SUGAR "TRUST."

Auckland Star, Volume XLIII, Issue 305, 21 December 1912, Page 11

SUGAR "TRUST."

A BREACH OF THE LAW,

MERCHANTS' ASSOCIATION FINED. TOTAL OF £5,000. SECOND CASE DISMISSED, (By Telegraph.—Press Association.) ■ WELLINGTON, Friday. The Chief Justice (Sir Robert Stout) delivered his reserved judgment in the case The King v. the Merchants' Association and others this afternoon. His Honor reviewed the evidence at length and found the following farts t<3 be proved:

1. That the =eaJe s were made to prevent competition in the salr and disposal of sugar. 2. That they were made to enable a commercial trust or association or group I of buyers to pet the control of the dis- i tribution of stgar. | ,3. That they were made so as to prevent I Fairbairn. Wright and Company or other persons from purchasing sugar and giving certain discounts to purchasers "from them. 4. That the defendants were acting in concert or conspiring together to get this j control. 5. That they were made so as to ensure a profit that migbt otherwise not have gone to the members of the trust going to the members of the trust. AGENT AND PRINCIPAL. Having dealt at some length with the relations of the law to modern commerce, tie judcmer.t proceeded. "I propose to refer first to the charge of conspiracy as defined in section 5 of the statute. The : fact that the defendants agreed together j to raise the scales, that it wa« agreed ! that Levin and Company should be treat- i sd as a purchaser for the company alone and as a principal, when in truth" and in fact Levin and Companj' was a mere agent ■ fer the raembere of the association who ' desired to purchase sugar and bound by ' its tariff and by its directions, cannot, in ' my opinion, be disputed. It was contended, however, that this combination was lawful. <uid not an offence under sec- ! tion 5, as the monopoly or control wa3 not pontrary to the public interest. It was , urged that to get a fair price and to pre- j vent wholesale merchants such as Fairb.iirn. Wright, and Company giving larger discounts than the members of the association had sanctioned, was not against the public interest. X HE PUBLIC INTEREST. What is meant, it must be asked, by public interest ♦ Suppose the prices were k?irt up. would this be against the public interest? It was contended that the mere keeping up of a price or the non-reduction of a price to an amount at which merchants could sell sugar would not be an offence under tht statute, and as an authority for this proposition, what is called the coal rend case, decided by the Sigh .Court of the Commonwealth of •Australia, was invoked. I am of opinion that the Court must hold that keeping ap the price of goods or not reducing > them when they could be reduced if there were free competition, is contrary to tha public interest. To sny that a difference of 4 or 4} per cent on goods will not affect prices b not to prove it. The only cvi dence on the subject was that it would affect prices to the consumer, and as the defendants called no evidence to contradict the statement of Mr Fairburn. the Court must assume that no such evidence could have been called. To hold that when the price of articles is lowered by the manufacturer or importer, the consumer will get no benefit if the lowering of price is only a matter of 4 or 5 Der cent if there is free competition, in sales, would be to ignore what is the universal belief of all political economists. The assumption made in our laws is that the benefit of lowering prices goes ultimately to the consumer. This is also the evidence, and, as I have said, it has not been contradicted. If the monopoly or control keep prices up, I am of opinion that the doing k> is contrary to the public interest. SUPPRESSING MONOPOLIES. This Co-nmercial Trusts Act is for the repression of monopolies. Monopolies, therefore, in the supply, demand and price of certain goods—of sugar—are thought to be things that should be repressedThat must mean that they are deemed by the Legislature to be "contrary bo the public interest. , ' Further, if the Sugar Company carries out or arranges to carry out schemes that the Etatute declares to be an offence, such schemes must be deemed to be contrary to the public interest. What, then, was the aim of the defendants in. altering the Bcales? There can. in my opinion, be only one answer. It was to prevent persons who were not members of the Commercial Trust getting goods at the same price as persona who were members of the Commercial Trust. It was to arrange a discount for one class and not for another class, to arrange a discount for a class that would obey a commercial trust, and give another discount to a class that would not obey a commercial trust. Such. Mmduct is, in my opinion, distinctly prohibited by section 3. If it is prohibited ij section 3, it must be assumed that all the acts declared offences under section 3 are act 3 done contrary to the public interest. It is unnecessary, therefore, to reply upon the raising of the price or the. lowering of the price as evidence that the acts done by the Sugar Company and the other defendants were contrary to the public interest. What they conspired to do was to violate the provisions of section 3 ci the statute. 1 am, therefore, of opinion that an offence was committed under section 3. DEFINING AN OFFENCE. Wafi there an offence committed under (d) or (ej section 3 by the Sugar Company? It was contended that it must be proved, before an offence can "be shown to haTe been committed under sections 3 and 4, that the acts done were eoatr'iry to the public interest. I do Sot think so. In dealing with sections 3 and 4 of "the statute, tha fact that in section 5 the- legislature lias inserted the words "-Aguittst the public interest," and tEnit-ted such & condition in sections 3 and 4 is strong evidence, were that necessary, that no such limitation can be put on sections 3 and 4. TO PROTECT TRADE. Another and perba'ps the main, conten'fion was tiuit tie acte done by the fiogar Company were to protect its bade, that is to present the importation of foreign engaTS and to give tihe disflonat arranged for io wholesale mer-fiha-rrts so as to propitiate them and get fcsaa to act as distributors of the Sugar

