Dáil Éireann debate -
Wednesday, 19 Apr 1972

Vol. 260 No. 4

Financial Resolutions, 1972-73. - Restrictive Trade Practices (Confirmation of Orders) Bill, 1971: Second and Subsequent Stages.

Minister for Industry and Commerce (Mr. Lalor)

I move: "That the Bill be now read a Second Time."

The object of the Bill is to confirm an order which I have made under the Restrictive Trade Practices Act, 1953, on the recommendation of the Fair Trade Commission, relating to the supply and distribution of electrical appliances and equipment and also to confirm a related amending order.

The commission's recommendation was made following the inquiry which they undertook on their own initiative following complaints from distributors that they were experiencing difficulty in procuring supplies of electrical goods.

In their report of the inquiry, the commission state that there are over 70 Irish manufacturers of electrical appliances and equipment. A high proportion of their output is sold on the home market, the requirements of which are also met to a substantial degree by imports. Irish manufacturers sell to wholesalers or direct to retailers and contractors. Imported appliances and equipment are sold by manufacturers' representative or agents to the wholesale trade or to retailers and contractors. Some manufacturers' representatives carry on a wholesale business also, and some wholesalers have a retail business as well. Many electrical contractors engage in the retailing of appliances and equipment. There are six associations representing the interests of manufacturers, manufacturers' representatives, wholesalers, retailers and contractors. Over 100 witnesses representing trade associations, manufacturers, manufacturers' representatives, wholesalers, retailers, contractors, the Electricity Supply Board and the Institute for Industrial Research and Standards were examined in the course of the inquiry.

The commission found that certain practices in the trade were not compatible with the public interest and recommended that an order be made to prohibit them. These practices include coercion of a supplier by an association to withhold supplies or discriminate against any person; preparation or publication of lists of approved traders for the purpose of limiting entry to the trade or boycotting a supplier; re-sale price maintenance; collective fixing of prices by suppliers; and withholding of goods by a supplier because of prices charged. The commission also recommended that the order should require a supplier to have written terms and conditions of sale and apply these terms and conditions to the acceptance of orders for goods.

I accepted the recommendations of the commission and on 26th April, 1971, I made the Restrictive Trade Practices (Electrical Appliances and Equipments) Order, 1971, to give effect to the recommendations and also to provide in the light of the report that a supplier's terms and conditions should be framed in an equitable way, should not be unduly onerous, and should be applied in a manner which would not involve unfair discrimination. Subsequently I found it necessary to make the Restrictive Trade Practices (Electrical Appliances and Equipment) (Amendment) Order, 1971, which provides for a minor drafting amendment of the original order.

Following the making of the original order and publication of the commission's report, representations were made to me by the Electrical Industries Federation of Ireland. While not objecting to the terms of the order, the federation maintained that the evidence cited in the report related to practices which no longer existed at the time of the inquiry.

While I accept that many of the practices concerned had been abandoned, I wish to point out that the commission have acknowledged this where appropriate in their report and it is also true that some individual firms continue to be influenced in their distribution arrangements by policies which have been abandoned by trade associations. Furthermore, the commission's report does not confine itself to practices of association but also embraces the activities of individual suppliers. While I am glad to have received the federation's assurance that restrictive practices have been abandoned I am satisfied, nevertheless, that the orders to which this Bill relates are necessary to prevent restrictive practices which are outside the control of the federation or which might reappear at some time in the future.

I hope that what I have just said has not given Deputies the impression that the federation are restrictive in their outlook. The impression I got from my discussions with them is that they have a constructive approach which is aimed at the raising of standards in the electrical trade. In fact, in the course of the discussions, they put forward constructive proposals relating to safety standards and the training of personnel which my Department are examining in consultation with the other Departments concerned.

The Restrictive Trade Practices Act, 1953 provides that orders of this kind shall not have effect unless they are confirmed by Act of the Oireachtas. The Bill now before the Dáil is the confirming Bill which is necessary to give the force of law to the orders concerned. With Bills of this kind, the orders which it is proposed to confirm may not be amended by the Oireachtas but must be accepted or rejected as they stand. The matters with which the orders deal have been the subject of a detailed public inquiry by the Fair Trade Commission, and their report sets out the arguments in favour of adopting the provisions embodied in the orders.

