PETROL PRICE WAR

Poverty Bay Herald, Volume LX, Issue 18264, 6 December 1933, Page 7

PETROL PRICE WAR

REPORT TO PARLIAMENT MANY DISCLOSURES PROMPT ACTION URGED DANGER OF MONOPOLY (Parliamentary Reporter.) WELLINGTON, this day. Strong doubts about the wisdom of utilising Orders-in-Council under the Board of Trade Act in connection with petrol prices were expressed by a number of members when the House of Representatives considered the Industries and Commerce Committee’s report recommending to the Government for “immediate, urgent, and faVorablo consideration,’’ tho Associated Motors Petrol Company, South Island Motor Union, and New Zealand Farmers’ Union petitions praying for legislation to fix petrol prices so as to prevent unfair competition. The committee had recommended special legislation, or, in the alteraatiVa, ‘.that tho powers under the Board of Trade Act should be invoked. All speakers agreed that there was a'necessity for action. Mr. H. M. Rush worth (C.P., Bay of Islands), while supporting the report in general, expressed grave doubts as to whether the committee’s suggested method of preserving the Motorists' Petrol Company should be by means of fixing minimum prices. He would not suggest alternative methods, but thebe were some, and the fixation of a minimum should not be adopted unless as a last resort. DANGEROUS PRINCIPLE . Mr. W. J. Broadfoot (Coal.. Waitomo), considered that the circumstances called for action, but there should be a fixation of both the maximum and minimum prices. “It is a dangerous principle to tamper with prices,’’ he declared, “but I 'think this country has been pillaged by the oil companies for many years past.’’ Mr. W. J. Poison (Coal., Stratford), a strong advocate for action, presented another angle to a complicated subject.. The Government itself, he said, was interested in securing a large sale of petrol, as it got lOpl revenue from every gallon sold. It should encourage its extensive use because of its effect on the State’s revenue, but cheap petrol was so essential an element in farming costs that this aspect must bo conserved. Mr. H. C. Dickie (Coal., Patca), commenting on the long discussion, remarked that it was interesting to see \vhere members were getting. Some had said that the petrol companies made enormous profits in the past, and a former investigation by the Highways Select Committee placed thoir profits at £2,130,000 annually. Now it appeared that they were not making enough profits, so it was proposed to fix a minimum price. There was an alternative of making petrol distribution a State monopoly. Franco made a public monopoly of tobacco, which was as much used at petrol, an; he was wondering whether it would ! e advisable for the Government to take over “the whole box and dim," though this might be accompaniji by an agitation for more bowsers and jobs for State employees. LITIGATION POSSIBLE Mr. A. D. McLeod, chairman of the industries and Commerce Committee, in reply, stated that an important point which the committee had to consider was how quickly to apply the law. Personally, he had never believed in the Board of Trade Act being .used to take action against concerns such as those under discussion. This Act should operate under OrderimOouncil, but matters of this sort should be thoroughly threshed out in Parliament before a decision was arrived at, for an Order-in-Council should not be used to produce results which might have serious effects on the community. Another point was that- these huge combines were capable of carrying on litigation right to the -Privy Council. The fight in the United States over the proposed dismemberment of the Standard Oil Trust lasted for three years, and the same possibilities faced the Dominion in connection with applying the Board of Tradp Act to the present situation. The committee had left its recommendation open for fear that Parliament would not have time to pass the .necessary legislation this session. It fteftainly should legislate if time permitted.

