On the section, in the Third Schedule under (d) dealing with unfair practices, could the Minister give us an instance where a person might unjustly enhance prices of goods or charges for services or promote unfairly at the expense of the public the advantage of suppliers or distributors of goods or of persons providing services? At Question Time today we asked the Minister for a hypothetical case and the Minister was unable to give us a hypothetical case. Surely, if you enact legislation either to stop a gap or open a gap, the very least we should know is what gap we are opening or closing, as the case may be. We should know what gap we are opening or closing. Can we have a hypothetical case where this unfair practice might occur?
Committee on Finance. - Restrictive Practices Bill, 1971: Committee and Final Stages.
Sections 1 and 2, inclusive, agreed to.
SECTION 3.
Question proposed: "That section 3 stand part of the Bill."
The Deputy asks what potential fault can be found with unjust pricing of goods. One reads into that that prices of goods or services are enhanced. That could happen arising out of a monopoly situation where one, being the only one to provide a service in a given area, would charge too much for it. In the same way, in the unlikely event of there being only one person producing some goods they could overcharge for those goods on the basis that none would otherwise be available.
Is it not true that in the case of only one person producing a certain type of goods or a certain branded article, the Minister always intervenes and fixes a maximum price? The only case I can think of where the Minister did not do this was in the case of beer, wine and spirits as sold in lounges and public bars. The Minister did not fix an actual price. It might vary from one place to another as in that trade it would be proper for it to do. But could the Minister tell me where he has not acted with other legislation to provide for a maximum price for one particular article where there was a monopoly situation or only one provider or producer?
The Deputy has instanced a specific field or range where I found it necessary to take specific action in the licensed trade arising from a collective announcement of the fact that they were going to charge what I felt was an excessive price for drink. I was in a position to take steps to deal, as I saw it, effectively with that situation then. On the other hand, you can have a situation where a group of people can get together and arrange an exorbitant price for a given article. Perhaps the facilities available in the prices section might not be sufficient to establish the fact that this was a co-ordinated practice and one could then pass the matter to the examiner under the Restrictive Practices Bill. If the Deputy devoted time to the matter he could visualise quite a wide field where the possibility would arise of prices for goods or services being unjustly enhanced. It would nearly be more likely to occur in that field where a group of people giving a particular service could charge an exorbitant price. It might not be so easy to determine the basis on which one could substantiate the allegation of an exorbitant charge.
If, for instance, a profession decided that there were certain areas in which a person who resided or practised in another area should not practise, would this be regarded as unfair? For instance, if the town agent of a professional man would not act in respect of property or services to be provided in a country area and one would have to go to a country agent, would the Minister regard that as an unfair practice?
I would
It is there with you. Obviously, I shall not go into any further details.
Previous legislation dealt with unfair trading as such and this is for practices.
If I reside in Cork and wished to have certain professional services in Louth and if I went to a professional man in Cork, the proper procedure would be for the man in Cork to do his business for me through the ordinary channels without reference to an agent in Louth. If he did that, it would be an unfair practice?
On the face of it, as set out by the Deputy, it would appear to me to be an unfair practice, but the circumstances surrounding the arrangement would warrant a good deal of investigation.
Prima facie. I cannot bring it out any further. That is the only question on that section
Question put and agreed to.
SECTION 4.
Question proposed: "That section 4 stand part of the Bill."
In regard to the fair practice rules under subsection (2) there is an opportunity for citizens to make representations. I take it that is all a citizen can do. There is no provision for recourse to a parliamentary agent to try to get a private citizen's Bill into the Dáil or Seanad? He has no other recourse except to let the commission know his views? That is really all he can do? As in the case of the President and the Council of State, he consults them but after that, he may, if he wishes, do the exact opposite of what they advise. He is free to do this under the Constitution. In this case the commission is free to do the exact opposite to what a person or group of persons might advise? The commission is all-powerful in regard to fair trade rules?
Yes, but the fair trade rules create a code of practice which is recommended. The rules devised by the commission are not mandatory unless, arising from complaints coming through the examiner subsequently as a result of non-adherence to the rules, an inquiry results in the commission making a recommendation to the Minister and an order being made which is confirmed by the Oireachtas. The fair practice rules of the commission are recommended rather than mandatory.
If a person takes note of the fair trade rules in regard to a certain trade or profession he does not break the law if he does not operate these rules but if there comes to the examiner a volume of complaints, he might then find himself on the wrong side of the law?
Yes.
This seems not wholly satisfactory? Does the Minister like that situation?
The object of the exercise, first, as far as the former Fair Trade Commission was concerned and the Restrictive Practices Commission under this Bill would be, having examined a situation, to make those fair practice rules which they would hope would be adhered to by people in the particular business or profession for which the rules would be designed. Those rules are there by way of recommendation. The Deputy asked did I think it right that the rules should not be made mandatory so that any group that had to abide by the rules would commit an offence in breaking them. I do not want the Restrictive Practices Commission to be committed to making a whole set of fair trading or fair servicing rules for every section of the community. That would mean that we would develop a robot-like society. What I visualise is that if the commission make fair practice rules and a series of complaints come to be examined, the examiner, on being satisfied that there was a breach of the rules, would refer the case to the commission.
Would he do that publicly?
Yes.
That would be important.
This is spelt out in the Bill. The publication comes when, arising from the submission of the complaint, the commission before holding an inquiry must publicise the fact that they are doing so. So that affected parties not alone have the opportunity of being heard but they must also be supplied with a copy of the examiner's submission to the commission. They will be fully equipped to give a full account of their stewardship to the commission and to defend themselves against any allegation.
