PRICE FIXATION

Evening Post, Volume CXVI, Issue 147, 19 December 1933, Page 10

PRICE FIXATION

We doubt very much if, parliament realises just what it is doing in approving the Motor-spirits (Regulation of Prices) Bill. Authority ia given in the Bill for the fixation, by Order in Council, on the recommendation of the Minister of Industries and Commerce, of maximum and minimum prices for motorspirits. We may pass over the curious position that has arisen in the fact that members of Parliament, who until recently complained that petrol was sold at too high a price, are now assenting to a measure to prevent a reduction in the price. The dangerous features that We see in the legislation are that it applied a general principle to a special commodity, and that it creates a.precedent which may lead much further than Parliament can see. In its interference with commercial freedom, the Legislature should, as far as possible, confine itself to general principles which are applicable lo commerce as a whole. Fixation of maximum prices was accepted as a wartime emergency measure, but was never applied extensively. Fixation of minimum prices has never been considered as a principle, for general application. If Parliament now accepts it for one commodity, what is lo hinder its application to all goods? There have been demands for this to prevent price-cutting in the sale of tobacco and in various proprietary lines. The same principle, was involved in the proposal, which we criticised, that borough councils should have power to fix minimum taxi-cab fares.

The explanation given by th« Prime Minister in moving the Second reading did not show that these general principles and the far-reaching effects of the Bill had been fully considered. Mr. Forbes said that the Government recognised that the question was of importance to the transport industry—especially in view of the fact that prices had been fixed for the carriage of passengers and goods. The cases' are no I parallel. The public authority provides and maintains the public highways. It jis, |o this the

transport industry and has a right to regulate its operation. But we have never heen enamoured of regulation by fixing charges. There should be regulation to prevent one competitor from skimming the cream of the, transport business, or spasmodically altering time-tables aud rates without hope of maintaining a stable service. Where licensing leads to monopoly, fixation of charges may be unavoidable, but we still think it would be better to avoid granting a monopoly of service. But even the precedent given by transport licensing does not warrant the application of the price-fixing principle to the material used in transport unless the Government is prepared to go the whole way and regulate everything. If it 'does this it will find itself in a morass of regulation. There are business people, facing the problem of unprofitable competition, who would like to see a short-cut taken to prevent anyone from selling at prices below what they consider fair. But commerce as a whole has not accepted this idea, nor agreed to exchange competition for Government regulation. The protest of the executive of the Associated Chambers of Commerce draws warning attention to the giav« danger involved in allowing that the State may assume control of private business by fixing the prices of goods, commodities, and services. If Parliament in its end-of-scssion haste ignores this warning it will b* making endless trouble for itself.