Tyre Price Agreements Condemned
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Monopolies Commission Oppose, by a Majority, • Resale Price Maintenance
COMMON prices for tyres, fixed within the Tyre Manufacturers' Conference, are condemned by the Monopolies and Restrictive Practices Commission in their Report on the Supply and Export of Pneumatic Tyres, published last Friday (Stationery Office, 6s. 6d.). By a majority they recommend that the maintenance of retail prices should be abandoned. ,
Tyre mileage contracts, of which there has recently been much criticism, are defended. The . contracts, the .Commission point out, are .bascd by manufacturers on a common formula Which they use to check the performance of tyres and to determine, the rate to be charged in the next quarter. In shared contracts, all suppliers normally charge the same rate, which is the lowest put forward by one concern and matched by the .others,
There ,has, the commission say, been little criticism from operators that the rates • are -high in relation to those charged in the more competitive prewar years. Operators who enter into mileage contracts .have a strong bargaining power and regard the arrangements as farmore favourable to themselves than the outright purchase of tyres. They would not welcome Ole withdrawal of these facilities, the CommiSsion add.
The Commission comment on the following practices, which .are held to be against the public interest— Discussions on prices which take place within the T.M.C. strengthen the tendency to reduceprice competition. The T.M.C. should cease to concern themselves with price levels and changes in them, and no other organization should be set up or employed by the tyre manufacturers for this purpose.
Identical prices collectively maintained: A majority of the Commission stresses that, in the special circumstances of the industry, the only way to secure genuine price competition at the retail stage is to abolish the maintenance of retail prices, and it recommends that no manufacturer should prestribe the resale price of his tyres. A minority dissents from this recommendation, believing that it is not justified by the circum stances of the industry. Instead, the minority recommends that the British Motor Trade Association should refrain from enforcing resale prices until discussions within the T.M.C. on prices have been abandoned.
Discounts fixed by the T.M.C. for users whose aggregate expenditure on car arid giant tyres in the replacement and mileage contract market exceeds £500 a year are condemned.
Private brand tyres: The ban on the manufacture of private brand tyres for concerns outside the T.M.C. restricts competition and should be discontinued.
Tyre Trade Registers: These tend to create a privileged class of trader and should be discontinued, No similar
l 0 registers should be compiled or maintained by any association concerned with the manufacture or distribution of tyres. The Commission would not object if the T.M.C. maintained lists of traders which could be circulated and recommended to manufacturers, to observe or not as they pleased. A minority of the Commission dissents from the recommendation that the Tyre Trade Register should be abolished, regarding it as conducive to safety and to efficiency in distribution.
Show restrictions: The supplemental agreement of the Society of Motor Manufacturers and Traders which requires tyre manufacturers to prohibit traders from cxhibitinguilluose tyres at shows not approved under the Society's bond, interferes with the legitimate interests of traders and should be terminated.
Terms for original equipment: Ajl the T,M.C.'s registers of vehicle and aircraft manufacturers entitled to special terms for tyres supplied as original equipment should' be abolished, and various classes of terms for original equipment should cease to be prescribed. The Commission would not object if lists of reputable vehicle and aircraft manufacturers were circulated for the information of tyre manufacturers, so long as the tyre makers were not obliged to observe them.
Secret ownership by the Dunlop Rubber Co., Ltd.. of two retreading concerns. the Regent Tyre and Rubber Co., Ltd., and Tyres (Scotland) Production, Ltd.. hampers the efficient organization of their retread business as a whole.
The following arrangements are regarded as not conflicting with the public interest, and the Commission say:—
T.M.C. tyre inspection panels which consider claims in respect of .giant and agricultural tyres which have failed prematurely, are, as at present operated, satisfactory.
Unbranded tyres: The industry's ban on the production of unbranded tyres promotes safety.
Restrictions on advertising accepted by all members of the T.M.C. leave a sufficiently wide field open to allow all manufacturers a reasonable degree of competition.
Mileage contracts: Although these involve some restriction of -competition, operators receive good terms.
Consultations between tyre manufacturers on the net prices to be charged to vehicle manufacturers on the " No Restrictions Register do, in a sense, restrict competition, but do not conflict with the public interest.
Secret allowances in the originalequipment market, the secret end-of-year allowances paid by the Dunlop Rubber Co., Ltd., to certain customers, and the secret monthly credits allowed by a sinaller manufacturer, provide.a form of clandestine price competition which is better than no competition at all.
The common scale of rebate based on aggregate purchases allowed by T.M.C. members to nine of the largest commercial-vehicle manufacturers in the original-equipment market does not attract business to one group of producers at the expense of another,and is not rigid in form.
Export prices: No fault is found with. the arrangement by which Dunlop set export prices for all T.M.C. members, after confidential discussions with their foreign competitors.
The interests of Dunlop in the distribution field, and their methods, have not tended to restrict competition.
The dominance of Dunlop in the retread industry has not in itself restricted competition.
Confidential allowances paid by Dunlop to certain distributors and motor dealers are permissible. R.M.A. : The arrangements of the .Ret read Manufacturers' Association promote safety.
Retread material prices: Discussions within the T.M.C. resulting in identical prices for retreading materials and members' remoulds are not against the public interest.
Apart from the specific matters already mentioned, Dunlop are held not to have used their dominant position in the industry to the detriment of the public interest.
The report is signed by the chairman and eight members of the Commission. Recommendations were unanimous, except in two cases. In these instances, four of the members dissented.