We can take the fair trading rules as being the first barrel over their head, as a warning. The second barrel is a second warning. If a set of fair trading rules are made for an industry, trade or profession, the person concerned can take that as a warning light and should consider whether or not he is abiding by the rules. At a given stage, as a result of the inquiry, a more concrete situation develops. Take the case of a person who having seen the rules and not having abided by them but over a given period of time does not break the law. Could that person find himself in the position of having retrospectively broken the law? He may consider that he has not broken the law but the inquiry finds that he has broken the law. Could this man find himself on the wrong side? I think he could and this is what worries me.
I would go with the Deputy a certain distance. I assume that the person was not greatly in breach of the rules.
If he had been, there would be little sympathy for him.
The point is, that irrespective of the sympathy there is for him, he is not committing any offence until such time as the commission have made a recommendation to the Minister.
I am happy. There is no question of retrospective offence?
No.
This is merely the warning.
Question put and agreed to.
Sections 5 to 7, inclusive, agreed to.
SECTION 8.
Question proposed: "That section 8 stand part of the Bill."
I should like to hear from the Minister if he intends to be absolutely specific in relation to section 8. The Minister and I are in trade. The other persons involved in drafting this Bill are civil servants. I am sure the Minister did not draft every line of the Bill. I should like that persons engaged in trade or commerce or manufacturers would be clearly defined and that there would be no question of a person finding himself in the grey area between black and white.
I should like to hear from the Minister whether or not it is his intention to safeguard decent people from prosecution or from the danger of finding themselves on the wrong side of the law. I would ask him to be utterly specific in his orders in relation to restrictive practices so that a person would not find himself wondering whether or not an action he took in respect of the provision of goods or services was in breach of the Minister's order. I should like to be absolutely sure that those engaged in trade and commerce will get a chance to be right or wrong.
(Dublin Central): In the context of unfair practices and unfair competition, I should like to draw the Minister's attention to the merger of two supermarkets recently. In last night's paper there was an advertisement indicating that no turnover tax would be charged by these firms. I am not altogether sure that this is not an unfair practice. I understood that turnover tax must be charged. This type of advertisement is misleading to the public. There might be certain discounts given, but I understand that everyone must pay turnover tax. Does this come within the category of unfair practice?
I am finding it difficult to be able to deal with the fear that Deputy Donegan has expressed on this section that the Minister will make an order which can hurt and which will not take due account of the problems of an individual trader.
It might be a bit vague.
Any order that I would make arising out of a recommendation made to me by the commission cannot be vague. Our experience of Fair Trade Commission reports down through the years has been that they are pretty exhaustive. They go into a great deal of detail in the reports saying why they are making specific recommendations, and up to now I do not think we have run into any difficulties with regard to the orders which I or my predecessors made arising out of the 1953 Act. I do not think the Deputy has any reason to fear that there would be ambiguity in an order. I thought at first that maybe one of the things that was worrying the Deputy was that this section leaves it optional for the Minister to make an order arising out of the commission's recommendations.
I believe in the Minister being the Minister.
He must be free to act according to his own opinion even arising out of the amount of study that has been put into it by the commission.
After all, he did win the last election, whoever he is.
Yes, and there would be people who would not need a crutch and then there might be somebody who would have to get a leg over the ditch from some sort of an assistant.
Present company always excluded.
This subsection in itself re-enacts subsection 9 (1) of the 1953 Act, suitably amended, to provide for a service, but, in addition, drafting changes have been made to tighten the text and 8 (1) (b) extends the Minister's power in line with section 7 to prohibit practices and methods of competition which, while not being restrictive, are unfair. This endeavours to enable the new commission to have a little bit more power than the previous one. We have always looked upon restrictive practices in the trade as practices whereby a group of people or a cartel get together and fix a high price. On the other hand, unfair trading can be done with too low a price in the very same way as too high a price.
I was asked at Question Time to define "unfair trade". Of course, a convenient definition would be anything that is not fair. There can be unfair trading in many ways. One of the difficulties is a high percentage of the distribution of any line being done through one or two channels. It is quite possible that if there is a sufficient amount of money behind a channel a loss situation can be allowed to continue over a period which that particular firm can stand up to but which other firms cannot stand up to and they find themselves going out of business. This section, by tightening up the text here and extending it to prohibit unfair practices or unfair methods of competition, would enable this commission to look more deeply into this type of trading than they have been in a position to do.
I wonder could the Minister be more explicit, in fairness to Deputy Fitzpatrick. It is suggested that there may be a prima facie case of restrictive practice or a case for investigation where a firm or a particular consortium in the retail trade repeatedly advertises that customers may allegedly purchase their retail products without paying turnover tax. The public are presumably expected to believe the words of the advertisement. Would the Minister not accept that within the context of the Bill there would be a prima facie case for the reference to the commission of such an advertisement?
We read a lot about amalgamation at present. If one of these big firms were to, as has happened in England, go to manufacturers here and say: "We will not buy from you unless we can get the goods at a certain price" it would mean that Irish industries would be put out of business. You could also get a continental or an English company with retail outlets in Ireland. They could buy for a period 50/50 Irish goods and the goods of their own country but gradually give better shelf space to their own goods and in that way beat the Irish goods in the long run. They would do this because they would probably own the manufacturing company in England, France or wherever it was. The money they would pay to purchase or rent premises in Ireland would be negligible compared with what they would make in their own manufacturing companies. I know that when we enter Europe we must give European, English and our own goods the same chance of being sold, but if these firms own the retail outlets they can push their own goods rather than Irish goods, which would mean a loss of jobs in Ireland. It has happened in England that when retailers get very big they can go along and say: "We want a coat made in this particular way." The manufacturer gives up manufacturing everything else but this coat. When they get him in that position they can say: "We want it at a certain price." If he does not agree, he is out of business. They gradually squeeze him into the ground. This could happen here. They could go to, say, Jacobs and say: "We want biscuits at a certain price and we have 80 per cent of the outlets." They could keep coming down in price until eventually Jacobs goes out of business. Does the Minister follow me?
