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Ecc: Fifty-First Report —Commercial Agents

Volume 387: debated on Tuesday 22 November 1977

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6.5 p.m.

rose to move, That this House takes note of the Report of the European Communities Committee on (Self-Employed) Commercial Agents (R/3/77). The noble and learned Lord said: My Lords, in moving that this House takes note of the Report on the Directive to co-ordinate the laws of Member States relating to (self-employed) commercial agents, I think it is appropriate that I should confine myself to the question of principle, as to whether it is a proper use of the power to harmonise laws of Member States—a question which was raised, I think with some justification, by the noble Lords, Lord Mottistone and Lord Jacques, in relation to the proposed Directive just debated.

The general power to harmonise the laws of Member States exercisable by Directives is contained in Article 100 of the Treaty of Rome, and the noble Lord, Lord Raglan, has just read out to you what it is. It is to harmonise those laws of Member States which "directly" affect the establishment or functioning of the Common Market. There is, however, a more specific power in Article 57 which enables Directives to be made for co-ordinating

"… provisions laid down in Member States concerning the taking up and pursuit of activities as self-employed persons."

But such Directives can be made only for the purpose of making it easier for them to do this. I shall revert to that a little later. These powers of harmonisation are valuable powers. We have had a whole series of proposed Directives for harmonising company law, for example; for imposing uniform safety standards; for the mutual recognition of qualifications for professions. These are powers which are useful, indeed essential, for the proper development of the Common Market.

But sometimes one has the impression that there are Directives which deal with harmonisation for harmonisation's sake alone. It seems as if some conscientious civil servant in Brussels, not having enough to do, takes it into his head, or is perhaps persuaded by some lobby (for there are lobbies in Brussels) that there is some branch of the law which it would be fun to alter; and having started on that course it is difficult getting him to turn back. I must confess that I have a strong impression that such is the origin of this Directive of which we are, I hope, to take note.

The Directive is concerned with commercial agents, which is a rather vague term, but which is defined as self-employed persons or companies with a capital of under £67,000, who negotiate contracts to supply goods or services on behalf of a named principal. The definition is very vague. It would cover those who are known in this country as manufacturer's agents; probably, I think, travel agents; maybe stockbrokers; maybe those who act as agents for football pools. Who knows! At any rate, in Germany from where the definition originally came, it has been held to be wide enough to extend to an agent who canvasses for pupils for a dancing school.

My Lords, manufacturers' agents provide one method of distribution. There are others. More common are commercial travellers, factors or own subsidiary companies. Whichever of these methods of distribution is used, it forms part of the cost paid by the consumer of the goods. Where people choose to use commercial agents for this purpose, the United Kingdom law enables agent and principal to make what contract they think is most suitable for the particular circumstances of each of them. This Directive will very largely rob them of that freedom. It lays down very detailed standard provisions, many of which are mandatory and must be put into the contract, so that anything which is in conflict with them is void. They must be put in every contract with a commercial agent, and they descend to such details as dates by which commission is to be paid, and the like.

Furthermore—and this is a vital consideration to remember—this Directive is not limited to commercial agents employed in trade and commerce between Member States: it is intended to apply compulsorily to all purely domestic sales. What is the justification for that? For this extension to domestic sales which have nothing to do with trade between Member States, the Commission relies on the proposition that

"trade in goods and the provision of services should always be effected under conditions which are similar to those of a single market".

Some of the Member States have codes dealing with contracts with commercial agents. These vary from country to country according to local conditions. None of them, I am informed, is so detailed or so rigid as those proposed in the Directive. Let me just mention (because I do not propose to go into the details of the Directive) one particular provision on which a lot of emphasis is laid in the Directive and in the Explanatory Memorandum which the Commission has provided. The provision deals with the right to what is called a goodwill indemnity. It is mandatory. It arises when the contract comes to an end, whether it be by notice from the agent or whether it be by notice from the principal; and it is to be paid at a rate of 10 per cent. of the annual remuneration for each year of service up to a maximum of 20 years.

