Dáil Éireann debate -
Tuesday, 12 Feb 1974

Vol. 270 No. 3

Committee on Finance. - Restrictive Practices (Confirmation of Orders) Bill, 1974: Second and Subsequent Stages.

Minister for Industry and Commerce (Mr. Keating)

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

The object of this Bill is to confirm an order which was made by my predecessor under the Restrictive Practices Act, 1972, on the recommendation of the Restrictive Practices Commission, relating to the supply and distribution of grocery goods and also to confirm a related amending order which I have made.

I would like to start by stating briefly my attitude in relation to the great changes in distribution which have occurred, most particularly in the food trades, and which are still occurring. In the first place, I would say that progress means change, and change must, regrettably but inevitably, hurt some people. To the extent that supermarkets, group buying, self-service and other modern developments mean greater efficiency, and consequently a reduction in ultimate costs to the consumer, I welcome these developments, and I shall do nothing to prohibit the general improvement of efficiency and economy by these means. I recognise that the supermarket and the chain store have special advantages to offer the public, and that the public are entitled to these advantages. At the same time, the independent trader, "the small man", has a service to offer in other ways which his larger competitors cannot match. The public are entitled to this service too, and the independent trader is entitled to protection, not from legitimate competition from the new media of distribution, but from any abuse of the economic power which they can build up. It is my determination to protect the small trader from such abuse, and I believe this Bill goes no small way to achieve that.

Lest there be any misunderstanding of any intentions, I would like to make it clear that I have no intention of guaranteeing economic survival to any and every individual trader. Even for the small shop, there are modern developments in methods of presentation, in promotion, in co-operative organisation which are probably essential to successful carrying on of the business. I intend to make it possible for the individual shopkeeper to survive and prosper by his own energy, initiative and adaptability to new methods, but whether he actually shows these qualities will remain, as always, up to himself. In a changing world, he will have to change, and no one can do it for him.

I turn now to the Bill itself, which, as I have said, is intended to give effect to orders made following an inquiry which the Restrictive Practices Commission undertook on their own initiative following numerous complaints of unfair trading practices in the grocery trade. Almost 100 witnesses were examined in the course of the inquiry. They included representatives of consumer interests, of distributors, both wholesale and retail, of manufacturers, of voluntary groups and of multiple supermarkets.

The principal issue considered at the inquiry were:

(a) the allegation that large buyers, particularly supermarket chains, were able to secure from suppliers terms which were unfairly discriminatory against independent traders;

(b) the allegation that large buyers were thus enabled not only to have an unfair advantage in competition but also to adopt unfair methods of retailing; and

(c) the contention that a consequence of this situation would be the disappearance of many more small retailers and the attainment by a few large buyers of a position of complete dominance.

The commission in their report make a distinction between "standard terms of supply" and "supplementary terms of supply". They define the former as the terms, usually in printed form, which are open, and seen to be open, to all trade customers. Supplementary terms are other terms which individual firms may negotiate, privately as a rule, with suppliers.

The commission found that the standard terms of supply of many important suppliers were operated in such a way as to discriminate unfairly in favour of large supermarket chains and against independent retailers and wholesalers. They recommended that standard terms and conditions of supply should be published, should be strictly observed in application, should be open to all traders meeting the relevant conditions and should not be set at unreasonable levels in such a way as to discriminate unfairly against any trader or to exclude new entrants.

The commission found that suppliers were also operating supplementary terms of supply in the grocery trade. These terms related to promotions, long-term supply agreements, advertising and merchandising. Promotions are offers of a product at reduced prices for a short period, generally a fortnight, and advertising allowances are usually linked with them. Long-term agreements are agreements providing for the payment of extra rebates to firms which achieve agreed increases in sales. Merchandising means, in the context of the inquiry, the activities performed by employees of suppliers in promoting goods in their customers' outlets. The granting of these supplementary terms reflects the bargaining power of supermarket chains who were the main beneficiaries.

The commission saw serious objections to these supplementary terms on the grounds that they were of an arbitrary character, favoured unfairly large-scale buyers, facilitated the application of pressure and abuse of economic power and resulted in unfair discrimination. On the other hand, the commission considered that negotiation from strength and the securing of trading advantages are inherent in competition in a progressive industry and they felt, therefore, that an outright prohibition of supplementary terms would be unrealistic and recommended that instead suppliers should be required to apply these terms in an equitable manner and without any unfair discrimination.

The commission found also that there was discrimination in the granting of credit in favour of large supermarkets and they recommended that it should be prohibited.

There are arrangements in the grocery trade whereby groups of manufacturers give terms to traders which are related, not to purchases from each individual manufacturer, but to aggregate purchases from all members of the group. The commission considered that such arrangements involve a restriction of competition and lead to uniformity of pricing and they recommend that they should be prohibited.

The commission considered that the use of "loss leaders", that is, the practice of selling certain items below purchase price stimulated competition and should not be prohibited. They considered, however, that advertising by supermarket chains of such prices in newspapers and other media created an unfavourable and misleading impression of prices in small independent outlets and increased the domination of the trade by large financial interests. They recommend that such advertising should be prohibited.

On 21st February, 1973, my predecessor made an order giving effect to the commission's recommendations. The order departed from the recommendations in two respects. First, whereas the commission had recommended that advertising allowances would be strictly related to services to be performed, examination has shown that this would be unenforceable in practice, and since the practice is not generally regarded in the trade as of particular value anyway it was decided instead to prohibit it completely. Secondly, following representations that there was the possibility that Irish manufacturers might lose orders from large buyers because the order would impose on them restrictions not applicable in practice to foreign suppliers, the order provides for throwing light on any developments of this nature by requiring traders who import direct from suppliers abroad to register the full terms and conditions of such purchases with the Examiner of Restrictive Practices, as our home suppliers have to do. Any attempt by traders to evade their obligations under the order in this way would be a serious matter, and I have made special arrangements to have a close eye kept on developments so that I may be able to take quick remedial action should that be necessary.

