Skip to main content
Normal View

Dáil Éireann debate -
Tuesday, 11 Jul 1972

Vol. 262 No. 7

Restrictive Trade Practices (Confirmation of Order) Bill, 1972: Second and Subsequent Stages.

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

The purpose of this 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 motor spirit.

The commission's recommendation is contained in their report of a public inquiry which my predecessor requested following representations made to him by the Irish Motor Traders Association, now the Society of the Irish Motor Industry, who wished to have restrictions applied to growth in numbers of motor spirit retail outlets.

A previous inquiry relating to motor spirit was carried out by the commission in 1961. That inquiry was mainly concerned with the solus system—the system under which a retailer undertakes to handle one brand of motor spirit exclusively. It was found that the system had certain advantages, but that it should be subject to regulation because it encouraged an excessive increase in the number of outlets. The then Minister for Industry and Commerce made an order in 1961 designed to regulate the system and the following year the commission agreed certain guiding principles with the petrol companies with the object of limiting the increase in number of retail outlets.

The report of the recent inquiry states that the pattern of supply and distribution of motor spirit has not changed significantly since 1961. There are at present six companies supplying the market; only one of these is wholly in Irish control. The three largest companies—Esso, Shell and Texaco—are subsidiaries of the companies which formed the consortium operating the Whitegate refinery; two others buy their requirements from these three and the sixth imports motor spirit. One trade association—the Society of the Irish Motor Industry—caters inter alia for the retail motor trade, including petrol retailing. The society have two classes of members—wholesalers and retailers. Distribution of motor spirit has become more efficient since 1961 by reason of such developments as increased tanker size, reduction of number of depots, round-the-clock operation of road tanker fleets and assistance to dealers to enable them to increase storage capacity, with the result that prices, exclusive of duty, are virtually unchanged.

Altogether 25 witnesses were examined in the course of the inquiry. They included representatives of the Society of the Irish Motor Industry, the petrol companies, motor spirit retailers, the Private Motorists Protection Association, various public bodies and the Department of Local Government. Growing control by the petrol companies of the retail trade through ownership of outlets is the salient fact to emerge from the inquiry. While the total number of dealer outlets seemed to have stabilised itself between 1962 and the time of the inquiry in 1970, and to that extent the guiding principles which had been agreed with the petrol companies had been successful, the number of company-owned retail outlets had been increasing unduly and the proportion of total sales of motor spirit through these outlets had increased from 16 per cent to 31.1 per cent. The commission felt that if this trend were to continue unchecked the petrol companies would be likely to secure substantial control over retail distribution in the foreseeable future. Such control would introduce a degree of rigidity into the market which would be likely progressively to reduce competitive pressures and which would lend itself more readily to restrictive practices such as market sharing and pricing arrangements. They considered, therefore, that the exigencies of the common good demanded that for a limited period these companies should neither purchase nor construct additional company-owned outlets. They recommended that all the petrol companies be invited to observe this pause on a voluntary basis on the understanding that it would apply to newcomers as well as to existing companies but if they were not prepared to do this the pause should be statutorily imposed. They also recommended that the maximum period of five years allowed for solus agreements under the 1961 order should be increased to ten years because the five year limitation had proved self-defeating in shifting the interest of the petrol companies away from dealers to the development of company-owned outlets.

Additional recommendations were that the 1961 order should be amended to prohibit any differentiation in the terms and conditions of supply of motor spirit between company-owned outlets and independent retailers; to extend the present obligation on the petrol companies to furnish information in respect of their own outlets to include information on facilities afforded to independent retailers; and to modify the existing prohibition on price discrimination to allow a surcharge to be made by petrol companies to retailers in respect of deliveries below a specified minimum size.

I accepted the recommendations of the commission and invited the petrol companies to observe a voluntary pause in the construction and acquisition of company-owned stations. Some of the companies were not prepared to do this, however, as they felt that statutory control would be more effective and more equitable. I therefore decided to make an order to give effect to the commission's recommendations and I informed the petrol companies accordingly.

