FLOUR MILLERS.

Press, Volume LX, Issue 18216, 29 October 1924, Page 10

FLOUR MILLERS.

COMBINE ALLEGED.

STATE INTERVENTION

(PEISS ASSOCIATION* TZLZGIASf.)

DUXEDIN, October 2S

The case In which the Crown elaims a penalty of £SOO from the Crown Milling Company (Dunedin), Fleming and Company (Invereargill'), the Atlas Eoller Flour and Oatmeal Mills (Timaru), Wood Bros. (Christchurch), and Distributors, Lid. (Christchurch), was commenced in the Supreme Court this morning. An injunction was also asked against the first four companies prohibiting the continuation of the employment of Distributor?. Ltd., as the sole selling agent for rlour, bran, and pollard, and from entering into a similar agreement in the future. A further injunction was asked against Distributors. Ltd., prohibiting them from continuing to act as sole selling agent. Mr F. Ij. Adams, Crown Solicitor, with Mr J, B. Callan, prosecuted. Mr S. Solomon, K.C., with Mr W. D. Campbell (Timaru) represented the Crown Milling Company and the Atlai Company; Mr M. Myers, K.C., Wellington, with Mr A. B. Haggitt, represented Distributors Limited: and Mr C. P. Skerrett, R.C., with Mr W. J. Sim, representee! Fleming and Company and Wood Bros. The statement for the Crown set forth that in October, 1922, defendants unlawfully conspired to monopolise the supply of flour, bran, and pollard, contrary to the public interest.

In the statement of defence the creation of a monopoly was denied, or, if a monopoly of control existed it was not contrary to the public interest but was reasonably necessary to stabilise and maintain an important Dominion industiy and secure economical distribution. It was further claimed that their operations were consistent with thO Government's action through the Board of Trade and the Wheat Controller, and alsn that the operation of Distributors, Ltd.. bad the approval throughout of the Government, authorities. Case for the Crown. Mr Adams, in opening, said the flour-milling trade of New Zealand consisted of approximately fifty flourmills. The annual output was 133,000 tons'. The capacity of these mills was three times the Dominion's requirements and yet, instead of keen coinpetition between the mills it was found that the great body had combined and were working together under the agreement referred to in the statement. There were great differences in the size and adequacy of the machinery in the mills, and the circumstances were such that in a. free market it might be expected that the smaller mills would go by the board, the larger ones taking them over. The- agreement between Distributors, Ltd., \and the other defendants gave the company power to deal with the Auckland mills. They would not do this, the Auckland mills being too strong, but by an operating clause they put the Waiwera South mill out of existence.

Mr Adams, proceeding, stated that no mills in Auckland we're associated with Distributors, Ltd., but outside that district it controlled the output of the whole Dominion. In the South Island there were only four small mills not under. Distributors, Ltd. The amount of flour produced by the free mills was 14,050 tons, just one and a half per eent. of the total production. Apart from the Auckland mills, it was alleged that the monopoly was practically complete. Counsel stated that Distributors, Ltd., came into existence in 1922. It was in the conditions existing then that the defendants sought justification for the combine. The Government then wished to relinquish the control of the wheat industry, and announced that there would be no guarantee for next season's wheat. Eesuming after the luncheon adjournment, counsel quoted judgments regarding restraint of trade continuing. The first point he desired to make was that. prices were now fixed by a body which represented the millers alone, and not by a body representing the public; secondly, any competition among millers as to price or quality, the normal incentive to make good quality to expand their trade, was completely removed; and, thirdly, that the output of the millers under the agreement was strictly and absolutely controlled.* The wheat crop for last season was only 4,250,000 bushels, so that no effective encouragement of the wheat trade had been effected. The combine had been in existence for two years, and it would be a necessary part of the Crown case to produce evidence showing its operations and their effect on the public. Questions of quality and brands had been largely responsible for the trouble. The Court was entitled to look on the past actions of the combine and to its possible future, and to consider what injury it had done and the injury it might do. He submitted that

in this combine there were the germs of a good deal ofi trouble. Mr C-allaii then proceeded to call evidence. The First Witness. "William .Josiah Love, Uourmiller, carrving on the Zealaudia mills at L-hristc-iiurch, said lie had Iteen engaged in the llourinilling business for 3-5 years, about J-j of which were in Dunedin. He to familiar with the steps taken by the millers a-s a body in 1H22. Air Bart-ram was appointed secretary in the early stages of Distributors. Ltd. He received circulars from Distributors, Ltd. inviting him to a meeting early in May. 1922. There was considerable cutting in prices, and a circular calling a meeting of flourmillers to consider this matter was received. Witness was present at the meeting in Christchurcii ptesideii over by Mr J. Rennie. at, which 27 millers were in attendance. The flourmillng industry was then in a very bad condition, but it was not hopeless. Various resolutions were passed as to the cutting of prices. References were made in the circular to the Northern Rolling Mills cutting prices. This related to the mill giving 5 per cent, discount, which was a larger discount than was allowed by other millers. In witness's experience there had been periods of price cutting, but he had survived all these periods. The project of a selling agency was gone on with, and witness was on the eom'mittee set up to go int-o the matter. He received a circular on May 30th, 1922, and on June 7tlx a copy of the agreement was received by witness. He understood all the millers received a copy. It was understood from the first that- Mr McDonald was to be the managing director, and that he was to fix the quotas us far as possible on the actual trade done by ench mill during the previous season. "Witness was running; the Zealandia Mlils and was doing 2000 tons per year. At the time of signing be was offered a quota of 1?00 tons, and he <Wined to take it. The allocation was then inerepc« f l to 1500 tons. He pio-ned for rbo tons, although he did not think it was a fair thing. To Mr Solomon: He was not an enthusiastic admirer of Distributors, Ltd., although he had joined up with it. Witness got his proportion of the whole amount dealt with bv Distributors, Ltd. "Evervbodv would drop his nrice if out of Distributors: Ltd. He himself would do a larger business. He had proved it in his experience in Christchurch. Bakers and Supplies. Brigham Cameron Hancock, baker, carrying on business at Riverton for the past three years, said that before Distributors Limited started he had used four different brands of flour. He got these from the agents in Invercargill, and did not often have difficulty in obtaining them. Since Distributors Limited came into operation he got his flour through Distributors Limited's agent in Invercargill. He could never get the same proportion of northern flour after Distributors Limited started as he could before —he meant flour from j Dunedin and Oamaru. He got some, but not so much as he ordered. The quality i of the flour received through Distribu- J tors Limited was patchy. He had endeavoured to get flour direct from Steven and from ]Vlilligan and Bond, but he was always referred back to the I local agent. He could get flour direct j from Fleming's and used to get about two tons a month before Distributors Limited came into operation, but after that he had to take a good deal more of j Fleming's flour than he had ordered. Eoberfc John Cochrane, baker, carrying on business at Dipton for seven years, stated that at present he was using nothing but Fleming's flour, .That had been the case since March last. He used a mixture of brands before that, because Fleming's flour was not too good by itself. He was using Fleming's flour at present because he found it to be of really good quality. From February, 1922, till March, 1923, he experienced, trouble because Fleming's flour was not satisfactory by itself and Distributors Limited would not give him anything else. The "quality of the flour was, in his opinion, the result of the bad season in Otago and Southland. Through the use of inferior flour witness's trade had declined to the extent of 50 loaves per week. At 5.30 p.m. the Court adjourned till 10 o'clock to-morrow morning.

The case is likely to last four days,