THE RESTRICTIVE TRADE PRACTICES ACT, 1956: A REVIEW OF CERTAIN JUDGMENTS
| Published date | 01 February 1960 |
| DOI | http://doi.org/10.1111/j.1467-9485.1960.tb00123.x |
| Date | 01 February 1960 |
THE RESTRICTIVE TRADE PRACTICES ACT, 1956:
A REVIEW OF CERTAIN JUDGMENTS
THE
Restrictive Trade Practices Act, 1956, contains three main pro-
visions; these have reference
to
:
(i) amendments to the Monopolies and Restrictive Practices Acts,
1948 and 1953, whereby the Monopolies Commission was reconstituted,
and the
scope
of the Commission redefined;
(ii) the individual enforcement by legal proceedings
of
conditions
as
to
resale prices;
(iG)
the registration and judicial investigation of (collective)
restrictive trading agreements, i.e., agreements under which two or
more parties accept restrictions concerning the price, quantity or
quality
of
such goods as they may supply, offer
or
acquire, or, the
terms on which such goods may be supplied or acquired.
It
is this
aspect of the Act that will be examined here.
All
such agreements are to be registered,
and
the Registrar
is
empowered to bring any agreement before a Restrictive Practices
Court which may declare any part
of
the agreement to be against the
public interest; where such
a
declaration
is
made, the restrictions
to
which that part
of
the agreement refers shall
be
void and, upon
application
of
the Registrar, the Court may make an order to ensure
that these restrictions, or any of like effect, may not be put into
effect.l
The provision which puts teeth into the Act is contained in para-
graph 21(1) which lays down that ‘any such restriction shall be
deemed
to
be against the public interest unless the Court is satisfied
of
one or more
of
the following circumstances.’ Then follows
a
list
of the seven so-called
‘
escape clauses
’
which led to
so
much doubt
as
to
whether the teeth would not in fact soon become blunted.2
Everything seemed
to
depend upon how broad
an
interpretation
the Court was willing to give to the concept of the public interest,
Restrictive Trade Practices Act, para.
6(1).
*
By virtue of this paragraph
a
restriction
may
be justified on the grounds
that it (a) affords to the public a measure
of
protection against injury; (b) is
a prerequisite
of
a specific and substantial benefit enjoyed by the public;
(c)
provides a counter to otFr restrictiye practices; (d) enables the parties
to the agreement to secure fair terms as either supplier or buyer when
faced by one person who, as buyer
or
supplier, controls
a
preponderant part
of the market; (e) keeps unemployment appreciably below what it would
otherwise be;
(f)
maintains export earnings above what they would otherwise
be, or
(g)
is necessary to maintain some other restriction which meets with the
approval
of
the Court.
147
148
F.
LIVESEY
and conversely how wide the escape ‘gates’ might prove to be.
Previous judgments under common law did not give grounds for very
great optimi~m.~ Now, thanks to a judicious choice as to which should
be the first agreements to be put before the Court,
it
is possible to
pass a preliminary judgment on this vital aspect
of
the Act. As will
be seen, the Court seems to be keeping the gaps narrow, and has
certainly done nothing to suggest that
it
may frustrate the avowed aim
of the Act to free the economy
of
restrictive practices.
The four agreements to be considered here are those of the Yarn
Spinners’ Association, the Blanket Manufacturers’ Association, the
Water-Tube Boilermakers’ Association and the Chemists’ Federation.
All
four bodies sought
to
justify agreements under sub-paragraph (b)
of
paragraph 21(
1);
in
addition, justification was sought under sub-
para. (a) by the Chemists’ Federation, sub-para. (e) by the Yarn
Spinners’ Association and sub-paras. (d) and
(f)
by the Water-Tube
Boilermakers’ Association. Hence at this comparatively early stage
of the Court’s existence we have had pronouncements relating to five
of the seven ‘escape clauses’. Each agreement will be considered
in turn.
The agreement made
by
the members
of
the Yarn Spinners’
Association provided,
inter
alia,
that no yarn containing not less than
85
per cent. cotton was to be sold at a price less than that fixed
under the rules
of
the Association. The Y.S.A. claimed that the
restrictions met the requirements
of
sub-para. 21(1Xb) since they con-
ferred on the public
five
‘
specific and substantial’ benefits, which
benefits would accrue to the public only
if
the restrictions were main-
tained. These alleged benefits were
:
1.
The price
of
yam fluctuated less than the price
of
raw cotton;
moreover, at the outset of a depression, yam prices fell more quickly
than they would otherwise have
done,
because everyone knew that
the minimum price would eventually be reached. Any uncertainty
about
future prices would make people hold out longer for higher
prices. Conversely, after the recession, the agreement would result in
prices rising less quickly than they would otherwise have done, because
of
the greater available capacity. Finally, the price restriction enabled
weavers, for example, to hold lower stocks since they could rely on
forward orders; this would lower the price of cloth. These three
arguments will be considered in turn.
It is difficult to see the reasoning which lies behind the argument
that prices would fall more quickly because there was a floor
to
the
3
Cf.
A.
Sutherland,
‘
The Restrictive Practices Court and Cotton Spinning
’,
Journal
of
Industrial Economics,
Oct.
1959,
p.
60.
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