Dáil Éireann debate -
Thursday, 29 Oct 1987

Vol. 374 No. 8

Restricitve Practices (Confirmation of Order) Bill, 1987: Second Stage.

Minister for Industry and Commerce (Mr. Reynolds)

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

A special review of the Restrictive Practices (Groceries) Order, 1981, was carried out by the Restrictive Practices Commission in the latter half of 1986 and their report was presented to me and published early in 1987. In their report the commission echoed the concern which I and many other people had been expressing about problems such as below-cost selling, "hello-money", and about suppliers' terms and conditions and they concluded that these problems had led to such an interference with fair trading that more radical measures than ever before were needed to rectify the situation.

The commission, therefore, recommended a number of changes to the 1981 Groceries Order including the introduction of a ban on below-cost selling, the inclusion of intoxicating liquor and "generic" grocery goods in the terms of the order and the prohibition of the payment or receipt of what has become known as "hello-money". They also made certain suggestions in relation to the treatment of supplementary terms and conditions of supply negotiated between suppliers and retailers. After studying the report I decided that the commission were correct in their conclusions and on 25 May 1987 I signed the Restrictive Practices (Groceries) Order, 1987.

The subject of below-cost selling and its effects on the grocery trade has been the main topic of controversy in the trade for some time. In recommending a ban on below-cost selling, the commission found that there had been a rapid growth in own brand or generic products on which below-cost selling was being concentrated and this increase had altered the power relationship between sellers and buyers. The commission found that some suppliers were actually paying allowances to the multiples on condition that their products would not be sold below cost.

The commission also expressed the view that below-cost selling by the multiples distorts the consumer's concept of prices and this in turn puts pressure on independent retailers who because they are not in a position to compete, can appear to be overcharging. It is often claimed that whatever about the long term effect below-cost selling is of immediate benefit to the consumer. I do not believe that this is the case. Most shoppers, I think, do the bulk of their weekly shopping in the one supermarket and it is my firm belief that much publicised reductions in price below cost on some items are made up by increases in the prices of other less publicised products. This sort of price manipulation is not concerned in any way with the long term interest of consumers but with gaining increased market share which I believe to be detrimental to the consumers welfare in this instance.

I agree completely with the commission's findings and their conclusion that the existing constraint of a ban on below-cost advertising has not been sufficient and that only a total ban on below-cost selling will do away with this unfair practice. I also accept the commission's findings that the exclusion of intoxicating liquor from the scope of the 1981 Groceries Order has meant that drink has been used as a loss leader by some multiples, with a consequent adverse effect, particularly around Christmas, on the drinks trade generally. I have, therefore, included intoxicating liquor under the terms of the 1987 Groceries Order.

On the question of "hello-money" I believe this practice is not about providing further benefits to the consumers but also more about gaining additional market share. This practice can act as a disincentive to manufacturers particularly in the case of small firms new to the market. The fact that "hello-money" exists seems to me to provide clear evidence of abuse by large companies or retail groups, of their dominant position in the marketplace. I am accordingly banning both the payment and receipt of any money or allowance for the purpose of making shelf space or additional space available for the sale of grocery goods.

The commission state in their report that they are satisfied that suppliers are continuing to discriminate unfairly between their customers. The 1981 groceries order requires suppliers to have published terms and conditions of supply and to sell their products at those terms. However, what has happened over the years is that discounts and allowances, which were not on the price list, were being given to major customers. While this practice is prohibited under the order, the commission feel that, before they make any further recommendations in this area, they need more information in relation to the various types of supplementary terms being offered by suppliers.

Consequently they propose to review the situation regarding supplementary terms 12 months from the commencement of the Act and in the meantime they have made a recommendation, which I have included in the Order, that retailers with more than five grocery outlets and wholesalers when requested by the Examiner of Restrictive Practices, must forward to the Examiner each month, details of supplementary terms negotiated with suppliers during the previous month. This will allow the examiner to detect possible breaches of the order and also provide the information for the commission's review in 12 months.

