266 THE NEW ZEALAND GAZETTE No. 8

Decision dated 23 November 1977. Copies of the full text
of this decision are available at a cost of $1.70.

Decision No. 21 (Abridged)

This decision follows upon and correlates with the Com-
mission's decision No. 18. It relates to appeals filed by Akrad
Radio Corporation Ltd. and Pye Ltd. (the appellants) against
decisions of the Secretary of Trade and Industry (respondent)
as contained in special approvals F40 and F41 relating to the
wholesale and retail prices respectively of "Pye" and "Ulti-
mate" brands of colour television receivers manufactured by
the appellants incorporating the new Vidmatic-SRU-CT103
technology.

Decision 18 of the Commission in effect resolved certain
issues of principle but did not have any effect on actual prices
as it related to colour television receivers, manufactured using
an earlier technology, which had all been sold prior to the
hearing of the appeals concerned.

It was acknowledged by respondent that, in making his
decisions embodied in those special approvals Nos. F40 and
F41, he applied the same principles, and made the decisions
upon the same grounds, as he had applied in making his
decisions embodied in the earlier special approvals No. F25
and F26, the subjects of the original appeal. Further, it was
agreed by appellants and respondent that the evidence before
the Commission was comprehensively applicable to both the
original and this further appeal and the Commission was
satisfied that that was so.

The Commission received a joint statement by appellants
and respondent which is set out in the text of the full
decision.

In the circumstances of the grounds of appeal being the
same as those of the original appeal, respondent's decisions
having been made applying the same principles and upon
the same grounds, and the evidence before the Commission
applying comprehensively to both the original and this later
appeal, the Commission applied its determinations on the
original appeal, stated in its decision No. 18, in this later
appeal with, however, one exception. That exception con-
cerns the rate of profit return to be applied to average assets
for the purpose of this later appeal.

The grounds of appeal and the Commission's determinations
on these is summarised below as stated in decision No. 18:

(a) That respondent was not justified in departing from the
Price Tribunal Decision No. 5300 formula of 30
percent on factory cost in approving the wholesale
prices.
Appellants' submission is rejected.

(b) That factory costs and the value of assets should be
allowed on the basis of "replacement" or "current"
cost accounting and not on the historical cost basis.
Appellants' submission is rejected.

(c) That depreciation of fixed assets should be allowed on
the "straight line" method on the replacement cost
of assets.
Appellants' submission is rejected.

(d) That, if the value of assets is to be taken as their written-
down historic cost, the appellants require a profit
return not of 15 percent but of at least 20 percent.
The Commission determined in decision No. 18
that 15 percent was a fair rate of return. However,
for the reasons set out in the full text of this decision
the Commission determined that the appellants be
allowed a rate of return on average assets, before
interest and before income tax, of 16 percent and
that that rate of return should be allowed until
appellants make their first application to respondent
for amendment of prices subsequent to their audited
accounts for the year ending 31 December 1977 being
presented to the respondent.

(e) That exchange losses on moneys borrowed overseas
should be taken into account.
The Commission consider that, for the purpose of
this appeal, it can take this question no further, pend-
ing any decision the Minister may take following
the Commission's report and recommendations aris-
ing out of its recent inquiry into the subject of
exchange gains or losses on moneys borrowed over-
seas.

(f) That a sum of $440,000, claimed by respondent to repre-
sent an amount of costs over-recovered by appel-
lants in a past period, should not be brought into
account to reduce appellants' wholesale prices.

Appellants' submission is upheld and accordingly
the Commission orders, pursuant to section 101 (3),
that the sum of $440,000 be not brought into
account in determining appellants' prices resulting
from this determination by the Commission or in
any subsequent applications made by appellants to
respondent.

The Commission determined, pursuant to section 102 of the
Act, that appellants' application of 11 July 1977 and respon-
dent's related decisions embodied in special approvals No.
F40 and F41 be referred back to respondent for reconsidera-
tion and that the matters specified in (d) and (f) above should
be taken into account in such reconsideration.

Decision dated 7 December 1977. Copies of the full text
of this decision are available at a cost of 90c.

Decision No. 23 (Abridged)

On 6 September 1977 the Golden Bay Cement Co. Ltd.
(the appellant) filed an appeal against a decision of the
Secretary of Trade and Industry (respondent) given effect to
in special approval D829 dated 17 August 1977. This decision
discontinued a grant of 57c per tonne for bagged and bulk
cement given to the company by decision No. 2 of the Com-
merce Commission in March 1976.

The appellant's submissions were that the appeal should
be upheld on the grounds that the decision of the respondent
was erroneous in law (for the reasons stated in the full text
of the decision). Alternatively if the decision of the respon-
dent was not erroneous in law, that it is just and equitable
that the grant of 57c per tonne for bagged and bulk cement
should be continued.

The respondent submitted that the appeal should be dis-
missed on the following grounds:

(1) That the grant of 57c per tonne for bagged and bulk
cement had been given effect to.

(2) That the grant of 57c per tonne made by the Commerce
Commission in its decision No. 2 was an unauthorised
exercise of the powers conferred on the Commission
by the Commerce Act 1975 and was invalid for the
reasons set out in the full text of the decision.

In addition the respondent lodged an application
to the chairman (pursuant to section 122) "To state
a case for the opinion of the Supreme Court on the
following questions of law:
(1) Whether the grant of 57c per tonne for bagged
and bulk cement made by the Commerce
Commission in its decision No. 2 on the
12th day of March 1976 had any effect in
law other than authorising the maximum
selling prices recorded in Schedule B
attached to the said decision, and, if so,
what effect?
(2) Whether the said grant of 57c was valid?
(3) On an appeal in respect of an application based
on annualised accounts is the closing date
for the accounts that date which was the
basis of the application to the Secretary of
Trade and Industry?
(4) On an appeal under section 99 of the Commerce
Act 1975 against a decision of the Secretary
under section 92 (4) of the Act:
(a) What weight should the Commerce
Commission attach to the Secretary's
decision?
(b) What is the nature of the appeal?"

The Commission considered the submission of both parties
and for the reasons set out in the decision resolved;

(i) To dismiss the application, lodged by the respondent
pursuant to section 122 of the Commerce Act, for
a case to be stated on certain questions of law.

(ii) To determine the appeal before the Commission by
ordering that the grant of 57c per tonne for bagged
and bulk cement, be continued until such time as
the company receives a decision from the Secretary
following an application by it either for a review
of its allowed profitability rate or for a price
adjustment, based on annualised accounts, to
enable it to achieve its allowed rate of return,
whichever of such applications is made the
earlier.

Decision dated 15 December 1977. Copies of the full text
of this decision are available at a cost of 80c.

D. J. KERR, Executive Officer.