The purpose of paragraph (a) of article 3 (3) of the order was to implement the commission's recommendation that where a supplier adopts quantity terms for the supply of grocery goods such terms should be set at realistic levels consistent with the encouragement of efficiency and economy in distribution. The article as originally drafted however could be held to oblige a supplier in, say, Dublin, to charge a higher price for goods supplied to a customer in a remote country area than to one in Dublin. While a supplier is free to do this it was of course never the intention that he should be obliged to do so. To achieve the original intention it was necessary to amend the order. I made the necessary amending order on 18th October, 1973, and I availed of the opportunity to make the article in question more precise and to simplify it.

Representations have been made to me that the orders, by removing certain special discount advantages which are at present obtained by some distributors, could result in the general public paying more for their purchases. This should certainly not be the case. The orders specifically provide for reasonable discounts related to bulk purchases. What they seek to prohibit is discount advantages over and above the economically justifiable level which some distributors could otherwise be able to demand by reason of their purchasing power. It is obvious that if a particular distributor loses sizeable special advantages of this sort there may have to be some increase in certain of his retail prices. However, it can be assumed that where a supplier gave such special discounts he met the cost, not out of his profits, but by charging more than he would otherwise do to his other distributor customers. If, then, suppliers' prices to certain distributors go up by a certain amount, their prices to others should come down by an equivalent amount; and prices to retail customers of these distributors respond accordingly. There is on this basis no net increase, but prices and costs are more equitably spread. In actual practice however I would expect worthwhile economies in distribution costs to be achieved, since the highly uneconomic practice of having manufacturers deliver their goods in comparatively small parcels to a multiplicity of shops would be discouraged. The economies resulting from a discontinuance of this practice should help to keep global prices down.

It has been suggested to me that suppliers may increase prices to certain of their customers as a result of these orders and that there is no guarantee that they will correspondingly reduce them to others. I do not think there is any great danger of this in present conditions of competition, but in any event I have every confidence that the vigilance of the National Prices Commission will ensure that it does not occur.

The Restrictive Practices Act, 1972, provides that orders of this kind shall not have effect unless they are confirmed by an Act of the Oireachtas. The Bill now before the Dáil is the confirming Bill which is necessary to give the force of law to the orders. With a Bill of this kind, the orders which it is proposed to confirm may not be amended by the Oireachtas but must be accepted or rejected as they stand. The matters with which the orders deal have been the subject of a lengthy and painstaking public Inquiry and report by the Restrictive Practices Commission. The orders will go a long way to ensure fair play for the small shopkeeper and his customers and should put an end to the unfair practices in the grocery trade which have been so much complained of in recent years.

I regard it as very much in the spirit which I have outlined at the outset, and I have no hesitation in recommending this Bill to the Dáil.

Mr. Brennan

This Bill is one which must be received with utmost reservation at the present time. The Minister pointed out that he intends to be vigilant and that the Prices Commission will be active in monitoring the whole situation. It is strange that in these times of raging price inflation these orders do not confer benefit on the consumer. My colleague, the former Minister for Industry and Commerce, brought in orders in March of last year in response to the examination already referred to carried out by the Fair Trade Commission over a long period. In so far as the Bill seeks to safeguard the small trader from unfair competition, nobody can quarrel with that. But it might tend to do other things and I appeal to the Minister to keep the situation under constant review.

This Bill could bolster up the inefficient small trader and act against the more efficient and progressive trader. Another effect could be to create a monopoly position among wholesalers. Evidence is already available, even since my colleague first made these orders, that monopolies are being created in the wholesale distribution trade. If that happens, we are really putting money into the pockets of the owners of the monopolies and we have no guarantee that the consumer will benefit in any way. We must remember the consumers at all times.

We are all aware of what can happen when big monopolies move in to press out small businesses. They may reach a stage where they tend to recoup themselves for any damage done while building up the monopoly. The Prices Commission can check my statements, but I feel there is evidence that some of the big monopolies in the wholesale distribution trade which are tending to become bigger these days, are showing very large annual profits. I do not know whether this is of any benefit to the consumer. For this reason these orders are fraught with danger for the future and particularly for the future welfare of the grocery trade and of the consumer.

A healthy sign is at present developing in the distribution field. Retailers co-operatives are developing and expanding. They form a competitive bulwark to the wholesale monopoly. Real competition can take place in such circumstances. All small traders are not members of retail co-operatives. I wish they were, because with the combined purchasing facilities which retail co-operatives can place at their disposal, small retailers can be in a position where they can compete and have healthy competition with the growing monopolies among the wholesale houses.

The wholesale distribution trade in this country is virtually in the hands of three big concerns at the present time. In recent times one of these has tended to become bigger and more powerful and to have greater economic power, than could possibly be possessed by any group at the time the former Minister made the order. I am reliably informed that this amending order we are confirming can result in a 5 per cent increase in profits to the wholesale distribution trade. By this I mean the wholesale houses who are rapidly growing into a monopoly.

The only real challenge to these monopolies in the wholesale warehouse business is the retail co-operative if it is sufficiently open to encompass without any restriction all the retailers who wish to participate. The Minister may be putting the cart before the horse in confirming these orders before he introduces legislation on monopolies. I do not think the Minister has the necessary power without introducing a monopolies Bill or some legislation for the control of monopolies.

We admit these orders may prevent supermarkets charging prices as low as they might otherwise do; in fact, it will result in their having to charge more for products. If, as was shown by the examination of the Prices Commission, the benefits conferred on supermarkets by the original system of buying direct from manufacturers in large quantities and getting advantageous discounts was reacting to the detriment of small traders, that system could not be condoned. Since the former Minister made the order last March, I have a fear it has tended to create a monopoly in the wholesale distribution trade and this could have very serious effect on the small traders.

The Minister should seriously consider the introduction of legislation with regard to monopolies; it need not necessarily be to control them. Many monopolies have resulted in more efficient operation and better distribution with a distinct benefit to the consumer, but the reverse has been the case with regard to some monopolies. Some of them have too much economic power and this can be to the disadvantage of the small trader.