Subsequently these companies made representations to me about certain provisions of the proposed order. They asked for exemption from the prohibition on the construction or acquisition of new company-owned stations in certain cases where their arrangements had reached such an advanced stage that withdrawal would result in severe financial loss not only for them but also for independent dealers and other private interests who were involved. I felt that in cases involving the construction of new stations the companies should be given a reasonable opportunity of completing their arrangements and I decided, therefore, that in such cases the order should not come into operation for four weeks after it was made. I was also asked to provide exemption where a company might dispose of a station and open up one in its place in another location, on the grounds that arrangements of this kind would not result in any increase in the overall number of company stations. I was not disposed to accede to this request but I decided that exemption would be justified in any case where a station was opened up in place of one which had been compulsorily acquired by a local authority or by-passed by a new road, provided the new station was in the same locality. Objections were also made to the proposal to allow petrol companies to levy a surcharge on deliveries below a specified minimum size on the grounds that such a surcharge would bear unfairly on remote areas of the country where the majority of dealers who take only small deliveries at a time are located. I mentioned earlier in my speech that distribution of motor spirit had become more efficient in the last ten years. One of the measures adopted by some of the companies in their efforts to achieve this efficiency was the withdrawal of supplies from retail outlets in certain cases where orders were so small as to make delivery uneconomic. I felt that, while the sale of motor spirit might not provide any substantial income to operators of small outlets, particularly in remote areas, nevertheless, an outlet attached to a shop, hotel or public house was a convenience for customers and it would be a good thing if the petrol companies could be induced to continue or to recommence supplying such outlets. The surcharge recommended by the commission would, it seemed to me, provide such an inducement and I decided, therefore, that it would, on balance, be unjustifiable that distributors should be prohibited by law from applying it, and the order provides accordingly.

Representations were also made to me that newcomers to the petrol distributing trade would have no chance of getting a share of the market if they were precluded from constructing or otherwise acquiring company-owned outlets. While I was not too happy with the situation where the scope for newcomers to enter the market was restricted I felt, nevertheless, that to allow them to develop company-owned outlets while prohibiting existing companies from doing likewise might constitute discrimination.

I also felt that newcomers could obtain a foothold in the market without necessarily constructing company stations or acquiring existing dealer stations. For instance, a new company could buy sites for sale to dealers and could finance the construction of stations on those sites by dealers in return for ten-year solus agreements, or dealers could be induced to sign solus agreements with a new company when their existing solus agreements with other companies came to an end. In any event, if it were found at a later stage that a new company could not enter the market because of the order the position could be reviewed. In all the circumstances, I decided that the order should apply both to existing companies and any new companies that might enter the market.

On 15th June, 1972, I made the Restrictive Trade Practices (Motor Spirit) Order, 1972, giving effect to the Fair Trade Commission's recommendations with the modifications I have already mentioned. The prohibition under the order on the opening of new company-owned stations will remain in force for a period of three years and it is my intention to ask the commission to review the position before the end of that period.

Orders of this kind do not have the force of law 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 order concerned. With a Bill of this kind, the order which it is proposed to confirm may not be amended by the Oireachtas but must be accepted or rejected as it stands. The matters with which the order deals have been the subject of a detailed public inquiry by the Fair Trade Commission, and their report which was presented to this House sets out the arguments in favour of adopting the provisions embodied in the order.

I commend this Bill to the House.

So do I. I speak on this Bill with specific knowledge because my father was the owner of the first petrol station between Dublin and Belfast which was outside a garage. At that stage, many years ago, an exception was made in his case because of a friend. While this order is restrictive in itself, the petrol companies have been far too clever and far too self-seeking in their approach towards the marketing of their product. Those of us in the trade have seen over 20 years a situation in which at times the petrol companies vied with each other in country areas to get shopkeepers and other people to set up petrol pumps and to get them under contract on the solus site system. Later on when they found that not enough petrol was being sold in certain places, they dropped them like the proverbial hot potato.

At the same time they were also trying to do other things like getting planning permission to set up solus sites on important arterial roads. This may be the sort of thing that happens internationally. It may be the sort of thing that has to happen, but it is not something we like to see in our country. I am glad that this order has come before the House. I agree that it is restrictive but I believe that restriction is necessary. Manners must be put on these people. They seem to have decided that they will run the country so far as their trade is concerned. They have decided what they will do, and for that reason I believe this is a good order.

The solus site system and the company owned site system were the modus operandi under which the companies vied with each other and at the same time, they fought with the prices section of the Department of Industry and Commerce for the last farthing per gallon, and to make sure that they got the highest possible price. The people selling the petrol and operating the solus sites—and I have been operating one in succession to my father—never got a decent profit. If you had a 24-hour site in Dublin and were selling thousands of gallons per day you had a goldmine. There are these goldmines but in this country they are very few.

