The Evening Star. TUESDAY, DECEMBER 16, 1924. THE FLOURS LUNG CASE.

Evening Star, Issue 18817, 16 December 1924, Page 6

The Evening Star. TUESDAY, DECEMBER 16, 1924. THE FLOURS LUNG CASE.

The judgment given today by Mr Justice Sim in what is known as the Flour-millers' Case will strengthen the popular view that tho Commercial Trusts Act should either be mended or ended. It was introduced somewhat unexpectedly in the 1910 session, and is understood to have been framed by the then Attorney-General. Sir John Findlay, on the lines of English legislation. Parliament followed tho lead of the 'Ward Government obediently but somewhat sceptically for tTio most part, for experience in this and other countries had suggested that when “big business” and tho Law came into collision the former seldom bean away anv pcm.uient marks of tho encounter. There is the outstanding case of tho United States Government and the big Chicago packing trusts. Finally llieir dissolution was announced, but toads circles .no quite satisfied where tho victory really lay, and the consuming public does not, by any means consider itself ns domiciled outside the realms of monopoly. In Mew Zealand the passing of the Actr has made but little impression on the modern trend of business towards amalgamation or the minimising or restriction of competition under gentlemen’s agreements. There have been at very infrequent intervals prosecutions by the Crown under the Act. There have also been Commissions of Inquiry as to whether certain actions in trade of which complaint had been made wero in violation of this seemingly formidable piece of legislation. Practically in every case the finding has been a justification of the trade practices in so far as non-violation of its terms is concerned. Years ago there was the big inquiry into the constitution, aims, and operations of the Merchants’' Association. More recently there was the Commission (over which Mr Justice Sim presided) which inquired into the price of cement and the alleged ring of manufacturers dictating that price, lliat case had in it some features alleged to have been characteristic of the Flour-millers’ Case. One of tho Crown’s statements of claim was that the monopoly and control had led to the closing down of certain flour-mills, including one at Mosgiel, in consideration of an annual payment. In tho cement case it was shown that requirements could bo met with one mill less operating, and that mill was closed down by the decision of tho manufacturers, and compensation was paid to it for keeping idle. The public, on comparing such findings with the wording of such a section as No. 5 of the Act, must wonder what the value can be of such qualified language. Section 6 reads: “ Any person who conspires with any other person to monopolise wholly or partially the demand or supply in New Zealand or any part thereof of any goods, or to control wholly or partially the demand or supply or price in Now Zealand or any part thereof of any goods, is guilty of an offence if such a monopoly or control is of such a nature as to bo contrary to the public interest. Fa err thing depends on the definition of conspire and of “public interest.” The definition is virtually left to the judiciary, and this amounts to their having in part to frame the legislation as well as* to interpret and administer it. This cannot be said to be a fair task to depute to our judges. Parliament should have done its work moro explicitly, conscientiously, and fearlessly. But the probability is that, if tho measure put before it had been more rigid, Parliament would have declined to pass it. In so far as the Act during its twelve yearn’ existence on the Statute Book may have exorcised some deterrent effect, it may have afforded some unascertainablo protection to the public, and that is one of the few arguments adducfble against Its repeal. Apart from that there seems to lie an element of mockery in its retention.

It has, however, j»K> bo remembered that Distributors, Ltd., was not a complete monopoly, for it did not embrace tho three flour-mills in the Auckland district, nor four small mills in tho South Island. Possibly about three-fourths of tho New Zealand output was under its control, and though even partial control (if contrary to the public interest) is sufficient to constitute an offence under the Act, yot tho clement of competition cannot be said to havo been absent, in virtue chiefly of tho important ** free ” mills in Auckland. The existence of possible competition from that source doubtless restrained Distributors, Ltd., from action that could not have been construed otherwise than as against tho public interest—in other words, from, exercising monopoly in the way that resulted from tho dealings of the New Zealand Merchants’ Association and tho Colonial Sugar Refining Company, outstanding as an exception to the usual failure of the Crown in proceedings under this Act, It would bo presumptuous on our port to do anything but agree with tho finding of the learned judge, backed as it is by precedents. All that can be dono is to repeat the belief that ho has had a very unsatisfactory piece of legislation to interpret and administer* It may- b® re-

fiiemhered that in 1919, when the cost of living was a particularly acute matter, the Industries Committee of the House of ■Representatives considered the price of flour and the milling industry, though that -was in tho days of Government control, before tho formation of Distributors, Ltd., which followed on the heels of decontrol. It was recommended by that committee that tho State should establish and operate an up-to-date flour-mill in each island in competition with other privately owned mills, and thus safeguard the consumer against exploitation. Except that this \wonld involve still further increase in the already far excessive capacity of the flour-milling industry, and would bo open to the same objections to which all Stato concerns competing with private enterprise are liable, it might have been preferable to relying on the Commercial Trusts Act for any protection in the matter of price-fixing. Tho Privy Council has decided that a monopoly is not necessarily contrary to the public interest because its object is to preclude competition in tho souse of undersellingamong tho members of the combinations, and by this means to raise and maintain tho price of an article. This decision is a big obstacle to the success of almost any prosecution. There being far too many flour-mills for New Zealand’s needs, tho two courses open to tho millers are to cut prices until tho vanishing point of profits is reached and passed, or to combine and fix prices, which would Necessarily bo at a level that would enable tho out-of-ciato and expensively-run mill to operate at a profit, and would involve excessive profit for tho most efficient mills. There seems point in tho proposal that tho Government, should come into the business and sot the standard, although it might mean the extinction of some of the sunerfluons and obsolete concerns.