I can, therefore, recommend this Bill to the Dáil without reservation. Its enactment will provide necessary safeguards against any future attempts at restricting normal competitive conditions in the electrical trade with consequent benefits to the trade and the public.

Mr. Donegan

When a situation developed which caused these orders to become necessary, the House had to take action. It was regrettable that this happened but I am glad of the assurance of the Minister that practice in the intervening years has shown that things have improved, that these things are not happening. We welcome that situation and, as I intimated, we do not welcome the necessity to bring in a Bill of this kind and to make orders of the kind provided for in that Bill.

This is a comprehensive piece of legislation and as far as we are concerned the salient point made by the Minister is that orders he will make will not be to stop things happening, because they have ceased, but so that they cannot happen in the future. In other words, the intention here is to regularise matters in this respect.

It is acceptable to anybody who accepts free enterprise competition that we must ensure that fair play will prevail as far as we can do so. In such circumstances we accept the necessity for making these orders and we are prepared to go with the Minister in that respect, although it is regrettable that a situation has developed or might develop whereby prohibition and coercion measures have to be introduced here. Of course proper free enterprise competition within trade would obviate such a necessity. Prohibition of lists of approved traders is something one must look at in more than one way. If one is selling an article like cigarettes it would be most unfair if an organisation prohibited certain people from selling them if those people were prepared to pay for their tobacco licences. On the other hand, I believe it would be less unfair in the case of something which required servicing afterwards to prohibit a list being published of traders on the basis of their ability properly to service such articles. I am sure there is not anybody in the House who has not bought some sort of electrical device which did not need servicing afterwards. Some of the traders who do servicing are good and some of them, let us face it, are diabolically bad. It is from that point of view that I wonder if prohibiting lists of approved service traders is wise.

As I said earlier, prohibiting lists of people from whom ordinary goods are to be withheld is one thing. Resale price maintenance at the request of trade associations is something you could go to jail for in America if you were doing it and from that point of view it is right to ensure that no organisation may say: "If you do not charge this for an article you will not be supplied with further or similar articles."

The rest of the Bill merely ties the whole thing into a neat bundle of powers. The need to take such powers is regrettable though necessary and I welcome the Minister's assurance that such practices as existed have been discontinued anyway. Long may that be so because it is unthinkable that people would be allowed to blackmail others and to assert influence and say whom they will supply and whom they will not supply. However, I repeat the point I made in regard to such articles as electrical appliances such as refrigerators, icemakers and deep freezers because it is necessary that there should be a proper after sales service and it seems necessary that such goods should be monitored through the proper channels.

Mr. M. O'Leary

The Minister made the point that most of these practices have ceased. From the point of view of keeping the cost of living at reasonable levels one should ensure in the supply of goods that competition should be the order of the day and that goods and services should be supplied at competitive rates. When it comes to the question of any trade that supplies goods to the public, the public interest requires that the most competitive conditions should prevail. The public are only too well aware of cost increases in the matter of foodstuffs.

There is no doubt that electrical goods today are essential for the management of any household in any part of the country and any suggestion that in these areas there should be agreements among traders and suppliers to keep prices at a particular level should be combated to the limit.

The Minister referred to the constructive attitude of the federation. I am glad to hear of that attitude. He mentioned some suggestions they had made about safety standards and indicated that he was having discussions with these interests. One would hope that the ESB would do more to advance the cause of safety in regard to both the installation and the fitting of inside apparatus in homes throughout the county. For some years Jack Lynch — he was unfortunate enough to get that name — has been working alone without assistance from any public source in an attempt to bring about a greater public awareness of safety precautions. He has made the point that this is an area which seems to evoke very little interest on the part of the ESB.

The Minister has indicated that he is having discussions with those engaged in the electrical goods trade and with the trade in general on safety measures. I hope from the constructive spirit he sees on the part of the federation that we will see some proposals advanced on how to bring about a greater awareness of safety precautions in the use of electrical goods. This is not a matter to be put on the long finger. I hope the Minister will be able to report progress on it very shortly. There should be no reason from the Department's viewpoint why suggestions could not be brought forward very rapidly.