Now, there is nothing in the law of the United Kingdom which prevents the parties making an agreement containing that term if they please and if they think that it is most suitable to their circumstances. But an agent may prefer a higher remuneration when the contract is going on to the possibility of "pie in the sky" a little later. It is, I venture to think, ironical that, in purported

exercise of a power to make it easier to take up and pursue activities as self-employed persons, this Directive says, "Yes, you can, but only upon terms that we think good for you, not those which you yourself may prefer". What is the justification for this, my Lords? It is, I think, summed up in a sentence in the Explanatory Memorandum, which says:

"Basically, the proposal has two objectives. The first is to remove the differences in law which are detrimental to the proper functioning of the Common Market. They affect the conditions of competition and create considerable legal uncertainty. This applies, for example, in relation to the good will indemnity, which is known in some Member States but not in others. It is more expensive for the principal to have an agent in those countries in which the good will indemnity is already compulsory by law, and this operates very much to the economic advantage of principals who are not under an obligation to pay any indemnity after the contract has terminated."

Before I come on to the second objective, I would venture to make some comments, not wholly uncritical, upon that justification for the Directive. True, it is intended to affect the conditions of competition, but by restricting it, which is exactly what is prohibited by Article 85 when it comes to undertakings. The object appears to be to make this method of distribution more expensive—as I say, inevitably at the consumer's expense. But it is doubtful, anyway, whether that object can be achieved by the Directive as a matter of arithmetic. All one has to do to create the goodwill indemnity is to reduce the commission by 10 per cent. The arithmetic is easy in this particular case. Secondly, there are competing ways of distribution and, if we add to the cost of this particular way, there is a danger that we shall force the principal into some other method of distribution. Thirdly, it does not create uniformity, which is apparently what is desired, because, first of all, the Directive sets out only the minimum requirements in favour of the agent. National laws may give them greater benefits than the Directive requires, as, indeed, does the law of France. Finally, it does not apply to the bigger companies, which, since they are not compelled to demand these terms, will be in a better competitive position than the smaller firms which it is desired to protect.

I come, then, to the second objective which is to safeguard or improve the

protection that already exists for commercial agents. Although they are self-employed, most commercial agents are economically in a weak position vis-à-vis their principals. That may be true in Germany, which is the origin of this particular kind of regulatory law, but there is very little evidence that this is true in this country and, in particular, those manufacturers in this country who are seeking outlets in the Common Market are likely to be the comparatively small manufacturers who are by no means certain or sure that they will be in a better economic position than their agents

Finally, may I say a word about the legal uncertainty which it is intended to remove? The Law Commission was invited by the Lord Chancellor to express its views upon this draft Directive from the point of view of principle and from the point of view of drafting. Its report was published after the report of the Select Committee and it is a devastating criticism of the contents and of the draftsmanship of the Directive. As I say, it is adopted from the German code. It does not fit in generally with our legal system—for example, it seeks to put in different periods of limitation, different concepts and measures of damages—nor does it fit into our general law of contract or of agency. I perhaps may echo the noble Lord, Lord Oram, when I say how essential it is that one should keep a consistent and coherent system of law, particularly in these wide fields of contract and of agency.

May I finish by reading a sentence out of the report of the Committee. It comes just at the end:

"The general law of a nation is not something that has come into existence by accident. It arises from the local circumstances, habits and sentiments of the people. Changes in it must be effected only with care and where real need can be demonstrated".

My Lords, in the opinion of the Committee, this Directive has not demonstrated a real need and I regret to say that it has not, in our view, shown that proper care has been taken in drafting it.

Moved, That this House takes note of the Report of the European Communities Committee on (Self-Employed) Commercial Agents (R/3/77) (Fifty-first Report of the last session (HL 267)).— (Lord Diplock.)

6.24 p.m.