Once this order has the force of law it is my intention to ensure that the provisions in relation to the publishing of terms and conditions by suppliers and the sale of their products in line with those terms, are strictly complied with.

The grocery trade has an important role in our economy. We are talking about a business where total spending is about £2.6 billion a year and which accounts for over 26 per cent of average weekly household expenditure. The intense competition which exists in this area might be expected to work for the good of the economy as a whole. But we all know that this fierce competition has led to problems over the years. The balance between the multiples and the independent grocers has always been delicate and it has become apparent in recent years that the balance has swung too far in favour of the multiples. The over concentration of buying power in very few hands has obvious dangers for manufacturers, for the trade generally and at the end of the day for the ordinary consumer.

Although I would not normally favour intervention in the market place, I believe that the new provisions in this groceries order will go a long way to redressing that balance, particularly in the area of negotiations between manufacturers and multiples and in the area of competition between multiples and independent grocers.

I would hope also that as a result of these new provisions an element of transparency will be brought into the trade and that the competition between multiples and independents will, in the future, be seen to be fairer than it is now. I am also convinced that by cutting out below-cost selling, consumers will at the end of the day be able to get a more realistic view of the real difference in price between the two types of outlets, than they may now have.

The recent appointment of a receiver to one of the major multiple groups was a serious blow to the grocery trade, particularly to manufacturers and suppliers and indeed workers. I have already spoken on that matter in a discussion on the Adjournment in the House on Tuesday, 20 October. It is my belief that the introduction of the 1987 groceries order and its strict enforcement will effect the changes necessary to bring more stability and fairer trading to the grocery trade generally.

I would also hope that the provisions of this order, particularly the ban on below cost selling, will help to eliminate the more extreme fluctuations in price which we have witnessed in the trade in recent years.

I might perhaps mention here that detailed price control as such was abolished by my predecessor last year but I want to make it clear that I still have power under the Prices Acts and I will not hesitate to take action where I consider it necessary and justified.

While on the subject of prices I would also like to say a few words on the alleged divergence in prices between here and the UK, notably Northern Ireland, which has been the subject of much publicity of late. As Deputies may be aware, I asked the Restrictive Practices Commission to carry out a special investigation and report to me on the situation. I have now received that report and I hope to publish it very shortly. Obviously I would not like to disclose the commission's findings in advance of publication, but I can say that the situation is fairly complicated and that there are a number of factors which can account for different price levels North and South such as different VAT rates, payment of MCAs, freight costs, distributors' margins and marketing practice for individual products.

I have asked the Director of Consumer Affairs, who is acting as Examiner of Restrictive Practices, to contact the suppliers of a number of products where there appears to be a notable divergence in price as between North and South and to report to me with an explanation.

On a more general note I would like to say that the prospects for the Irish economy have been greatly improved by the new spirit of optimism which is evident in the country since this Government came to office. Through our strong and decisive policy stance confidence has improved. A central theme of Government policy is the need to get our costs down on all fronts. This is how we will remain competitive. As a result of the policy initiatives we have taken since we came into office, we have succeeded in reducing interest rates by up to 5 percentage points on the inter-bank market; stabilising our debt to GNP ratio; reducing inflation to 3 per cent or lower for the year; guaranteeing that budget targets will be achieved; reversing the outflow of funds from the economy and achieving a sizeable inflow instead.

A further example of our determination to tackle prices which bear directly on our competitiveness was the reduction of 10p in July and 4p in October in the price of premium grade petrol. In simple terms these reductions over a full year would put about £41 million back into the economy and back into the consumers' pockets.

The thrust of Government policy, as is clearly evident in all these measures and in this Bill, is to further competitiveness throughout our whole economy and to bring about a better deal for the consumer.