Mr. T.J. Fitzpatrick (Dublin Central)

I am a firm believer in free trade. Free competition is of vital importance to the wellbeing of any business and to the public. I am sure the recommendations made here by the Free Trade Commission are acceptable. We must always remember that after sales service is of vital importance especially in regard to electrical equipment. Retail establishments which sell electrical equipment and appliances can be very competitive at times. Some retailers are prepared to sell at a very low profit. It should be pointed out when people are purchasing those goods that there is no after sales service. There is a distinct difference between a retailer giving a guaranteed after sales service and the particular retailer who is prepared to receive the goods from the wholesaler, sell them to his customers and then be finished with the matter.

We know how complicated washing machines and television sets are and how costly it is to repair them. There should be some standards for all those appliances in retail outlets. I believe free enterprise is a good thing in business. When there is competition in a locality you get better business and better service. I would like to see something in regard to after sales service written into this Bill.

Mr. Hogan

I am pleased with this Bill in so far as it is calculated to prevent practices which we all find objectionable. Price maintenance and price fixing behind closed doors is undesirable in any commercial enterprise. I agree with the previous speakers that open competition is very desirable in any society. The question of closed shop arrangements is very reprehensible. In a service like the electrical trade covering 70 manufacturers and six different associations selling a large variety of equipment, you are bound to have all sorts of different levels of standards and practices. It is gratifying that the trade association and the federation have made any necessary corrections. However, there are some firms who are prepared to carry on restrictive practices.

The question of safety in the electrical equipment trade has been mentioned. I always had the impression, certainly in regard to the wiring of houses, that the ESB took an interest in the matter. I do not know whether any safety guarantees are required with regard to equipment from different manufacturing companies. The Minister in his statement said:

I accepted the recommendations of the commission and on 26th April, 1971, I made the Restrictive Trade Practices (Electrical Appliances and Equipment) Order, 1971, to give effect to the recommendations.

Now he comes here in April, 1972, with this Bill. What has happened in the meantime. I take it once the order is made, irrespective of when the Bill is brought before the House, that it is effective.

Mr. Lalor

Legally, no.

Mr. Donegan

A prosecution could hardly come until after the Bill becomes law.

Mr. Hogan

Therefore, it is necessary to come before the House and to have the Bill passed before anything effective can be done. This seems to be a weakness in the system in that a person has to wait for one year to discover something which is fundamentally wrong. It would seem to me to be in the interest of the public that it should be possible to get at the matter more expeditiously than to have to wait and go through the cumbersome method and the delay of bringing in legislation, perhaps a year after, to control something which could still operate throughout that year without being open to any real control. Perhaps the Minister would deal with that in his reply.

Minister for Industry and Commerce (Mr. Lalor)

It was natural, as this Bill confirms an order made some time ago, that it should be welcomed by the House. As I said in my opening remarks, this Bill confirms an order made under the Restrictive Trade Practices Act, 1953. It was natural to assume that this Bill would be generally welcomed by the House in view of the fact that the order in question was made after a pretty exhaustive inquiry, at which many people contributed, by the Fair Trade Commission.

Deputy Hogan spoke about the delay in making the order and also in having it confirmed. Before the order was made, after the presentation of the report by the Fair Trade Commission, it was necessary to look into the changes that had taken place within the electrical industry.

It took some time to compile the report of the Fair Trade Commission after the inquiry, with the result that some of the restrictive practices which had been the subject of the inquiry had been done away with. In fact, between the time of the inquiry and the presentation of the report to me all of the restrictive practices which were being investigated had disappeared. It would be fair to assume that the people in the industry who might have been guilty of unfair practices would have anticipated the report and would have abolished the practices. In fairness to the federation in this regard, I must state that the practices which had developed have been done away with.

Deputy Hogan referred to my statement when I said that the commission's report did not confine itself to practices of associations but also embraced the activities of individual suppliers. I said that while I was glad to have received an assurance from the federation that all of those practices had been done away with, I was satisfied that the orders to which this Bill relates were necessary to prevent restrictive practices that were outside the control of the federation.

