DISTRIBUTORS (LTD.).

Otago Daily Times, Issue 20006, 25 January 1927, Page 13

DISTRIBUTORS (LTD.).

APPEAL TO PRIVY COUNCIL. ALLEGED MONOPOLY. CROWN v. THE MILLING COMBINATION. (From Our Own Correspondent.) LONDON, December 15. The Judicial Committee of the Privy Council has been hearing an appeal from the Court of Appeal of New Zealand arising out of an action by the Crown against a combination of companies in respect of the alleged ■ offences of conspiring to monopolise the supply of flour, etc., under “The Commercial Trusts Act, 1910.” The case was heard before Viscount Haldane, Viscount Finlay, Lord Wrenbury, Lord Darling, and Sir John Wallis. Mr F. H. Maugham, K.C., Mr M. Myers, of the New Zealand Bar, Mr J. H. Stamp, and Mr W. D, Campbell were for the appellants, and the respondents were represented by Sir John Simon, K.C., Mr F. Luxmore, K.C., Mr F. O. Langley, and Miss Joan Clarkson. The appellants were the Crown Milliner Company, Limited, Fleming and Co., , Limited, Atlas Roller Flour and Oatmeal Mills (Evans and Co.), Limited, Wood Brothers, Limited, and Distributors, Limited. The question, upon which the six judges who heard the action and the appeal were equally divided, was whether a combination of flour millers, under which the first four appellant companies and the great majority ol other flour millers in New Zealand concurred in appointing the appellants (Distributors, Limited), to be their sole agent for the sale of their flour and other wheat products, constituted an infringement of the penal provisions of the Commercial Trusts Act, 1910. APPELLANT’S CASE. In the case stated for the appellants, it was mentioned that in New Zealand courts it was contended against the appellants that Aie combination impugned in the action infringed Section 5 of the Act, directly and independently of the other provisions of the Act, as being of “such a nature as to be contrary to the public interest,” and that the combination constructively infringed that section as involving alleged breaches of Section 3 of the Act. It?had, the appellants stated, never been disputed that the combination involved the formation of a “commercial trust,” and the establishment of a “partial monopolv” within the measure of the Act, and the controversy in this case was whether it also involved the element of detriment to the public interest which was essential to an offence under Section 5 of the Act. CO-OPERATIVE SELLING. The combination was stated to have been arranged between May and September, 1922, upon the cesser of the Government control of wheat which had subsisted since 1917, and its object was to stabilise the, flour trade by regulating competition and stardardising . prices, and in particular to put a stop to price war in the flour trade. The combination entered into active operation on October 1, 1922. The central feature of the scheme was co-operative selling on standard terms by a common agent of all the milling firms concerned, on the footing that within a margin of 5 per cent, more or less, and subject to qualifications, the total sales in each month should be allocated between the firms in proportions arrived at mainly by reference to the yolume of their trade during the preceding three years. The appellant company (Distributors, Limited), was registered for the purpose of undertaking the duties of. common agents for that purpose, the primary objects of the company being to buy, sell, deal, and act as agents for the sale of wheat, flour, and other products, milling, and cereals. Upon the registration of Distributors, Limited, each of 'the 40 milling firms participating entered into an agency agreement with the company m identical terms, except that the amount of their respective allocations differed. The appellants denied that the commission payable to the combination had tended to increase the cost of marketing, and said that it had, in fact, operated in the interest of the public by helping to encourage the growing of wheat m New Zealand, and to stabilise not only the milling trade, but the important allied industries of wheat growing and baking, ihe appellants asserted that no unjustifiable or improper increase in the price of flour had been shown to have resulted from the combination. FURTHERING THE PUBLIC POLICY. Mr Myers, in his address for the appellants. as to the finding of the Now Zealand Court of Appeal in favour of the Crown, supported the contention that it was not contrary to the public interest that any class of traders should obtain a reasonable profit on their sales. The Millers Combination in New Zealand, it was argued, tended to insure that the farmers in that country obtained not more than sufficient profit to encourage them to grow wheat and thereby tended to further the public policy of the Dominion of encouraging the growing of wheat. . , . It was explained that it was only ky means of home-grown wheat that cheap supplies of bran and pollard could be secured for the important industries that required those products, including dairying, which was now the most important industry of New Zealand. . , ,’ , The combination, it was pointed out, operated upder the control of the Government and subject to the very stringent provisions of the Board of Irade Act, 1910, under which every member of the combination would’ be liable to heavy fines and imprisonment if the prices which they charged for flour included more than a fair and reasonable commercial profit. the combination, Mr Myers, contended, had prevented a price war, with consequential trade and financial instability and hardship, in the three important trades of wheatgrowing, milling, and bakery. ~ He argued that they had done nothing detrimental to the public interest or to lay themsclvjs open to heavy penalties. CONTRARY TO PUBLIC INTEREST. For the respondents it was stated that the subject-matter of the action was a scheme promoted among the flour-millers of Now Zealand admittedly to monopolise and control in part the supply and price in that Dominion of the products and by-wheat-milling. It was admitted b v the appellants in the Courts below that the putting into operation of the scheme had resulted in the creation of a comivereial trust, -I thin the defiml on of the Act ” The mills comprised in the trust, it was alleged, accounted for roughly 70 per cent, of the output of the mills in New Zealand It was contended that, a monopoly of flour must bo a monopoly or such a nature ns to be contrary to the public interest and that the monopoly and control admitted to exist in this case wore of that nature and involved a prohibition of competition, a limitation of output, an exclusion of selection by the public a fixture of price irrespective of quality and a fixing of price at the dictation of a commerciel trust with regard to a vital commodity of fond , , . , Their Lordships have reserved judgement.