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Storm over RPM

Radio and Electrical Retailing, February and April, 1964.
    
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As we go to press there are rumours of impending storms within the Tory Party over the Governments expressed intention to introduce immediate legislation to make it illegal for manufacturers to enforce a minimum retail price for their goods. Critics of the proposal made in the House by Mr Heath, Secretary for Industry, are asking whether the Cabinet has been panicked into a major tactical error.

Government back bench MPs are saying that abolition of RPM will harm many industries and will certainly raise the wrath of the small shopkeeper. It can be anticipated that the 'pressure lobbies' of the House will be working at full strength to oppose the move.

Supporters of the abolition of RPM in the House claim that it will lead to an overall reduction of prices to the consumer, will assuage the Trade Unions, and, dare we whisper it, will win votes.

At the same time it is revealed that the Government will oppose the Private Members Bill sponsored by J Stonehouse (Lab. Wednesbury) which also seeks to make price fixing illegal, on the grounds that the Government's proposed action will go beyond the confines of his Bill.

Inevitably the abolition of RPM must be a matter of serious concern to all small retailers, but it need not, in our opinion, be catastrophic. We foresee many months of trading chaos, with the get-rich-quick merchants doing their best to cash in on the situation, but for the dealer with a firm belief in his own efficiency and tradition of personal service the outlook need not be gloomy. The main plank in the platform for the independent dealer in a trade without RPM must be the valuable personal service which he is able to give, and for which, incidentally, he is fully entitled to charge.

As we write this there has been little time to obtain any reaction from the trade or industry, but the following are some off-the-cuff comments:

  • National Association of British Manufacturers: We are in favour of the maximum freedom of competition, and where possible. in the reduction of prices.
  • Resale Price Maintenance Co-Ordinating Committee: If RPM goes we shall see an acceleration in the growth of large multiple retail outlets, and a tendency towards a monopolistic control of distribution.
  • AEI - Hotpoint: Our current list prices will become our recommended selling prices.
  • John Barker, Rank-Bush Murphy: We must go along with the abolition of RPM and make it work. The public will have to decide whether it wants to buy at the cheapest possible price, with no service or to pay extra for really individual service.
  • Leon Selzer, Alfa Sewing Machines: I welcome the opportunities which a change like this will bring in its wake. A strongly forged chain from manufacturer to retailer to consumer, offering a service of skilled help and willing service is surely a formula to ensure satisfied customers.

We must not forget, of course, that abolition of RPM is not a matter of concern merely to industry. The public is also vitally interested, and as we see it, the public wants a free-for-all-trade, wisely or otherwise. May we be forgiven if we reflect that these same public are also voters?

The RPM Bill

Report in April issue.

So much has been written and said in recent months about RPM, its evils or benefits, according to which side you support, that we suspect our readers will not want any more lengthy expositions on the subject.

By the time this article appears in print the Bill will have had its second reading and as we write it is evident that it is likely to be used for a considerable amount of political jockeying. The Labour Party, which is basically in agreement with the decision to abolish RPM is nevertheless intending to exploit the dissension within the Conservative Party over some of the terms of the present Bill. Main guns of the Labour attack will concentrate on the fact that the Bill vitally affects the future of the small shopkeeper, without any corresponding action against big monopolies and combines.

Fourteen Clauses

The Bill has only fourteen clauses, the provisions of which are as follows:

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  1. All agreements, verbal or written, to fix minimum selling prices are prohibited, but allowance is made for the establishment of 'recommended' resale prices and maximum selling prices.
  2. A supplier may not cut supplies or discounts to any trader who sells at less than 'recommended' prices.
  3. A supplier may, however, stop dealing with anyone selling goods at less than he bought them for, with the exception that 'seasonal or clearance' sales may be exempted from this ruling.
  4. RPM will not be a criminal, but a civil offence, and the Crown will be able to apply to the courts for an injunction to stop infringements, as will private individuals.
  5. The Restrictive Practices Court will deal with applications from manufacturers for exemption from the provisions of the Bill. Three grounds for exemption are listed. It must be proved that consumers would suffer on account of (a) a substantial reduction in the variety or quality of goods, (b) a substantial loss of retail outlets, or (c) a substantial reduction of necessary services. The onus is on the manufacturer to prove that the advantages of RPM are in the interests of the consumer.
  6. Applications for exemption must be made within three months of the Bill becoming law, and until a decision has been reached by the court manufacturers claiming exemption will be able to continue to enforce RPM.
  7. Three new High Court judges and one new Scottish judge will be appointed to deal with the new situation.

RPM was abolished by Act of Parliament in 1964. - Ed.

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