My Lords, noble Lords will be grateful for the excellent report of the Select Committee under the chairmanship of the noble and learned Lord, Lord Diplock. I confess that when I settled down to read this report and the Minutes of Evidence I did so without any feelings of pleasurable anticipation; but, in actual fact, I found it extraordinarily interesting and absorbing. In my opinion—and since this is the first day on which I have addressed your Lordships from such an exposed position, it is, indeed, a humble opinion—the report describes the purposes of this proposed Directive in a most lucid manner, justifiably criticises the drafting, rightly questions a number of assertions which seem to lack the support of investigation, and comes to the conclusion that flexibility is preferable to the imposition of rigid standards. The recommendation of the Committee is that this draft Directive raises important questions of policy and principle and should be debated in the House.

I do not propose to concern myself with matters of drafting other than to emphasise the necessity of ensuring that any confusion over the definition of the expression "commercial agents" is thoroughly eliminated in any future Directives on this subject. There is no doubt that the harmonisation of law throughout the Member States must be undertaken where it is demonstrated to be necessary. I quote from the Commission's Explanatory Memorandum:
"To remove the differences in law which are detrimental to the proper functioning of the Common Market…".
Personally I am not persuaded that this has been demonstrated in the matter of commercial agents.

It is interesting to look at the background. The idea of protecting commercial agents originated, as the noble and learned Lord told us, in Germany where it was considered that agents were in a weak position vis-à-vis their principals. Therefore, in 1953, they enacted legislation to help the agents. But Dr. Haumann, secretary of the German Agents Association, said in evidence before the Select Committee:
"We are not in favour of compulsory provisions overall in Germany. We are in favour of freedom of contract. There must be some compulsory provisions in Agency Law but in my opinion there is a little too much in this respect in the EEC draft Directive".
He went on to say:
"In France at one stage there was a situation where principals were not interested in entering into contracts with French Agents, but the protection of French Agents goes much further than the Directive lays down at the moment, so perhaps they are over-protected".
Since harmonisation is being sought by the Commission, it would be reasonable to presume that, if the proposed Directive came into force, French agents would lose some of the protection they now enjoy, German agents would receive more protection, and a completely new approach to agency practice would need to take place in this country. However, I understand that it would not be required that the French should reduce the level of protection. This surely illustrates the Commission's thinking and strongly suggests that the present proposals are only a first step to be followed by the imposition of more rigid rules in the future.

This thinking seems to me to be dangerous. There are several alternative ways of selling goods, and if agency agreements are required by law to be heavily in favour of the agent the principals will tend to employ commercial travellers or to set up a subsidiary company or to use some other means. I wonder whether the members of the Manufacturers' Agents Association in the United Kingdom are wise to be so enthusiastic about the proposals, which could turn out to be against their interests.

There are certainly divergent opinions from those held by the Manufacturers Agents' Association of the United Kingdom. Mr. Michael Meacher, Parliamentary Under-Secretary of State at the Department of Trade, submitted an Explanatory Memorandum to the Select Committee which stated that there was opposition from certain groups who would be affected and a concern about the legislative approach chosen by the Commission which is regarded as removing the flexibility which presently exists. Similar views were expressed in a Memorandum by the Association of British Chambers of Commerce, which concluded that the proposals must retain a greater measure of flexibility in the interests of the commercial community. It went on to say:
"The Commission should be warned against under-estimating the capabilities of agents in the protection of their own interests and should not discourage firms from establishing agencies by reason of the strict rules imposed".
The CBI goes even further in suggesting that the proposed Directive has been prepared without sufficient investigation into the facts, and without sufficient consideration as to whether there is a need for action and, if so, what form of action. It suggests that adoption of the proposals might well be harmful in the United Kingdom. So the guiding principle behind the proposals—that the agent is in a weaker negotiating position than his principals—is strongly questioned. So also is the Commission's justification of the proposals in that they would
"remove a continuing and quite definite inequality of the conditions of competition".
The arguments for disagreeing with these two assertions are cogently set out in the report of the Select Committee. I shall not weary your Lordships by spelling out those arguments, but I should like to touch on the proposal for goodwill indemnity as the noble and learned Lord did just now.

