Price of stove

Press, 29 May 1981, Page 16

Price of stove

Sir,—Recently I purchased a new stove. The make and model I chose turned out to be identically priced in the three different establishments that I canvassed. Each establishment expressed an interest in offering a price competitive with another establishment on the basis of a discount for cash or for a trade-in, but each also claimed that their franchise agreements precluded them from competing by simply reducing the price of the new stove. I would appreciate your inquiring to the Commerce Commission as to whether such agreements between retail and wholesale suppliers of stoves are not resale price maintenance agreements as outlined under section 23 (e) of the Commerce Act (1975) and, if so, whether steps are being taken to prohibit this practice as contrary to public interest and section 27 (1) of the Commerce Act.—Yours, etc., JOHN FOUNTAIN,

Senior lecturer in economics. May 15, 1981.

[Mr D. J. Kerr, executive officer, Commerce Commission, replies: “The situation your correspondent describes would appear to be an example of individual resale price maintenance (1.R.P.M.) and as such it is section 28 of the Commerce Act, 1975, which has application. The act does not prohibit I.R.P.M. Rather, it defines two types towards which separate approaches are taken. The first “inflexible” sort is capable of being approved by the Commerce Commission in keeping with the provisions of section 29. In fact, however, none have been since the passing of the act although a number fall within the transitional provisions of section 30 and can, at present, be operated within the law. The second “flexible” sort require merely to be notified to the Commission in terms of section 28 (4). Under this section it is lawful for a supplier to suggest resale prices to his resellers, provided he informs them that they are free to charge other prices without sanctions being applied! The best, thing that your correspondent could do would be to communicate the exact details to the Examiner of Commercial Practices, P.O. Box 10069, Wellington, to enable an investigation to be made.”].