Managing the introduction of competition into the Jute industry 1957-63

"Between 1957, in the aftermath of the passing of the 1956 Restrictive Trade Practices Act, and 1963, the date when the Restrictive Trade Practices Court ruled against the agreements operating within the British Jute industry to maintain prices and regulate supply, government and business relationships in the jute industry underwent a fundamental re-organisation. The significance of this re-organisation within the jute industry cannot be over-stated. The new form of competitive market that emerged out of this re-organisation set the framework not only for competition within the domestic market, a framework which it was believed within the industry would seal the fate of the domestic jute industry, but also established a new environment for market competition that was to influence the whole of British industry. This environment was adopted by consecutive British governments across industry until her entry into the Common market in 1972. The case of the jute industry provided an early test for the new political economy emerging within government in relation to domestic market competition and the private sector. It was a political economy which emphasised market competition and enforcement of competition through anti-monopoly legislation over government support for cartelisation and industry organised regulation, through price fixing arrangements, for limiting market competition. It was not one, however, of untrammelled market competition. Rather cartels and price fixing arrangements were replaced by increased market competition within a domestic market protected by external tariff protection. The jute industry therefore provides a useful early indication of the competitive shocks that were to hit manufacturing industry from the 1960s onwards and a historical study of the development and effectiveness of competition policy in Britain. This paper examines the development of the 1963 court case brought by the Board of Trade’s Restrictive Trading Arrangements Office against jute manufacturers in order to examine the impact of the newly introduced competition policy for government-business relationships in this important period for the British economy. It was a period in which increases in market competition derived from the introduction of competition policy which was amongst the most stringent in Western Europe. The following sections of the paper examine first, in section 1, the development of competition policy within Britain. In section 2 the paper examines the development of the case against the jute employers’ ‘gentleman’s agreements’ regulating prices, supply and imports through the government body Jute Control. Section 3 examines the process of dismantling Jute Control and the dismantling of the gentleman’s agreements on Dundee’s jute industry. Finally, the paper concludes that although, as the industry feared, the Restrictive Trade Practices Court found against the jute manufacturers the impact was not in fact to ‘blow the bottom out of jute’. Government’s decision to retain a modified form of Jute Control after 1963 ensured that not only was price competition controlled but Dundee did not see the return of mass unemployment that the industry argued would occur."