NOTES OF CASES
| DOI | http://doi.org/10.1111/j.1468-2230.1963.tb00700.x |
| Published date | 01 January 1963 |
| Date | 01 January 1963 |
NOTES
OF
CASES
RESTRICTIVE
AGREEMENTS
“
TO
THE
LIKE
EFFECT
”
WHERE the Restrictive Practices Court finds a restriction to be
contrary to the public interest,
it
may, upon the application of the
Registrar of Restrictive Trading Agreements, make an order
restraining the parties from giving effect to their agreement in
respect of that restriction and from making any other agreement
“
to the like effect.”
l
It
has been usual for the court not to make
such orders but for the respondents to give suitable undertakings
on the same lines. The present case,2 which went to the Court of
Appeal,3 arose not out of the issue of a court order but out of
such an undertaking given, as
it
were,
in
lieu of one. The Regis-
trar applied for a declaration that a proposed new agreement. was
in one respect
“
to the like effect
))
as a restriction which had been
found by the court to be against the public interest, and that a
restraining injunction be issued.
The Restrictive Practices Court, in rejecting the application,
specified a test for the determination of the
“
likeness
77
of two
restrictions. This Note points to the difficulties of applying this
test in several classes of ~ituation.~
It
suggests, moreover, that
while, in the Court of Appeal, the Master of the Rolls explained
that he was
“
not to
be
taken
to
be expressing any dissent from
anything which fell from the court in the judgment under
appeal,”
a
passage in the appeal judgment lends itself to the
interpretation that a different test was being put forward, albeit
tentatively. The appeal was refused.
In
the
Black Bolt and Nut
case6 the price restrictions were
of two kinds. The first applied to what one may call general
users. For them, there was a list of minimum prices, known to
users. The court found that this restriction was not contrary to
the public interest, on the grounds that it saved the larger buyers
from the costs of shopping around for supplies, that this was a
substantial and specific benefit to the buyers concerned (in terms of
section
21
(1)
(b)
of the Act), and that other buyers suffered no
1
Restrictive
Trde
Practices Act, 1956,
s.
90
(3).
2
Re Black Bolt and Nut Association’s Agreement (No.
2)
(1961)
L.R. 2 R.P.
433.
3
Re Black Bolt and Nut Association’s Agreement (No.
2)
(1969) L.R.
3
R.P.
43.
4
The Restrictive Practices Court itself observed that its test
*‘
cannot be
applied where there has been
a
consent
order
on the original reference.
In
such cases
no
reasons are given” (L.R.
2
R.P.
433
at
p.
446).
Consent
orders
are made when the respondents do not defend their agreement and
there are no hearings
in
court.
5
L.R.
3
R.P.
43
at p. 61.
6
Re
Black Bolt and Nut Association’s Agreement,
I1.R.
2
R.P.
50.
76
JAN.
1963
NOTES
OF
CASES
77
countervailing detriment.? The second restriction was an arrange-
ment without a list of prices, but with a prescribed procedure for
the
ad
hoc
determination of the minimum price to be charged on
a particular order
or
inquiry from a customer. This restriction,
referred to as the
“
large-user
”
restriction, applied to business
with government departments, railways, harbour boards and other
large users in response to inquiries (other than inquiries for day-to-
day requirements). Suppliers approached by
a
customer in this
category notified their intended prices to the secretary of the
association, who, in turn, notified interested suppliers of the lowest
of these prices, which became the minimum price binding on all
members. This restriction was declared to be contrary to the
public interest.
The new agreement proposed by the respondent association
provided for the category of large users
(i.e.,
government depart-
ments, etc.) to be subject to the ordinary general-user price list.
What was in dispute was whether this restriction, new in its
application
to
large users, was
a
restriction
“
to the like effect
”
as the old large-user restriction. A comparison between old and
new is involved. The question raised by section
20
(3)
of the
Act is: what aspect or aspects of the two restrictions are to be the
subject of the comparison to determine likeness
?
The Restrictive Practices Court answered this question
as
follows
:
‘‘
The resemblance relevant to the comparison sought to
be made
is
in
those characteristics of the restrictions which caused
the court to declare them contrary to the public interest.” Where
the court have given
a
reasoned judgment as to why the attempted
justification of these restrictions has failed,
“
there should be little
difficulty in determining whether
a
new agreement entered into by
a respondent
. . .
has characteristics, which, if the new agreement
had also been the subject-matter of the original hearing and not
supported by evidence other than that called at the original
hearing, would have led the court to the conclusion that the
justification
of
the new agreement also failed. Accordingly, the
test to be applied in a case where the court has given a reasoned
judgment on the original reference is this:
‘
In the absence of any
fresh evidence other than the terms of the new agreement, would
the reasoning expressed in the judgment of the court in the original
reference, in which it was held that the respondents had failed to
satisfy the court under section
21
of the Act of 1956[,]
. .
.
neces-
sarily lead the court to the conclusion that [the new restrictions]
.
.
.
must also be deemed under that section to be contrary to the
public interest?
’
”
The only relevant material was to be the
terms
of
the new agreement, the terms of the restrictions in
1
Ibid.
eap.
pp.
96-96.
8
L.R.
9
R.P.
433
at
p.
444.
0
Ibid.
pp.
444446.
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