The action I am taking in this Bill is in line with the overall thrust of our policy of getting costs down. As I have already said, I signed the Restrictive Practices (Groceries) Order, 1987 on 25 May 1987 but in accordance with Section 8(3) of the Restrictive Practices Act, 1972 all orders under that Act must be confirmed by an Act of the Oireachtas before they have the force of law. I can assure the House that it is my intention to see that the terms of the order will be actively enforced and I also intend to review the operation of the order after it has been in operation for one year. I would ask the House to support this Bill to confirm the order and thus give full effect to the recommendations made by the Restrictive Practices Commission in relation to the grocery trade.

Mr. J. Bruton

The biggest concern the general public have at the moment about the grocery trade is in regard to the very well documented allegations that there is substantial overcharging of consumers in the Republic as against both Northern Ireland and the United Kingdom. It is ironic that the first concrete proposal of the Minister for Industry and Commerce in the wake of these allegations is to introduce a measure which says that they shall not fall below a certain amount, in other words, the putting of a floor under prices at a time when the concern of the general public at least, perhaps not the trade, is that the prices are already too high without the operation of a floor such as is proposed in this legislation.

The debate on this legislation is being carried out in the absence of relevant information. The most relevant information that is lacking is the study, very wisely sought by the Minister for Industry and Commerce, into the alleged divergence in prices between here and the UK. The Minister has told the House that he actually has that report in his possession but that he is withholding it from this House until such time as this debate is over. For a start, this debate would provide a useful forum for public discussion of that report and its recommendations. It would also put this measure in a proper context and people would see whether on balance, in the light of the overall problems of prices for the consumer, this is the best measure. It is extremely important that we have a Committee Stage debate on this Bill that will allow us to examine, and have answers from the Minister on the meaning of certain terms and provisions in the order which this Bill seeks to approve. I have some concerns about some of the terminology used but I may well have these concerns allayed by the Minister when I get the opportunity on Committee Stage to put them to him and to have replies.

There is another point I should like to make. There have been allegations — and I do not know what foundation these have — that the recent price war has had the effect of putting one major retailer out of business. My view is that, in fact, that is not so. The problems of that retailer were of a longer date than the recent price war. However, it has been suggested by some that the announcement that the Minister was going to put a ban on below-cost selling but was not actually doing it just yet — in other words, he announced something in May——

Mr. Reynolds

I signed it in May.

Mr. J. Bruton

The Minister signed it in May but that was merely a signature. It had no effective value without the House actually sanctioning it.

Mr. Reynolds

The House could have had it in July if it had wanted to.

Mr. J. Bruton

It is possible that the certainty that the Minister intended to do something but was not actually doing it could have contributed to the intensity of the price war.

Mr. Reynolds

That is rot.

Mr. J. Bruton

If that is so, and if it is the case that the price war caused some of the problems experienced by this group——

Mr. Reynolds

The Lord preserve us.

Mr. J. Bruton

——then we are entitled to ask questions as to why the Minister signed the order at one time and brought the legislation forward at this time. If parliamentary time was not available it might have been more sensible for the Minister to have postponed the signing of the order until last month rather than do so on 25 May without the ability to carry the effect of that signature through into practical implementation.

As I have said, I have a number of concerns about the effect of this order in practice. One concern is that it may lead to a shift by Irish multiples towards the usage of imported goods. On pages 47 and 48 of the Restrictive Practices Commission's Report, this has been adverted to, the commission console themselves with the fact that the representatives of suppliers argued that a prohibition on below-cost selling would not lead to a surge of imports. However, I should like to make the point that if one is to determine whether a sale is below cost, then one needs to look at the costs incurred by the supplier. If the supplier is overseas, the ability of the Irish authorities to examine his costs is obviously considerably less than it is to examine the costs of a domestic manufacturer. If a multiple wishes to engage in below-cost selling and avoid prosecution it would appear to be easier to do that using imported goods rather than using domestically produced goods. I know that that is not the Minister's intention. I know that the Examiner of Restrictive Practices and the other enforcement agencies will bend all their efforts to ensure that that does not happen, but that, in itself, is not a sufficient consolation. Clearly, it is more difficult to police things that are happening outside the jurisdiction than within the jurisdiction.