Yes, I do. I am very conscious of this problem. Perhaps the Deputy was being charitable when he said he knew this was happening in England. Unfortunately, I am aware that it is happening in Ireland. This is where the overall strength of the big retail distributor can reach the stage where the use of his power and of the market which he has and the value of his orders to the manufacturer is such that he can put him at a great disadvantage. If any Minister for Industry and Commerce were to say that the time was nearly nigh when he must start thinking in terms of introducing minimum resale prices rather than maximum ones he would be saying something that would be politically dangerous. In the grocery trade in particular there is the business advantage of the "loss leader" and this has created a major problem. At the present time there is no legislation to prevent anyone from selling an article at a very low price. From the housewife's point of view quite obviously it would not be popular legislation.
Throughout this Bill the term "the common good" has been used to a considerable extent. Essentially what is meant is that the examiner or I can refer to the commission the investigation of certain practices that are developing where the common good might be affected and where it might not be to the advantage of the consumer in the long term. I am glad to say that the chairman of the Consumers' Association saw the point in this connection with regard to a statement I made recently.
The general public are becoming aware of the overall danger to the welfare of the community with regard to the practice adopted by distributors of using the "loss leader" line. The public are aware that this is not always in the best interests of the consumer. I realise that it will be necessary to introduce a considerable amount of legislation. I have been speaking for some time about consumer protection. Deputy Fitzpatrick and Deputy Belton drew attention to the problem of the impression created in recent advertisements that turnover tax is not being charged. There is no doubt that turnover tax must be paid. The impression may be created that turnover tax is not being charged because it is not being added at the check-out point but the fact is that all distributors must pay this tax. It is one of my proposals to introduce legislation and make orders indicating that the selling price of articles must be displayed and that the prices indicated must include the taxation element, whether turnover or value-added tax.
Will the Minister legislate that when a retailer indicates the price of a pound of tea or coffee the price must include the turnover tax?
Yes.
In all cases no turnover tax would be added on as distinct from being charged at the check-out point?
That is my intention.
I think the Minister is right.
A number of years ago a number of retailers set up in Ireland. They imported cheap furniture and, in fact, they bought as little as possible from the Irish furniture manufacturers. I am frightened that big companies might come in here when the tariffs go and that they will buy only from the manufacturing companies in England. In this way they can squeeze out the Irish manufacturer. Is there any way that the Minister can prevent this happening? A situation could arise where a firm would approach a manufacturing company for, say, a consignment of chairs. They might tell the Irish company that instead of paying the normal price of £6 they would only pay £4. If this were not acceptable to the Irish company the firm might refuse to sell any of the Irish-made goods in their premises. Is there any way the Minister can control this?
I think the Deputy is asking a lot here. We must accept the straightforward fairness of trading. Even though a firm might come here and sell only imported articles which they might sell at a cheaper price, I cannot see myself bringing in legislation to prevent that. On the other hand, I have enough confidence in the Irish housewife to put her money where her husband's job is although I realise that this is not being done to the extent I would wish.
The Deputy mentioned an example of a firm telling a manufacturer that they would only pay £4 for an article for which the manufacturer wanted £6——
The manufacturer would need to get the £6.
I am conscious of this aspect of trading across a very wide sector. The Deputy is assuming that the firm could buy the article for £4 outside this country——
I was referring to an example of a firm having their own manufacturing company in England. By importing their own products they would make a profit and would squeeze out the Irish manufacturer.
I am worried about the big power salesman, the man with a monopoly in the distributive business, misusing that monopoly in order to squeeze out the manufacturer, but I think the Deputy is stretching the overall possibilities too far. I know there will be more and more competition from outside in the EEC but I am mindful of the fact that the overall national spirit of the average man and woman will combat that to a considerable extent.
What the Minister has said is happening at the moment. If a person has a big group of retail outlets here and a manufacturing company in England he can sell his own goods in his outlets here. He can push the Irish goods to the back of the shelves, cut the price of his own goods and run down the Irish company. This is happening in the company to which I referred.
The Minister made a very fine contribution in suggesting that he might make an order—at all sales, I presume, in the country under the supermarket system, or the system whereby you serve yourself and pay at a check-out—whereby the 5 per cent turnover tax would be included in the price displayed on the article on the shelf and not charged as extra at the check-out.
I do not think that the entrepreneur or the person who is a bit smarter than his neighbour and produces a gimmick should not get the reward for the gimmick. This is a natural sequence of events. We ought have a look at the supermarkets versus the small shops in a general way. I would venture to suggest that it is true that the advent of supermarkets resulted, broadly speaking, in a wider variety of goods being available not only in supermarkets but in small shops, and in a reduction in price. Some of the moneys which were squeezed from manufacturers by the great purchasing power of supermarkets and chains were passed on to the consumer.
As well as that, the supermarket proprietor who was such a large buyer could provide a standard of goods and a variety of goods which placed the small shopkeeper very much on his or her mettle to compete with him. The small shopkeeper may have benefited to a great extent because, if the supermarket proprietor with his colossal purchasing power and colossal directing power to the manufacturer, could demand what he wanted, it was likely that the same article would be available to the small shopkeeper as well.
I could not agree more that there is a grave danger of unfair trading in the case of the supermarkets versus the small shops. The Minister mentioned the loss leader. The loss leader is something we must take note of under this section. It might be bananas today, soap tomorrow, and easy chairs the following day. It is an elusive will-o'the-wisp like Proteus who had the power to change himself into something else at will.
