Commission moves on chemists

Press, 18 June 1986, Page 29

Commission moves on chemists

PA Wellington The Commerce Commission has asked the Chemists’ Guild to change the name of a "price-off" scheme. Words such as “chem-ists-specialling programme” would be more appropriate to describe what the chemists had in mind, said the commission chairman, Mr John Collinge. The commission found, however, that the guild could lawfully continue a national “price-off” scheme under the 1986 Commerce Act provided it did not substantially lessen competition. The commission used an application by the

guild for approval of a national “price-off” scheme to explain the approach to collectivespecialling schemes. Under this scheme, the guild bought goods for members and advertised availability from chemists as “specials.” The commission said that such schemes could, at the same time, both restrict competition and enhance competition. Thus, it could restrict competition among chemists in relation to those goods if they were advertised and sold at a uniform price. On the other hand, specialling programmes were a competitive tool used by chemists in rela-

tion to other distributors, for example supermarkets, of the same goods. Mr Collinge said the act did not place any absolute prohibition upon such schemes and, in fact, that .they were especially exempt from the per se prohibition against collec-tive-pricing agreements. This meant, he said, that these were illegal only if a resulting substantial lessening of competition could be proved. If a scheme was engaged in by, say, a number of smaller concerns to improve their position against larger rivals, it might be positively competitive. If, on the other hand, the effect of the scheme

was collaboration by the parties to keep the level of retail prices high, it was likely to be unlawful as constituting a substantial lessening of competition. The commission said the responsibility was on the trade association conducting the scheme, in this case the Chemists’ Guild, to ensure that the scheme did not fall into the unlawful category. Mr Collinge said the commission had in past years canvassed a number of such schemes, and had generally been satisfied that these were pro-com-petitive in both purpose and effect. However, the commission would con-

tinue to be watchful. The commission found the Chemists’ Guild could lawfully continue a national "price-off” scheme under the 1986 Act provided it did not, in fact, substantially lessen competition. ' Nevertheless, the commission recommended to the guild that it cease to call the scheme a "priceoff” scheme because this Implied that it was recommending to members to adhere to the recommended prices in other circumstances. Words such as “chem-ists-specialling programme,” would be more appropriate to describe what the chemists had in mind, Mr Collinge said.