We are now experiencing serious inflation and price increases are announced almost daily. Today a trader gave me a circular he received from his supplier warning him that prices may change from the time he orders until the invoice is received. The impression given is that traders are lucky to receive the goods. The scarcity of commodities has a bearing on the orders we are making now. I would ask the Minister to examine the possibility that the small trader may not receive the goods or get the particular brand he wishes to sell. The single purchase—what the trade calls "the drop"—encourages or perhaps obliges the purchaser to buy in large quantities. If this is the case he will be obliged to buy the leader brand that is selling best on the market and is more expensively advertised. This can have an effect on the small producer who has not the marketing power of the well-known brand. We do not want to mention names but we can think of many brand names for jams, biscuits and so on. That danger is inherent in the confirmation of these orders. I am not trying to score points in my comments here; I realise the intention is good but the outcome could be different.

The Minister has already sounded a warning note that there must be a good deal of surveillance of what will happen under these orders. We all know the family grocer has had a difficult time. In the past he was frequently asked to carry a considerable amount of credit and to give a personal service to his customers but he found himself being passed by the big combines who could purchase on better terms. While retail organisations have come to the rescue, I am not convinced all retailers were quick to grasp the opportunity to become members. Perhaps some of the retail co-operatives are a little monopolistic.

This should not be the case. Retailers should be assisted by the Prices Commission or some other organisation connected with the Department to get the full benefits of combined purchasing that is available so that they may offer real competition. In that way the consumer will benefit as a result of this competition.

We are passing through a strange phase now in rapid development and changes in distribution practices, as the Minister outlined in the early part of his speech. It is only natural that efficient traders will always find ways and means of improving their own cash flow and outlets. But we must keep two things primarily in mind: that production will not be stunted and that the consumer will not be overcharged for what he is buying. In between these two is the whole question, and problem, of distribution. If we can achieve efficient distribution to ensure that traders are not in any way victimised, one against the other; that restrictive practices do not operate unfairly to put people out of business but that efficiency, better distribution and rationalisation will be given a full chance to develop. This I think, is the big task that underlies any effort which anybody responsible for consumer prices and for better production must be interested in at the present time. I hope we are aware of what can happen from the time goods are produced until they come out of the basket in the home. It is something which concerns everybody. However important it is—and I am fully in favour of giving a fair deal to the small retailer—the small retailer must grasp the opportunities available to him to create efficiency and take part in the power purchasing accessible now only in large measure to the bigger combines and supermarkets. I think he can; there is sufficient organisation building up, and retail co-operatives, to enable the retailer to take part in these better combines which will give him the same advantage as those who have the marketing power at the present time.

We could easily move here in the wrong direction in the interests of protecting a very important section of the retail community. This is the warning I would like to sound so far as this side of the House is concerned. Orders made last year may not have the same relevance this year in view of rapidly changing circumstances, particularly in relation to supplies and to monopolistic situations rapidly developing. And there are some giants being created in the wholesale distribution trade today. We should ensure that any monopolistic advantages they are getting ultimately will be passed on to the consumer, but—and this is where we must support the Minister in the confirmation orders—that, at the same time, they will not result in putting the small retailer out of business; will not just bolster up inefficiency in the matter of the retail business.

Towards that end I advocate that the retailer should be assisted and encouraged to avail of the opportunities now presenting themselves by joining one or other of the good retailers co-operatives, thereby entering into competition with the very strong wholesalers in the distribution trade, rather than seeking protection from this House to enable him to remain in business if he is not himself making an effort to avail of the opportunity to protect himself and be as competitive as are the giants, because the tendency today in monopolies is something which could be rather serious.

I want to conclude by saying again to the Minister that monopolies legislation is overdue, monopolies legislation that will act as a watchdog to ensure that where monopolies are being created ultimately they are for the benefit of society and for the consumer. Some of them are. Most of them ultimately can turn out to have the very opposite effect to that which they sought originally. I was very young when transport was an open competitive business in this country. I remember two bus companies on one occasion reducing prices to the extent that one company had free fares on the journey from a part of Donegal, Carrigart, to Derry city. Ultimately one of them got possession and then we paid for the cheap rates we had had until the monopoly was created. This was before the days of the Public Transport Act. I mention it only as an example of how competition ultimately can lead to a monopolistic situation where, eventually, the consumer pays.

I see inherent in the Minister's confirmation of these orders—which the House will give him without a division—that a serious situation could develop unless there is continuous vigilance by the Prices Commission over how this operates. I would ask the Minister to think seriously about the urgency of legislation to deal with monopolies, to think seriously about encouraging and making it possible, by any means available, for retailers to become part of some of the retail co-operative organisations which will give them the same economic power as that of the big wholesalers at the present time.

Dr. Byrne

I shall not delay the House long. I want to compliment the Minister on the speed with which he has introduced the Restrictive Practices (Confirmation of Orders) Bill, 1974 and to say that on behalf of all the small traders in the Dublin north west constituency.

I think the following part of the Minister's speech is terribly important:

At the same time, the independent trader, "the small man", has a service to offer in other ways which his larger competitors cannot match. The public are entitled to this service too, and the independent trader is entitled to protection, not from legitimate competition from the new media of distribution, but from any abuse of the economic power which they can build up.

The protection of the small retailer throughout our community is of the utmost importance. Of note in past years—with the combines set up in this country—has been the purchasing power and efficiency with which they could obtain large amounts of goods from abroad, bring them into this country and sell at a profit margin which was way above that of the small trader or those in less favourable conditions. At one time some of the larger retailers in this country imported up to 55 per cent of the goods they offered. They purchased these outside the country at reasonable rates and various checks on the general set-up were involved.

Nobody can substitute for the family grocer, the local shop where one can always go in and out, get things marked up and where personal attention is given. Nowadays one is confronted with the very impersonal service in supermarkets. I wish to express agreement with the previous speaker that we here have a very general interest in the proposed Monopolies Bill. The sooner it is introduced the better. In the meantime, the Minister is to be complimented on introducing this measure.

Mr. Crowley

I would say that in the calm and controlled economy of 1972, a Bill such as this would have been very welcome and, indeed, desirable. Now, however, I cannot but regard it as a cynical exercise when we have absolutely raging price increases, no control whatsoever over what the consumer is paying for his foodstuffs from one week to another and apparently no effort whatsoever being made to restore or to cut down the enormous increases being granted.

