I—l3A.

General Result of the Evidence. We have been impressed by the volume and force of the testimony as to the harmful effects of price-cutting upon the manufacturers and distributors of advertised branded goods and ultimately, as was contended, upon the public. The selling of branded goods at abnormally low prices in order to attract customers to buy other goods tends to disorganize and antagonize the retail trade. Shopkeepers in the neighbourhood of price-cutters cease to stock the goods affected, or at any rate cease to push them, with the result that the manufacturer finds his sales falling off. In the end the price-cutters themselves may cease to stock the goods, finding that they are no longer effective as a decoy. It is natural that the manufacturer who owns the brand and bears the expense of national advertising should claim in these circumstances to protect the final conditions of sale of the goods, since the prosperity of his trade is at stake. The retail price fixed for branded goods is not always as low as the price charged for similar qualities of unbranded goods, though no doubt it is sometimes as low or lower." The mere fact that a somewhat higher price may be charged for branded articles than for non-branded articles of the same quality does not, however, in our opinion, condemn the system. For the branded article is sold with such warranty of quality as is implicit in the brand label, while the unbranded article is sold without any guarantee, unless it be that of the retailer. Where the purchaser feels confidence in the judgment of the retailer with regard to quality and in his integrity he may, of course, in some cases, expect to obtain an unbranded article cheaper than a branded article of similar quality. Disadvantages of the System of Price-maintenance. It must be recognized that the price-maintenance system has disadvantages from the point of view of the public, though in our opinion such disadvantages are incidental and are not such as would justify a withdrawal of the right of the manufacturer to sell his goods subject to conditions as regards prices to bê charged on resale. It does not seem to us to be in itself unreasonable or contrary to the public interest for the exceptionally efficient or exceptionally well-placed retailer to be able to obtain branded goods only on condition that he undertakes to observe the uniform price fixed by the manufacturer in the interests of his trade. The charging of uniform prices is a practice commonly pursued by manufacturers who sell their output through their own shops, notwithstanding that overhead costs vary as between different shops. All the considerations to which we have drawn attention are presumably weighed by the manufacturer when deciding whether to enforce uniform retail prices, and it does not appear to us that his interest in this respect diverges from the interest of the public. The Retailers , Margin. We saw little evidence of competition for retailers' custom being carried so far as to result in any considerable or undue widening of retailers' margins as a whole. Wide margins may be given in respect of particular articles, and certain manufacturers give special discounts to retailers who undertake to give window displays. On the other hand, there is a tendency in some trades to discourage undue competition for retailers' favour. Thus the Proprietary Articles Trade Association informed us that they have refused to place on their protected list articles offered with a very high retailor's margin, intended to induce chemists to give a preference to the article, though they added that they would raise no difficulty if the article were of the character of a luxury. Generally the representatives of manufacturing interests who gave evidence before us maintained that the margins allowed to the retailers were not more than adequate for the purpose of enabling the goods to be efficiently distributed. Effect of the System on the Efficiency of the Retail Trade. It is, we suppose, generally agreed that there is room for improvement in the organization of many retail trades, and may be in some areas there are more shops supplying certain classes of goods than are necessary. No doubt the entire abolition of price-maintenance would lead to the disappearance of many, small retail shops, but it does not follow that these would be the least efficient or the least useful. A small shop may be operated on as low a basis of overhead costs as a large shop, and yet by virtue of greater financial resources and of the greater range of goods traded in, the latter may be able by price-cutting to ruin the former. Retail Margin on Branded and XJnbranded Goods. We collected no elaborate data comparing retailers' margins on branded and unbranded goods, but we found that in the trades which we particularly investigated the retailers' margin of profit upon price-maintained goods is generally not higher than it is on similar unbranded goods, and is in many cases considerably lower. In so far as there is effective competition between different brands or between branded and unbranded goods, the possibility of unreasonably large profits being made is presumably diminished. Effect of the System of the Provision of " Service " by Retailers. A further aspect of the price-maintenance system to which we must here refer is the emphasis laid upon the alleged desirability in the public interest of placing competition among retailers on a basis of service instead of price. The word " service " in this connection includes not merely such points as the giving of credit and delivering goods at customers' houses, but also, more widely, the keeping of a comprehensive stock of goods and of a conveniently arranged and situated shop ; the giving of advice to customers who ask for advice ; and " after-sales service," such as the exchanging of goods found to be unsuitable and the effecting of small adjustments. It is claimed that the pricemaintenance system enables enterprising and efficient retailers to serve the community more effectively in all these various ways. On the other hand, it is contended that in many cases the effect is to induce the consumer to accept service which he does not really require, or to make him pay for service which he does not accept. There is much to be said for both sides on this question, but there is nothing so compelling as of itself to lead us to form an adverse opinion on the system of price-maintenance. ■ General Conclusion as to the System of Price-maintenance. Our general conclusion regarding the broad principle of maintained re-sale prices for branded goods is that no sufficient case has been made out for interfering with the right of the manufacturer to sell his goods upon conditions which permit him to have the terms on which such goods shall be resold. We have dealt with some of the disadvantages and drawbacks of the system, and we must not be taken as finding that the prices charged to the public and the margins allowed to the retailer are in all cases reasonable, but we are quite unable to say that the interests of the public would be better served by an alteration of the law which would prevent the fixing of prices of branded goods. Trade Combinations. In connection with this question we have carefully considered the power of bodies, such as the Proprietary Articles Trade Association, which comprise manufacturers producing a very large part of the output of particular goods, together with wholesale and retail distributors. There are two aspects of the activities of such a combination. One is the operation of an effectual boycott against persons who, in breach of their contracts or otherwise, sell at cut prices. The other is the possibility of a ring to raise prices against the public. As to the former aspect, we do not feel that there is ground for interference with the Proprietary Articles Trade Association or other such bodies if they forbid their members to supply persons who have broken their contracts or who have otherwise engaged in price-cutting.

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