FLOURMILLERS’ CASE.

Southland Times, Issue 19393, 6 November 1924, Page 7

FLOURMILLERS’ CASE.

RESTRAINT OF TRADE ALLEGED

CASE FOR DEFENCE CONCLUDED

YESTERDAY’S PROCEEDINGS.

EVIDENCE FOR THE DEFENCE. CONTROL OF THE INDUSTRY FAVOURED. (Special Reporter.) DUNEDIN, November 5. The Supreme Court case before Mr Justice Sim, in which the Crown is proceeding against Distributors, Ltd. and others under the Commercial Trusts Act for alleged restraint of trade, was continued to-day. Mr F. B. Adams (Crown Prosecutor) and Mr J. B. Callan represented the Crown, the defendant parties -being represented by Messrs S. Solomon, K.C., M. Myers, K.C., and C. P, Skerrett, K.C., Messrs W. D. Campbell, A, N. Haggitt, and J. Sim acting respectively as junior counsel. DISTRIBUTORS’ MANAGER CROSS-EXAMINED. The cross-examination of William George McDonald, formerly Wheat Controller, and later managing director of Distributors, Ltd. was continued by Mr Callan. Mr Callan read an extract from the Invercargill office of Distributors, Ltd. to the Christchurch office, from which he assumed that at the time Fleming’s flour was being pressed in Invercargill. Witness: You would assume that. Mr Callan: The date of that letter is May, 1923. How do you reconcile it with your statement yesterday that your trouble up to September, 1923, was to keep the Southland bakers from using too much of Fleming’s flour ? Witness stated that Fleming’s flour was being pressed on one client in the case mentioned, but held to his previous statement so far as the general position was concerned. Questioned further, witness made the statement that in June, 1923, 62 per cent of the Southland demand was being supplied by the Invercargill mill. Asked to explain a telegram to the Southland office on April 20: “Please push orders Flemings,” witness said that the date was towards the end of the month, and that Fleming’s allotments throughout New Zealand were undersold. Learned counsel read another letter suggesting that the general tendency in regard to Fleming’s flour was not as witness had said. Witness opposed the suggestion. Mr Callan: You have heard these letters urging a concentration upon Fleming’s flour. Can you produce letters asking the Invercargill office to sell less of Fleming’s flour? Witness: I do not know if I could or not; I have not been through the correspondence. Mr Callan: Your opinion is that the trouble at Fleming’s mill rules out the suggestion that the drier or the Grinnell sprinkler were defective. Witness: I suppose so, but I am not an expert. I think that the wheat was at fault. TRANSFERENCE OF SUPPLIES. In answer to further questions by Mr Callan, witness said he knew that Fleming’s Riccarton mill had supplies of northern wheat, but he did not know that it had more than for requirements. He had not heard of a proposition to send some of that wheat to Invercargill, though efforts were made to secure wheat about Ashburton to send south. He did not think any was obtained. It was a commercial proposition to send northern wheat south to tone up the flour. In regard to sending flour south, that was entirely a matter of price. After the price of northern wheat came down, the price of Fleming’s flour did not come down. Under free competition, Fleming’s misfortune would have been somebody else’s opportunity. There would have been better bread, but the rest of New Zealand would have had to pay more for wheat and flour. He could not suggest any circumstances in which it was desirable that the miller’s trade-mark and brand should not be on the bag. Mr Callan asked where it was provided i for in the agreement that millers should, under the arrangement with Distributors, Ltd., be enabled to supply their old customers.

