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Thursday, 2 December 1965

Mr WHITLAM (Werriwa) .- I move -

At the end of sub-clause (I.) add the following paragraph: - " (d) imposing resale price maintenance conditions.".

This amendment is yet another effort to legislate for all of the proposals which Sir Garfield Barwick put to the Parliament three years ago. Honorable members will mow readily recollect that Sir Garfield Barwick proposed that there should be a register of six multi-lateral horizontal arrangements and of four bilateral and unilateral vertical practices. The Bill introduced by the Attorney-General (Mr. Snedden) has provided for the registration of five of the six multi-lateral horizontal arrangements and for examination but not registration of three of the bilateral and unilateral vertical practices. My amendment, if accepted, will provide for the examination of the fourth bilateral and unilateral vertical practice as promised by Sir Garfield Barwick three years ago. Sir Garfield stated the practice which had to be registered and examined as "resale price maintenance ". My amendment accordingly uses that term.

This is one of the most striking omissions from the Bill. On 20th May last - the day following the introduction of the Bill by the Attorney-General - the Financial Editor of the "Sydney Morning Herald" commented in these terms -

The first really conspicuous deficiency in the Snedden draft compared with its predecessor is typified in the abandonment of action against resale price maintenance.

This is only one aspect of the bill's apparent neglect in general of the great field of vertical restrictive trade practices - those reaching down from supplier to distributor - as distinct from the horizontal type between ostensibly competing companies.

It was a Conservative Government in Britain that legislated against price fixing last year, Mr. Edward Heath being the pilot of the Act.

The consequent price reductions and enlivening of competition in the United Kingdom have been marked. Even the former critics of the change seem to have been silenced by the actual experience, and one hears practically no objections to the move in the few months of operation.

There are several industries in Australia where numerically competitors hardly exist, and where vertical practices are the crux of the monopoly problem.

It is true that the susceptibilities of Mr. Bolte and perhaps one or two other Premiers had to be considered. But constitutionally it was possible to go a good way regardless of them, as the recent fortunes of the old Industries Preservation Act show. And the Federal authorities could eventually, if necessary, seek powers by referendum.

I hope it will not be asserted that I am moving any proposal here which Sir Garfield Barwick promised but which has been enacted in some other way in the Bill. There is no reference in this Bill to resale price maintenance. There was a definite promise concerning resale price maintenance in the proposals made to the Parliament by Sir Garfield Barwick three years ago. Sir Garfield had stated the nature of the practice and of its detriment to the public in his document " Australian Proposals for Legislation for the Control of Restrictive

Trade Practices and Monopolies " - in particular in the tables with which he illustrated his proposals in August 1963. He stated the practice under these three headings -

The reselling of a product at a price fixed by agreement between the resellers.

The reselling of a product at a price fixed by agreement between the resellers and the manufacturer of the product.

A concerted refusal by resellers of a product to buy from a manufacturer unless he withholds supplies from a reseller who is offering competitive prices or terms to the consumer.

Sir GarfieldBarwick then went on to state in these terms the detriment to the public interest from those three types of resale price maintenance -

The possibility of price competition is excluded . . The agreed price may be fixed by reference to the costs of the least efficient manufacturer.

The exclusion of the possibility of price competition removes the incentive for the manufacturer or reseller to pass on to the consumer the benefit of economies achieved in the manufacturing or reselling process. Where the consumer, himself, is a manufacturer who requires the product for the manufacture of another product, the costs of production are increased.

I reiterate that Sir Garfield Barwick stated the nature of resale price maintenance and the detriment flowing from it in those terms in August 1963. He was illustrating the proposals which were made to the House on his behalf in December 1962. So long as he was Attorney-General, there was never any suggestion that resale price maintenance would prove too difficult to implement under the proposed Bill. Nor is it difficult to implement. The Conservative Government in Great Britain introduced and passed a Resale Prices Act, which came into effect in July last year. In October this year in New Zealand a Trade Practices Amendment Act came into effect which declared that collective resale agreements were presumed to be contrary to the public interest. The Bill was sponsored by the Deputy Prime Minister, the Minister for Trade, Mr. Marshall. In Great Britain, Mr. Heath who is now Leader of the Opposition brought in the Bill.

