Benefits from Restrictive Agreements: The British Experience

Abstract

The British Restrictive Trade Practices Act, 1956, states, in Section 21, that “a restriction accepted in pursuance of any agreement shall be deemed to be contrary to the public interest unless the Court is satisfied” of one or more of certain specified circumstances. Thus, the onus of refuting the general presumption that restrictions on competition are against the public interest is placed on the parties to a restrictive agreement, and the arguments they may employ (or circumstances they may seek to prove) are stated in the legislation. One such argument or circumstance is given in Section 21 (1) (b): “That the removal of the restriction would deny to the public as purchasers, consumers or users of any goods specific and substantial benefits or advantages enjoyed or likely to be enjoyed by them as such, whether by virtue of the restriction itself or of any arrangements or operations resulting therefrom.” If the restriction passes through this, or any other, “gateway,” the “tailpiece,” or balancing procedure must still be faced, as the Court must be “further satisfied (in any such case) that the restriction is not unreasonable having regard to the balance between those circumstances and any detriment to the public or to persons not parties to the agreement (being purchasers, consumers or users of goods produced or sold by such parties, or persons engaged or seeking to become engaged in the trade or business of selling such goods or of producing or selling similar goods) resulting or likely to result from the operation of the restriction.” Thus, if an agreement, for example, convinces the court that it meets the “specific and substantial benefits or advantages” requirement of 21 (1) (b), it will be found not contrary to the public interest only if it also survives the balancing test in which any public detriments resulting from the agreement may be taken into consideration. These, in brief, are the guide-lines given the Restrictive Practices Court by means of which it performs its obligation to pluck, from the class of all restrictive agreements, those presumably few agreements from which the public derives, on balance, a benefit.