There will be the discerning housewife who will use her discretion if she has time. If she has seven or eight children at home and a hungry husband coming home at 1 o'clock she will not have time. If she has two or three supermarkets within a few hundred yards of each other in the vicinity she will buy the loss leader, if she wants it, and go over to another supermarket for the rest of her goods at a slightly smaller price than she would have to pay in the supermarket with the spectacular loss leader. She might even buy the loss leader in the other supermarket.
This percentage of housewives would be a very small fraction of the total number. The housewife is, perhaps, the person most pressed for time. She has to get the children out to school, clean up the house and prepare the lunch, so she has not much time to make her purchases and get home again. Therefore, she is more or less at the mercy of the purveyor of goods if he is powerful enough.
It would be unfair to the supermarket proprietors to say that no good came from their operations. Good did come in the variety of goods and prices. I wonder can the question of the small shopkeepers versus the supermarkets ever be solved properly, fairly and humanely? The purchasing departments of the supermarkets can do a lot of good. Many of them have laboratories in which they test the quality of articles such as woollen garments to see whether they will shrink, or whether they will stand up to wear, and to see whether they are, in fact, what they are meant to be. This is a good thing and it could never be done by the small shopkeeper who probably benefits from it.
Deputy Belton mentioned the easy chair for £6 or £4. It is quite obvious that, unless there was complete automation as against very old-fashioned production, a difference of 50 per cent in the cost of an article could not arise. Most of the articles sold in supermarkets are ordinary articles used in most houses. They are not the sort of thing you might buy in certain exclusive stores in Grafton Street. They are the type of thing you might buy in any furniture store. Deputy Belton's example showing such a wide discrepancy in cost is a clear example of how a furniture manufacturer might be put out of business, or severely handicapped if he had the money to carry on until he could produce sales outlets for himself.
Twenty years ago the man who produced the industrial goods was the boss and the shopkeeper was very much the small boy. He was less of a small boy if he had a large shop and more of a small boy if he had a small shop. This has now turned full cycle. The cost of production is less. There is ease of production more than there is ease of selling. The man who has got his hands on a large slice of the retail outlets—and I say this in a most measured way; I have been extremely measured in what I have been saying in relation to small shopkeepers and supermarkets but I think neither of them will like me when I sit down—can put the small producer out of business. I do not suggest that any supermarket operating in this country ever used that power but it could be used if a small producer was foolish enough to let all his produce go to one supermarket chain. It is a very difficult problem for the Minister.
I welcome this Bill in broad principle. It is our job to examine it on Committee Stage. I know it will not produce a perfect solution but it is necessary. I am glad the Minister had the courage to say that this is so, having said that it would be very dangerous politically to say there should be minimum prices for grocery goods. When he said that, I thought back in history to some fellow who once said: "I have said it," and the Minister did say just that. I think it will be a difficult path for the Minister, but I accept completely that there was some necessity as between the three sections—the supermarket operator, the small shop and the consumer—for what one would almost term interference to see that there is fair play for all concerned. I think this section does as much as it can.
(Dublin Central): I would like to comment on subparagraph (c) which enables the Minister to make such provision as he thinks necessary to ensure the equitable treatment of all persons in regard to the supply or distribution of goods or the provision of services. What I have in mind is the big purchaser who can go to a manufacturer and get a 25 per cent discount and the small retail outlet going to the same manufacturer who can only succeed in getting 2 per cent. I am wondering whether under this provision the Minister will have power to see that some equitable treatment is given to the small retail outlet in relation to its small purchasing as against the larger retail outlets.
I believe that the large purchaser who gets the 25 per cent discount is automatically affecting the list price of goods, because a manufacturer who gives the large retail outlet this kind of discount must rethink his manufacturing costs and there is every possibility that when he is going over his costings, the list price will have to be increased, if he is to give this large discount to the big retail outlets. I was wondering if the Minister can regulate this in any way because I believe there is a terrible discrepancy between the discounts which the large retail outlets are getting as against the small retail outlets. Under this section, will the Minister have any power or does he intend to look at this particular aspect of the wholesale or manufacturing trade?
I endorse the particular point which Deputy Belton has made, but perhaps he did himself a disservice in quoting the figures of £6 and £4.
I do not think he did.
Mr. Belton
No, I did not.
I think he clarified it very fully by so doing.
Yes, clarified it in principle by so doing. This is a matter which it is absolutely essential for the law to deal with. It may be cumbersome and it may be impossible in certain cases, and for a person like me who is not intimate with the details of business, it is very hard to provide a reasonable answer, but it strikes me that if a supermarket makes such an approach to a manufacturer, the documentation should be sent to the Department of Industry and Commerce and kept there for future reference. If the unfortunate man has to go out of business, he notifies the Department that he has gone out of business and believes that it is this marketing activity of the supermarket which was responsible for it, and at this stage the Department keep a very close eye on the supermarket to see that they do not boost their subsequent prices when they have no competitor.
This may be a cumbersome way of doing it and I expect that some people who know business much better than I do would say that it is impossible to work, but I think the problem is so important that legislation should not be concluded without some answer being provided. It may not work, but with the experience got from it some other method might be devised.
Deputy Fitzpatrick raised another point and I do not think it necessary to remind the Minister that I was in his presence when a certain Member of the House told him that when purchasing certain goods from a manufacturer, it was pointed out that he would get those from a distributor, provided he made up the goods in the interests of the distributor. This is another situation which should be dealt with. It was a restrictive trade practice, to my mind, that when making up the goods they could only make them up for a particular person. This was imposed on them, not alone by the person for whom they were making up the goods but by the maker of the actual material.