There was a Dáil comment today that the Government parties would not be like Fianna Fáil and have two budgets. I submit that we are having a budget every week with price increases and, therefore, more money from VAT going into the Exchequer. Therefore, one cannot be blamed for viewing this bit of window dressing with a cynical eye. Not alone are we in a serious situation but we are in a critically serious one in relation to food prices, and the Minister has the audacity and the gall to come in here to try to sell this as being something concrete towards price stabilisation.

What is the Minister doing about the deliberate hoarding of phosphates by big combines who are making it virtually impossible for smaller farmers to manure their lands? What is he doing about the price of animal feeding stuffs? Very little indeed. One would suspect that the Minister does not know what is going on around him if one were not aware that the Minister is an intelligent man who must know. A worse condemnation is to ask what is he doing about it.

I must come to the conclusion that no positive action is being taken by the Government in relation to prices. Week after week the housewife is paying more and more for the same items. Where will it all end? Does the Minister seriously think that the introduction of a Bill such as this will benefit the consumer in this era of galloping price inflation? I submit that if this is the Coalition's answer to pegging prices they have failed miserably. I am informed that at least 1,300 items have had price increases in the past 12 months, perhaps many more. This has happened under a Government who made one of their election planks the pegging of prices. Indeed they implied that by doing away with VAT on food there would be a reduction in food prices.

How can one take seriously this Bill and the sentiments expressed in it when the Government have failed so miserably on a much larger issue? The Minister has said the National Prices Commission will keep a close eye on prices and ensure that the terms of this Bill will be implemented. I wish him luck. I hope he succeeds. Each one of us here represent poorer sections in the community who do not know what has hit them. They were expecting a Utopia when the National Coalition with their open Government came in. But what they have got is far from it. What they have got is a living hell, week after week trying to meet their bills, to feed their families, to try to ensure that their children have enough nourishment to carry them on from week to week. I do not think I exaggerate the position when I say we have arrived at a crisis stage in relation to prices and this Bill, though it might have been very laudible in the controlled and calm economy of 1972, will have absolutely no bearing on what the consumer ultimately will have to pay for groceries.

The sentiments in the Bill are laudable and nobody would disagree with them, but let this not be a substitute for courageous and positive action to ensure that we will not have other types of monopolies who will get away with any type of price increase they seek. I refer to the prices of phosphates and animal feeding stuffs because the Minister and the Department have not been able to control these prices and farmers are going out of business. I, who represent a community of small farmers regretfully say that in this House.

Then, can the Minister blame me for throwing a cynical eye on this type of hogwash he brings before us as an excuse for doing something positive. There is no doubt that the action requiring to be taken needs to be much more drastic and revolutionary if we are to bring about a situation in which housewives know from week to week what they will have to pay for their goods. We will have to do something more than increase the finances of the Government Information Service so that they can spew out their Gospel-like propaganda.

The people are not being fooled and we on this side of the House will not be taken in or fooled by this sort of window-dressing. I know the Minister for Industry and Commerce has a difficult time and that some of the price increases are outside his control but he could control many of them. The Government could do something about this matter but this is a typical dilemma in a situation in which you have a Government of extreme conservatives and extreme socialists. You end up by getting nothing done. If they were all extreme socialists or extreme conservatives you would get some action because they would have a co-ordinated policy. Now, because of this dilemma and because of the exhibition we saw here last week from Government speakers in relation to prices the people have lost complete confidence and faith in the Government to control the price of foodstuffs.

I would like the Minister to tell us when it will all stop, when can the housewife be sure that for any two consecutive weeks she will be able to go out and pay the same price for her groceries. I would also like the Minister to tell us how he will ensure that there are no under the counter deals even after this Bill is introduced. How do the Government intend to seek out and punish the hoarders who at the moment are hoarding phosphates and fertilisers on a massive scale? It could be foodstuffs in the very near future. What type of protection have the community got against those manipulators?

The Minister for Industry and Commerce has always expressed himself as being very concerned with the plight of the less well off members of our community. I am surprised that he has now let things get out of hand the way they have. We get no pleasure on this side of the House out of preaching gloomy facts but, nevertheless, we have an obligation as an Opposition to try to ensure that the people realise that this Government have failed totally to control prices because (a) they are divided among themselves about how to do it and (b) because they have been led up the garden path by certain advisers they have brought in from outside.

How will the orders in this Bill break the monopolies and the rings in the grocery business? We can assure the Minister that he will get every help and assistance from this side of the House but there is no good in saying he will do something about these people unless he does it. The solving of that problem will be a very hard experience for the Minister. Does he seriously think that this Bill will stabilise prices or reduce them? The Minister may say that this Bill is to protect the smaller retailer but does it protect him? It ensures that big groups should not seem to be getting an advantage over their smaller competitors but it is absolutely naive to suggest that the introduction of a Bill such as this will make these big capitalists turn away an order when they could get it for an extra 2½ per cent discount. You will have wholesale abuse in this matter.

I know the Minister is as concerned as I am that something is done about the soaring food costs in the country but the difference between the Minister and me is that he is in a position to do something about it and I am not. If the Fianna Fáil Party were in Government at the moment we would not have the prices shambles we have. I urge the Minister, even at this late stage, to devote all his energies and his well endowed intellect to solving this problem. As a socialist, he would then be performing his most important function, that is, looking after the less well of members of the community. It might pinch the richer people but their standard of living does not drop like that of the poorer people. They really get belted in a situation such as we have at the moment.

I hope this Bill will bring some small relief to the consumer. In my opinion this is getting away from the main problem, which has not to do with monopolies or small retailers, but has to do with excessive profiteering by manufacturers and others. That is where the kernel of the problem is. Unless and until the Minister attacks that problem he will have a similar situation.

I wish the Minister well in solving the problem but, if we are to take the performance of the Government up to now—and I mention the word "Government" deliberately because, perhaps, the Minister is not his own master—the future is very bleak indeed. The sooner the people get a chance of putting in a Government over there who will do something about prices the better it will be for the Irish people as a whole.