Mr Buchanan - He said " collective " price arrangements. The honorable member's amendment does not refer to collective arrangements.

Mr WHITLAM - It covers collective ones.

Mr Buchanan - The word "collective" is already included in the Bill.

Mr WHITLAM - I point out that Sir Garfield Barwick made no such limitation. As in all the amendments, I have carefully followed the wording of Sir Garfield Barwick. It should be possible for the Conservative Government in Australia to legislate for resale price maintenance as proposed by Sir Garfield Barwick three years ago in this House; as pursued by him in his speeches, documents and brochures until well into 1963; as implemented by the British Conservative Government in July last year and as implemented by the New Zealand Conservative Government in October this year. There are no difficulties in legislating for the examination of resale price maintenance.

I come now to some comments on this omission from the Bill. Professor Richardson, the Dean of the Faculty of Law at the Australian National University, wrote in the " Canberra Times " on 9th November 1965 in these terms -

A few years ago it was estimated that in the United Kingdom about 8s. in every £1 of personal expenditure was spend on goods and services supplied at prices the same for identical items for all customers wherever they were and that about Ss. of the 8s. was accounted for by vertical resale price maintenance.

No one is certain about the situation in Australia - one feature of the Australian economy is the lack of information of such matters - but it is almost certain that the figure of 5s. would be too low for this country.

The Trade Practices Act, 1964, of the United Kingdom has now brought this kind of resale price maintenance under control.

It cannot be lawfully carried on by anyone unless the particular practice is upheld by the Restrictive Practices Court as not infringing the public interest. When the Trade Practices Bill becomes law, however, a single supplier will still be able to fix the resale prices of his goods as a condition of supply.

Professor Maureen Brunt wrote on this subject in the September 1965 issue of " The Economic Record ". She said -

It seems that there may also be an important implicit exception arising from the practice of resale price maintenance. Not infrequently tenders are received from distributors who obtain their supplies from a sole manufacturer. Since individual resale price maintenance is not covered by the Bill, common tenders will still be received. The Bill prohibits only " agreements " on tendering and bidding, and distributors' adherence to a manufacturer's price is unlikely to be held an "agreement ". Indeed, it is conceivable that the simultaneous use of resale price maintenance by a number of manufacturers could offer a serious loop-hole to the intentions of this part of the Bill. . . .

But it may be questioned whether the coverage and emphasis are appropriate when individual resale price maintenance is omitted and vertical practices are played down. Even a selective regulation of business conduct should give resale price maintenance high priority and should fasten upon certain vertical practices.

Individual resale price maintenance is a widely used practice which is questionable in itself. But more than this, it can be used to buttress the parallel behaviour and collusive activity of trade associations. Collusive tendering is one instance of this. Another instance is the informal policing of resale price maintenance by associations of distributors, yet another all those informal representations and pressures which members of a trade association may use on a manufacturer. More generally, the problem of resale price maintenance is part and parcel of the problem of price agreements; to exclude the practice from the Bill is to propose legislation which is inefficient as well as inconsistent.

Many restrictive trade practices are omitted from this Bill. There is no reference to export franchises. Admittedly, Sir Garfield Barwick did not promise any legislation on export franchises, but many agreements and practices which Sir Garfield Barwick proposed to include are omitted from the Bill. There have been many modifications of the treatment of agreements and practices which he proposed to include. There is no more serious variation or dilution of his proposals than the omission of a provision concerning resale price maintenance. From the very day on which the Attorney-General introduced his Bill this omission was noticed and deplored by all the financial editors, ail the economists and all the academics. Their views remain the same to this day. There is all the less excuse for omitting Sir Garfield Barwick's proposal on this matter since the Conservative Governments in Britain last year and in New Zealand this year have found it possible, in fact necessary, to legislate against resale price maintenance.

The advantage to the public in reduced prices of legislation against resale price maintenance is quite clear. In Britain there was considerable opposition in the House of Commons last year among Conservative members to Mr. Heath's bill. No politician in Britain now would repeal that bill. There is always difficulty with conservative members when a bill to curb restrictive trade practices is introduced. This is a clear case in which the sights have been lowered, Sir Garfield Barwick's proposals have been diluted and the public interest has been betrayed.

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