1 The Act allows a reference to the commission where a single firm or cartel controls one‐third of the supply of a commodity. It also applies to the export and processing of goods.

2 Monopolies and Restrictive Practices Commission, Collective Discrimination (H.M.S.O., 1955).

3 The Restrictive Trade Practices Bill also applies to practices not covered by the report on collective discrimination.

4 Hansard, 15th July 1955, col. 1942. Whether these practices should be made criminal offences is, of course, a matter of expediency. Many acts which are immoral are not made criminal offences.

5 Catholic Herald, 29 July, 1955.

6 My treatment of this subject is based on the essay by Fr Lewis Watt, S.J., ‘The Theory lying behind the Historical Conception of the Just Price’, in The Just Price, edited by V. A. Demant (S.C.M. Press, 1930).

7 It is assumed, of course, that there is no agreement among sellers to fix prices.

8 Similarly, if profits are unduly low, firms will leave the industry.

9 This he does by restricting output to the point where the additional cost incurred by increasing output is just equal to the additional revenue earned by the sale of the increased output. The additional revenue is the price received for the additional output, less the amount by which price is reduced (in order to sell the greater output) on the previous output.

10 It is probable that the high rates of profits were mainly due to the rapid increase in the demand for the new product. High profits would normally be expected in such conditions in a competitive industry, for it may be difficult to increase productive capacity as rapidly as demand, and shortages will force up the price.

11 To operate a large plant for a small output is wasteful. Firms are anxious to keep their plant running to capacity and reduce prices in order to obtain orders. They continue to reduce prices so long as these cover prime costs, i.e. such items as raw materials and wages of direct labour. If these costs are not covered it is more profitable to cease production altogether. When a firm reduces prices it may attract custom from other firms, but this is lost when others follow suit. In many industries, where total demand is unresponsive to price reductions, this means that all firms have slashed prices to attract custom from each other, since there is no significant increase in total demand, and none are better off as a result of the price cuts.

12 For example, the problems of the Lancashire textile industry arise from the loss of export business accompanying the development of the textile industries of Japan and India.

13 It is a common plan for the firms that remain in the industry to buy out their weaker brethren. The industry remains monopolistically organized, and the remaining firms are able to exploit the consumer by restricting output and raising prices, though no abnormally high profits will appear to be earned since the remaining firms will include in their capital sums paid to buy out the firms that have ceased production. The ideal arrangement would be to eliminate the weaker firms swiftly, and then allow competition to be resumed. A levy on firms in the industry to provide the funds to buy up the excess capacity would not be objectionable, but the firms that remained would not have the power to exploit the consumer, by forming a price ring. The levy would be an outright loss to the firms remaining in the industry. There is no moral objection to this. Profits are supposed to be the reward of enterprise and risk‐taking. If firms wish to justify the profits they receive in this way they must be Willing to meet losses when things go against them. They cannot expect to be allowed profits in good times as a reward for risk‐bearing and then ask to be cushioned by monopoly against losses in bad times.

14 The immediate effect of the introduction of monopolistic restrictions is, of course, to create some unemployment. This may be particularly serious for skilled men who cannot find comparable work in other industries.

15 Output in these other industries will be increased. The greater output will be sold at a lower price, and wages will therefore have to fall. (This tendency may be strengthened by a fall in productivity as more men are employed.) Thus the burden of monopoly does not fall entirely on the consumer but is partially shifted on to the worker in the form of lower wages.

16 An alternative method is to offer a financial inducement to exclusive dealing.

17 Associations operating such schemes have suggested that the distributor who fails to honour such an agreement to deal exclusively in their goods is not deserving of sympathy if his supplies are stopped. In the ordinary course of events it is certainly dishonourable, if no more, to break one's word. In cases of this kind. however, it can well be argued that the agreements are made under duress and are not, therefore, morally binding.

18 The collective enforcement of resale price maintenance (the process whereby a manufacturer fives the price at which retailers and others may sell his product) is made illegal. If an association stops supplies to a retailer who has cut the price of goods supplied by any member of the association, the retailer will have a remedy in the civil courts. On the other hand, the power of the individual manufacturer to enforce resale prices will be increased if the clause is passed giving him the right to take legal action against a retailer with whom he has no contract but who has been given notice of the conditions of price maintenance.

19 The Commission will also deal with agreements relating solely to the export trade.