It must be said that the record in enforcing competition legislation has been fairly poor in this country. We are great people at making new laws and very bad at enforcing them. I could go through a long history of attempted legislation in the area of restrictive practices which effectively became a dead letter. For example, there was legislation in the mid-sixties, when the President was Minister for Industry and Commerce, to ban collusion between companies in the setting of prices and that became completely unenforceable. Although it was an excellent idea it just could not be and was not enforced. The enactment of legislation which cannot be or is not enforced is subversive of law itself. We should be careful to ensure we are not engaging in a similar deceptive exercise on this occasion.

I find the explanations in this Restrictive Practices Commission Report as to why the ban on advertising of goods at below cost was not properly enforced most unconvincing. These are referred to on page 59 of the report. It would be no harm to read them into the record:

The Commission in 1972 and 1980 was of the view that a prohibition on advertising and the right of suppliers to withhold supplies if their goods were being sold below cost would be effective in ending the practice. These constraints did not achieve their objective for a number of reasons, including the inability of suppliers to withhold supplies of their goods, the redirection in many cases of below cost selling to own brands, the unwieldy nature of the prosecution process and the continued growth in the area of selling space by the multiples which meant that their prices became widely known without the necessity of advertising.

I find these explanations frankly unconvincing. As to the inability of suppliers to withhold their goods, of course they might not withhold their goods, but that did not prevent them from reporting to the examiner that these goods, having been made available to the multiple, were in fact being advertised and sold at below cost. That is not an explanation. Likewise the redirection in many cases of below-cost selling of their own brands is not a convincing explanation either, because the supplier of the goods, if satisfied that he was suffering because his goods were being sold at below cost under an own brand label, was equally able to make available the necessary information as to the cost of the goods and as to the process at which they were being advertised to the Examiner of Restrictive Practices so that there could be a prosecution. We are coming a little more close to the problem in the reference to the unwieldly nature of the prosecution process. That is the problem. However, perhaps before he applied the sledgehammer of banning below-cost selling outright, it might have been more appropriate for the Minister to have reformed the prosecution process so as to ensure that the ban on below-cost advertising could be enforced without going to the extent of getting involved in the banning of the practice altogether, which is a much more heavy-handed, bureacratic process. In fact, selling goods below cost is of no value to a multiple unless the multiple can advertise the fact.

Mr. Reynolds

The Deputy must be joking.

Mr. J. Bruton

Therefore, the effective implementation of the ban on advetising is something that should have been more thoroughly examined by the commission and the Minister than it has been. I recognise that the commission claim that the prices at which various goods were being sold by multiples became widely known and that there was no need to advertise these prices. If that is the case, why do we see so many advertisements in our newspapers and elsewhere of the prices at which goods are being sold in multiples? Why do we see them advertised at the entry to supermarkets also? If people are able to find out about them without their being advertised there ought to be no need for this advertising which in itself is an expense for the supermarket.

I have another difficulty with this legislation. I feel that there may well be deliberate flouting of it for advertising purposes by certain retailers in that they may decide to sell below cost — damn the consequences — in order that the prosecution may bring them favourable notoriety. The fines under the new legislation are referred to on page 82 of the Restrictive Practices Commission's report. The maximum fine which may be imposed amounts to either £500 or £50 per day. Given the size of the operations of some of these multiples, paying £50 per day two years later for the privilege of selling below cost at Christmas when there is a very heavy trade could well be a good investment when one does a discounted cash flow exercise based on the probability of prosecution and on the probability of being able to put up a pretty good defence with the aid of a good lawyer which would, perhaps, abort the prosecution altogether. If that were to happen the law would certainly be brought into disrepute as happened in the case of the ban on below cost advertising because of the failure of the authorities to enforce that ban. We are in danger of stepping deeper into the mire of unenforced and possibly unenforceable legislation. That is why it is very important, as I said, that the individual terms of this order be teased out properly here in this House.