In the normal course of selling this product the power was in the hands of the petrol companies, and did they use it? They certainly did. The Minister mentioned the refusal of a petrol company to supply if the cost of delivery was too high. That is an example of how they have behaved over the years. I am delighted that at last even for three years, which is a very short time, there will be a restriction on the setting up of further petrol outlets.

We do not need to buy petrol every mile of the road. There may be the odd person who has not got the money to buy more than two gallons but in a small car two gallons of petrol would bring you 60 miles. Therefore, there is no need to have a petrol station at every mile of the road. We must be normal and modern about this. On the M.1 and other roads in Britain at 20 mile intervals permission is granted for a petrol filling station on the basis that they will stay open for 24 hours per day and, when they stop doing that, the planning permission is removed. They must also provide, at a modest price, meals for motorists, toilet accommodation, wash-up accommodation and the basic facilities for minor repairs. That is the sort of thing that can never happen in this country because we had an intermittent war between the petrol companies and, at the same time, they were trying to get stations where there should not be stations.

I am delighted with this order but I must also say that something else has happened in the past six or nine months. The petrol companies knew about this. Section 3 (2) of the Restrictive Trade Practices (Motor Spirit) Order, 1972, provides:

This Article shall not apply in relation to a motor spirit station the construction of which was completed after the commencement of this Order if the whole of the station at and below ground level was completed not later than four weeks after the date of the making of this Order.

If I were so disposed I could tell the Minister of two cases where there is a rush on to beat this order by two major petrol companies, to their shame. They have their money and their sales of petrol and their share of the Whitegate Refinery, and they should not be trying to pick up the last shilling, and trying to compete with existing petrol stations which they made solus stations or were made solus stations by their competitors years ago. What is the date of the commencement of the order? It is very important that we should know this. Can the Minister tell us?

The official date is the day the Bill is passed.

In other words, from tonight on there are four weeks in which people who have got planning permission for petrol stations can get them to a certain stage of completion and comply with this order?

The Bill is not law until the order is passed.

That is tonight.

The Seanad has to pass it.

That will be next week probably.

I would claim that the month starts from the date of the order itself.

Which is retrospectively when? This is very important. Can the Minister tell me what is the date of the commencement of the order?

When the Bill has been passed. The date of the order is 15th June. Therefore the effective date becomes 15th July.

And if the petrol station is not "completed not later than four weeks after the date of the making of this order" which is 15th June, effectively 15th July, the petrol station cannot be considered?

"...if the whole of the station at or below ground level was completed not later than four weeks after the date of the making of this order". So, my interpretation of that would be that, if the ground level section has been completed on 15th July, it is in order.

And if it is not completed on 15th July, it is not in order?

That is my calculation.

That is very important. I know of only two. I despise this rush to beat legislation by persons in very big business, who should know better, against people in private business, who have very much less money and who have been serving people on the road that I speak of for many years. Of course, I am not talking about anybody on the Dublin/Belfast far from my constituency. The position is that the station must have road. I am talking about another road been completed at or below ground level before 15th July. That is all I want to know. I hope that those petrol companies who have been trying to "jump the gun" will not succeed in having these stations completed to that extent by that date. I hope that those whom they wish to supersede, the suppliers in a particular area, will ensure that these companies will be subject to the full rigours of the law under this order and that the Minister and the Department will ensure that that is done. If the idea is to restrict the number of retail outlets, this should be applied fairly. If I had been making this order I would not have given one day, even though that might have involved a loss to a petrol company that had started operations and had spent money. Once a concession is made, a powerful organisation can spend more than anybody else can afford and can succeed in complying with the order by having building work done even within a week or so. Therefore it would have been better not to have given a month during which people could rush to finish work.

In relation to the petrol trade generally, the system whereby, for long-term contractors and the giving of solus rights, better terms were applied to people who were prepared to sign their names to this, is one that I deplore because my experience of it both in relation to a small petrol station and other business is that, once your name is put on the paper, somebody else gets a better price. The big companies decide to give a certain rebate for a certain gallonage of oil. People are delighted to get the rebate. The moment they sign, there is another company that will come in and offer a price that is one-farthing less to somebody beside you. Such behaviour required to be investigated and I am glad the Minister did it. The application, while restricted, was necessary and I commend the Minister for having operated as he did.

