CAB129-35 — Page 51

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30/5/4906 5pm

THIS DOCUMENTIS2TF368OPERTY OF HIS BRITANNIC MAJESTY GOyfeet 20

Printed for the Cabinet. May 1949

SECRET

C.P. (49) 116

19th May, 1949

CABINET

Copy No. 31

REPORT OF THE COMMITTEE ON RESALE PRICE MAINTENANCE

NOTE BY THE CHANCELLOR OF THE EXCHEQUER

In the absence of the President of the Board of Trade, I circulate herewith, for the consideration of my colleagues, a memorandum by the Parliamentary Secretary, Board of Trade, on the report of the Committee on Resale Price Maintenance.

The recommendations in this memorandum were discussed with the President before he left for Canada, and they have my support.

Treasury Chambers, S.W. 1,

19th May, 1949.

R. S. C.

ANNEX

REPORT OF COMMITTEE ON RESALE PRICE MAINTENANCE

MEMORANDUM BY THE PARLIAMENTARY SECRETARY, BOARD OF TRADE

1. Following a decision by the Lord President's Committee (L.P. (47) 8th Meeting, Minute 2), the President of the Board of Trade appointed a Committee to enquire into resale price maintenance. This practice is used by manufacturers and trade associations to ensure that, whatever the channels of distribution through which a particular article has passed, it shall be sold to the retail customer at a price which has been fixed in advance by the producer. The committee's terms of reference are at Appendix A.

2. The Committee has now reported and the report is to be published as a Command paper on or about 2nd June. The main conclusions and recommenda- tions in the report are at Appendix B.

3. The report, which is unanimous (with one qualifying note referred to in paragraph 6 of this paper), does not condemn all forms of resale price main- tenance outright. It finds that resale price maintenance, if operated, reasonably and flexibly by individual manufacturers, has certain substantial advantages for producers, distributors and consumers alike; it is useful as an aid to the con- tinuous flow of planned production and as a means of preventing drastic and uneconomic price-cutting, in particular the use of the so-called loss-leader" technique by which retailers slash the price of some popular and well-advertised brand of goods (often to less than wholesale price) as a bait to attract customers for the other goods they are offering for sale.

4. The Committee's first recommendation, therefore, is that no action should be taken which would deprive an individual producer of the power to prescribe and enforce resale prices for goods bearing his brand, provided that this power is not used to obstruct the development of particular methods of trading, to impede

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