Liquor-supply case

Press, 11 July 1979, Page 2

Liquor-supply case

PA Wellington A liquor importer should not be allowed to cut supplies to a Westport-based firm involved in selling iiquor at a cut price, the Commerce Commission was told today. The Westport firm, Bailie Wines and Spirits Ltd, has complained that the importer, a subsidiary of Dalgety New Zealand, Ltd, has refused to supply gin and other spirits to it except On conditions which would greatly push up the price.

Bailie’s case has been taken to the commission by the Examiner of Commercial Practices, and is seen as a test case for cut price liquor, which is now available at several Wellington hotels, as well as South Island hotels. The Examiner told the commission that in March, the importer, Philips and Pike, Ltd, of Wellington, said it would not supply direct to Bailie in Christchurch and Dunedin, but only through the company’s Westport base. Bailie had been forced to

expand its activities from the West Coast after hotels in that area had been bought up by the brewery companies. Bailie worked on lower margins than was traditional for wholesalers, and it had built up a substantial trade with cut price hotels in Dunedin and Christchurch. If supply was restricted to its Westport base, the cost of transport would be greatly increased. The Examiner said other suppliers had also refused to supply to Bailie earlier this year, while Montana Wines (N.Z.), Ltd, and McWilliams Wines (N.Z.), Ltd, had resumed supplies, suppliers in addition to Philips and Pike were still refusing to supply. The Examiner said Philips and Pike claimed that discounting tended to lower the quality or status of a product. The Examiner disagreed, saying he did not believe that the public identified reduced prices with inferior products. The importers also said that United Kingdom suppliers of products such

as gin might cancel their supplies if discounting took place. But cut price liquor had been sold in Dunedin for 15 years, and in Christchurch and Wellington for a year, without affecting this, the Examiner said. He said the importers had asserted that their other customers would reduce purchases if discounting was allowed. No evidence had been supplied to back this assertion, and brands in competition with those supplied by Philips and Pike were also being discounted. Supplying Bailie at places other than Westport could be against the Sale of Liquor Act, the importers had said. The Examiner said he had obtained opinions from several Government agencies, none of which supported this view. The practice imposed by Philips . and Pike was contrary to the public interest because it tended to increase costs, increase prices and limit competition. The commission should rule that the practice be stopped, the Examiner said.