There is another difficulty in this area. Which manufacturers will gain and which will lose as a result of this process? At present, if Irish food manufacturers are to expand and grow and if they are to export they must break into the British or continental markets and that requires a substantial investment in marketing. Whatever about establishing a brand image and loyalty in the Irish market which is a relatively small one, most Irish manufacturers cannot afford the expense of doing that in the British market. The obvious route for an Irish manufacturer to get his product into the British market is by becoming connected, as a supplier, with a large British multiple such as Marks and Spencers or Tesco. Obviously, becoming involved with a larger British multiple would involve them in much higher standards of quality control and in selling their products competitively but for that they would save immense advertising costs that otherwise would have to be undertaken if they wanted to get their goods on to the shelves independently under their own brand as distinct from being under the brand of a well known retailer who has a quality image in the market.

Contrary to the general belief I believe that manufacturers selling to multiples are in fact obtaining useful practice in Ireland for the bigger leap required to sell on the foreign markets because they will face exactly the same competitive pressures from their foreign multiples when they eventually try to get onto their shelves as they are facing here. An attempt to insulate them from that type of pressure could well create a situation where they would be more comfortable on the domestic market than they would otherwise be and they would therefore not make the effort they should make to break into export markets. If one is to be serious in the food business in Ireland at present one must be thinking about breaking into export markets. There will be no examiner of restrictive practices, no Uncle Albert, to protect them in those markets from threats of prosecution. They will have to stand on their own in a rather cooler climate where the Government may not be willing to get involved in the market to protect one section against another.

This brings me to the statutory basis on which this entire order is founded. There is a considerable measure of vagueness and subjectivity in the criteria on which the Restrictive Practices Commission make judgments on which they recommend orders of this kind.

Section 8 (1) of the Principal Act states that the Minister, having considered a report of the commission, may make an order in relation to any goods in order to do either of the following two things: first, to prohibit restrictive practices including arrangements, agreements or understandings which prevent or restrict competition or restrain trade in the provision of any service or which involve resale price maintenance and secondly, to prohibit unfair practices or unfair methods of competition. Is this order being made under subsection (1) (a) or under subsection (1) (b) of section 8? I submit that it is unlikely that this order could be justified within the terms of section 8 (1) (a) in that it refers only to restrictive practices.

I do not believe the practices involved here could be contended to be restrictive within the meaning of the Act but perhaps the Minister could enlighten me on that. If that is the case then the commission and the Minister are relying for this order on the provisions of section 8 (1) (b) which simply refers to prohibiting unfair practices or unfair methods of competition. I submit that the term "unfair" is very much a subjective one; what is unfair for me is not necessarily unfair for the Minister. I might consider that it is unfair that he is in the job he is in and I am in the job I am in at present. But I do not expect the Restrictive Practices Commission to come along and eject him from office just because I feel it is unfair. Unfairness is such a vague and woolly term it has the capacity to allow anyone to do almost anything to almost anyone else so long as they get the Restrictive Practices Commission and the Minister to agree with them under the terms of this legislation. I also think it is an excuse for sloppy thinking. Indeed that sloppy thinking is evident in the Report of the Restrictive Practices Commission. They said in their overall conclusion — on page 60, paragraph 4.77 — and as I understand it this is essentially the basis on which all this is being done:

We have stated, however, in Chapter 3, our concern about the level of concentration of buying power. It seems to us, that, although we have examined the effects of a prohibition in considerable detail, they are difficult to predict with certainty.

So they do not quite know what they are doing. They continued to say:

We cannot overlook, however, the views of manufacturers and independent retailers that it would make a significant difference to them.

Therefore what the commission are saying is: we are not quite sure what will happen if we do this but the manufacturers think it is a good thing and we are prepared to go along with it. One would be extremely scathing if a politician had said that. Certainly if Deputy Reynolds had said it I would take paint of the wall——

An Ceann Comhairle

The Minister for Industry and Commerce.