Every miller, every shopkeeper and every person in business has uneconomic outlets. Very few of them have the impertinence to refuse to supply. As long as they pay, they are supplied. That goes for the smallest supplier and the largest supplier. I think of petrol companies who have been facilitated. They were facilitated under an inter-party Government in the building of Whitegate Refinery which, if the Minister were doing his job, would be expanded to twice its size. I think of petrol companies refusing to supply what they regard as an uneconomic outlet. It is time that the State informed these companies as to what they should do, instead of allowing them to decide what they will do. They should be made to operate in the manner that has been a feature of business since the inception of this State.

I want once again to indicate my view that any major petrol company that has not complied in detail with section 3 (2) of SI/150 of 1972 should not be allowed to trade.

Substantially, I am not in disagreement with the Bill. I have always regarded the price of petrol as being an overcharge. This has evolved because of the existence of a ring. On occasions the price of petrol is reduced by 1p or ½p a gallon. This shows that the control rests with a few people.

I realise the aim of the Bill is to regularise the sale of petrol. The small person in an outlying district should be allowed to sell petrol. There is a reassurance on that point in the Minister's speech. I do not disagree with what Deputy Donegan said, but he lives in a town. For those who live in isolated districts it is inconvenient that there should be a petrol station only every 20 miles. I see that what is envisaged in this legislation is to introduce the rule that exists in other countries whereby there is a distance of 20 miles between petrol stations. For a person in an isolated district who runs short of petrol, this would represent a considerable distance. The petrol companies mentioned by the Minister—there are only three—would have monopolistic control over the sale of petrol. For this reason I want to suggest to the Minister that they are not sea-green incorruptibles when given a monopoly. In the village of Ashford, County Wicklow, there was one petrol station, an Esso filling station, about three years ago. Two years ago another station was opened. In the last week another petrol station has been allowed. They have got planning permission. How they managed to get it I do not know. They seem to have got it extremely quickly. It is worked out to the last second, so to speak, so that they can beat the order the Minister is bringing in. I understand the Minister will bring in the order on 14th July. Am I right in that?

It is four weeks from 15th June. I said the 15th July. It is the 13th.

The day after tomorrow?

That is the Minister's date?

Yes—when the construction at or below ground level is to be completed.

Absolutely completed?

By the day after tomorrow. I hope they are caught.

Those private exploiters who got a licence are in a position to put up a third petrol station in a village which is virtually only a street with a few houses, a post office, a church and this petrol station. They have got planning permission. We will not go into where they got it from but my information is that they got it by political influence. They are able to open this petrol station. Only the foundations are laid. There is nothing else there. The Minister can ring up and find out or he can send one of his officials to find out if what I am saying is true. There are hundreds of cases like this all over the country.

I suppose word has gone out from the Fair Trade Commission that petrol pumps may be set up in different parts of the country to beat the order. This restriction will start in two days time. Perhaps what the Minister is doing is necessary but whenever Dáil Éireann are going into recess we always have legislation like this brought in. The Deputies are asked to acquiesce with everything and not hold up business, not to keep the Dáil going longer than necessary. By standing up tonight I am probably extending the sitting time of Dáil Éireann.

I am not satisfied, first of all, that small dealers should be restricted from having petrol pumps. They suit rural Ireland and the people who live away from large petrol stations. The trend in all legislation we introduce here is that it is all Dublin-minded or big-centre minded legislation. I want to put in a word for the small fellow, the person who lives in rural Ireland. I do not see why people who are in a small way of business in a small village, where there is no big company, should be restricted. The Minister said that the matter would be reviewed in three years time but that is a long time if people have got into the habit of obtaining petrol from those small people. The Minister for Finance is probably anxious to get more revenue from people who buy petrol.

This Dáil should legislate for everybody in Ireland. It should not legislate for Dublin and built-up areas alone. I appreciate that Ministers are surrounded by advisers who want to do things in the best interests of the country and are inclined to accept things hook, line and sinker. We have a great many monopolies in this country and I do not want to see any more operating. I want to put in a word for those whom the majority of Deputies represent, the people who live in rural Ireland.

