Commission Rules Against Booksellers’ Agreement

Press, Volume C, Issue 29682, 28 November 1961, Page 8

Commission Rules Against Booksellers’ Agreement

(N.Z. Prtst Association)

WELLINGTON, November 27. The Trade Practices and Prices Commission has decided that the Associated Booksellers’ of New Zealand’s agreement on book prices and discounts is a trade practice contrary to the public interest. In its decision released today, the commission granted an application by the acting Commissioner of Trade Practices and Prices for an order compelling the association to discontinue the practice.

The commission has invited counsel to submit an agreed draft order within 14 days. The commission comprised Mr S. T. Barnett (chairman), Mr R. D. Christie and Mr F. F. Simmons. Mr W. Guy Smith represented the Associated Booksellers of New Zealand and Mr R. C. Savage was counsel assisting the commission. The commission said: "It is clear as crystal that the rules of the association and the trade practice thereunder have resulted in virtually a total elimination of price and discount competition. ‘‘lt is not said that competition is entirely prevented. What is said is, that as to SO per cent, of the books sold in New Zealand, there is a very high degree of adherence to rules that require members to abide by price and discount schedules, conclusively fixed. "Ne Fetters'* "That, as the commission understands the Act; is an ‘unreasonable’ reduction or limiting of competition. The law is obviously devised in the belief that there is a singular benefit to the public that there be no fetters upon free competition. ‘‘lt seeks to remove impedi. ments which lie upon competition and create conditions in which it can flourish. Iti this case competition is nearly squeezed out altogether, not merely by the high proportion of sales in the hands of members of the association but in -the total range of books available to the public.” Under the rules of the association members agree to observe the current price schedules for books and the current discount schedules they agree to charge "postage extra” on books and magazines supplied through the poet and to observe the stipulated conditions relating to "sales.” .. ; The commission said the association prepared and issued a schedule to its members which fixed the retail price of an imported book according to the publiahed price of that book and also the discount that might be allowed off the publiahed price. Every person (except those getting discounts) paid the same price for the same book sold anywhere in New Zealand by a member of the association. ‘‘Nothing New” The commission commented: “There is nothing new or sinister in this arrangement. It is based on a scheme tentatively begun in Britain 20. years ago (the Net Book Agreement) which gradually became the accepted normal trade practice. The scheme had as its central purpose die security and stability of book publishing and distribution. It operated in New Zealand long before the Trade Practices Act was contemplated.” The commission said the facts in the Trade Practices Commissioner’s report were undisputed. Its decision said: “As Mr Smith for the association put it—the commissioner depended on one argument—‘that the Associated Booksellers have agreed upon uniform discounts, upon uniform prices, and that competition in the sale of books is unreasonably reduced.' “That, said Mr Smith, ‘is the starting point', as it. is. Indeed, at the commission believes, it is the beginning and the end of the argument.** The commiSUon said there was a wealth of evidence and argument put forward, directed to support a submission that what the book trade was doing wm in the public interest as well as in the interest of the trade, and that it would be dangerous to the public to upset this practice. “Mr Smith sought th Induce the commission to read into section 19(1) of the Trade Practices Act something which would give the commission a substantial, discretion to determine where the public interest lies. This section reads:—

“. . . ‘Where after inquiry . . . the commission is of the opinion that the continuance and repetition of the trade practice would be contrary to the public interest, the commission may make an order. “Success for Mr Smith lies in the interpretation of the liberty given the commission by the words ‘may make an order.’ “In the first place the commission is told plainly enough in section 20 what is against the public interest. In this ease no attempt was made to show that the practice was not a statutory affront to the public interest as propounded in section 20. “All the evidence and legal argument on behalf of the association were brought to bear to show that, if not innocuous, there were positive advantages in the practices of the association which outweighted the statutory conception of the hurt done the public interest.” The commission’s duty was to decide whether or not there had been an unreasonable reduction of or limitation put upon competition. Gave Stability The kernel of the association’s case was that the practice gave stability to the bookselling trade and maintained the confidence of its members and • of the public who could buy any book in any shop at the same price, It was claimed that if this practice was brought to an end undercutting would compel booksellers to concentrate on sure sellers and

“good” books would become more difficult to buy. The commission could not say whether or not this would happen. “It could be so,” the decision said. “But it could be quite otherwise.” The commission could not resolve the question before it by speculation on the consequences. The commission commented later in the decision that it did not believe that booksellers had any decisive or particular influence on the book - buying propensities and reading habits of New Zealanders. If the booksellers did not have books in stock the people would find other ways of getting them. The commission had formed the impression that, operating under the rules of the association, bookselling was not a risky occupation and an enterprising and competent person could make a satisfactory income. There was no suggestion that prices had been fixed at an undue level. If profit margins were high, other shopkeepers would stock books but they did not. However, the reasonableness or otherwise of prices had no bearing on the question of the legality of the agreement or arrangement. The commission found that the whole purpose of the agreement or arrangement between booksellers was to reduce competition to the vanishing point and it had been effective in doing so. Consequently the commissioner was entitled to the order sought and the commission so ordered.