PRICE UNECONOMIC,

The committee reported:— (1) That the recent progressive fall in prices was due to a combination 'of (lie major oil companies, with the object of crushing Associated Motorist's Petrol Company. (2) That the present selling prices were uneconomic, and were likely to result in destroying competition amongst sellers, thus bringing about a monopoly. (.1). That such monopoly will probably result iu substantially increasing thu prices to consumers. (1). That iu the public interest, the petition should be referred to the Government for immediate and most i favorable consideration, with a recommendation that special legislation should be enacted to control selling prices, or, in the alternative, that the powers provided under the Board : of Trade Act bo invoked for that puiposo. ) Mr. McLeod said that the committee after hearing the evidence, and closely examining the reports and evidence available from Australia, was unaiu--1 mously of the opinion that apart from the Associated Motorists Company, all other petrol companies trading rn New Zealand were working in harmony as far as wholesale prices were concerned, and had been doing so for : at least 12 months past. Committee members were also satisfied that at least one of the major petrol companies, apart from the Associated Motorists, Company, is importing Soviet petrol into New Zealand. COSTS UP; PRICES DOWN. Tile main evidence on behalf of the petitioners, said Mr. McLeod, had been given by Mr. Todd, managing director of the Associated Motorists : Company. Full opportunity had been given for all other petrol companies trading in New Zealand to give evidence, but all had courteously replied, declining to do so. Mr. Todd had claimed' that the advent of his company into the New Zealand trade had , caused a rapid reduction in petrol prices. He had further stated that ! early in February, 1933, when the Government decided to place a further tax of 2d. a gallon on petrol, the major petrol companies had unanimously refused to carry any part of such i:t* creased taxation, stating that their margin of profit would not permit it. It had been amply proved to the committee that since January, 1933, the overseas landed cost of petrol in New Zealand had gone up by at least 2:ld per gallon by reason of the exchange and other causes. However, since the advent of the new' spirit in March, 1933. the wholesale price of petrol in New Zealand to consumers had been reduced by the major petrol companies by at least (id a. gallon, notwithstanding the addition of the landed cost. ADVERTI SING REELSEI) Continuing, Mr. McLeod said that Mr. Todd also complained that the newspapers had been discriminating as to advertising, to the disadvantage of his company and to the advantage of the major petrol companies. Full opportunity had been given for an answer to such complaint. Messrs. Earle, (Dominion), and Blundell (Evening Post) had stated that they resented the imputation that monetary consideration influenced the policy of the Newspaper Proprietors' Association. Mr. Earle, as president of the association, had stated that in Mew Zealand his association followed the rules adopted generally throughout the British Empire, of not permitting the insertion of advertisements by one competitor which reflected on a rival competitor. Mr. Earle, while stating that this rule was not always easy of being carried out, said that the Newspaper Proprietors’ Association had always done its best to have it carried out. Re-examined, Mr. Todd bad submitted evidence that his company had had an advertisement refused by the newspapers, pointing out that a certain brand of petrol had saved the petrol consumers of New Zealand £2,250,000 over a year’s consumption of petrol, while the association had permitted another brand to advertise certain statements which be had claimed in addition to being a reflection on the quality of other petrols, . were not in accordance with fact. EXTERNAL COMBINES The report added that the evidence went to show that re-sellers were detrimentally affected as the result of the petrol war, also that the re-selling points were far beyond the reasonable requirements of the petrol retailing business. While far from being unanimous as to the wisdom of fixing prices generally, said Mr. McLeod, the committee was unanimous that the petrol price fixation should not, be within the coirff&ete power of a trading monopoly. Mr. J. A. Lee, (Labor, Grey Lynn) said that New Zealand was being run by external combines. American organisations .would adopt any tactics that would enable them to obtain a stranglehold on the business of this country. He trusted that the committee’s recommendation would lead to some action being taken by the Government. Mr. A. M. Samuel (Ind., Thames) said the report was one of the most important that had ever been presented to the House. He trusted that the Government would give it the consideration it deserved. He suggested that if the war was won by the "trust,” tile people of New Zealand would have to pay for the whole cost of the operation. He.

contended that the petrol companies’ resources were unlimited, and would be used to squeeze out a competitor. The Government should fix a minimum selling price and perhaps a maximum selling price too. j FIXATION A LAST RESORT Mr. Rushworth said lie was a small shareholder in the Associated Motorists’ Company, and the Farmers’ Union was u much larger shareholder. When the company had been formed it had been pointed out that the other companies would endeavor to eliminate it by undercutting prices, and in reply it had been pointed out that the formation of the company would then have achieved Us object of reducing prices to motorists, and it could close down temporarily. It I was a question whether it was possible for the company to close down tempo- : rarily, and still preserve its existence, 1 blit there was no doubt that it should ibe preserved. He had grave doubts as to whether the method of meeting the situation should be the fixation of rnini- ' ilium prices. He suggested that there , were alternatives, and the fixation of minimum prices should be the last resort. Mr. F, Jones (Lab., Dunedin S.) said that if the petrol companies succeeded in eliminating the new company they would immediately raise the prices. He suggested that the (Internment should take over the control of the importation and distribution of petrol. Mr. A. S. Richards (Lab., Roskill) also supported the committee’s recommendation. THE RETORT ADOPTED Mr. W. E. Parry (Lab., Auckland G.) said he agreed tliat the Government should be culled upon to fix the price of petrol-.

Mr. R. A. Wright (Iml., Wellington Sub.) saiil the Government surely would not be afraid to deal with a combination of companies. Mr. F. Langstoho (I.ab., Waimarino) congratulated the committee on its report, which he characterised as “an impeachment of the Government which had done everything possible to shield and protect oii companies.” Mr. 11. T. Armstrong (Lab., Mmstdlurch K.) said there seemed to be unanimity in the House on the question. He supported ihe view that the Government should take over the importation and distribution of petrol. Mr. A. J. Stall worthy (Ind., Eden) expressed the view that there was necessity for a more searching inquiry. Mr.-M. J. Savage, Loader of the Opposition, replying to this contention, said that the companies had been making huge dividends while the inquiries were being made. He commented on the silence of the petrol companies during the taking of evidence, and said: ‘‘They have been robbing the people and it is about time the Government took action.' Mr. W. Nash (Lab., ITutt) said it was just as unfair to sell below cost as to make an unjust profit. Tlie report was adopted.