Decision Reserved In Grocery Inquiry

Press, Volume XCVIII, Issue 29061, 25 November 1959, Page 17

Decision Reserved In Grocery Inquiry

- (New Zeaiana Press Association) • WELLINGTON, November 24. t t at J here seeme <i to be some resentment that, through efficiency and making goods available at a low cost and with standards of service given by few, if any other retailers, grocers had taken profit comparing unfavourably with the average wages paid to male workers, saidJ;he secretary of the Master Giocers Federation (Mr R. M. Barker) to the Trade ; Practices and Prices Commission today. ~ which has been inquiring into : the effect of margins and prices determined by master grocers organisations, heard final submissions today and reserved its decision.

“It seems to have become a matter of concern that by its operations and by its planning the federation has ensured that grocers have obtained a share of the Dominion's prosperity, unfortunately disproportionate to that of other retailers,” said Mr Barker.

For six days the affairs of the federation had been subjected to a most searching inquiry, he said. Its very soul had been laid bare and in the final analysis there was produced a “mouse” in the shape of a somewhat distorted version of action taken about one brand of tea. Throughout the inquiry there had not been proved any one instance where an association had endeavoured to ensure that prices initiated by the association or the federation should be observed. • “The Tea Case” Referring to the tea case, Mr Barker said the packers, along with all other major ones, had indicated a desired retail price, which incorporated the margin of retail profit provided for under the current price order The variety store offered the tea for sale at a price which, had the grocers matched it, would have reduced their amount of profit to one-third of the amount fixed by the price order. The federation sought to make it clear to the packers that they could not have the best of two worlds, said Mr Barker. “In other words they could not reasonably expect to have the support of the retail grocers if a variety of stores was going to sell their tea at 6d a lb less than the retail price named by the packers,” he said.

It was to the federation’s credit that when the position was straightened out it took all possible steps to see that no unfair blame was attached to the packers by affiliated associations. The Commissioner of Trade Practices and Prices had said that harm done at the time was still continuing. If that was so, then one hated to think what the position would have been had the federation not ensured that the packers retained the goodwill of the retail trade. The action of the federation saved the packers from what could nave been a very unfortunate fate, said Mr Barker. The federation had no objection to any store selling the tea, put it stood to reason that, if the margin was reduced by twotnirds to the grocer who wanted to compete with the variety store offering the lower price, n n grocer would prefer to sell other brands being retailed at a price showing that fair and reasonable margin of profit fixed by price order. “Survey Incomplete” Much of the commissioner’s report revolved around the survey made by him of prices charged by a representative cross-section of grocers in the four mam ?® n J res - was of some concern that there were certain weaknesses in the survey. It was not a complete picture. The commissioner had alleged associations took positive steps to prevent pace cutting of association list prices, but there was not one bit of evidence to support that. On the contrary it was said that no pressure whatever was brought to bear on members to adhere to those prices fixed initially by the association. Members were at liberty to sell at whatever price they wished, said Mr Barker.

There had been no suggestion that grocers were not efficient in operation, he said. No evidence whatever was called to show that the trade had abused the freedom given to it in decontrol, said Mr Barker. The question of whether or not the same prices generally were observed by the trade was of, little significance or value unless it could be shown that, through that general observance, the grocer had achieved an unfair reward. He attached some significance to the question of margins because there seemed a high degree of inconsistency if on the one hand increases were granted and then on the other hand they were not taken advantage of. \ When he had been asked whether grocers would prefer price control or no price guides, he replied that price control would be preferred. That attitude had been endorsed by members of the federation. Convenience of Guides “Could it reasonably be suggested that a retail trade, which is subject to greater vigilance from price control than any other, a trade which has had to battle and prove a conclusive case before any relief has been granted in the matter of margins, would express a willingness to revert to full-scale price control if increased profit margins were its goal,” said Mr Barker. Price guides were a convenience to the grocer and whether they were made possible by a fullscale reversion to price control or a continuance of the existing practice did not matter very much. The important thing was that grocers had maximum (in the case of price control) or recommended (in the case of decontrolled lines) prices available to them. Fixing of Margins Counsel assisting the commission, Mr G. S. Orr, said the evidence showed that the opinions of the commissioner were justified Reflections had been made on, the integrity and sincerity of the commissioner, and he hoped they would pe withdrawn. Margins of decontrolled grocery lines were generally determined by the annual conference of the federation or by the executive between conferences. These margins were applied by the four associations.

There was substantial adherence to prices in the price guide. Test checks showed that almost 84 per cent, of prices charged by association grocers conformed with the price guide. The federation had argued that the mark-ups were only a reasonable return for a reasonably efficient grocer, and that many grocers lacking previous experience found the guide convenient. Yet the federation conceded that pressure was brought on members to ensure they charged the maximum prices for Governmentcontrolled lines. Mr Orr said manufacturercontrolled lines were in two classes. In one small classs there was a contractual relationship with the retailer. In the other, manufacturers set a price they could not legally enforce. Evidence clearly showed that providing the mark-up conformed with that set by the federation, that body would do all it could to see that prices were maintained. There was no point in a manufacturer consulting the federation and agreeing on a mark-up unless it was to be adhered to, said Mr OrfMr Orr said price guides were substantially adhered to because this was the clear federation policy. • Mr Orr said that far from the commission having no jurisdiction over the practices, they were matters most properly of concern because they were part of an arrangement between members of-the association. Mr Orr said grocers had enjoyed some years of buoyant trading with, at least, satisfactory net returns. It was clearly open to the commission to decide that free and open competition in the trade was in the public interest.