Mr. Cunningham

I want to mention one particular type of restrictive practice but, before doing so. I should like to take up a point made by the last speaker about poor people. The number of poor people in this country has trebled since this Government took over and allowed prices to increase without control. It is not the unemployed who are poor now. A man who had a reasonable income last year on which he lived comfortably is now a poor man. He is poor because of indecision and lack of guidance on the part of the Government.

I want to refer now to a restrictive practice which was brought to the notice of the Government day in and day out and about which they have done nothing and, unfortunately, about which they do not seem to be going to do anything, that is, the scare scarcity technique used by monopolies of one kind or another, and about which, when he was over here, the Minister urged that this, that and the other should be done. The Minister knows the technique well. You take one commodity and create a scarcity scare. At the time there is probably an application with the Minister for a price increase. The formula of applying for a price increase to the Minister is more honoured in the breach than in the observance at the moment, as he well knows from the coal situation in Donegal which has been brought to his notice quite often by letter, by Dáil question, and by debate in the House. People are thumbing their noses at the Minister on the question of prices.

What is worrying the people now is not only high prices but a scare situation which comes first. The rumour gets around. It pays these people to deal in rumours first. The rumour is that a commodity is scare, that it is going off the market, that there is no more available, and a demand is created at any price. Up goes the price and the following week there is plenty of the commodity but the public have been brain-washed and there is a rush for the commodity. The Minister is doing nothing about this. It is one of the worst restrictive practices I know of.

This applied in the past to coal and petrol. The Government should have said to the people over the Christmas period: "There is no scarcity of petrol. The quantities of petrol in the country are sufficient to maintain a reasonable allocation."

Mr. Esmonde

Is that not what the Government said at a time when you were looking for rationing?

Mr. Cunningham

They did not say it. We were asking what the position was. We were suggesting that, if the position was as bad as the Government said it was, there should be rationing.

Mr. Esmonde

The whole theme of your argument was that there should be rationing.

An Ceann Comhairle

Order, please. Deputy cunningham without interruption.

Mr. Cunningham

The Minister cannot control the price of raw materials or manufactured goods coming into the country which we must import and for which we must pay the price demanded. That is fair enough; but what about the barley situation and what about the grain situation? At a time when animal feeding stuffs were controlled at around £50 per ton the millers bought the produce of the 1973 harvest and, immediately it was bought, the lid was lifted off the controlled price for animal feeding stuffs. It was alleged that competition between the millers would maintain reasonable prices. I am sure it was not said that that competition would keep down prices. It is not long since the price was £50 per ton, roughly, and now the prevailing price is somewhere between £80 and £90 per ton and nearer to £90, of course, than £80.

I should like to know why the Minister is not restricting those practices. He is bringing in this Bill to control restrictive practices which will create financial problems for poorer people. Every day every paper carries indications of unfair prices charged, illegal prices charged, and higher prices being charged than the controlled prices, and nothing seems to be done. At least, that is what the people think. This is the playback we get at all our meetings. Does the Minister know that, when a few people congregate, all the talk is about prices, lack of control of prices and higher prices being charged than the controlled prices? Will he make a statement about the coal situation in Donegal and in other places? Will he make a statement about the very many other complaints which he is getting?

This seems to be only the first instalment of something larger. What about the mergers? Is this the first instalment of something bigger to deal with the people who are creating the necessity for this Bill? I think it is only tinkering with the whole problem which is due to the circumstances of 1974.

The Minister seemed to indicate the number of prosecutions but I do not know whether these were actual prosecutions in respect of overcharging or in respect of not displaying prices. This is not getting at the real root of the problem. Where a commodity price is officially increased by the Minister the bigger merchants go out of that item and the small shopkeepers do not find it profitable, so that these shopkeepers are victims just as much as the public. In a rural area a small shopkeeper must stock a large variety of articles and these people are in the hands of the larger combines which cut their profit margins very low so that not only the public but also the small shopkeepers are at the mercy of the Minister's inactivity.

I do not think this Bill is good enough or goes far enough and I think it will have no effect on the restrictive and dishonest practice of creating a scare situation before a price increase. I understand there will be, or perhaps there is, an application by the petrol and oil companies for increases. I was informed by telephone in the past few days that one petrol company in Donegal is charging 3p per gallon more for fuel oil this week for central heating et cetera. I do not think there is permission for this increase. I am bringing it to the Minister's notice; perhaps he will do something about it, perhaps not.

Mr. White

This commission met about two or three years ago and I happened to be one of those who gave evidence at it. I think it worthwhile to go back and trace the history of what is the real cause of this Bill. I believe it was H. Williams who opened the first self-service store in Ireland in Henry Street some 14 years ago when the self-service business came to this country. Fantastic changes have taken place in the food business since then. It is hard to believe supermarkets began operating 14 years ago. Their development and the manner in which they have been put over to the public represents for the food industry, I think, one of the greatest achievements of any industry. When H. Williams opened I remember reading in the papers where the average citizen thought they were mad, that goods would be stolen left, right and centre from the shelves. From that, the supermarket business developed and the first thing we had was multiples setting up stores throughout the country. The only way the small men could compete in those days with the multiples was to form chains which were called retail groups. In turn, the wholesalers organised and formed wholesale groups. You then had the three people in the food industry as you have to this day, the multiples in their own right, the retail groups comprising most of the independent retailers and wholesale groups, retailers who had been trading with wholesalers down the years and joined wholesale groups.

It made me smile to hear some Opposition spokesmen speak of rising prices because this is nothing new in the food trade. Anybody who has been in it has seen rising prices not only this year but over the last seven or eight or 10 years. It is only fair to say that many price increases in the past year have been due to no fault of ours but to imports. The first criticism many shopkeepers will make of this Government to day is that they are too tight on price control. Many of them have said to me that if the Opposition were in Government now prices would be higher than they are. Margins have certainly been cut in the last 10 months and nobody can deny that.