Witness: It is not definitely provided for in this agreement, but it is provided for in other agreements. Witness further stated that it was not likely he would not be able to supply the demands of bakers because lie had given too much of the mills’ product early in the month to his agents. SERIOUS SHORTAGE DENIED. Witness admitted that in certain circumstances an unexpected demand for a particular brand of flour might place bun in difficulties. Mr Callan: You have been in this Court since the beginning of the case, and you hold to the opinion that the trouble in Otago and Southland was not serious ?—I do. We have 150 customers in Southland, and after currycombing the place you produce twelve to give evidence. If Distributors, Ltd. did not exist there would be the same difficulty as to distribution, if an exceptional demand arose, as when Distributors, Ltd. were in existence. Witness had been informed by Mr Rennie that he had made an experiment with Fleming’s flour in Christchurch, and he found that equal quantities of Fleming’s and northern flour made a good baking mixture. At the time, Distributors, Ltd. were sending about 60 per cent of northern flour to Southland. Distributors, Ltd. had between 8000 and 9000 customers, dealing with bakers and storekeepers from Whangarei to Bluff. The reputation of Hudson’s and Crown flour was the very best. WELLINGTON BAKER’S VIEWS. Albert John Clegg, managing director of the Denhard Automatic Baking Company, Wellington, said he had held the position since 1914. The company purchased about 120 tons of flour per month. It was the second largest business of the kind in New Zealand. He had had experience of the conditions under a free market, under Government control, and under Distributors, Ltd. They had used seven brands of flour for baking, and were generally able to get the brands they required. Under Distributors, Ltd. they had had no difficulty in getting the flour they wanted, and, so far as he knew, no one in Wellington had any difficulty. The fact that under Distributors, Ltd. the price of flour had been fixed definitely and for a definite period had helped to stabilise the bread business, and through there being much less cutting than previously, competition had‘resolved itself into a matter of quality. “FIXED PRICE FOR FIXED PERIOD.” Witness went on to say that in 1922 the bakers in Wellington and elsewhere were concerned about the position of the trade. They began to receive wires from the millers down south offering flour at all sorts of ridiculous prices. Witness was deputed to go to Christchurch to interview the millers. At the same time the New Zealand Master Bakers’ Association were in conference. As a result of representations made by bakers the millers were brought together again and Distributors, Ltd., was formed. The bakers were so satisfied with the Government control, that they decided to have a i substitute if possible. Uniformity of the terms of payment was one of the conditions. The bakers in Wellington had tried to meet Distributors, Ltd., half-way, in cases giving up brands they had used for years and Distributors, Ltd., had done their best to meet them. If anything, he thought the quality of Distributors,’ Ltd., flour was a little better than the quality under the old system; it was more regular,

To Mr Adams: Only on about three occasions had witness been asked to forego certain brands of flour by Distributors, Ltd. Even if the Government had not fixed the price, he thought Distributors, Ltd., would help to a great extent, because they would have a fixed price for a fixed period. WELLINGTON MASTER BAKER. Walter Abraham Kellow, master baker of Wellington, over 40 years in business and using about 100 tons a month, was the next witness. He said that before and since the establishment of Distributors, Ltd., he used seven and eight different brands, but he never put more than three brands in the one mixture. For the past two years, the quality had been very equal and the flour had been more regular since Distributors, Ltd., were formed. To Mr Adams: He was satisfied that the idea of Distributors, Ltd., to keep the flour up to the best quality possible, had been carried out. Under free competition, he thought it was the carelessness of millers that resulted in inferior quality flour. To Mr Myers: In the days of free competition, cutting tactics were quite usual. The system of testing that he adopted was rather elaborate. He had found that the baking test was not sufficient. CHRISTCHURCH BAKER’S EXPERIENCE. Frank Hestor Hawker, a member of the baking firm of Stacey and Hawker, Christchurch, said that he had been in the trade for 23 years. The flour produced under Distributors, Ltd., tended to produce a better - loaf than before. He was of the opinion that stable conditions produced good quality bread. Under free competition there were periods of cutting and secret commissions. The baker who got a cut in his flour in those days, did not always give the public the benefit of it. In Christchurch there had been no cause for complaint since Distributors, Ltd., commenced operations. Minor complaints had always been promptly attended to. Before the formation of Distributors, Ltd., he had had difficulty in getting flour he wanted. The flour which he had received from Fleming’s had been obtained during the period of trouble in the mill. He would say that the system of Distributors, Ltd., was advantageous to longterm contracts, such as those in connection with supplies to hospitals. “A NECESSITY AND AN ADVANTAGE H Witness said that he had been aware in July, 1922, that Government control was to cease, and also had information regarding the formation of an agency for the control of the distribution of flour. He and his fellow-bakers in Christchurch regarded the Company as a necessity and an advantage, and nothing had occurred since its formation to change his opinion. He had followed the trend of prices in Australia during the present season and if similar conditions had existed in New Zealand there would have been, in his estimation, a rise of £4 per ton in the price of the flour here. The flour he had received from Distributors, Ltd., had been uniformly even.

