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Thursday, 2 December 1965

Mr SNEDDEN (Bruce) (AttorneyGeneral) . - The Government opposes the proposed amendment. In dealing with resale price maintenance, it is necessary to make a dichotomy. There is resale price maintenance which is a collective arrangement and there is resale price maintenance which flows from the individual will of a manufacturer. Collective resale price maintenance is examinable because, if it is collective it will have an agreement as its base, whether u oe an agreement between a number of manufacturers or one between a number of distributors. Collective resale price maintenance involves an examinable agreement under the Bill as it stands, whereas the proposed amendment seeks to make examinable the practice of individual resale price maintenance.

The Government decided not to include individual resale price maintenance because it involves a situation where competitive forces are at work. If I may, I will take the dreadful example of ashtrays. Let us suppose that an individual manufacturer of ashtrays says: "I want my ashtrays to be sold for 2s. each and I will not provide ashtrays to any reseller who does not sell them for 2s. each ". The question is whether the reseller is so anxious to have those particular ashtrays for resale that he is prepared to comply with the wishes qf the individual manufacturer.

Mr Haworth - Does the Minister think that the reseller will not consider a reasonable rate of profit for himself?

Mr SNEDDEN - He may consider a reasonable rate of profit. The individual manufacturer may say: "The reputation and standing of my goods is such that I want them sold at 2s. each. Anybody who detracts from the standing and reputation of my goods by selling them for ls. 9d. each will not be provided with those goods". The manufacturer is perfectly free to do that, and would not bring himself by doing so within the ambit of the legislation, lt is equally true that if an individual reseller decides he will sell the ashtrays at ls. 9cl. each, the individual manufacturer of the ashtrays can do nothing unless he has a contract which is enforceable at common law. The manufacturer can do nothing to make the reseller sell the ashtrays at 2s. each. Of course, he could withhold future supplies.

I wish to make clear that a distinct difference must be drawn between collective resale price maintenance and individual resale price maintenance. Collective resale price maintenance is examinable as an agreement. Individual resale price maintenance is not examinable because competitive forces are at work.

Mr. CONNOR(Cunningham) {10.20].- Contrary to the views expressed by the honorable member for Mallee (Mr. Turnbull), members of the Opposition have a considerable amount of respect for the Attorney-General (Mr. Snedden). Criticism in a debate of this nature is not personal and there are times when the acerbities of political life can be forgotten and men can proceed as gentlemen in their own right.

Mr Turnbull - One can always apologise, like the Kaiser-

Mr CONNOR - It is a poor circus that cannot afford one clown and I think I can see him now. Perhaps the best answer to the Attorney-General is the decision of the Government of the United Kingdom. After eight years experience of the operation of restrictive practices legislation which was introduced in 1956, the United Kingdom Government finally introduced an act such as this. It is true, as the Attorney-General has said, that in respect of multi-lateral horizontal agreements collective retail price maintenance is an examinable practice. That is understood. Nevertheless the value is shown of the figures quoted by no less a person than Mr. Heath, who is of the same political persuasion as the AttorneyGeneral. These indicate the value of the retail turnover which is comprised within this practice. On that basis alone this matter merits serious consideration. After the experience of eight years, the Conservative Government in Great Britain chose to introduce legislation of this kind.

There is no valid reason why this Government, which is of the same persuasion, in a country where monopoly is much more concentrated than ever it was in the United Kingdom, should not introduce such legislation here. In that regard I wanted to put on record the words of Professor Brunt. I quote from an article in the "Economic Record" of September 1965 in which she said -

While just about every restrictive practice known to man is used in Australia (other than those subject to common law restraints), price agreements, both horizontal and vertical, are undoubtedly the most common. For instance, the recent Tasmanian Royal Commission into the activities of 70 trade associations found 59 to be operating restrictive agreements. Excluding 6 trade associations for which evidence was incomplete, in only one association investigated was there no joint endeavour to maintain price, ranging from the strictest horizontal and vertical agreements enforced by collective boycott to informal policing of individual manufacturer's systems of resale price maintenance. Finally, mention should be made of what is distinctive in Australia (at least by comparison with Britain and the U.S.). First, there is not only an unusually high incidence of restrictive agreements, but these arguments also have an unusual stability clearly associated with the high degree of market concentration. Second, another consequence of high concentration, unilateral vertical practices such as tying clauses and requirements contracts are fairly common.

I add a further comment by Professor Brunt as follows -

In Britain and the United States single-firm monopoly is normally regarded as a textbook curiosity. In Australia today there are a dozen important cases accounting for 9 per cent, of gross value added in manufacturing; and they are all basic industries (such as steel, sugar, paper and glass) occupying a strategic position in the economy. In general, what is unusual in Australian market concentration in manufacturing, mining, retailing and finance is not the prevalence of oligopolistic markets (for this is true also of the United States, Canada and Great Britain) but the frequency of monopolistic and tightly oligopolistic markets).

In a situation like that, no government has any justification for refusing to introduce unilateral resale price maintenance legislation.

Question put -

That the amendment (Mr. Whitlam's) be agreed to.

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