Cordial Group Told To End Agreement

Press, Volume XCVIII, Issue 29067, 2 December 1959, Page 12

Cordial Group Told To End Agreement

(New Zealand Press Association)

WELLINGTON, December 1. The Trade Practices and Prices Commission today ordered the Wellington carbonated water and cordial trade group of the Wellington Manufacturers’ Association to discontinue the agreement or arrangement among members of the association as to the sale of aerated waters. In a reserved decision the commission also told the association not to revive or renew the agreement.

The commission said it had "no hesitation in deciding the agreement was contrary to the public interest in that it prevented or unreasonably reduced or limited competition in the sale of class o( goods manufactured by the members of the association. The commission added: “Each party to the arrangement is sufficiently experienced and competent to assess market conditions, and each one of them should be free to fix the price of its product in accordance with its own judgment of the factors likely to affect its business.” Counsel were invited by the commission to submit an agreed draft within 14 days. The members of the group are: Phoenix Aerated Water Company, Ltd., Wellington; Star Aerated Water Company, Petone; Thompson, Lewis and Company, Ltd., Wellington; Lester’s Cordials, Ltd., Levin; and O’Connor’s Cordials, Ltd., Levin. Since the inquiry began on October 7, Lester’s and O’Connor’s have amalgamated, leaving four members involved in the inquiry. The commission which conducted the hearing comprises Messrs S. T. Barnett (chairman), R. D. Christie, and F. F. Simmons.

Counsel were Mr H. H. Taylor, representing the whole group, Mr W. E. Leicester, an ' individual company, and Mr G. S. Orr, the commission. Terms of Agreement The commission said that the terms of the agreement or arrangement among the members of the association were adequately covered in the words of the secretary of the group:— “Members of the trade group agree to consult together from time to time to approve recommended ex-factory and retail prices for aerated waters for sale

in Wellington, Hutt Valley, and environs. Retail prices agreed upon are suggested prices only, and no steps are taken on a group or agreed individual basis to enforce them with retailers.” The commission said it was accepted that the group had no separate constitution or rules, and that there were two other members—the Coca Cola Export Corporation and Schweppes, Australia, Pty. Ltd—which were not parties to the price agreement and took no part in discussions or decision on prices.

“Any change in price requires the unanimous consent at all parties to the agreement and, if there is no such unanimity, then no change in price is made,” the commission said. “The parties to the agreement suggest to their retail customers the prices that they should charge for the various products, but that aspect of the group’s operations is not within the ambit of this inquiry. “At the hearing there was no dispute that there was and is an agreement or arrangement contemplated within the terms of section 19 of the Trade Practices Act. The only point that was contested was whether such agreement or arrangment wps contrary to the public interest. Commissioner's Argument

“The commissioner contends that the agreement or arrangement among the five members of the association concerned is contrary to the public interest only in so far as ‘the effect of the practice is ... to prevent—or unreasonably reduce —or limit competition in the . . . sale,’ etc., section 20 1 (o), and that in the result the public interest is injured.”

The decision adds: The questions to be answered by the commission hinges on the word ‘unreasonable.’ That the firms linked in the agreement have eliminated competition among themselves as to prices is not disputed, and it surely cannot be gainsaid on the face of it that that is an unreasonable restraint upon competition. ‘‘lt remains, we think, to consider the submissions made in amelioration of this seemingly clear answer to the commissioner’s contention that the arrangement is contrary to the public interest.” Submissions The commission summarised submissions made by the respondents counsel.

These submissions follow: (1) There are two firms (Coca Cola and Schweppes) manufacturing similar products which are members of the association but which do not participate in the pricing agreement Hence it was argued there is active competition. (2) The sale of “soft drinks” is shared by the products of the members of the association and by mixtures made into “soft drinks” sold in “soda fountains” and thus the members of the association are in competition for the saip of their wares. (3) The individual members of the group were in competition with one another in advertising, delivery, and sales service and supply of plant to retailers. The commission said it thought none of these submissions was of any avail to the respondents. No attempt was made to support any of their contentions by evidence and no information was given as to comparative prices. “As to competition among members of the group in services to public and retailers, nothing is known to the commission other than that counsel said there was some form of competition,” it adds.

Thus, said the decision, the commission was left with the certain knowledge that four companies which manufactured assorted flavoured aerated waters had entered into and abided by an agreement to sell their product at the same price, and those companies were the only makers of such drinks within a certain territory. The commission said the records of the transactions of the group put in at the inquiry disclosed that not always did all the members of the group think an advance in price was necessary even if the dissentient members concurred.