We are talking still about this section 8 which deals specifically with all the orders I may make after getting a report from the Restrictive Practices Commission. All the matters raised here by the various Deputies are in themselves matters which can be considered by the Restrictive Practices Commission in relation to distribution. The practices to which Deputy Belton in general referred, and to which Deputy Gibbons also referred, are certainly practices which can be investigated under the provisions of this Bill.
Deputy Fitzpatrick raised the question in general of discounts to traders as such and talked about what we call bulk purchase which qualifies for the greater rate of discount, the sizeable bulk purchase. This is something that has been there for years. It has developed, and it is something which it seems logical to see, say, in the jam trade, that 50 gross of jam qualify for a certain rate of discount, where ten gross qualify only for so much, and then five gross and down to one gross. Certainly from the manufacturer's point of view, there are far less transport costs maybe, far less organisation and far less overheads if he is able to sell an amount of 50 gross orders rather than to have the equivalent amount in ten gross lots distributed all over the country. There is a limit and I think this is what Deputy Fitzpatrick may have been speaking of.
You cannot have bulk buying picking up a discount rate to the extent that eventually the manufacturer has to give more discount than the profit enables him to give. This is the subject we have been discussing at length here —the volume of the order developing to such an extent that the manufacturer is working for very little and eventually finds himself working at a loss or going out of business. This, in fact, is what this whole section is about, enabling me to make orders prohibiting or regulating practices in relation to the subject matter of any recommendation made to me by the Restrictive Practices Commission.
I might point out, in view of the problems that have arisen in this regard and lest the House might feel that nothing has been done in the light of the problems that have developed in the distribution trade, and especially in the grocery distribution business over the past few years, that I have already told the House today in reply to a question, and I have been pointing it out for some time, that I am as of now awaiting a comprehensive report from the present Fair Trade Commission arising out of a pretty thorough and detailed investigation which they conducted into the grocery trade last year. I indicated in the House at Question Time today that I expect to have this report to hand before the end of this month.
The investigation was so exhaustive that I expect to receive a comprehensive report and as I have indicated I will exercise my power as Minister to make orders arising from the recommendations that may be made, bearing in mind what is best in the common good. Of course, I do not know what may be the recommendations but from normal reports that have come to hand arising from the exhaustive inquiry that was held and in line with the solid and sensible recommendations that the existing Free Trade Commission have been making to me and have made to my predecessors I expect there will be some sound recommendation in relation to fair trading. Again, this is an extension of the existing arrangement under the 1953 Act for the purpose of improving existing legislation to deal with the prohibition of practices and methods of competition which are unfair, without specific reference to prices.
Regarding a point made by Deputy Fitzpatrick and supported by Deputy Donegan here, again, we have the big groups becoming involved so that it is a case of the tail swinging the dog. The Minister has said that, in respect of jam, discount can range from 20 to 2½ per cent. If one considers this he will find that the discount may be 5 per cent on the first gross or that, perhaps, 7½ per cent would be the discount instead of 2½ per cent. Because of the pressure brought to bear by the supermarkets, this profit is cut. In other words, they might be giving 7½ per cent as against 2½ per cent only to give 5 per cent to the big groups who would cause trouble if they were to stop an order for one month.
I agree with the Minister that it is cheaper to leave six gross at one place rather than to distribute one gross in each of six places all over the country, but if they gave less discount to the big groups they could still make a good overall profit. This is where the big man is squeezing out the small one.
Take the case of a person I knew, in England, who was manufacturing women's dresses; he was getting orders from many retailers but gradually he let these go and took only very big orders. The big groups from whom he was getting these orders then began to request him to reduce the prices. He complied with their requests until he realised that is was no longer economical for him to supply them so that he recommenced supplying the retailers whom he had been supplying originally. That was not so bad in England because there were other outlets but if a manufacturing company here were to find themselves in the same situation where they would be caught by the three big supermarkets and if they were to reduce their prices until it could be no longer viable for them to continue in business, they would go out of business altogether.
I agree with what the Minister is doing here, which is basically to save Irish industry against foreign industry. I am against big business chains in Ireland who, in the interests of shortterm competitiveness, are inclined to keep down prices of goods manufactured by small industries. The big groups have the advantage of selling in bulk and it is as good for them to sell 6,000 articles at 5p as to sell 3,000 articles at 10p. They do not have to worry because they can buy in England or elsewhere. I do not know how this can be covered completely unless, perhaps, there could be some legality introduced now. By the time such practices are reported it is too late to take any action. This will happen here as it has happened in England and in other countries. The small concerns can be squeezed out to the detriment of Irish workers.
The only point I would like to make at this stage is that so far as the question of quantity discount arises, I do not think there is anything wrong in this. One of the things that the small shopkeepers have done is to group themselves into cooperatives for the purpose of bulk buying so that they can avail themselves of the larger discount.
They have delivery costs afterwards.
Yes, but they are their own shareholders so that this cost should balance out. Some of these groups are registered under a name containing three letters. The benefits that accrue to them from bulk buying enable them to be competitive in so far as they can advertise to advantage. This is a natural result of what has happened here. That is all right but what would be wrong would be if the small man was suffering reduced discount because of the bigger concerns being able to avail of increased discount. If the prices are fair that situation should not arise and the position should be that the manufacturer would begin to look at the level of discount he was giving. It would be wrong if this House were to create dissatisfaction with regard to quantity discounts because the small shopkeeper also has utilised these to help him compete. He would never have had to do that if the very large buyers had not appeared on the scene. However, we cannot turn the clock back. This has happened.
