The origins of the Restrictive Trade Practices Act 1956 – a re-interpretation

Abstract

The Restrictive Trade Practices Act of May 1956 laid the basis for the effective abolition of the British cartel system as it had existed since the 1930s. This was achieved through the operation of the Restrictive Practices Court after the Act was passed, rather than being intrinsic to the terms of the Act. The Act was the first piece of competition policy carrying the assumption that restrictive practices were against the public interest unless industrialists could prove otherwise. However, the result of the Act was not to create a paradise of free atomistic competition, but, in the long run, to contribute to the overall tendency of twentieth-century British business towards concentration and oligopoly. Peter Thorneycroft, President of the Board of Trade since 1951, introduced the Act with a flourish. The purpose of the Bill was ‘to secure that the virtues of free enterprise – initiative, adaptability and risk-taking – are not throttled by restrictions imposed by industry upon itself’. But Labour MPs described the Bill as ‘bogus’ and the Labour Party moved that a Second Reading not be given to the Bill. They argued that the Bill was ‘so framed as to encourage the growth of the movement towards actual combines or full monopolies’, and designed ‘to destroy the Monopolies Commission as an effective weapon against the citadel of monopoly capitalism in the trusts and combines’. It will be shown that the Act did indeed, potentially or deliberately, favour the development of large, and specifically transnational, firms.