Company's products and of thr products of no one. else. The way to teat thia argument is to ascertain'what was theimmediate cause or reason for the c6mpany'e action. The answer must be that they gave the discount because tie purchaser was a. member of a commercial trust. Tie ultimate and final end of an actioa is not to be sought for. It is what led rmmed'rately and directly to the act done. The Sugar Company made I their ecaJes and gave their discounts to ■', Levin and Company for the reason that the firm of Levin and Company was a member of a commercial trust. - If the company had not been such a member it would not have got thai discount, and the whole arrangement of the conspiracy had. the giving of such discounts in view. It was also because Fairbairn, Wright and Company were not -members of the cam-mercial trust that the • eo-mpanv raised the scales and made { t impossible lor Fairbairn, Wright and Company to get their discount, and this offence was committed under section 4."-'- -._.-.. NOT FRAUDULENT--PREFERENCE.' It was said .that the Co-urt *6ould look at the reaj aim of tjie Sugar Company and not a mere phase of the question. ><o doubt the Court should, in evorv transaction, try and ascertain w.hat the trath fe, independently of the mode in which the transaction may have been carried out Here all that can be urged is that the Sugar Company did, in fact, prefer a member or members of a commercial trust, but-for an expected reward, namely,, that .these members would not purchase foreign sugars, and would be •the distributor of i-ts sugar. The reason that the discount waa given to Levin and Company and to the ether members was, therefore, tha-t they were -members of a commercial trust. "No membership no discount. -. If this contention were to prevail, that the giving of some reward were to be an excuse for the company's action, then it would have to be held that the company could dictate as its terms the currying "out of the beheste ol a. commercial trust. The Act -would be reduced to inrpatence if this suggestion were listened to. LARGE. PJJKCHASEK'S ADVANTAGE. It -was urged further that there waa nothing wrong in. making scales which gave a large ■ purenaser" an advantage over a. small .purchaser. It may be that the statute does not provide against such a differentiation. Such a differentiation of rates has not been allowed in England, and in the United States, nor in New Zealand, in references to publicutilities, such as the transportation of goods on railways. It may be that such cannot be permitted under this Act. It is* not, however, necessary to consider that question, a3 the raising of the scales was done for a definite purpose, to give a succession to members of a commercial trust which is an offence under section three. It was not a bona fide exercise of any power the company had, and 1 doubt also if fixing the scales, as was done in this case, would not be an offence under section six of the Act. OFFENCES COMMITTED. The offences, therefore, -which I rind, proved, are: —(1) All the defendants are guilty of the offence charged in paragraph 37 of the statement of claim in the first action, being an offence under section 5 of the Act. (21 The Sugar Company is guilty of an offence under section 3 (d> in giving the discounts j given to Levin and Company. Ltd., as I charged in paragraph 31 of the statement of claim in the. first action. (3) The Sugar Company is guilty of the offence under section 4 (c) charged in paragraph 32 of the statement of claim in the first action. (4) The defendants* i other than the Sugar Company, are i guilty of- the offence under section 9 of I the Act charged in paragraph 34 of the statement of claim in the first action. As to th? second action I am of opinion that Levin and Company was not a principal in the transaction of giving discounts to the persons mentioned in paragraph' 28 and 29 of the statement of claim in the second action, and they were not agents c-f the Sugar Company. They were agents of the members to j i whom the discounts were distributed, and ; I 1 read the word "agents' , as members to j afrents of the vendore. I am, therefore, j of opinion that the plaintiff cannot sue-" i oeed in the second action. j FRAMING THE PENALTIES. j Regarding the penalties to be imposed, I am of opinion, looking at the magnitude of the transactions: That every one of the defendants j should be liable to a penalty of £500 for | the offence committed mentioned in the j foregoing paragraph (I). I That for the offence mentioned, under | paragraph (2) the Sugar Company should j be liable to the penalty of £250. . | That for the offence mentioned in para-! graph (3) the Sugar Company should I d« liable to the penalty_of £250. j That for the offence mentioned in | paragraph (4| every one of the defend- | ants save the Sugar Company should be liable to the penalty of £-500. j Judgment, therefore, will be for £I,ooo' against every one of the defendants in i the first action, with costs of issuing ] writs and statement of claim, andpre- - paration, according to the. scale of I £1,000. extra counsel for five days at I £S 8/ per day, £15 15/ for second, tllird, fourth, fifth and six -days of hearing; also, witnesses' expenses and disburseall these costs to be added-.t'o-gether, ! and divided.into.five parts, and every one of the" defendants to pay ojie j parti the cost of hearing to' be paid by; each as on the scale of £1,000. As to the -second action, I give judgment for the defendants, with £8 8/ to every one of the defendants, and any disbursements in that action. TAKEN TO COURT OF APPEAL. After judgment had Deen delivered, Mr. Skerrett applied for—a- stay of proceedings pending the determination of the appeal. The Crown intimated its willingness to be found for the amount of J;he.judgment and costs by January 21: the appellants to undertake to proceed with the appeal at the April sitting of the Court of Appeal. A stay of proceedings was granted on these terms. Mr. Herdman: We claimed an injunction. Your Honor did not mention it. His Honor: That 13 a matter you can move in if you wish. I think it is a matteT for which there is no need,. I I will reserve" the question for an injunction, and you can make the application.