Mr. J. Bruton

I meant no disrespect to the Minister or his office. But it does not seem to me to be a very convincing rationale in itself. The key sentence in the whole of that report is:

We have stated, however, in Chapter 3 our concern about the level of concentration of buying power.

The commission admit that they cannot actually measure the concentration of buying power. They admit that they do not know in fact what is the market share of multiples. One member of the commission says that he has serious reservations about the statistical validity of any attempt at measuring market share. Yet the whole thing seems to be based on the concept that the market share is too large. They cannot measure it, they do not know what its effect will be, yet that is why they are recommending this order.

The inherent weakness of the legislation, in allowing such subjective and vague factors as unfairness to determine action in section 8, lies in the fact that the commission have not said what they believe would be the proper market share for multiples. They say that the multiples have too much power, therefore they are recommending this order. They say they do not know what their present actual market share is and they do not say what their desired market share should be in the view of the commission. So they do not know where they are going, they do not know where they are but they are certainly prepared to recommend a raft of detailed regulations which would have to be enforced by the Examiner of Restrictive Practices.

I have the gravest doubts about the ability of the Examiner of Restrictive Practices and the Director of Consumer Affairs to enforce this legislation. Remember that the Director of Consumer Affairs and Examiner of Restrictive Practices also is responsible for enforcing all of the consumer protection legislation, all of the existing restrictive practices legislation plus this additional and extremely complicated order. One might well ask: how many staff has he got with which to do this work? I have not got Iris Oifigiúil with me here but my impression is that it is a very small staff indeed. I heard no proposals from the Minister in the course of his introductory remarks to increase the examiner's staff with a view to enabling him to do this. My impression is that his staff — in terms of field staff, for example, people who can actually go out and do the work — amounts to about four or five people who have the responsibility of enforcing all of the consumer protection legislation, all the existing restrictive practices orders, plus this one. I do not think it will work.

Before plunging into making new laws we should be examining why existing laws are not being enforced adequately. That is why I feel that the restriction on advertising should have been enforced more effectively than it was. I understand that the reason was some defect in the order when it actually came to court. Probably that was quite a small defect and could have been remedied relatively easily without the whole panoply of this massive document.

I would like to ask a question of the Minister, that is: how will cost be measured? Is cost simply the figure that the manufacturer puts on an invoice or a price list, or is it the actual cost of production? If it is the actual cost of production does that not involve a detailed examination of each cost factor in each manufacturing enterprise? If it is simply the figure a manufacturer puts on an invoice or a list, is that not something that is wide open to manipulation and collusion between manufacturers and producers?

I am curious about the significance of paragraphs 3, 4, 5, 6, 7, 8 and 9 of the order. These seem to me to be concerned with a ban on retail price maintenance and have little or nothing to do with below-cost selling or "hello-money". I may have misread the order. I trust the Minister will explain this to the House in due course.

I am curious also about the definition in the order of "seasonal goods". I understand that if one is selling "seasonal goods" and the season has passed one will be allowed sell them off below cost; that is reasonable. But "seasonal goods" are defined in the order as meaning Christmas cakes, Easter eggs and Hallowe'en bracks. Are there not lots of other "seasonal goods" one could think of that are not either Christmas cakes, Easter eggs or Hallowe'en bracks? For example, what about Christmas cards; what about plum puddings? Indeed I will offer a drink in the bar afterwards to any Member of the House who can volunteer at least five other possible "seasonal goods" which are not included——

Mr. Keating

Easter cards, birthday cards——

Mr. J. Bruton

I would like to offer two cups of coffee to the Minister; I know that he does not imbibe any other liquid. But the definition of "seasonal goods"— and I quote — is hard to believe. "Seasonal goods" means Christmas cakes, Easter eggs and Hallowe'en bracks, full stop. In my rather tinpot way I have tried to read this order and, if this is indicative of the standard of drafting, God help us.