The purpose of the Bill is to make sure that multiples will not be able to buy on better terms than groups. One must be realistic and say that the small man must join a group today if he is to survive. If he has a small supermarket of 1,000 or 1,500 square feet he must join a group, whether wholesale or retail, if he is to survive because he will not have capital to buy 20 cases or 50 cases of this or that. Interest rates are too high. The idea of both retail and wholesale groups is that they will buy so that the small man can get the advantage. No doubt multiples were getting unfair trading terms from manufacturers, and were even pressurising to get these terms. It is common knowledge that they were getting advertising allowances, that manufacturers were putting staff from their own organisations into the multiple stores to see that their stocks were kept properly topped up, that they got rebates at the end of the year and that they often got 14 to the dozen, whereas groups were getting only 13.

I am really surprised that there is nothing in this Bill about trading stamps. I have always maintained— and there can be no doubt of it—that trading stamps have certainly put up costs in any store that gives them out. Trading stamps themselves cost 2½ per cent and stamp companies go to firms and say: "We will increase your turnover by 22 per cent and in that way you will get back the money you spend on trading stamps". I think the figure is 22 per cent or in that region. But this is not how trading stamps work. If anybody, as I have done, makes a survey of different stores, it is shown that shops which are giving trading stamps, apart from bread and butter lines, are always higher than shops that are not giving these stamps. It is commonly known in the grocery trade that the housewife really knows the prices of only six, seven or, perhaps, ten items when she goes into a foodstore. This is very true.

Any housewife knows the price of a pound of butter or two pounds of sugar but when it comes to tinned fruit, oranges, apples, onions and so on the customer does not know. The shops do not charge for trading stamps on the eight or ten items the price of which everybody knows but on the other articles. Of course there are loss leaders in certain stores. I do not think there is any harm in having loss leaders because in any grocery store there are the good weeks and the bad weeks. If somebody wants to promote his shop it must be, first of all, clean, the displays must be good to encourage the housewives to buy and there must be special offers to encourage people to get the best value they can. It is high time this Restrictive Practices Bill was brought into operation but I would like to see the Minister having a special look to see whether it is true that trading stamps are costing the public millions of pounds every year.

I notice that almost 100 witnesses were examined in the course of the inquiry. I met many of them. They represented every section of the food industry. There were small men, big men, wholesalers and multiples and each of them said his piece. It is high time that multiples, retail groups and wholesale groups were guaranteed that all will buy at the same price. That is only fair. Let there be no doubt that the way for the small shopkeeper to survive is to join either a retail chain or a wholesale chain and to see that he gets a fair deal.

Mr. Callanan

I welcome this Bill as far as it goes but I do not believe it goes far enough. We on this side believe that there are many imported commodities over which the Government have no control. During the last election campaign I had to canvass a very poor area. When asked about the cost of living I told the people honestly that the cost of living would go up and that the only thing we could do was to try to increase social welfare benefits and wages to meet the cost of living. The canvassers for the present Government were following me telling the people definitely that they would hold the cost of living at the level it was then at and would control it. I would credit the people on the opposite benches, particularly the Minister, with being very intelligent men. I claim that that was a dishonest promise which they knew well they could not fulfil.

Deputy Cunningham said the grain crop of this country was bought for £50 a ton. I sold good barley at £45. That grain is now being sold to people at between £80 and £90 a ton. What attempt was made to control that? We had An Bord Gráin abolished with the stroke of a pen. They bought the grain and subsidised it for the west, the non-grain growing areas. They sold it at a fairly reasonable price. But merely because of a clause in the Treaty of Rome—a clause I cannot find—An Bord Gráin was done away with. It was to be replaced by a co-operative but that has not been done. We have a free-for-all now. The result is the price now being paid for feeding stuffs. The Government have failed miserably to do anything about these things. There is no use in anybody saying they can control the price of oil. That is outside our control.

I agree with the last speaker on the question of the small shopkeepers. I never had any use for supermarkets. I remember some years ago being away at an international conference. I came home of the opinion that the small shopkeeper would disappear before the small farmer. The only hope for the small shopkeeper is to co-operate, which is what the small man must do in all areas. If this Bill does anything to control prices it will be a good thing. I am with it as far as it goes.

Because I have maintained that you cannot control certain prices I am told: "You are as bad as the rest of them. We were told it could be done." I know there are certain things you cannot do but there are certain things that can be done and have not been done. We know that the sale of petrol was held up in anticipation of the increase of 4p a gallon. There was not enough control to ensure that people would not hold on to petrol. Now that there is to be another increase the Minister should tell his colleague to ensure that the petrol pumps are not closed for a week beforehand. This is the type of thing to which the Government should be alive.

I wish the Bill well. However, I am very sore about this matter because we lost a considerable number of votes in towns because we would not come out and tell a lie. That is a thing I will never do. I knew well we could not keep the cost of living at the point at which it was but the present Government said they could do it. The general public swallowed it but they are very disillusioned at present.

Mr. Esmonde

A previous speaker referred to trading stamps and I agree with him in condemning them. This Bill and the statutory rules and orders which it will implement are based on a 34-day inquiry, the report of which was issued on 29th September, 1972. It is the Fair Trade Commission's report of the inquiry into grocery goods for human consumption. That was a public, sworn inquiry and a much tougher and far more searching inquiry than the previous inquiry into the grocery trade.

In the course of that inquiry it seemed to me, when acting in a professional capacity and as a participating member who had to ask numerous questions and cross-examine many witnesses, that there was little justification for trading stamps except to the point that they were an incentive to people to purchase and to give a little extra to the housewife for her own pocket. One must remember that trading stamps are based on the selling price of the product. If there is a rise in the price of the goods up go the number of trading stamps, but somebody has to pay for the trading stamps.

It is no use saying that they are paid for by the seller of the goods. In the first instance they are but in the long run they are paid for by the purchaser of the goods. They give a false benefit to the purchaser. I can see no economic justification for the use of trading stamps except in the very limited way I have referred to. This brings me to a matter in which I slightly disagree with the previous speaker. In that very careful and full report, in paragraph 273, the commission came to the conclusion that it was a matter that if there were any ills concerning it it would have to be dealt with by independent legislation and not by the code of law dealing with restrictive trade practices.

