I move: "That the Bill be now read a Second Time."
I am obviously delighted to move the Second Reading of this Bill on behalf of the Progressive Democrats. We have for some time been giving this whole area serious consideration and we realise that there is a great need for a wide range of new legislation. We have taken the first step in introducing the Enterprise (Competition and Consumer Protection) Bill, 1989, because of the urgent need to outlaw anti-competitive practices. As long ago as 1975 the Restrictive Practices Commission first called for this type of legislation, yet 14 years later no such legislation has been passed. If we want our economy to develop at a rate comparable with that of our partners in Europe, we cannot simply rely on the business community to make all the progress. The Oireachtas failed over many years to keep legislation up to date and this has hindered may areas of business from developing. This is not a desirable state of affairs, particularly when one considers that the Irish economy is one of the most open in the world.
I am convinced that the lack of proper legislative planning has hindered job creation by not creating the necessary environment for a competitive economy to grow and prosper. Our legislation tends to protect restrictive practices and anti-competitive conduct in many sectors of industry, trade and professional services. This Bill will for the first time introduce into our law a general prohibition on anti-competitive practices in all sectors of the economy. The lack of competitive forces operating in many sectors has caused areas of industry and business to be run very inefficiently. This has been the case simply because businesses have not had to compete at the same level as many companies in other countries. This factor has caused many job losses and has led to lack of growth in areas of job creating potential.
This Bill will also have major benefits for the Irish consumer, who for many years in a whole range of areas has not had freedom of choice in the purchase of goods and services because of restrictive practices and anti-competitive forces. The consumer is entitled to a much better deal and it is up to us in the Oireachtas to put right the wrongs that we allowed to happen by not keeping up to date with an imaginative legislative programme. The operation, for instance, of scale fees across the whole range of professional services is extremely restrictive and does not give a fair range of choice of service or price to the consumer.
The provision of goods from suppliers to purchasers can operate in a very restrictive way. There are many instances of purchasers being able to get exclusivity in relation to certain goods coming into the marketplace. This is often done to the exclusion of all others. This in many cases puts the purchaser in a very powerful position with regard to the supplier and he is eventually able to dictate terms and price, which many suppliers have to accept if they are not to be forced out of business. This is a very serious abuse and such practices must be outlawed. Unfortunately the Restrictive Practices Acts of 1972 and 1987 contain no general prohibition on anti-competitive practices. The Minister can from time to time, under section 8 of the 1972 Act, make a restrictive practices order relating to particular areas of the economy. While, for example, the Restrictive Practices (Grocery) Order of 1987 prohibits price fixing in the retail grocery sector, there is no general ban on such anti-competitive behaviour. Under our domestic law price fixing and price collusion, which is especially prevalent in the professional services sector, is not unlawful. I am not trying to point the finger exclusively at one area because the professional services sector in general are operating quite rightly within the terms of our domestic law as it stands. Because of this there is no onus on them to change their ways. This Bill should have a major impact in this area and should encourage a much more competitive environment which would benefit everybody.
The Director of Consumer Affairs and Fair Trade, who is an autonomous official, is charged with enforcing the present statutory provisions. While one can make a complaint to the director and he can take certain action on behalf of the complainant, including seeking injunctive relief in the High Court, the director is not a judicial personage and therefore he is not in a position to award damages to a trader or an individual who has been seriously injured by the anti-competitive practices of another. The major principle established by this Bill is the provision that the courts may award damages to a person aggrieved by anti-competitive practices. The power of the courts to award damages in such cases will without doubt be the most effective way of ensuring that the competition laws are fully adhered to.
It has already been seen in the European Court of Justice, under articles 85 and 86, and also in the United States under the Sherman anti-trust legislation, that the powers to award damages are the most effective way of ensuring that these laws are adhered to. We have given lengthy consideration to this aspect of the Bill and we are convinced that without the ability of the courts to award damages in such cases it would be much more difficult for this legislation to be effective. Companies or individuals who seek to ignore this legislation will have a very strong deterrent because of the possibility of an injured party receiving damages if the courts rule that anti-competitive practices are in operation. This legislation is strengthened greatly by this provision, which will have a direct bearing on its successful application.