There seems to me to be no reason to quarrel with the idea that an appropriate payment should be made by a principal to an agent who has built up a substantial volume of business which, after the expiration of his agency agreement, will benefit the principal. But the Select Committee takes strong exception to the proposition that it is more expensive for the principal to have an agent in those countries in which the goodwill indemnity is already compulsory by law, and that this operates very much to the economic advantage of principals who are not under such an obligation. As the report points out:
"Obviously, the question whether one principal has a competitive advantage over another depends as much, if not more, on the rates of remuneration which they each pay during the period of the contract, to say nothing of the other terms of the contract".
It is not hard to imagine a particular agent who, having heavy school bills to pay, prefers to receive high remuneration and no goodwill indemnity. If such an arrangement is suitable to both parties, what need is there for legislation to be directed against it? To stipulate that a goodwill indemnity is an essential feature of an agency agreement militates against the flexibility favoured by the Select Committee. There is, after all, no reason why an agent should not negotiate terms which include a goodwill indemnity if he so wishes.

Finally, I trust that, if a Directive on this subject eventuates, it will only apply to future agency agreements and not to those already in existence. To conform with such a Directive would be simpler for most other EEC countries, where agency law is defined by Statute, than for this country, where the legal aspects of the agency relationship are governed by common law. It would need much legislation to adapt our agency practice for future agreements; but I suggest that it would be impossibly disruptive in the case of existing ones.

My Lords, I find myself thoroughly in agreement with the views expressed in the report of the Select Committee, and I am thankful to the Committee members for the clarity of the report. We are all aware of the tremendous amount of work carried out by the Select Committees on the continuous flow of paper from the Commission. I wonder how many people in the country realise how essential this work is, or how many impractical proposals would slip through in the absence of the fine toothcombs which are painstakingly used. I should like to congratulate the noble and learned Lord, Lord Diplock, and his colleagues on producing a report of such high quality—a quality to which we are accustomed from all the EEC Select Committees.

6.35 p.m.

My Lords, Sub-Committee B of your Lordships' Select Committee has co-operated as a junior partner with Sub-Committee E under the chairmanship of the noble and learned Lord, Lord Diplock, in considering the draft Directive of the Council of the European Community purporting to coordinate the laws of Member States relating to self-employed commercial agencies. It is my duty as chairman of Sub-Committee B to support in general terms, and briefly, the Select Committee's report under debate. I have no hesitation at all in doing so and, in particular, in stating my full concurrence with what Lord Diplock has said to your Lordships this afternoon—especially, among many other relevant points, what he has said about the extension of the Directive to domestic transactions.

I do not contest the general proposition that the laws of the Member States of the Community should be harmonised for the better functioning of the Common Market, provided that caution is used and that such harmonisation is based on a correct assessment of the facts and will be beneficial to the conduct of trade within the Market. That the draft Directive is not correctly based on the facts and is not likely to have a beneficial effect is amply shown by the report.

In order to detect the weakness of this Directive, we need not read further than the first paragraph of the report. It is maintained by the Directive that the existing differences in the relevant commercial practice are detrimental to the functioning of the Common Market; but no evidence is adduced to support this view. The Directive makes it clear that its purpose is not only to harmonise the laws of the Member States but to strengthen the position of the commercial agent vis-à-vis his principal by requiring that all Member States should adopt rules which favour the agents. It is in effect a false harmonisation and is more likely to distort the pattern of trade. Moreover, if the second objective is pursued, the first cannot be fairly achieved.

The question then arises as to whether it is desirable to level up the status of the commercial agents. A presumption behind the Commission's proposals is that commercial agents are invariably in a weaker negotiating position than their principals and thus need protection. The Association of British Chambers of Commerce challenges this assertion. The real position appears to be that there is variegated pattern of agencies—in some the negotiating position of the agents is the stronger, in some the weaker—on which the imposition of one body of inflexible legal rules cannot be justified. The report is surely right in asserting that what is needed is a flexibility which will enable the parties to the agency contract to arrange terms which suit their respective needs. There is no doubt that the imposition of inflexible rules will lead to distortions of business.