(Dublin Central): I did not want to give the impression that I was against this. What I am saying is that the manufacturer is pressurised to such an extent that he gives discount below the profitable price. This is the danger that I see. When it comes down to that level I believe the manufacturer must have a look again at his costings and, having had a look, he will probably have to increase the list price and that increase will affect the small purchaser as well as the large purchaser. We must protect the small retail outlets. Efforts are being made to protect the small farmer. We will have to protect the small retailer. Every week small retailers are closing down because they are not able to compete against the big supermarkets. The advertisement in last night's paper says that no turnover tax is charged. This is utterly misleading. It gives the impression that large combines are exempt from turnover tax. This is what I object to in this kind of advertising.
I should like to echo the sentiments expressed by Deputy Fitzpatrick. Only last night a small shopkeeper came to me and expressed a similar concern about this particular advertisement. I do not know if the Minister has any power to do anything about this. I expect he has not.
What happens is that a bigger percentage discount is given to the large retailer. Where it is 2½ per cent in the case of the small retailer it can be as high as 50 per cent in the case of the large retailer. On an article costing 8s the small man will get 2½ per cent while the big man will get 50 per cent because he buys in such large quantity. This is what is wrong.
There seems to be a degree of unanimity in the House about the problems and the problem is how to tackle these problems. This is really what is behind section 8. I expect that suggestions as to how to tackle them may come in the latest report from the Fair Trade Commission.
Question put and agreed to.
SECTION 9.
Question proposed: "That section 9 stand part of the Bill."
I should like the Minister to indicate to me what sort of examples he has in mind in relation to material or methods which a manufacturer or a processor might refuse to use?
I am in a difficulty here. This subsection is a re-enactment of subsection (4) (1) of the 1959 Act. The reason for this provision in the 1959 Act was that the restrictive practices relating to the use of particular material or particular methods for manufacturing or construction purposes might prevent the reasonable development of trade and business and might inflate costs. It was not the intention that, following the holding of an investigation, orders would be made, but it was felt that it would serve a useful purpose if restrictive practices of this kind were inquired into and reported on by an impartial body, such as the commission. It transpired that the necessity to use this power of inquiry was happily never realised but, in reviewing the situation, I decided to retain that power and that is the reason why it is there. We had the original Act of 1953. Then this was included in the 1959 Act, but the occasion to use it never arose. It is no harm, I think, to have it in the Bill.
Fair enough.
It was not the intention to insist, perhaps, on the use of Irish raw materials rather than imported materials. Was that in mind?
I imagine it could have been. I am somewhat at a loss as to the working of the Minister's mind in 1959.
That was before he became international and outward looking.
It might have been one of my illustrious predecessors, such as the present Taoiseach, but there must have been a good reason for having it there and what the Deputy has just said strikes me as one good reason for keeping it there.
The Minister is aware that, if we were to decide to give preference to Irish raw material and insist that it be used, the price being equal, under the Treaty of Rome we will not be in a position to do that, as I understand the situation.
Yes, but I had this legislation drafted before our final decision on that and I do not see any reason for deleting it.
I agree. If it does become impotent it will be no harm, but I think the section is all right.
Question put and agreed to.
SECTION 10.
Question proposed: "That section 10 stand part of the Bill."
I do not see any objection to the special review machinery.
Question put and agreed to.
Sections 11 and 12, inclusive, agreed to.
SECTION 13.
Question proposed: "That section 13 stand part of the Bill."
Is the Minister happy that he should be the man to appoint the examiner at all times?
No better man.
That is a matter of opinion.
Question put and agreed to.
Sections 14 to 22, inclusive, agreed to.
SECTION 23.
Question proposed: "That section 23 stand part of the Bill."
The penalties appear to be quite severe but where you are playing for big stakes you must have big wins and big losses. For the want of any suggestion as to how they could be varied for the improvement of the Bill, I have no objection to the section.
Question put and agreed to.
Sections 24 to 28, inclusive, agreed to.
FIRST SCHEDULE.
Question proposed: "That the First Schedule be the First Schedule to the Bill."
At an earlier stage I said that while the Minister is there he should be Minister. It is my job to get him out if I can but so long as he is there he should exercise his powers rather than hand them over to other people. He is going to hand over power to these people. Could he indicate from what section of the community they will be drawn? I do not want to pin him down. He is to appoint the chairman and at least two more members of the Restrictive Practices Commission. Does he intend to have a consumer, somebody from a large supermarket chain, somebody from industrial production, a small shopkeeper or somebody from RGDATA or somebody like that, or does he intend to take people at random or from the selection of the members of the local cumann?
That is very unfair.
It is not meant that way.
At present in the Fair Trade Commission we have the chairman and two part-time members. This provision allows for the expansion to five full-time permanent members, including the chairman. There is no particular field that I could specify from which members will be appointed. Apart from the chairman of the present commission, there is one legal member and the other is an expert in the distributive field. This Bill extends the field from trading into services and any inquiry might involve some of the professions. I think it would be impossible at this stage to spell out the type of people who would constitute the commission. At any stage the Minister may nominate temporary members for a particular inquiry. He would not, however, nominate two temporary members for one inquiry. For a threeman inquiry it would be necessary to have two permanent members and one who would be drafted in with perhaps particular expertise for that particular matter. He might not be suitable for the following inquiry and it is rather unlikely that he would. It is quite possible that the type of intelligent man that would be chosen would be the chairman of a cumann but he would not be chosen because he was chairman of a cumann but because of his other qualities.
Question put and agreed to.
SECOND SCHEDULE.
Question proposed: "That the Second Schedule be the Second Schedule to the Bill."
I really believe that the best way to do this is that the Minister at the time, whoever he might be, should appoint the examiner. I have no objection to this procedure.
Question put and agreed to.
THIRD SCHEDULE.
Question proposed: "That the Third Schedule be the Third Schedule to the Bill."
