COMMERCIAL TRUSTS ACT.

Press, Volume XLVIII, Issue 14523, 27 November 1912, Page 10

COMMERCIAL TRUSTS ACT.

THE ALLEGED SUGAR "RING."

IMPORTANT DISCLOSURES

j (PRESS ASSOCIATION TELEGRAM.) 1 WELLINGTON, November 26. j The hearing of the charges against ; the Wellington Merchants' Association : and others for an alleged breach of the j Commercial Trusts Act was continued before the Chief Justice, Sir Robert I Stout, to-day. ■ INTERESTING CORRESPONDENCE. j Tho Attorney-General, continuing his J address, produced a letter written by | tho secretary of the Merchants' Assoi ciation regarding sugar, stating that j "retailers will be required to sign an

undertaking that they will not re-sell at prices lower than those fixed by tho local Wholesale Association. No member of the New Zealand Association is permitted to give away any portion of the 4. per cent, discount. The business of such retailers as may be nominated by Levin ami Co. will be exclusively for the benefit of the Association." Tho secretary of the Merchants' Association wrote on March 28th. 1911: — "It has been decided not to add to the list already approved by the New Zealand Association any other firms in the North Island, and, as pointed out in my letter to Mr J. H. Cook, tho object of mentioning these firms was to prevent any possibility of business going to Fairbairn, Wright and Co " Other

letters read proved, tho AttorneyGeneral contended, that the nomination forms for firms to get discount wero drawn up by the Sugar Company. On April sth Mr Cock (Nelson) wrote to the secretary of the Merchants' Association as follows Tripe seems to bo under a misconception in regard to tho distribution of extra discount, and Mr Bell says the Association may lawfully act as it proposes, only provided it does not prescribe or in any way attempt to fix the price at which sugar shall be sold by persons who have Dur-ohas-ed through the Association, which, of course, is what the success of the whole arrangement depends on." Mr Herdman read other letters, all of which he contended went to show that vigorous efforts had been mado to forco Fairbairn, Wright and Co. to join tho Merchants' Association. He also read a letter from the general manager of the Trust in Sydney, which, he claimed, showed it was idle for the company to suggest that it was ignorant of the fact that tho Merchants' Association was a commercial trust. THE SUGAR BONUS. Tho Attorney-General said that Fairbairn, Wright and Co., who evidently realised or feared that an attempt was being made to drive them out of tho trade, wrote to the Sugar Company threatening to make trouble unless they wero supplied on the best terms, and, acting on instructions from the general manager of tho Company, tho New Zealand manager simply acknowledged receipt of the letters. In September, as a result of the new scale, two largo grocers in Auckland, who • had been purchasing through Fairbairn, Wright and Co., applied to Levin and Co. to buy through them.

