Injunction sought against Tasman

Press, 27 October 1982, Page 7

Injunction sought against Tasman

PA Auckland The Newspaper Publishers’ Association is seeking a court injunction against Tasman Pulp and Paper, Ltd, over increases in the cost of newsprint.

The association has asked Mr Justice Barker in the High Court at Auckland for an injunction to restrain Tasman from increasing the cost of newsprint. The hearing, which opened yesterday, is expected to last two davs.

Mr J. S. Henry, Q.C., and Mr B. R. Latimour appeared for the Newspaper Publishers' Association and the newspapers which comprise the N.P.A.

Mr E. W. Thomas, Q.C., and Mr L. L. Stevens appear for Tasman Pulp and Paper, Ltd.

In his opening submissions, Mr Henry said that at issue was the effect of the price freeze regulations on the legal rights and obligations of the newspapers and of Tasman.

The cost of newsprint was of prime importance to the newspapers which bought more than 100,000 tonnes of newsprint annually from Tasman.

The regulations came into effect from June 23, 1982. The ruling price of newsprint at June 22 was $503.63 a tonne.

That cost represented approximately 30 per cent of the production costs for a metropolitan daily newspaper and had a direct and major impact on the cost to the consumer.

The supply of newsprint was governed by a contract negotiated by the N.P.A. and entered into individually by each of the newspapers.

Under the contract the price of newsprint was to rise to $543.63 a tonne for newsprint supplied after October 1, 1982.

That increase would have

a dramatic effect on the economics of all newspapers if it was imposed when the newspapers themselves were subject to the restraints of the regulations and “thereby unable to make an. appropriate compensatory adjustment,” Mr Henry said. Mr Henry said that in 1974 the newspapers had agreed to an increase in the price of newsprint by up to 3 per cent annually. The agreements were to run for 10 years but, in order to ensure the continuing financial stability of Tasman, the N.P.A. from time to time, agreed to price increases of more than 3 per cent. Mr Henry asked his Honour to contrast that with “the hard-nosed” attitude now taken by Tasman. On June 29, the parties agreed that the proposed increase in the cost of newsprint from October could not be implemented, Mr Henry said.

It was not until September 29 that Tasman indicated it intended to charge the increase from October 1. The N.P.A. has submitted that the increase would be illegal and in breach of the price freeze regulations. Mr Michael Horton, the chairman of the N.P.A.’s paper committee, told the Court that the cost of newsprint was a vital economic factor of the industry. Referring to the agreements allowing for an annual increase of 3 per cent in the cost of newsprint, he said, newspapers had agreed to a number of voluntary surcharges to assure the viability of Tasman. In March, 1981, the agreed surcharge was $251.29 a tonne. The April increase raised this to $301.29. Mr Horton said there would have been no prospects of newspapers agreeing to a surcharge to the cost of newsprint if the industry had no right to recover the sur-

charge, and Tasman was well aware of that.

In late 1981 and early 1982, negotiations with Tasman resulted in the 1982 price rise agreements of $5O a tonne effective from April 1 and $4O effective from October 1.

Mr Horton said his own company (the “New Zealand Herald”) was due to recover the $5O increase on the first Monday of the third quarter, but the price freeze regulations came into effect. Mr Horton said that on June 29 when he met Tasman representatives it was agreed that the October $4O increase could not be implemented because of the price freeze regulations. It was also agreed that after the Budget they might discuss a lesser increase but no one party would move unilaterally in the meantime.

Mr Horton said the lesser charge referred to was the Government and import content of the product, which the newspaper industry could recover.

Mr Horton said Tasman did not raise the question of the October increase when the N.P.A. met in September.

The first mention of the $4O increase was “dropped into the conversation,” Mr Horton said, when he met Mr A. G. Fletcher on September 29, to discuss other matters. Mr Horton said the effect was shattering. “He was saying that in two days time the industry would be asked' to pay $4O extra, we, having been under the impression we would not have to pay it.”

Mr Horton said that as chairman of the N.P.A. paper committee he was greatly embarrassed and upset. He said the industry needed a minimum of three months notice of an increase in the price of newsprint because newspapers usually ordered their newsprint quarterly.