Replying to Mr Callan, witness said he had known that the bakers in Southland had complained in reference to quality of Fleming’s flour. He had tested that flour in the proportion of two in five sacks and found it satisfactory. Wood Bros, had also tested Fleming’s flour and had found one out of two samples of good quality. He agreed that it would be an advantage to be in a position to change the brand of flour used in order to negative the variations in quality that occur from time to time in individual brands of flour. THE THREE SYSTEMS. Charles Edwin Boon, baker at Christchurch and President of the New Zealand Master Bakers’ Association, said he had had experience of free competition of Government control and Distributors’, Ltd., arrangements. Free competition tended to variation of price which w r as not in the public interest. Millers frequently, under free competition, quoted different prices to different bakers and these variations were embarrassing to bakers. He would say that cutting in price between bakers was often reflected in depreciation of quality. Witness added that he had found also the necessity for complaint regarding the quality of flour and had on occasions experienced difficulty in securing the brands he desired It was not a particularly serious matter to a baker to be unable to get the brand he wanted always. Since the formation of Distributors, Ltd., he had not known of many complaints in Christchurch in reference to Distributors,’ Ltd., control. Such few as were made were promptly adjusted. It was probable that if Distributors, Ltd., were to go out of existence and free competition prevailed, the change would be reflected in the quality of bread. He had found the quality of flour more regular since Distributors, Ltd., commenced. QUALITY OF THE FLOUR. John S. Robertson, baker at Waimate and formerly of Dunedin, gave evidence as to his satisfaction with Hudson’s and the Crown brands of flour and the evenness of quality which, in his experience, had characterised those brands.

James Thompson, foreman baker of Dunedin, gave it as his opinion that the coming of Distributors, Ltd., had made no difference in the quality of the flour sold. He did not attach much importance to complaints from bakers regarding the quality of flour because he had frequently used flour of which complaints had been made and found it quite satisfactory. Whatever improvement had been noticeable lately in the flour was due to the use of Australian wheat in milling, which would raise the quality of the flour Edward Thompson, foreman baker, corroborated the evidence of the two previous witnesses regarding the conditions of Distributors,’ Ltd., control. Robert Dick, baker of Waikiwi, Invercargill, who had recently given up business, said he had for a number of years used Fleming’s flour. He remembered Distributors, Ltd., coming into existence and since then he had found Fleming’s flour of improved quality, except for the short period in which complaints had been general. At no other time had he had cause to return any of that brand. The flour substituted for that returned had been of good quality. During the period of trouble in Fleming’s mill he had approached Distributors’, Ltd., agent in Invercargill on two occasions and had been supplied with the amount of northern flour he required. His dealings with Distributors, Ltd., had on all occasions been satisfactory.. Answering Mr Callan, he said his business during later years had' not been prosperous. He admitted that his shop had been very elaborately decorated with Fleming’s advertisements, but he had at no time been assisted financially by Fleming’s. The largest amount he had at any time owed Fleming’s was £l4O or £l5O, representing, a month’s supply. His business affairs had been prosperous and private reasons were the cause of his selling out. USED FLEMING’S FLOUR. John Richmond Derby, baker of Invercargill, said he turned out 1700 loaves per week. Prior to Distributors, Ltd., starting he had used Milligan and Bond’s and Meek’s flour, but he had used mostly Fleming’s, which he had found reliable. Since Distributors, Ltd., commenced he was using large quantities of Fleming’s. He would say that the quality of flour generally hpd improved since Distributors, Ltd., commenced. During the period of trouble ip Fleming’s mill, he had returned five sacks which were replaced by five others, which met his requirements. He had no fault to find with Distributors,’ Ltd., control.

Answering Mr Adams, he said that for the last nine months he had been using practically Fleming’s flour only. He had not been a regular attender at meetings of the Bakers’ Association and had never heard any discussions at meetings he had attended. Regarding the quality of Fleming’s flour, his output had not been decreasing during the last two years. CONCLUSION OF EVIDENCE. This closed the case for the defence. His Honour said the most convenient course would be for the Crown to move for judgment, arguing in support such propositions of fact as they considered established and then counsel for defence could reply. The Court will resume to-morrow morning.