I was going to quote the last sentence of the report, but Lord Diplock has been before me in doing so. I trust that the legal advisers of the Council will not overlook the principles set out in the sentence which the noble and learned Lord quoted in their otherwise laudable desire to achieve harmonisation of the laws of the Member States. We may share their desire to harmonise but in this instance we can hardly applaud the choice of subject or the methods adopted.

6.38 p.m.

My Lords, for the second time today it falls to me to thank the Chairman of a Sub-Committee of your Lordships' House—in this case it is two Chairmen of two Sub-Committees—for giving the House a careful and helpful lead in examining an EEC Directive. We are all grateful to the noble and learned Lord, Lord Diplock, and the noble Lord, Lord Trevelyan, for what they have had to say this evening, and for the report that they have presented to us. This is my first opportunity to welcome the noble Lord, Lord Cullen of Ashbourne, to the Despatch Box. I warmly do so. During the past two years the noble Lord and I have had one or two constructive exchanges on subjects on which he is an expert more than I, and I am very glad now to have the prospect of continuing exchanges in closer proximity across the Chamber.

I have listened carefully to the points which have been made by the noble and learned Lord, Lord Diplock, and other noble Lords who have spoken. Before I comment on them, it may help if I sketch briefly the history of this proposed Directive. It has quite a long history. The idea of a Directive on this subject goes back to the early years of the Community, and the first draft of the Directive emerged from discussions among the six founder Members before our country became a Member in 1973. After the three new Members had joined they were shown the first draft and invited to discuss it informally with officials of the European Commission. United Kingdom officials, after consulting interested bodies in the country, made those bodies' views (some of which were favourable and others unfavourable) known to the Commission, at a Conference in June 1973. We were subsequently invited about two years later to discuss informally some revisions which the Commission had made to try to take account of our earlier comments. The Commission then proposed to the Council of Ministers the text we have before us today. In accordance with the normal procedure, copies were sent to the European Parliament and the Economic and Social Committee, who are now considering it. There has not yet been any opportunity for discussion of the text by the Nine Member States.

In the absence of such an opportunity, it has been difficult for the Government to form a firm view on the Directive. They have received numerous representations from interested bodies. These have ranged, on the commercial front, from an enthusiastic welcome from associations who have a large number of self-employed manufacturers' selling agents among their membership, to highly critical comment from bodies representing the interests of principals. On the legal front we have received strong, reasoned objections from the Law Commission and the Scottish Law Commission, the Senate and the Faculty of Advocates.

At the same time, we have to recognise that several of our EEC partners have considered it necessary to incorporate within their law some specific provisions about the relationship between commercial agents and their principals. The Law Commission, in their report on the draft Directive, helpfully reproduced the relevant clauses of the German Commercial Code. They appear to cover a good deal of the same ground as the Commission's text, although in some respects in less specific terms. I am told that Belgium, France and Italy have provisions of a similar kind.

The Sub-Committee in the closing sentence of their report—this was quoted earlier—observed that the general law of a nation does not come about by accident, but arises from the local circumstances, habits and sentiments of the people. No doubt those countries who have already legislated about commercial agents had good domestic reasons for doing so. What we have not yet had a chance to explore in a Community forum is how far these domestic reasons are mirrored in other Member countries, to what extent they need to be harmonised, and what benefits it is believed such harmonisation would introduce for intra-Community trade. Until we have done so, I suggest it is right for the Government to keep an open mind on the Directive, but that is not to say that we are indifferent about it.

I recognise that some of the criticisms which have been made in the report and again today have a great deal of force. The Commission's Explanatory Memorandum does not elaborate its assertions that the absence of harmonisation is detrimental to the functions of the Common Market. The problem of assimilating to our system of common law specific provisions based on those in codified systems of law is a general one, not limited to this particular Directive, as the Sub-Committee underline. Legislation based on the Directive would fit rather awkwardly into our existing law of agency. We also need to have regard to its consequences for other parts of our law. The preferential status as creditors which the draft Directive would confer on agents when their principal became bankrupt is one case in point. But I do not think your Lordships would argue that it should be rejected on such grounds alone. The test should be whether there is a need for changes in the balance of advantage and rights within the trading community which such legislation would involve, and its workability in practice.