That did not necessarily mean that there were individuals not within the control of the federation who were still indulging in restrictive practices because I am not aware of this. Therefore, arising from what I have said, I should not like it to be taken that I was aware of the fact that there were people at present carrying on restrictive practices in contravention of the order I have made. Arising from the question put to me by Deputy Hogan, it is right for me to say that the order I have made is not legally binding until this Bill has been enacted. To my knowledge, there are not any restrictive practices in operation here and, even though this Bill has been on the stocks for some time, there was no urgency attached to it. It is really to make sure that the problem — one that existed at one time — will not arise.

Deputy Donegan said it was regrettable that it was necessary to have had an inquiry but, unfortunately, it was necessary to have an inquiry. We hope it will not be necessary to have any prosecutions as a result of this measure and that restrictive practices will not develop in this industry.

Deputy Fitzpatrick of Dublin said he would like to see some further provision in the Bill dealing with the question of after sales service, or making regulations which would insist that wholesalers or retailers of electrical equipment should give some kind of assurance to customers regarding after sales service. The purpose of this Bill is to confirm the order. It can only be confirmed or rejected. It cannot be added to or amended. The order can only deal with matters into which the Fair Trade Commission have inquired and I must act and prepare legislation on the basis of the recommendations of the Fair Trade Commission. The commission did not investigate or report on after sales service——

Mr. Donegan

If they did not do so, they were wrong.

Mr. Lalor

I think we could have a discussion on that point in relation to the next Bill we shall be discussing. Up to now the Fair Trade Commission were restricted with regard to inquiries in relation to services. However, this difficulty has been cleared up by the Restrictive Practices Bill with which we shall be dealing next.

Deputy O'Leary referred to discussions between the trade and the Department regarding the question of safety. One of the points spelled out by the Fair Trade Commission in relation to safety standards was that the electrical industries were claiming as justification for a restrictive practice in which they were involved the necessity within their association to ensure standards by preventing new people from entering the industry. They used by way of excuse for trying to create a closed shop the fact that they wanted to ensure that standards would be high, and, as a particular section, they thought they should involve themselves in a monopoly type of situation. The Fair Trade Commission pointed out that a trade organisation which is concerned with the promotion of sectional interests was not a suitable medium for discharging functions relating to safety standards which would involve control over the admission of new entrants into the industry.

Since the publication of the report of the Fair Trade Commission a new council has been established. It is known as the National Electro-Technical Council and it has been set up under the aegis of the Institute for Industrial Research and Standards. The object of this council is to bring about improvement in efficiency and safety and it can be backed up by the statutory powers of the Institute for Industrial Research and Standards. It includes representatives of the ESB, Government Departments and various branches of the trade.

During my time as Parliamentary Secretary to the Minister for Transport and Power, I recall listening to comments in the House with regard to the responsibility of the ESB in relation to safety standards. This council which is representative of the ESB, various Government Departments, the Institute for Industrial Research and Standards and representatives of the industry, is studying the situation with a view to working towards greater safety in the manufacture and presentation of electrical articles.

Deputy O'Leary saw the advantage in this, in that you must have that degree of competition between the various manufacturers, wholesales and retailers in order to ensure that the consumer will get the article at the finished price, and that a type of ring or arrangement cannot develop such as developed some years ago. If somebody sold a refrigerator, or electric fire, or any other electrical article at a certain price he was refused supply from the manufacturer because he did not maintain a particular price. That has been done away with completely.

The purpose of this Bill is simply and solely to ensure that type of development will not arise again. I fully accept the claim that was made to me by way of protest. When I introduced this order the federation protested on the basis that all what might be termed illegal practices that were then being conducted had been abandoned. As I saw it, it was necessary to make sure that the temptation would not arise again and I wanted to confirm that by way of legislation. I am pleased that this Bill, which confirms the order and makes it legally binding, has been welcomed by spokesmen from all sides of the House. I hope that the necessity to take action under this legislation, which does not exist at present, will not arise in the future.

Question put and agreed to.

Agreed to take remaining Stages today.

Bill put through Committee, reported without amendment, received for final consideration and passed.