A PROFITEERING CASE

Dominion, Volume 13, Issue 257, 24 July 1920, Page 9

A PROFITEERING CASE

' ANDEKSON AND' SONS PINED £10. Reserved judgment was delivered in the Magistrate's Court yesterday morning by, Mr. E. Page, S.M., in,the.case brought by the Board of Trade against David Anderson aud Sons, the board alleging that defendants sold a 251b. bag of flour at an unreasonably high price, namely, 7s. 6a. Tho Magistrate said ,that tho price of a hag of flour landed in the defendant's Btoro was 4s.' 4d.j and' the selling price represented a gross profit of 68 por cent, and 41 per cent, on the amount of the turnover. Other Wellington grocers charged from ss. 9d. to 6s. per bag. A grocery business returning a gross profit of 23 per cent, to 25 per cent. - on the turnover would, under normal circumstances, be considered satisfactory. Flour was turned over many times in the course of the year, and the cost of handling It was estimated by, the defendants at not more than 20 per cent, of the selling--price. Moreover, tho risk of loss or deterioration wa3 not great. Ho'did not think, therefore, that the amount added to the cost of the flour should bo greater than tho averago amount that need be added over the wljole business,- but in the present oase tile amount added considerably exceeded that average,, For-some years tho defendants' business had not been profitable, aud it had been contended on behalf of the prosecution that if it was shown that a singlo artiole had been sold nt an unreasonably'high price, the factthat other goods had been sold at a loss, or that tho businoss had been run at a loss, was not an answer to tlie charge, and was only relevant to tlie question of penalty. The Magistrate said he agreed with that proposition, and held that once it had been shown that any article had been sold at an Unreasonable price -the caso for tho prosecution had been estanlished.

It appeared to him, however, that tho question iu respect of each article should be, considered in relation to tho genera] business. Thus, if it wore shown that for certain reasons tho general expenses of a business were above the average, tho fact should be relevant to tho question of whether the prico charged for,a particular article was unreasonably high, or if tho goods were liable to dopreeiato in value that fact was to be , taken'into consideration. But if in any easu the informant snowed tnat tho price chargcd was'substantially greater than that usually deem-' cd to - be a satisfactory price, a prima facie caso would be established and tho onus would bo thrown upon defendant to show that that prico was justified. Although a business as a whole might be unprofitable a breach of the Act might still be established, if tho price was found to,bo unreasonably high when the wtole of the circumstances was taken into account. .

Tne Magistrate said ho did not agree witli defendant's counsel that if the defondants' operations worn resulting in a loss, they were justified in charging any price they chose for any article, but in Buch a business the proper course would be to make a general increase over the whole business to return a reasonable profit. The amount added by defendants' represented an increase of 68 per cent, on the invoice price, as against 32 per cent and 39 per cent, added by other grocers, and it seemed to him that notwithstanding the position of defendants' business the pqce charged was unreasonably high and a tonviotion should therefore bo recorded. There were some special features in regard' to tho case, for in addition to the fact that the business was not a very profitable one, the defendants flan expected a rise in the prico of flour, una had, in fact, been advisod that a rise hud taken placo. That information vma premature, but it led thorn to calculate thou- retail prico upon the new figures given. The fixing of the retail price at 'Is, ml. was not part of a plan to advance ihe prices generally, but was due to the defendants' failure to peruso the iuvoico lor the flour'. The case did not appear to be one for a largo penalty. The firm was fined £10, and ordered to pay costs. Notice of appeal was given, *nd security was fixed at £10 10s. At tho hearing Mr. J. i'rendeville appeared for the Board of Trade and Mr. A. W. tho defendants.