In this spirit, a number of specific criticisms have been made of the Directive. One of the most important of them concerns the definition of those agencies to which a Directive would apply. The term "commercial agency" is not defined in our law. The Sub-Committee believed that the true intended effect of the Directive was to protect independent commercial agents who are engaged to canvass for orders for the principal's goods or services. That may be so: but the present text certainly does not make that clear. It would seem to apply to many types of agency relationship conditions which would often be inappropriate or unduly cumbersome. Therefore, we shall need to explore with our Community partners over what range of activities we need to be thinking about harmonising.

Certainly the Manufacturers' Agents' Association, and the United Commercial Travellers' Association, which is a section of the Association of Scientific, Technical and Managerial Staffs, have argued strongly that the Directive would benefit independent commercial travellers. They assert that at present principals frequently oblige agents to accept oral undertakings which the latter have difficulty in enforcing, if the principal does not honour them or if, for example, he disputes the commission payable. They would therefore welcome a requirement that such contracts should be in writing. The Associations would also wish to see agents protected against arbitrary termination by the principal without compensation, and assured that principals would provide them with adequate sales support. These objectives are closely akin to some of the provisions of the proposed Directive.

If we are persuaded that the reasons which have led other Member States to legislate domestically on this subject do have repercussions elsewhere which call for some concerted action by the Member countries, then we shall, of course, want to look very closely at how extensive that harmonisation needs to be. Is it necessary to insist, as the present text does, that in all countries there must be separate provision for goodwill indemnity, and compensation for particular responsibilities and restrictions imposed on the agent? In some they have clearly been found to be desirable. In this country, so far, they have not.

I have referred to some of the problems which the Government will need to clarify in discussion with other Member States before reaching a view on them. Many of them have been referred to today by noble Lords in their speeches, and this debate has been useful in focusing our thoughts on the important issues. When discussion of the draft among the Nine will begin, I cannot yet say. The European Parliament and the Economic and Social Committee have first to submit their opinions for consideration by the Council of Ministers. The usual procedure would then, I think, be that the Council would remit the draft to a Working Party of officials from the Member States, which would provide the opportunity to discuss the matters that I have mentioned, and, of course, the detailed wording of the text. At that stage, it will be particularly valuable to have behind us, and with us, the observations which we have heard today from your Lordships, as well as the valuable report to which our attention has been directed.

6.52 p.m.

My Lords, the posture that the Government are taking on the tactical side is rather interesting, as this short debate has brought out. How long is it good tactics if, in the end, this Government would want to impress their view upon their partners in the Community, to have an open mind? The problem is not new. As the noble Lord has said, it was in draft before we joined and, indeed, a draft had been submitted and to some extent revised. I do not know how much it had been revised from the first draft which the then Government saw. The noble Lord gave his explanation and, to begin with, I was a little disturbed, because he gave me the impression that he felt he had to take the views of the Members of the Community, rather than be the advocate of the point of view being expressed in this country. I feel that on purely tactical grounds it would be a very good thing, at the earliest possible moment, to form a view based upon the opinion of the agencies and principals in this country, quite apart from whether or not the same argument would be upheld in connection with Germany where we are told that things are rather different.

Then, at the end, the noble Lord suggested that it was not only the views of the Member States that he wanted to take into account before deciding what line the Government would take, but that two organisations in this country had expressed themselves in agreement with the Directive and felt that the safeguards included in it were things that they wanted. I do not think that uncertainty, if I have judged it even almost aright, ought to be allowed to exist for very long, because, unless there is enough substance in the points we have heard from the noble and learned Lord and from my noble friend to form a view which gives an indication as to how we are likely to react, I feel that uncertainty will affect the effectiveness of our reaction when we come to it. So that what I am urging upon the noble Lord and his colleagues is to consider whether it is a strength or a weakness to maintain for much longer what he called an open mind. It is not new; it has been around for some time. I should have felt that the sooner they decide as to their line when this goes in front of the Ministers, the more effective it will be when it is presented.

