IS THERE A MONOPOLY.

Taranaki Daily News, 21 July 1925, Page 9

IS THERE A MONOPOLY.

DOMINION S FLOUR SUPPLY. POLICY OF DISTRIBUTORS, LTD. ALLEGED BREACHES OF ACT. CASE IN APPEAL COURT. • ' By Telegraph—Press Association. Wellington, Last Night. Both divisions of the Appeal Court are engaged in the hearing of an appeal in the flourmilling case heard in Dunedin, in which penalties are sought for alleged breaches of the Commercial Trusts Act, 1910 (relating to monopolies), by the Crown v. The Milling Company, Limited, of Dunedin, flourmillers, Fleming and Company, Ltd., the- Invercargill flourmillers, the Atlas Roller Flour and Oatmeal Mills (Evans and Company), the Timaru flouTmillers, Wood Brothers, Limited, the Christchurch Flourmillers and Distributors, Ltd., of Christchurch, the flourmillers’ agents of which companies are respondents in the present proceedings. The case is, with the sugar case of 1912, the most important proceeding heard in New Zealand under the Commercial Trusts Act. The offence alleged was that respondents had conspired together to monpolise wholly or partially the supply of flour, bran and pollard in New Zealand, and to control its price and supply, such monopoly of control being of mature contrary to the provisions of the Act. Sir Francis Bell applied to have three counsel heard for appellants, saying the Solicitor-General and Mr. Adams were not going to cover the same ground. The court granted the request.

THE CROWN’S CASE. Sir Francis said the Crown’s argument was that such a combination as had been created was ipso facto an offence under section 5 of the Commercial Trusts Act, even if there was no breach of sections 3 and 4. Under the terms of the agreement the millowner sold his output to Distributors, Ltd. at the price which that company fixed. It was also appointed by agreement a del credere agent. The agency covered not only what the millowners manufactured, but also what they imported into New Zealand. (Sir Francis Bell here read the agreement between Distributors, Ltd. and various millowners, also Mr. Myers’ address to the New Zealand Fiourmillers’ Committee on June 21, 1922). The Government had to have regard to the price of bread when it encouraged farmers to grow wheat. It was ridiculous to assume that the fixing of the price of wheat by Distributors, Ltd. had any other object than gaining a profit for the miller. It was alleged that the control exercised by the incorporation in October, 1923, of Distributors, Ltd., for the purpose of acting as sole selling agent for flour, bran and pollard for all such flourmillers as should enter into an agreement to that effect was to the public interest. After such incorporation nearly all the flourmillers in New Zealand entered into this agreement for a period of about six years. “PARTIAL CONTROL.” The Crown contended that the incorporation of Distributors, Ltd. resulted in many bakers being unable to obtain the brands of flour ordered and . only getting an inferior article. Sir William Sim found in favour of respondents, and the Crown was now j appealing against that decision. Sir Francis Bell pointed out that it was possible for people to create a most dangerous monopoly, to work innocently under it, and then, after some years, to exercise it, I Mr. Justice Herdman: It is admitted I that there is a monopoly. | Mr. Skerrett, for respondents: It is I admitted that there is partial control j of the supply of flour. t ‘Sir Francis Bell: We submit that an lex facie agreement constitutes an offence ( under section 5. The thing speaks for jitself. Our first contention invites the J court to construe the agreement as if I the action had been brought just after I the agreement had been signed. Our • second contention is that the question lof whether the contract is or is not I contrary to public interest is a pure I question of law; thirdly, the eases in i the Commonwealth upon which the ' lower court placed reliance do not ap- ' ply; fourthly, decisions on the common ! law rule relating to contracts in rej straint of trade or in relation to com- ■ binations do not afford any guidance to • the interpretation of the New Zealand statute; fifthly, American cases under the Sherman Act are precisely in point, both in the Standard Oil case and the tobacco ease (in America there was an emphatic protest by a minority); sixthly, the argument that the agreement can be defended as being consistent with the attitude of the Government is untenable, for the view of the Government is indicated by this very action.

CONSPIRACY ALLEGED. Mr. Skerrett: We do not admit that the question before the court turns upon the mere construction of the agreement. Sir Francis Bell said the combination did not have the consent of the Government, but may have had that of Mr. McDonald, who was then in charge oi the Board of Trade and afterwards became managing director of Distributors, Ltd. -Mr. Skerrett said it was admitted by the Crown in the court, below that Mr. McDonald's conduct throughout the whole transaction was square and above board. Sir Francis Bell: My seventh point is that many or all bakers may have approved, but this lias no bearing, but if it has then the evidence shows why they did it. Eighthly, the evidence proves that a conspiracy has actually operated, which is contrary to public interest, if the article being monopolised is of such a nature as to be contrary to public interest if monopolised. Here a monopoly must be contrary to public interest, for a monopoly of flour is of such a nature as to be in itself contrary to public interest. Sir Francis Bell said this special combination was contrary to public interest: (I) Because it prohibits all competition; (2) because it prohibits any mil; producing more than a certain quantity in any year; (3) because it provides for a fixed price from all mills irrespective of quality; (4) because it provides that the price shall be fixed by