Grocers Submit Price Inquiry Not Necessary

Press, Volume XCVIII, Issue 29051, 13 November 1959, Page 14

Grocers Submit Price Inquiry Not Necessary

(New Zealand Press Association) WELLINGTON, November 12. Concern that so much time, money and manpower was being expended in an inquiry relating to a retail industry which in standards of efficiency, economy of operation, and of service to the public was second to none was expressed by the secretary of the New Zealand Master Grocers’ Federation (Mr R. M. Barker) today at an inquiry being conducted by the Trade Practices and Prices Commission into margins and prices determined by master grocers’ organisations.

The hearing arises from a report submitted to the commission by the Commissioner of Trade Practices and Prices (Mr H. L. Wise).

The report stated the pricing methods adopted by members of the New Zealand Master Grocers’ Federation and by members of the Auckland, Wellington, Canterbury and Otago Master Grocers’ Associations limited competition in the sale of groceries. Prices set by the federation were generally observed, enabling individual grocers to increase their prices in accordance with higher federation and association-established margins and to feel secure that they would not lose trade as a result, said the report. The report said the associa-

tion’s rules did not provide for enforcement of the prices, but members were approached by the associations when they sold under list prices. “Specials” were also discouraged.” To check the extent to which association prices were adhered to by members, a price check was made, in the four main centres of 78 lines, in 86 shops. This showed that 91 per cent, of the prices were those listed by the association or higher. “These checks indicate that in the four main centres the practice of charging agreed prices is widely observed by master grocers, whether or not they obtain financial advantage from group buying or from the development of self-service,” said the report. Order Requested The commissioner recommended that the commission make an order instructing members of the organisations concerned to stop operating an arrangement between them to sell groceries only at prices agreed upon between them, and to refrain again from operating price-fixing procedures in any similar form. He also asked that the four provincial associations be ordered to refrain again from setting, prescribing or recommending retail margins for incorporation in retail grocery prices. Mr G. S. Orr, counsel assisting the commission, said it appeared to be assumed in some quarters that no evidence was called by counsel assisting the commission and that it was left to the parties engaged in the trade practice concerned to prove that it was not against the public interest. This was not the case. Where the facts on which the commissioner’s report was based were disputed, evidence was called to substantiate them. In the most recent case three witnesses had been called to substantiate the facts in the commissioner’s report. Unfortunately little, if anything, appeared to have been reported of this evidence in the extensive newspaper reports of that case. Mr Orr said it was, of course, on the basis of that evidence and not simply the commissioner’s report that the commission was invited to take the view that the practice was an agreement on arrangements contrary to the public interest in that it prevented or unreasonably reduced or limited competition. Mr Orr said he would call evidence from five investigating officers in confirmation of the commissioner’s present report Evidence from inspectors in other centres would be submitted by affidavit. Mr J. R. Marshall, representing the Wellington Small Shopkeepers’ Association, comprising 300 members, and Mr W. E. Leicester, representing Self Help Co-op., Ltd., and Hill Bros., Ltd. (179 stores), appeared briefly before the commission to say that while their clients were not named as parties to the proceedings, they asked the commission to giye them opportunity to present a case if the commission’s decision should affect them. Report’s “Deficiencies’* Opening his case, Mr Barker said one could not imagine an inquiry being based on a report so deficient in legal authority, more lacking in logic, more totally discriminatory as between certain grocers’ associations and other organisations which issued price guides, and more factually unsound. The report, Mr Barker said, did the commissioner a disservice and was contrary to the high standards of efficiency he had consistently displayed in carrying out his duties. The federation found it difficult to conceive that the inquiry had a basis of substance. It appeared to be not the outcome of a genuine concern on the part of the commissioner or of the commission relating to the pricing procedure adopted by grocers’ organisations but was, in fact, an endeavour to create in the minds of the public, an assurance that its were being closely watched. Food prices had always been.

and always would be, a political football and for this reason, and probably for none other, it was inevitable that, at some stage, the commission would hold a public inquiry into the pricing procedure of the retail grocery industry. The Minister of Industries and Commerce (Mr Holloway) had said when opening the annual conference of the Grocers’ Federation that he had asked the commission to look into the practices of the foodstuffs industry, Mr Barker said.

It was submitted the Minister had no statutory power to request the commission to inquire into any industry. At the most, he could have brought the matter to the notice of the commissioner and such a request, Mr Barker said, would surely place the commission in a most invidious and unenviable position.

It was unreasonable to place a civil servant in a position where, by declining to make the type of report envisaged by Secti n 17 of the Trade Practices Act, he could deny the commission the power to conduct an inquiry into the subject matter of the investigation made by the commissioner.

Mr Barker said it was readily conceded that, at the present time, there was a fairly general pattern of uniformity in prices of many grocery items. If the commissioner’s report was taken at its face value, it seemed reasonable to assume that he would like to see a far greater degree of competition at the level of prices. The competition the commissioner pleaded for was not financially possible, and price-cutting was highly "undesirable in the interests of . the consumer, . the manufacturer and the retailer. Present Price Control

The stage had now been reached where, because virtually every grocery commodity was subject to price control, grocers were being issued with price lists of a type similar to, but in some respects less commendable than, those which the commissioner now alleged were contrary to the public interest. “Surely the commissioner is being hoist with his own petard,” said Mr Barker. The present position, as far as price books were concerned, was one of the commissioner’s own making and the federation felt he could take credit for it rather than blame. “There is no disgrace in a system of orderly marketing which ensures goods and services bein'; made available to the consumers and housewives at prices which are fair to the seller and equally fair b the consumer," Mr Barker said.

Last year, the federation reviewed existing margins and made several important reductions.

“It cannot be sustained that any action taken by this federation in the matter of margins, or of its pricing policy generally, has resulted in an unfair or unwarranted gain to the grocer. We believe that, in actual fact, he has lost ground when compared with other sections of the community, and particularly the wage and salary earners.” Mr Barker will continue his submissions tomorrow morning.