It is not a question, my Lords; I am contributing to the debate. I do not know why there is this disturbance when I get to my feet. This is something which ought to be examined. It has been very carefully examined by the noble and learned Lord, and I have formed a view as to the noble Lord's reply. It is very important. The noble Lord may know that I resigned as a Minister on the issue of whether or not we ought to be under the surveillance of a Common Market community of this kind. These are the kind of points that worried me from the first and one anticipated how one's own business would be affected. Now we are there, we have to make the best of it and make it succeed. Despite the noble Lord's impatience with me, I say that in looking after my interests, and those of my colleagues who are likely to be affected by this, the sooner the Government can give the impression that they have made up their mind, the more effective they will be when they want to get it put into operation by getting the Directive altered or amended in some way.

My Lords, if I may, with the leave of the House, respond to the noble Lord, Lord Harmar-Nicholls, I think he will agree that I was not displaying any great agitation at his intervention. But I should have thought that a great deal of what I said in my remarks was an explanation of the tactical position as Her Majesty's Government best see it; that is, that circumstances in this country are different from those in other Member States and we are anxious to have an opportunity, which we have not yet had, to hear the situation as they see it, in order then to be able to decide to what degree harmonisation is required as between our situation and theirs. If it is a question of tactics, then I should have thought that that required at least keeping an open mind until that forum has been assembled in which we can listen and speak, but particularly listen to what they have to say.

6.56 p.m.

My Lords, I should like to express my thanks to noble Lords for the reception which they have given to this report and, indeed, to all noble Lords who have taken the trouble to remain in the Chamber for this debate. May I just make three short comments? The first is that this is a joint report of Sub-Committees B and D, and that my noble friend Lord Trevelyan shares the responsibility for anything that is good in it. I have two more comments. I recognise that there may be some need in some of the EEC countries for a codification of protection for commercial agents. If that is so, it is due to local circumstances, habits and sentiments, to quote the report, and who am I, or who are any of us, to say that they are wrong to seek it; and who are they to say that we are wrong not to do so?

My last comment is this. I have not suggested that there may not be room, because of local circumstances, habits and sentiments, for some alteration in the law about particular kinds of commercial agent in this country. For instance, if there be a need for a written contract, so be it. Let us deal with our problem. But I venture to think that, because there may be some improvements which one requires in this country, that is no reason for a compulsory harmonisation of the law throughout all Member States on a

PERCENTAGE OF INCOME RETAINED AFTER TAX BY A MARRIED MAN WITH TWO DEPENDENT CHILDREN WITH EARNED INCOME OF:—
£
5,00010,00015,00020,00025,000
United Kingdom78·4 (72·6)70·2 (67·1)60·6 (58·5)52·6 (51·1)46·4 (45·1)
USA (Federal tax only)96·9 (91·1)88·7 (83·3)83·5 (79·9)78·8 (76·1)74·6 (72·5)
USA (Federal and state tax)96·9 (91·1)86·5 (81·1)79·7 (76·1)73·5 (70·8)68·1 (66·0)
France97·5 (90·5)91·8 (87·3)87·2 (83·5)83·3 (80·2)81·0 (78·2)
West Germany90·1 (73·9)84·0 (73·5)77·1 (70·1)72·0 (66·7)68·2 (64·0)
Italy88·7 (81·3)81·4 (73·9)77·3 (69·9)74·8 (67·3)72·7 (65·2)
Canada (Federal tax only)95·3 (92·6)87·4 (85·9)82·4 (81·5)78·8 (78·1)75·8 (75·3)
Canada (Federal and Provincial tax)92·6 (90·0)81·1 (79·7)74·0 (73·0)68·9 (68·0)64·8 (64·0)

1. All figures relate to income for the 1977 tax year, except: United Kingdom (1977–78), and France (1976—French tax rates are set in arrears).

2. Figures in brackets include the social security contributions payable by employees.

3. The figures take account of personal allowances and reliefs, minimum expense

subject where local circumstances, habits and sentiments vary and which can have but a minimal effect upon trade and commerce between the Member States.

On Question, Motion agreed to.