I do not disagree with the previous speaker when I say that it is a bad thing economically because it has an inflationary effect. At that inquiry— I had better declare my colours at this stage—I appeared for Spar, Mace, VG and ED wholesale and retail groups. They were wholesalers who came together with retailers in an effort to assist, particularly, the smaller and medium sized family grocer because at the time of the formation of those groups the small and medium retail grocer had no method of protection or help. That was the reason for the birth of these organisations.

These organisations have their counterparts in continental countries although they are separate autonomous units and work independently. These groups have managed to help and, in many cases, save the existence of the family grocer because at the time they came into existence we had in this country the emergence of large super stores commonly referred to as multiples. At that time these multiples, and I am afraid they still do, obtained undue advantages, price-wise and trade-wise, from their suppliers, namely the manufacturers. That was because these multiples have large financial power in the market place and when they go to a manufacturer they are able to dictate terms.

The effect of trading to date in the grocery trade has been for these multiples to get an unfair advantage by being quoted better terms than even wholesalers are getting, or are able to obtain, for the benefit of their retailers. In many cases, and there is plenty of evidence to support this, the wholesalers are buying five or ten times the quantity of a particular multiple owner but the multiple owner gets better, or at least equal, terms to what the wholesaler gets. It should be borne in mind that that wholesaler when buying is buying for people who are in business in a small way and he is taking the cost and expense of distributing and delivering these goods all over Ireland, right down to the western seaboard.

If it was not for these wholesale groups there would be far fewer grocery businesses in the west, and in my constituency. These groups were born out of sheer necessity and by virtue of that necessity and the work they have done, they have saved the livelihood of many a family in rural Ireland. They have helped to provide a living for people who work small and medium size grocery shops in rural Ireland.

It does not take a lot of investigation to see the areas where the multiples operate. They operate in areas of big population. Their advent has resulted in the abolition of a large number of family grocers in such areas. It may not be appreciated by the people who read and swallow the publicity gimmicks that a lot of these family businesses have given traditional employment to other families in the area.

The measure being introduced by the Minister for Industry and Commerce has been long sought by small grocers. The number of people who have been forced out of the grocery trade runs into hundreds if not thousands. I should like to remind the House that there are about 40,000 to 50,000 people dependent on the grocery and distributing trade. This is a very important fact. I was surprised at the cold water Deputy Crowley was throwing on this Bill. He comes from an area which I thought would be very interested in a statutory measure of this nature. However, in so far as my constituency is concerned, I am giving my wholehearted support to this Bill.

This inquiry elicited certain facts, expressly or by implication. It was discovered then that the multiples were able to get such terms of trade that the minimum period of time in which they had to pay their bill was 30 days but, with careful manipulation, it was spread to 90 days. The money that the multiples were getting as ready cash found its way to the London money market that night. Basically these multiples, having obtained unfair terms of trade, used that money as money brokers in London and they were not trading as grocers at all. Deputy Brennan may grin, but let him not forget that for 34 days I sat in on that inquiry and I think that I was the person responsible for having elicited that information. If a man wishes to do business as a grocer he does business as a grocer.

Mr. Brennan

What the Deputy is saying does not appear in this report.

Mr. Esmonde

No, but it would have appeared in the cross-examination.

Mr. Brennan

It must not have been relevant.

Mr. Esmonde

It was relevant and was appreciated by the commission. However, those people, being able to get these terms of trade, were able to offer loss leaders, to play havoc with the market, to sell butter or whatever they wished at give-away prices. But the traditional family grocer was not a money broker or a moneylender and what was he to do? He was being hammered by the big boy up the road. I can assure the House that the manufacturers are delighted to have these statutory rules and orders: they want a baseline so they can stand up against unfair pressure from the bullyboys in the market place. That is being said quite freely in the grocery trade and is well understood.

Many irrelevant matters have been brought into this debate for the purpose of having a slap at the Minister in relation to price control. I wonder if Deputies read the papers today and took note of the comments concerning feedingstuffs and whether at the same time, they remembered all the screams from various sources concerning the Minister's confirming the conclusions of the Prices Commission. It is well known that the Prices Commission are doing a fine job. They are an absolutely non-political body. Their job is a tough one, one which must be executed in very difficult circumstances. Any Deputy who comes here and endeavours to make capital out of prices, prices that are being dealt with by the Prices Commission, is not being honest. I can only hope for a cessation of that type of debate and comment so that we might have a little honesty in the market place.

Minister for Industry and Commerce (Mr. Keating)

This Bill is entitled the Restrictive Practices (Confirmation of Orders) Bill, 1974, and it is my intention to refer only to those serious matters that were raised and which are relevant to the Bill. Last week Deputies had the opportunity of a fairly lengthy debate on prices, and if they wish for another such opportunity they shall have it soon when the Estimate for my Department comes before the House. The debate on the Bill before us ranged rather widely.

I wish to express my thanks to the Opposition spokesman on Industry and Commerce for what was an informed and a constructive speech, a speech to which I listened with interest and with some benefit. Deputy Brennan concentrated on what are the central points of concern to both of us. However, in relation to his expressed opinion that these orders do not confer any benefit on the consumer I would say that in a narrow sense that is true but, then, that is not their objective. In a broader sense steps which are good for the general health and efficiency of distribution and which create, first, an environment in which the family trader can thrive and give his service and, secondly, which stop some of the restrictive practices in the area of distribution, are undoubtedly a benefit to the consumer, though not an immediate one. It would be very difficult to stop all restrictive practices: people are very good at thinking up new ones.

Deputy Brennan raised two points. He agreed, as did every Deputy who contributed to the debate, that the small man has a place in distribution. This Bill is one confirming orders introduced by my predecessor. It is not a party political effort. It is not possible to quantify in money the personal knowledge, the snippets of conversation, the kindness and the individuality of treatment that one receives from the family grocer. These qualities are precious and render the whole business of shopping more human, more pleasant and are a real benefit to the consumer.

