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Thursday, 2 December 1965


Mr POLLARD (Lalor) .- I have here the annual report and balance sheet of Rothmans of Pall Mall (Australia) Ltd., the tobacco manufacturers. I think it must be conceded that Rothmans is a near monopoly in the tobacco business. There are, of course, three other manufacturers in Australia. The directors of Rothmans are well known public identities. They include Mr. Irish, O.B.E.; Sir Kenneth F. Coles, who is a director of a vast wholesale and retail distributing concern in Australia; Mr. Engela, and Sir William A. Gunn, who is Chairman of the Australian Wool Board, in which capacity he endeavours, I believe, to get the highest price for the wool growers. But as a director of Rothmans, Sir William Gunn must see his duty as being to obtain tobacco at the lowest possible price. A number of other distinguished gentlemen are on the board of directors.

The. activities of Rothmans show conclusively that price cutting takes place in Australia. It should not be necessary for members of the Opposition to prove conclusively that price cutting is prevalent in Australia. It should be enough to quote from the last annual report of Rothmans which reads -

The incidence of price-cutting has been the subject of some controversy, in which one manufacturer-

At present that manufacturer is a competitor of Rothmans. But who can say that, as a result of price cutting and mergers in the tobacco business, Rothmans will not, within five years, become so strong as to be virtually the only tobacco manufacturer in

Australia? Unjustifiable price cutting and other unjustifiable practices could very rapidly build this group of manufacturers into a monopoly.


Mr Bowen - What about clause 37?


Mr POLLARD - It does not deal adequately with the problem. I want to stress that this directors' report is based upon Sir Garfield Barwick's proposed legislation. At the time this report was issued nobody had any knowledge of the Snedden legislation. Let me quote from the report -

The incidence of price-cutting has been the subject of some controversy, in which one manufacturer

Not the Opposition - has tried to infer that the blame rests with other manufacturers. It is desirable that the facts should be made clear.

It is traditional in the tobacco industry in Australia and overseas that the range of discounts or rebates on the basic wholesale price depends on whether the buyer is a wholesaler, semi-wholesaler or retailer, and on the quantity purchased. So far as- Rothmans is concerned-

That firm is protesting its innocence - the difference between the minimum discount or rebate (on a purchase of 5,000 cigarettes) and the maximum (on a single delivery of 1,000,00!) cigarettes or more) is no more than one cent per packet -

That may be a justifiable discount or it may not, I do not know - whatever type of buyer may be involved. However, the buyer of 1,000,000 cigarettes-

He could be G. J. Coles, who is a director of Rothmans - has to pay handling charges, freight and delivery to individual stores, and in some cases meet other costs, such as financing excise duty, which would otherwise fall on the Company.

Quite obviously, this difference in discount or rebate (which covers every form of benefit from Rothmans to any buyer) allows no possibility of price-cutting because of discriminatory prices.

The plain fact is that some retailers are prepared to sell below the standard margin of profit, and there are some who have sold at a price below cost, but never as a result of any action or special concession by this Company.

The Company has examined its position under the Commonwealth Trade Practices Bill -

That was the Barwick Bill - and is satisfied it does not infringe any of its requirements. If the Company stopped supplies to a price-cutter, or gave discriminatory prices, it could be in breach of the proposed law.

My point is this: If under the Barwick Bill, which was a more rigid Bill than the Sned den Bill, a manufacturer could, in the opinion of Rothmans be guilty of discriminatory trading-


Mr Buchanan - No, a retailer.


Mr POLLARD - Wholesaler and retailer. Allow me to quote portion of that passage again for the information of the honorable member for McMillan -

The incidence of price-cutting has been the subject of some controversy, in which one manufacturer -

Surely that is clear enough - has tried to infer that the blame rests with other manufacturers.

There are only four of them in the game and one says that one manufacturer has tried to suggest that some other manufacturer is guilty of price-cutting. The point is that Rothmans considers that these manufacturers - not Rothmans itself, although that firm could be examined loo- would, under the Barwick Bill, be free- and that Bill was a much more rigid Bill than this one. But the point is that we have only Rothmans' say-so, and if that Bill was satisfactory from the point of view of Rothmans and the other manufacturers and Rothmans is free, how much more important it is - on the say-so of these manufacturers that this kind of thing does take place - that the Bill should retain, as the Opposition's amendment suggests, the strength of the Barwick provision instead of replacing it, as the Government proposes to do, with a much weaker proposition.







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