I would like the Minister to state what is the position under the Rome Treaty in relation to the right of establishment in relation to this Bill. Is it in line with the EEC regulations? The second point I want to make is that it has come to my notice during the past year that a number of ordinary, decent people who were running their garages under the solus system found all of a sudden they were not owners of the sites on which they worked. There was a High Court action in relation to this brought by a number of what turned out to be garage tenants who thought themselves to be garage owners. Apparently the small print which the petrol company had put into all the agreements with these people meant that the people who had worked and developed the business for a number of years were not, in fact, the owners of the business. They were only tenants. This situation is wrong and there should have been legislation giving those people who had developed their business down through the years certain stronger rights than they had.

The third point I want to make is that the Minister stated that the distribution of motor spirit has become more efficient since 1961. He further stated that prices of motor spirits exclusive of duty is virtually unchanged. I would like to know what prices those are. Is it the prices as stated by the petrol companies, the prices at refinery level, or at import stage? What prices have remained the same? It is obvious from what the Minister said that the duty put on motor spirits over the past ten years has been the main cause of the big jump in the price of motor spirits in the Republic. I would like the Minister to comment on this.

Generally speaking, the three contributors to this Bill welcomed the making of the order. Deputy Donegan welcomed it enthusiastically and Deputy Esmonde welcomed it to a 50 per cent degree in that he instanced a particular case and indicated that by some peculiar machinations between the Minister for Industry and Commerce and the planners, some arrangement had been made within the last month, whereby some individual was able to get planning permission and able to have a petrol station fully erected before now. I am afraid the Deputy cannot possibly expect the House to agree with the allegations he made in this regard. He went on afterwards to challenge the right of anybody to interfere with any person building a petrol station down the country; that the country people should have reasonable access to petrol pumps. People down the country, according to the Deputy, should be free to build filling stations anywhere they are required. He said that this order was a Dublin-orientated recommendation.

The Deputy wanted to make some point about a new station at Ashford and this was the reason why he spoke. Deputy Donegan stated that if he were bringing in this order he would not have given a month's grace at all. The period of four weeks was the minimum period required, as I saw it, to cover cases of genuine hardship. The month's grace was primarily intended to protect private interests from suffering financially if they had to abandon arrangements which had reached an advanced stage. I was not thinking of the larger petrol companies from this point of view. I know in at least one case in which there was a suggestion that a private owner was dependent on the sale of his site to a company to avoid being forced into bankruptcy. Hardship could be imposed by making an order on a particular date, if the order became applicable from rent date. There was no question of a leakage.

One of the recommendations made to me by the Fair Trade Commission was that I should endeavour to negotiate a voluntary restraint with the petrol companies. I accepted that recommendation and, arising from that, the officials in my Department had discussions with the petrol companies to see if we could effect a voluntary restraint. Following the report and the later discussions, all the petrol companies would have been aware that the recommendation had been made and that I was carrying out the spirit of the recommendation by having discussions with them to see if voluntary restraint could be arranged and, if not, that I would proceed with the introduction of an order. There was no question of leakage. Companies who knew that I would be introducing an order would, naturally, try to finalise their plans for the provision of filling stations.

The situation is now straightforward. For the next three years there will not be any further developments of this nature. Deputy E. Collins asked how does the Rome Treaty or membership of EEC affect this position. There is no problem. Any legislation introduced here is equally effective on all concerned without discrimination. There is no problem concerned with the implementation of this order.

Deputy Collins also referred to solus site owners. I have no references with me in this regard, nor have I had time to make inquiries. These owners apparently found that the company owned the stations, not themselves. In fact, there was a long discussion with Esso. Deputy P. Barry knows of a famous case in Cork. The station was erected by the company. There was never any question of the tenant being deprived of something he had provided for himself. Eventually, anyone in possession of a station for more than seven years was able to establish title to it under the Landlord and Tenant Acts. The companies then introduced arrangements for giving restricted tenancies. There was no question of anybody building his own station and then, following a solus agreement, finding that the company could take it over from him. The opposite position was the one aimed at.

I have endeavoured to cover the points raised. I am glad that the House welcomes the order. It will give the possibility of stabilisation over the next three years, when the position can be examined again.

Question put and agreed to.
Agreed to take remaining Stages today.
Sections 1 and 2 agreed to.
Title agreed to.
Bill reported without amendment, received for final consideration and passed.
Top
Share