Deputy Brennan raised the question of whether there would be a bolstering of the inefficient small trader. That is a real question but I do not think that will happen because of such factors in relation to the small trader as general commercial pressures and because of efficiencies of scale from the big people. Even with protective organisations such as the co-operatives or the chains, the small trader has no option but to seek efficiency. Whatever we may wish for small traders, if they do not endeavour to sharpen their efficiency all the time they will go to the wall. Regardless of the contents of this Bill the general pressures are such as to guarantee a growing efficiency of small traders.

The second point raised by Deputy Brennan referred to the creation of a monopoly situation. I agree entirely with the point made concerning the need for a monopolies Bill. We shall have such a Bill here soon. I acknowledge that we inherited a Bill of this nature. Our predecessors had given thought to the matter although the Bill we intend introducing may not be the same as the one they had in mind. The one we inherited will be improved and added to. It is a measure that is needed. When this other Bill is being discussed the situation will be that monopolies in this context will form more than 50 per cent of the trade of the country. That is not being approached in the amalgamation of wholesalers at this time. I recognise the significance of the warning issued by Deputy Brennan but I do not think the situation is yet reaching the stage to which he referred. However, it is something that we must watch and about which we shall soon have power to do something.

If one looks at the genesis of this Bill and of the orders and if one puts in a nutshell the general direction of the conclusions of the Commission of inquiry into Restrictive Practices, it will be seen that the large multiple chains under the regime that was investigated by that commission were in a relatively favoured position vis-á-vis the wholesalers. That was the circumstance of the time. The recommendations made by the commission are the basis of these orders and of this Bill and were concerned to redress the balance away from the large multiples and towards the wholesalers. I think they will have that effect. When you redress a balance it is possible that you tilt too far the other way and if this happens appropriate action must be taken. This is quite possible and it seems to me correct to work at it. The position will be kept under close and continuous review by the Examiner for Restrictive Practices. If the tendency to increase the power of the wholesalers vis-à-vis the large chains tilts too far we will redress it. It is a real danger and it is worthwhile that attention be drawn to it.

The question arises whether the small shopkeeper can get the same variety of goods as previously. Irrespective of whether these orders were in force, there is a tendency, whether in large or small outlets, to get fewer lines and it is easier for the large outlets to do this. There is a tendency for the less successful brands to disappear, there is a narrowing of the range of goods available and this is inherent in the growing efficiency and intensification of distribution. However, distribution is a complicated matter, opposite tendencies can operate at the same time. There is the tendency that nobody wants the small orders of the rarer lines because they are a nuisance for the distributor and the wholesaler. These orders will not prevent a trader from getting the same variety of goods as before. It is true that in order to get best terms some traders may confine their orders to a limited number of lines but I do not know if there is any easy way to overcome it having regard to the intensification of distribution. Ultimately consumer demand will overcome it if the consumers are educated and want the wider range but I do not think that tendency is intensified.

It is true that there is also a tendency away from the past situation where suppliers provided small quantities at best prices. In doing that sometimes there were hidden diseconomies which helped to keep prices up and which were inflationary. No matter how they were covered up by the pricing policy with regard to supplies—the system whereby a manufacturer would supply small orders to a multiplicity of outlets—as matters intensify the tendency of costs to rise continues and this is seen to be uneconomic. In the past the public were offered a wider choice but sometimes this was at the expense of building in costs, of building in price increases that did not need to occur. At this time we are right to put price considerations ahead of considerations of the maximum facility in regard to small lots and a wide range of products.

Deputy White mentioned trading stamps and I should like to make some comments on that matter. My predecessor announced his intention of abolishing them. I have read a number of statements he made over a period of months and I think I am reflecting his thinking accurately when I say his opinion shifted away from prohibition and towards regulation. I do not think I am distorting his views on that subject and I may add this is my own opinion. People like trading stamps; they may do a little saving with them and acquire certain objects they might not otherwise get. Perhaps a woman might get a few things for the house she would not get if she had to put away the odd pence. I do not think trading stamps are very important either way but my intention is regulation rather than prohibition. What I do not like in the Irish context is that there is no significant competition. If we had competition and regulation we would overcome many of the drawbacks. I do not like prohibiting anything; the fewer prohibitions there are the better. If people enjoy getting trading stamps and if they are regulated to ensure they do not do significant harm, my attitude is not in favour of prohibition. I hope to have the report of the National Consumer Advisory Council before the summer. I do not want to tie them to a date because many of the people concerned are giving their time and do a lot of work. However, I hope to have the report in late spring or early summer and we will move the whole matter on a little.

Deputy White said goods should be supplied to all at the same price. It is the objective of the orders that people pay the same regardless of whether they are big or small dealers but not regardless of the quantity they buy. The business of having a discount for the large order is perfectly reasonable and proper because there are some economies. However, it is the objective that regardless of whether the purchaser is big or small the price is the same and that is desirable and progressive. There is provision for a variation of price by reference to whether the purchaser is a wholesaler or a retailer. The object is to permit lower prices to the wholesaler than to the retailer; that is proper and natural on the part of distribution. We have had a useful debate and my opposite number made a serious and helpful speech——

Mr. Brennan

Can the Minister give us his comments on how he sees the retailers' co-operatives developing?

Mr. Keating

I am glad I was asked that question. We have had a consensus that it is essential if the small man is to survive that he should get into some kind of protective organisation. Deputy Brennan praised the retailers' co-operatives and commended them and I should like wholeheartedly to do the same thing. Whether they are co-operatives or other groups, they are essential and are a necessary protection. At their invitation I visited a number of them. I believe I have good relations with them and I am open to suggestions or requests from them about any way we could facilitate their growth and strengthen them. I am glad I was reminded about them so that I might have an opportunity of putting my comments on the records of the House.

Question put and agreed to.

An Leas-Cheann Comhairle

Next Stage?

Mr. Keating

Because this Bill is simply confirming orders, I understand there will not be a debate on later Stages.

Mr. Brennan

It is possible there could be amendments, but it is not likely that the nature of the orders would lend themselves to much amendment at this stage. The principal thing is the undertaking given by the Minister that he will watch the situation develop. I am glad to hear that he will consider any representations the retail co-operatives may have to make to him. I can foresee a certain danger in the trend of events even over the past year.

Agreed to take remaining Stages today.

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