SALE OF SWISS WATCHES

Southland Times, Issue 25546, 14 December 1944, Page 4

SALE OF SWISS WATCHES

Firm Charged With Profiteering PENALTY OF £5OO ON EACH INFORMATION

(P.A.) AUCKLAND, December 13. Fines totalling £lO5O were imposed upon the firm of New Zealand Distributors Ltd. (Mr North and Mr Winstone) when a plea of guilty was entered to a series of six charges, including two alleging profiteering on the sale of Swiss watches. The prosecutions, which were heard before Mr F. H. Levien, S.M., were conducted by Mr Cleal on behalf of the Price Tribunal. The hearing of four of the charges was adjourned from last Friday, when pleas of not guilty were entered. Opening his case today, Mr Cleal said the defendant had now entered pleas of guilty to all six charges. Two related to the sale of watches at an unreasonably high price, one referred to the issue of a document stating that the price had been approved by the Price Tribunal when this was not the case, one related to the sale of prohibited goods, watches, without an approved price being obtained and two concerned the sale of corn caps at a price in excess of that charged in 1939. “New Zealand Distributors Ltd. is a private company with a capital of £lO,OOO in £1 shares,” said Mr Cleal. “I have been instructed to say that in the opinion of the tribunal this is the most serious case of glaring breaches of the Price Control Regulations ever to come under its notice, and I have been requested to ask for the imposition of substantial penalties.” MENTION OF GUARANTEES The first and most serious offences were two profiteering charges that arose out of the sale of three consignments of 430 Swiss watches, imported by the company in March, April and May. An investigation of the sales to the end of May showed that 209 watches had been sold, representing an average mark-up on the landed cost of well over 100 per cent. Actually, it should not be more than 40 per cent. Guarantees had been mentioned to support the high mark-up, but the evidence already given indicated that this was an afterthought and the guarantees were forwarded by the defendant company as much as two months after the sales had taken place. Referring to the charge of selling prohibited goods, Mr Cleal said that a prohibition, which took effect last April, prohibited the sale of watches until the price had been approved by the Tribunal. The defendant company had never applied for an approved price, although a considerable quantity of watches was sold. The defendant’s practice had been to notify its retail customers of the Price Tribunal's retail selling price, whereas no approval had been given. This was considered a serious offence because the public would possibly pay more for goods than it should and because it made the retailers unwitting parties to an offence. Explaining the corn caps charges, Mr Cleal said that the firm’s 1939 price had been 9/6, but the defendant had sold them since May last at 10/6. It was obvious from the number of informations laid that the Price Tribunal had spread its net exceedingly wide, said Mr North. Fourteen charges previously brought had all been dismissed, but the defendant had made no claim for costs against the department. The reason that the pleas had been changed should be placed before the court, counsel continued. On the profiteering charges the defence had believed that it would be able to establish that the watches mentioned in the informations were part of a consignment purchased in July, 1942. It had since transpired, however, that the watches were not part of this consignment and the plea was accordingly changed. REPLACEMENT COSTS It was a common warehousemen’s practice that all prices were adjusted on replacement costs, counsel went on. The Crown’s refusal to accept this contention cut right across the whole framework of commercial practice. The Crown’s insistence that the unfortunate retailer should sell at cost, plus an approved margin, with no regard for replacement cost had resulted in the same article being sold at widely differing rates, thus leading to commercial

chaos. In 1942 watches were in great scarcity and local supplies were bought up, often at high prices. These locallybought watches were placed in a box and tagged, but when the firm had to shift its premises to make room for the American authorities the stock became mixed with new importations. The prices for the locally-bought watches were high, but the profit was a proper one, being as low as 26 per cent. Pleading for a low penalty, counsel said there was no pronounced tendency to profiteering on the part of firms in this country such as might require a deterrent. It was difficult to assess penalties, said the magistrate. There was little guidance available, but it appeared that the maximum penalties should be reserved for cases where profiteering was rife. In this case, the number of watches handled had not been great. On each of the charges involving profiteering a fine of £5OO was imposed. The penalty on the charge of issuing a document stating that the price had' been approved was fixed at £5. For selling prohibited goods the defendant was fined £25 and on each of the charges of selling corn caps at excessive rates a fine of £lO was imposed, making a total of £lO5O. The defendant was also ordered to pay all Court costs and solicitor’s fees of £3/3/-.