I should like the Minister, in relation to service, to indicate what would be unfair practices. I have indicated one that I thought might possibly be an unfair practice and the Minister agreed that in certain circumstances it might be. For instance what would the Minister think, in regard to the supply of goods by chemists, would be an unfair practice? Would he consider the absolute fixing of the price of goods by a pharmaceutical association, for instance, an unfair practice? I am not criticising chemists but the practice is that every chemist has a large book including every item it is possible to price in a chemist's shop, whether it is a proprietary toothpaste or a medicine prescribed by a doctor. Apart from the normal prescription fee this book fixes the price. Perhaps it is a bit difficult to ask this across the House at this stage.
I should also like to know in regard to services if certain things are laid down that must be adhered to by the customer or by the purveyor of services, is that an unfair practice? May a group of professional men say they will not do a certain thing which from their point of view does not suit them but is something that might suit one purchaser of the service and not another? Would the Minister discuss those two instances?
I am satisfied that the Deputy is being very reasonable. Outlined in this Third Schedule are all possible contingencies. This is where the Deputy feels he may be unfair and it might be unfair if he wanted me to go down through the full Schedule and say that this, that or the other is an unfair practice or unfair operation of a service. The whole object of the exercise here is to give instances of practices that the examiner can look into. If he decides that there is a prima facie case of unfair service or unfair practice then he goes to the commission and reports to them that in his view a group of traders or professional persons have been guilty of unfair practice and he must be in a position to substantiate that allegation by evidence. The Deputy asks me at this stage to determine what is or what is not an unfair practice. I might have a view. The Deputy might have a view.
I have expressed no view. I merely gave examples.
The Deputy put a question earlier on as to whether I thought a certain practice was unfair. I might say, off the cuff, that a certain practice would be unfair. There is conduct which I as a man in the street might consider unfair but which is regarded within the profession as fair practice. Probably the profession that people criticise most is the legal profession. As a Deputy I meet people who complain that their solicitor, A, is not conducting their affairs properly but that solicitor B will not take the case. In some cases B would be very foolish to take the business from A because the reason why A is not doing the business is that the client is not the sort of person anybody would want to do business with. There would be background reasons for A not taking the case. If, on the other hand, B refuses to take the case, he might be regarded as being guilty of refusing to give professional advice to a client. I would much prefer to determine what is a restrictive practice on the basis of a recommendation made to me by the commission following full-scale examination.
There is a code set out in the Third Schedule to be followed by persons engaged in trade and services. How is it proposed to police this and to carry it into effect? Will the Minister wait until he gets a complaint? Will the commission wait until they get a complaint? Will there be people permanently employed in policing this and, when they come across a case, will they take action in regard to it? In the case of the imposition of unjust or unreasonable conditions, who is to decide what is unjust and what is unreasonable? Does it require a court case? Can it come back to the Minister and can the Minister decide what is unjust and what is unreasonable or will it be open to a number of interpretations as to what is unjust and what is unreasonable? Who is the final authority? Must the matter go through the courts?
This Schedule is there solely as a guide. It is for the guidance of the commission and the examiner. This is one of the changes made in this legislation. The commission has not the power and will not have the power to undertake an inquiry where they could before. The commission can undertake an inquiry only when they have been asked to do so by the examiner or by me, through the examiner. The examiner is the ombudsman through whom all complaints are channelled. He having examined complaints decides there is a case for examination by the commission and submits it to them. Deputy Donegan asked for a definition. This is there only as a list of restrictive or unfair practices.
(Dublin Central): In the event of a firm being brought before the commission, the procedure can be protracted. It is normal practice for a firm to employ solicitor and senior counsel to defend them. In the event of the commission finding that there was not an unfair practice, will the firm get costs from the commission?
I am glad that Deputy Fitzpatrick has raised this point. I had just been checking back on my file because on Second Reading I passed over it rather rapidly.
Deputy Cooney, on Second Reading, suggested that an inquiry in a specialised field might involve the production of expert witnesses, even witnesses from abroad, and would almost certainly entail the employment of professional advocates. I said that I would look at this matter. It arises under section 5. I said that to my knowledge there had been no demand for compensation or financial aid in such circumstances in the past and that I did not consider the granting of such compensation would be desirable. Having regard to the fact that the operations of the examiner could give rise to increased activity, I did promise to look into the matter and I have done so.
At every inquiry held by the Fair Trade Commission there have been expert witnesses. These experts came from the trades or businesses involved. In inquiries involving the professions I presume the experts would come from those professions. The suggestion that experts would have to be brought from abroad carries with it the implication that the professional people in this country would not be fully capable of managing their own affairs. The Deputy probably did not intend it to be taken in that way. Deputy Fitzpatrick makes the point that counsel might have to be engaged.
The inquiry held by the Fair Trade Commission or the Restrictive Practices Commission, as it will be now, is not the same as a trial in a court of law. The manner of the presentation of the case is of very little importance at an inquiry because the commission is not concerned with establishing the guilt of any person but with the economic issues arising out of the restrictive practices in a trade or service. I think Deputy Donegan spoke earlier of a man committing an offence unknown to himself. There is no offence at all. Perhaps wrong methods have developed. We are having a look at those wrong methods to see if we could call those wrong methods unfair practices with a view to doing away with those unfair practices. If, arising from the inquiry, the Restrictive Practices Commission make a recommendation to the Minister that he should do something about it and if arising from the recommendation he does something about it, then to commit the offence subsequently would constitute an offence. There is nobody there defending themselves and in danger of being found guilty.
I think if I were to undertake to write into the Bill a question of compensation for witnesses called or for legal advice sought by people who would consider themselves defendants in this sort of case it would only increase the cost and would encourage groups—generally it would be groups or associations—and induce them to incur what I feel would be unnecessary expenditure on the employment of expert witnesses or on the engagement of professional advocates in the expectation that such expenditure would be recouped by the State. Having given the fullest consideration to the points made by Deputy Cooney and by Deputy Fitzpatrick I am not disposed to do this. In fact, I am totally opposed to it.
