Wells: is there an alternative?
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by Brian Ca.tee
IN the face of an " unequivocal" Opinion from a specialist counsel the Road Haulage Association's national council lest week voted to drop the proposals in the Wells Report Which it had earlier this year approved in principle. Has it given up too soon?
The question is not only OM, but is already being asked by members who had supported the proposals. The supporters are, on all the evidence, a minority. Out of the questionnaires which were sent to the 16,000-plus members of the Association in July, only 307 replies were received, a mere 1.75 per cent of RHA membership. Of these, 282 were in favour, 22 were opposed and 3 were unusable. The favourable replies represented 1.60 per cent of the membership and 4.01 per cent of the RHA vehicle strength.
So, although a vast majority of the actual replies were in favour, the response from the membership at large was a thunderous roar of apathy.
The national council last week decided by an overwhelming vote (reportedly 30 to 3) not to proceed, in the light of the poor response and more particularly of counsel's opinion. A council member told me this week he thought that, but for the legal opinion, there was a good chance that the scheme would have gone ahead, despite the apathetic response to •the questionnaire.
Just how did counsel's arguments run? The Association is not saying; nor is it going to publish the Wells Report in full. But in a statement issued after last week's council meeting it said: "Since major questions as to the practicability of Mr Wells's proposed scheme arose out of the effects of the Fair Trading Act 1973 and other restrictive practices legislation on that scheme, a specialist leading counsel's Opinion on this issue was sought. All the relevant material was submitted to Counsel and his very fully detailed and reasoned Opinion states unequivocally that the proposals as to the publication of minimum daily earnings and the creation and circulation of a register of "approved undertakings" would be in breach of the restrictive practices legislation in several important respects.
"The legal problems raised by the proposal, which is an integral part of Mr Wells's scheme, that certain services such as the supply of goods at a discount, bulk purchasing facilities and so on, would be made available to "approved undertakings" were also closely examined by Counsel who concluded that this part of the scheme would also be caught by the restrictive practices legislation.
"Counsel had been asked specifically whether he could suggest any means whereby the objectives of the proposed arrangements could lawfully be achieved without being caught by the restrictive trade practices legislation, and his Opinion stated that he could conceive of no way in which the objectives of Mr Wells's scheme could be achieved without falling foul of the legislation."
The decision not to proceed raises two immediate issues: (1) Why could the RHA not legally set up trading co-operatives if organisations like the NFU are already running them?
(2) If the legal situation is as set out by counsel, the Government's fahtrading legislation is surely having the effect of preventing responSible trade bodies from improving operating standards and trying to contain costs.
To answer the first point it is necessary to exp:ain how restrictive trading legislation works.
The two principal Acts under which measures are at present in force are the Restrictive Trade Practices Acts of 1956 and 1968. These make it illegal (among other things) to operate trade agreements which are against the public interest. The operators of trade agreements —including trade associations —are obliged to notify any such agreements, and what are called "information agreements," to the Office of Fair Trading.
At present this obligation applies to manufacturers and suppliers but not to services, but under the Fair Trading Act of 1973 the Minister (in this case Mrs Shirley Williams) was given powers to extend the trade agreement provisions to services as well. Mrs Williams has said •she intends to intro duce an order to do this "soon," which has been taken to mean later this year.
So the RHA, as a service trade association, will be brought under the legislation, and would presumably have had to register its daily earnings, approved list and cooperative bulk purchase activities if it had gone ahead with them.
When such agreements are natified to the Director-General of Fair Trading, in London, they are placed on a public register and the Office of Fair Trading decides whether they are acceptable (in which case they remain on the register but no action is taken) or whether they appear to be against the public interest, in whith case they are referred to the Restrictive Practices Court for a ruling.
Before making a recommendation on an agreement, those responsible for it are questioned by the DirectorGeneral's office about the objectives of the agreement and its method Of operation. I was assured by a spokesman from the office of Fair Trading that agreements are scrutinised very closely on their merits.
So back to the first question: if the NFU can do it, Why not the RHA? The answer lies in a measure called the Agriculture and Forestry Associations Act which specifically exemPted certain types of organisation (notably farming co-operatives) from reStrictive trading legislation.
There would, of course, have been nothing to stop the RHA "having a go" despite counsel's Opinion. It is exactly what it says—an opinion, though backed by great experience and specialist knowledge of the laws in question.
We asked one or two bodies What they thought of the RHA (Wells) proposals and the legal position. A spokesman for the Department of Consumer Protection was surprised that the register of approved undertakings and the bulk buying scheme would fall 'foul of the law. A member of the Office of Fair Trading thought it was only possible to discover Whether or not a particular trading arrangement would be allowed by deciding to "suck it and see."
On the other hand, an offidial of the Central Council for Agricultural and Horticultural Co-operation was not at all surprised at counsel's opinion.
Does the RHA now have to abandon all its plans for improving standards and easing the pressure of costs? One lhopes not. I understand that an alternative to the Wells proposals lies on the table for consideration by the executive board. And perhaps a way of achieving the bulk purchase objectives would be for a group of members to set up a quite separate private company or co-operative society with shareholders, admitting RHA members at its discretion.
Certainly there are many members More fundamental, however, is the second point I raised. If restrictive practices legislation is preventing responsible bodies from raising standards and holding costs (both of which would benefit the consumer), then surely it's time that legislation was Changed.Tags