Politics & Prices

The onslaught of the discounters began to demolish U.S. Fair Trade laws in 1958. France outlawed price fixing ten years ago, and in Italy there are as many prices for most items as there are stores selling them. Only three diehards in Western Europe still have Fair Trade laws--Switzerland, The Netherlands and Great Britain. Last week the death knell of Fair Trade sounded in Britain, giving British consumers the liveliest field day they have enjoyed in decades.

Price Cutting. Caught in a frenzy for bargains, British retailers slashed prices on a wide range of goods. Some supermarkets cut the price of cigarettes by four pennies, others made a sixpenny cut in chocolates and a one-shilling chop in razor blades. Most appliances were reduced anywhere from 10% to 30% in the big stores. Scotch whisky was marked down 10% in many stores. Said Jack Cohen, chairman of the powerful 340-store Tesco chain: "The cut prices still show us a very good margin of profit."

The reason for the price-cutting wave was the government's announced intention to end resale price maintenance, the British equivalent of U.S. Fair Trade, which has been on the books for 60 years. RPM has long been condemned by Labor, but defended by the free-enterprising Conservatives, largely because half a million shopkeepers are registered Tories. Most small shopkeepers see in RPM their last chance of coexisting with supermarkets and discount stores. Even with the protection of price fixing--and despite a native British dislike for impersonal service--the number of shops with fewer than ten branches declined from 503,000 in 1950 to 483,000 in 1961.

No Tory leader really tried to touch RPM until Edward ("Ted") Heath, the energetic Minister of Industry and Trade under Sir Alexander Douglas-Home, rose in the House of Commons two weeks ago and pronounced resale price maintenance "incompatible with our objective of encouraging effective competition and keeping down costs and prices." Despite lingering Tory doubts, Prime Minister Douglas-Home stood firmly behind Heath, who promised that a bill would be ready for Parliament's consideration within a fortnight. "It cannot be in the interests of the consumer," said Douglas-Home, "to peg prices at artificially high levels."

Facts of Life. Not everyone agreed. The Scotch whisky firm of Wm. Grant & Sons (famous in the U.S. for the slogan, "As long as you're up, get me a Grant's") obtained an injunction last week to restrain retailers from selling its products at discount prices while RPM is still in effect. Cadbury's at once stopped sending sweets to firms discounting their goods, and the National Chamber of Trade bravely promised to "move heaven and earth to prevent this bill being adopted."

But, in fact, many who really oppose repeal have begun to direct their efforts at getting the inevitable bill watered down. The Times of London put the whole business in perspective: "The whole purpose of abolishing price maintenance is that the inefficient shall be hurt. This may seem harsh. But the facts of modern economic life are harsh."

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