(Dublin Central): I am sure the examiner will be a very competent man and he will initiate the inquiry. The commission will depend a lot on his investigation and on the evidence he will supply. I believe there will have to be expert people to present the case to the commission from the other side if the commissioners are to form a balanced opinion. I think it would be a bad idea if the examiner had no defence put up against him. To give the commission a fair picture and enable them to form a right judgment the other side of the case will have to be put forward properly. Irrespective of whether there are costs or not, I believe you will have to have experts on the other side to put the evidence.
I fully agree with Deputy Fitzpatrick in this. If the examiner is not an expert at the beginning he will become an expert. He is setting out to establish that a group or firm have been pursuing unfair practices. He will be an expert and the people he will have with him and who will examine every detail will be professional people. I agree with Deputy Fitzpatrick that you must meet this with some sort of professionalism if you are to put the case of the people in business. You have this in every walk of life today. You have it in planning appeals. You have expensive experts being employed by people who have to defend themselves and it pays them to do it. I think what Deputy Fitzpatrick is looking for is compensation where eventually it is shown that a firm or group have been unreasonably put to the expense of proving that they were right and that the commission were wrong. He is not looking for expenses if they are beaten. If they are beaten they are not entitled to expenses but if the commission are beaten they should pay the expenses of the other side. That is a fair enough thing to look for.
The Minister said the commission would be activated by the examiner. I take it the examiner would get his information from the public or would be prompted by the public to inquire into a certain situation. If the Minister suggests to the examiner that something should be investigated does this mean that it automatically goes to the commission or has the examiner the right to kill it when he examines it himself?
Deputy Clinton talked about persons being found innocent. The situation that has obtained since the passing of the 1953 Act has been that the Fair Trade Commission themselves were able to set up an inquiry. They would perhaps get a complaint from somebody. This would be examined and arising from a pretty exhaustive examination, as they saw it, they decided to hold a public inquiry. When the Fair Trade Commission decided to set up this public inquiry one would logically have to assume that they were prosecutors and judges at the same time. This meant that the particular sector being examined had to be found guilty before an inquiry was started at all.
You had to have a prima facie case before you started.
Under this Bill the commission consider nothing. This examiner, whom Deputy Clinton anticipates will become an expert at prosecuting in due course, brings the case to them. The commission are now approaching the job quite objectively. They have no preconceived ideas.
Deputy Fitzpatrick raised the question of the advocates on behalf of the defence. Let us take an inquiry into the grocery trade. The examiner decides there should be an inquiry into distribution. He has already had complaints from the man in the street. He would also have taken up the complaints with various distributors, various manufacturers and other people. Arising from all this he feels there is something wrong. He asks permission to investigate and the commission put a notice in the paper saying they are going to hold a public inquiry on a certain date and asking all people interested to indicate their interest so that they can be heard at the inquiry. This is held. The question arises as to who is the defendant. This is a straightforward open inquiry into the distribution of groceries or petrol. We had a recent one about the electrical industry.
You made two orders.
The Electrical Appliances Order was in operation. At the time there was an organisation called the Federation of Electrical Industries —I think they are a different group now. They went to the inquiry on behalf of their members. The commission found that this organisation were guilty of restrictive practices. As far as I know they came and voluntarily gave their evidence and endeavoured to justify their reasons for preventing the development of new outlets. Having heard all the evidence, the commission decided that there should be better distribution and that some of the practices were unfair. However, that did not mean that the Federation of Electrical Industries were people who should be sent to jail or put into custody. What was condemned was the practice that had evolved.
The situation that obtains is that a group in answer to an advertisement in the newspapers contact the commission and attend a hearing. Frequently, those people who attend the hearing offer evidence on their own behalf. It may be found subsequently by the Fair Trade Commission that a practice has developed which may be unfair and should not be encouraged. In that context there should not be an arrangement whereby the State would be committed to paying the legal or other expenses of that group.
It is not the people who are charged in this matter—it is the practices that have developed that are being investigated. I do not visualise the type of situation mentioned by Deputy Fitzpatrick of some person being found guilty. There is no question of his being found guilty; what might be established is that a certain practice should be discontinued.
I do not think that there is anything the Minister can do on this. We should not disguise the fact that there will be expenses. The Minister has correctly pointed out that it is the practices rather than the people involved which are being investigated.
Some months ago there was an inquiry into the flour and bread industry. The flour millers indicated they were losing £26,000 per week and the Government instituted an inquiry to see if this was true. There was a delay of from 15 to 18 months. I was present at the private session as a witness and I know that very many professional people were involved. The Irish Grain and Agricultural Merchants' Association had senior counsel and the second biggest firm of auditors and accountants in the country to act for them. They had a firm of solicitors which deals with the Road Haulage Association to give expert evidence regarding the cost of haulage. I shall not disclose the amount involved but as the inquiry continued for more than a week there was a considerable amount of money involved. Apart from their own staff, the Flour Millers' Association had the biggest firm of auditors in the country acting for them in addition to senior counsel and other professional advice The bakers also had professional advice. People from the various trades attended the inquiry at their own expense, they absented themselves from their businesses and provided their services. In due course awards were made. The Minister might say that absolute justice was done, but one must take into account the cost involved for all concerned. The Minister might regard this as part of the cost of producing the goods and say that when he would come to talk with those people in 18 months time the costs involved would be written in. This is such a "grey area" that I do not think the Minister can do anything about it. I agree with Deputy Fitzpatrick that there is some case here, but I do not think the Minister can do anything about it.
Question put and agreed to.
Title agreed to.
Bill reported without amendment, received for final consideration and passed.