might thus give a meaning to the clause in some unexpected way which would put in peril the people whom the honorable member desires to protect.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - It occurred to me that we might insert after the word "person" the words "not acting under patent rights."

Mr Isaacs - I do not think that is necessary for the honorable member's purpose, and it might lead to danger. If you express one thing and do not express everything, there is a danger that things might crop up unexpectedly which might be held to be within the section.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - That is an argument I used against the honorable and learned gentleman himself at an earlier stage of the Bill, in regard to the jury.

Mr Isaacs - Whether or not it is a good argument depends entirely upon its application. I yielded to what the honorable gentleman said on the occasion to which he refers.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - I should' like to be sure that the Attorney-General is absolutely satisfied that the operation of this clause will not interfere with rights under a patent.

Mr Isaacs - I am as satisfied as I can be. I fully think so. There is no suggestion in America' that that difficulty arises, although the words are used in the same way in the American Act. No one there has ever suggested that they would apply in the way mentioned by the honorable member.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - If the clause would so apply, the honorable and learned gentleman will admit that, appearing in a later Act, it would override the provisions of an earlier Act.

Mr Isaacs - Yes, it would.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - I think the honorable and learned gentleman might look into the matter.

Mr Isaacs - I shall look into it very carefully, and shall satisfy myself on the point so far as I can.

Mr DUGALD THOMSON (NORTH SYDNEY, NEW SOUTH WALES) - The AttorneyGeneral should' satisfy himself that the clause will not interfere with patent rights. I trust that if on examination he finds that there is any danger he will make such provision as will secure the maintenance of rights under patent. .

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