We have deliberately modelled this Bill on the provisions of articles 85 and 86 of the Treaty of Rome, which are framed in general terms. Their objective is to render illegal all anti-competitive behaviour. Irish companies which trade internationally are subject to the provisions of the Treaty of Rome under articles 85 and 86. We have seen an example during the recent take-over bid for Irish Distillers, when the European Commission intervened. This was only possible because this company traded on the international market. These provisions do not apply to companies which trade on the domestic market but do not engage in inter-state trade. This is a very serious flaw in our legislation. The companies who are trading abroad on the international market probably represent the most dynamic aspect of our economy, the area which is showing most growth and the greatest potential for job creation. This is occurring because they are subject to the full rigours of competition. Competition in a legal framework is only the means to allow competitive forces to operate. The business community and the industrial world will take up the opportunities given to them if they can be more competitive. That means companies competing with one another and a much more efficient sector operating in the economy. The companies operating in the competitive area are also up to date and their forward planning and streamlining of their operations are much better. This is all brought about simply because they must keep ahead of the posse. They know if they do not maintain their position in the marketplace inevitably they will fall by the wayside.
Why is this not in operation in our own domestic economy? It is in this area we are seriously falling down. The European economy is booming yet our economy is not expanding or showing the growth which is occurring in other economies. The reason for this is the operation on the Irish domestic scene of such restrictive practices and anti-competitive operations as to render many areas of the economy useless because there is no growth. The reason for this is that they are not subject to full competition or the type of operation in the international sector which has shown this country what that means, where the growth and the expansion are coming from. This is a serious handicap on the Irish domestic scene and we must face up to it in terms of our legislation.
We — particularly the Government — have been informing Irish business of the advent of the single market which will be created in Europe. It is wrong to think of this market in terms of the future as we have already seen the benefits to some extent. We must, in our legislative programme, put measures in train now that will help our companies to face the rigours of competition which will undoubtedly come in the not too distant future. We cannot on the one hand dictate to Irish business about what will happen if on the other hand this House does not implement the kind of legislation necessary to allow them to be open to the type of forces which will be in operation. Because of the failure to put that legislative programme in train we are introducing this Bill.
Another drawback in relation to the present restrictive practices legislation is that the legality of certain practices is not judged solely by reference to their anti-competitive effect. For example, professional bodies can still arrange to fix fees and exclude price competition on the grounds that this is not unreasonable because, in their view, such price fixing arrangements are in the public interest and are required by a professional code of practice. It would not be possible under our proposals to justify a restrictive practice according to such extraneous and subjective criteria. In this country the full weight of these kind of practices should be outlawed by bringing in the necessary legislation. The competition provisions of the Treaty of Rome are in operation in most of the economies throughout Europe but they are not fully operational in this country.
Under this Bill all sectors of the Irish economy will be subject to broadly the same competition irrespective of whether there is an international dimension to that trade. That is a fundamental point because, as I said, it is wrong that certain sectors of the Irish domestic business community should be subject to one set of rules while others are subject to a different set. This country is too small to operate on such a basis. The economy is not that well spread — the same applies to the business community — in respect of such a huge, wide and diverse range of activities. It is wrong, therefore, that there should be such different areas operating under different legislation.
For many years the public sector has been in a privileged position and their monopoly has not allowed them to grow efficiently, to prosper and ultimately to provide the best possible service for the consumer. A very good example of this was the deregulation in relation to air transport. The position of Aer Lingus was very seriously questioned and it was pointed out quite forcefully that if any changes occurred the company would be in serious jeopardy. However, the result was the full weight of competitive forces and the irony is that it has greatly benefited the State company involved. They have increased their capacity and prices to the consumer have dropped substantially. There are many new companies — mainly Ryanair — in operation who have also grown, providing employment for people who would otherwise have emigrated. That is one example of the type of forces that should be brought to bear on companies.
We have also introduced a saver in the Bill for the statutory position of State monopolies but it does not cover the whole area. There are many State monopolies, Dublin Bus, Bus Éireann, the ESB and many others who operate under licence and it is in the Minister's area of responsibility to take this legislation into consideration. It is not in the consumer's interests to allow State monopolies. When there is competition there is a demand for the consumer for the services. It is our contention that the full weight of competition should be allowed to operate in these areas because otherwise there will not be an efficient State sector or an efficient service in other areas because they are not subject to competition. For that reason, they do not feel the weight of change in the marketplace or do not necessarily have to react to it because their position is protected. Is that a desirable state of affairs?
I accept that changes are occurring at present in the area of broadcasting, for instance——