The Attorney-General contended that the internal, correspondence of the

Company showed that they were aware that the bonus was not paid to Levin and Co., for their own use, but for distribution to their customers. Tho retailers allowed to purchase through the Association did not receive tho whole of tho discount, a portion of which went to the Association. In tho Association's balance-sheet this source of income was disguised as "special subscriptions." A "ring" of some 90 persons, said the AttorneyGeneral, "divided the sum of £29,0-8 7s in a period of twelve months in tho; way of discount. Knowing the amount of the discount of the rate they conld draw, the inference was that tho amount of sugar purchased by tho "ring" was £-05,000 worth in a year. In tho same period, Fairbairn, Wright and Co. purchased £126,000 worth. These two totals aggegated £731,000, which it was contended was the total output of the Sugar Company except for special contract supplies for brewers, etc. The Merchants' Association practically got control of the whole output of the Sugar Company. The only buyers they were unable to squeeze "out were Fairbairn, Wright and Co.. and that firm, though they were tho largest individual buyers _ of sugar in the Dominion, purchasing more than £10,000 worth of sugar in a month under the 5 per cent, maximum scale, were unable to earn at most a discount of 2. per cent....whereas the members of the "ring," some of whom purchased about £300 worth in a month, got the full -5 per cent. In the second period purchases decreased. That showed that the "ring" wero gradually squeezing Fairbairn, Wright and Co. out of the sugar trade. If they had been able to do that, they would have been pi a position to dictate their own'price, at least to retailers. THE CROWN'S SUBMISSION. Mr Herdman submitted that the documents, etc., would go to prove that the "ring" existed for influencing prices at any rato, and if they did that the Crown was entitled to judgment to. that extent. The evidence would go to provo that Mr Fairbairn was refused supplies, and that a breach had been committed in so refusing to supply him on favourable terms. iuo evidence would go to provo that either the Colonial Sugar Company committed a breach of tho Act in giving the discounts, or, in the alternative, Levin and Co. committed the breach. The/ Crown had to provo a conspiracy, and they said that the whole of the letters and telegrams went to prove that there was a conspiracy between tho Sugar Company and the Merchants' Association to pay tho 5 per cent, into tho pockets of the merchants. Tho dominant motive of the Sugar Company was to prevent other sugar coming into the country, but that did not necessitate the raising of the scale to such an oxtent. Counsel did not intend to deal with tho allegation of monopoly. If tho other charges were proved then they went to show that defendants conspired to create a monopoly. Ho did not intend to dwell on the question of penalty. Tho breaches of the Act committed by tho Sugar Company and tho Merchants' Association were so - grave as to justify his Honour in im- " posing a heavy penalty. It was submitted that tho penalties might he io inflicted that each payment of discount constituted a separate offence. In addition to tho penalties which his Honour might inflict, he had tho power to grant an injunction to prevent tho defendants from carrying on theso operations in future. If the Crown satisfied his Honour as to the charges, they asked that an injunction be also granted. - E. 'M. Sladden, solicitor in tho employ of Young-and Tripe, said his firm acted for all the defendants except Levin and Co. and the Sugar Company. He prepared tho affidavits of discovery for the Merchants' Association, Bannatyne and Co., and Nathan and Co. Messrs Bell, Gully, Bell and Myers prepared tho affidavit of discovery for Levin and Co. Copies of all the correspondence were sent by him to the Crown Law Office. Mr Herdman said this witness's evidenco was sufficient, under section 15, to allow the printed books to go in as evidence of the correspondence. Mr Skerrett objected to the documents being taken as correct without the proof of the originals, and without more satisfactory proof as against his clients concerning the authenticity of tho documents. In regard to the Colonial Sugar Company, documents, what

evidence was there in them against the Associations he represented? None. His Honour: That is a difficult point. Tlie letters of the Sugar Company cannot bo evidence against you, but that does not touch upon the question of them being permissible. Theso cases were being taken together. Mr Skerrett contended that the evidence could bo admitted against one party, and excluded against another " , , i Mr Myers said he took tho same o_jection for Messrs Levin and Co. His Honour said he would admit the evidence, subject to tho points mentioned being raised later. George Craig, chief clerk in the Customs Department, produced a return compiled by- the Department at Auckland!" of the refined sugar imported there during 1010 and 1911, and the first part of 1-12. Mr Hosking objected on the ground that witness had not prepared the return. V

Mr Ostler asked that the document be admitted under section 15 of the Act.

It was agreed that the papers should be admitted, subject to objection. Returns wero also submitted, showing the importation of raw sugar during tho same period, and the quantity exported, etc. To Mr Skerrett, Mr Craig said these returns showed that the Colonial Sugar Company was tho only importer of raw-sugar, but refined sugar was imported by others as well. Mr Gold, secretary of the Merchants' Association, was called upon to produce tho minute-book of that body. Ho was also called upon to produce tho agreement relating to corn broom manufacture.

Mr Skerrett said he would object to the admission of this latter document.

His-Honour said he would note the point. Mr Hosking said ho would, on behalf of the Sugar Company, object to the admission of documents not relating to them. • Sir John Findlay said that they he'd that theso documents might bo 'mado use of against the Sugar Company. ■Mr Skerrett said ho would also object to tho minute-book so far as it referred to meetings held before the actual incorporation of the Association.

Sir John Findlay said he desired his point settled now, for it would affect his next witness.

His Honour said he would reserve his decision on the motion of admitting the previous minutes till tho morning. The Court adjourned till next morning.