I believe the banning of "hello-money" is justified. I see no point in the practice of operating "hello-money", but the Minister needs to do a good deal more than he has done so far in explaining the need for a ban on below-cost selling as distinct from a ban on below-cost advertising which we have had for some time and have been unable to enforce. He needs to consider what exactly is the long term objective of this order. Is it to maintain the market share of multiples, to allow it to increase or to reduce it? That seems to be the key basis on which the order is made. If it is, as the Minister might say, to maintain every grocer in business, that is an impossible objective because it is in the whole nature of any free trade that some people will go out of business and others will come into business. The grocery trade is a dynamic trade and no legislation should be made on the basis of wanting to provide a guaranteed living for anyone else. If that is not the objective, what is the objective? What is the perfect market the Minister has in his head? Is it 49 per cent in the hands of the multiples and 51 per cent in the hands of the independents, is it 60 per cent or 25 per cent?

If we are to get into the area of criminal sanctions in commerce between individuals, what we are doing here is proposing to make criminals of people if they sell something to a consumer below what they paid for it. If we are criminalising something of this kind we want to be very clear why we are doing it and where we want to be five years from now when we have done it. I do not see in this legislation clarity in regard to that. I realise that the grocery trade, being small independents, want it, but it is not so much a ban on below-cost selling that they want. They want the multiples to stop growing. There may be an argument on social grounds that it is better to have a number of small independent grocers than large multiples. That was the view taken by the Right in France when they introduced the Loi Royer some time ago. However, that sort of socio-political argument is not the argument being made by the Minister. He is arguing on economic grounds and if it is on economic grounds these grounds should be much more precise than they have been stated in the speech he made in this debate.

I believe that the future of the independent grocer is quite secure without this order. The multiples are reaching a stage, as do all large institutions, where they become rigid, bureaucratic and — because of rules within their own operation, union-induced restrictive agreements and the like — unable to provide the service the customer wants. The history of all large institutions is that they grow for a while, soon they reach a point of maturity and the smaller people come along and eat away at them by providing a more flexible service, for instance, a 24-hour grocery open around the clock. There is no question of multiples being able to provide a 24-hour service, whereas the small grocer can and does.

The small grocer is able to provide services of a human kind to his customers that it is not possible for the large grocers to provide. Just as in manufacturing where those that are large can become small and those that are small can become big, that dynamic exists in the grocery trade. I am not quite sure the introduction of legislative controls involving criminal sanctions on the way in which certain goods are priced is going to aid the long-term cause of the small grocer. It may give a temporary sense of relief from what is seen as unfair — to use the vague term in the Bill — trading but it may not represent the true way forward for the independent grocer.

If one extends it into grocery, why not have a ban on below-cost selling in respect of every product? Why not have a ban on below-cost selling in the drapery trade or in almost any area? If it is right in principle in the grocery trade, it should be right in principle everywhere, but, there has not been, as I understand it, a defence in principle of what the Minister is trying to do. There has simply been the statement that the manufacturers want it, the retailers want it, we feel there is unfairness, therefore, we are going to do this. A more rigorous classification is necessary if any commercial practice is to be criminalised.

Mr. Keating

It is the view of most of us in this House that in the general area of consumer interest one of the most challenging and immediately urgent difficulties is what is perceived to be a substantial degree of rip-off, or profiteering on consumers. Deputy Bruton referred to this also. I would like to see that challenge being tackled as a matter of urgency. Every wage earner is paying something in the order of £6 extra per week over and above that which he needs to pay based on the accumulated evidence coming from bodies such as the ESRI, the Restrictive Practices Commission and the Consumers Association of Ireland and evidenced in a recent "Today Tonight" programme. That excessive profiteering on purchasers arises because the cost of groceries is inflated and in this country consumers are paying not less than 10 per cent over and above what they would be paying if they were paying normal, average prices as other European countries lay down. The Irish grocery trade is of the order of £300 million or something short of that. Therefore, we are talking about a figure every year of £3 million over and above what is reasonable to expect. I ask the Minister to consider urgently the setting up of some form of ministerial commission who would investigate fully and report within three months because the evidence is readily available, and to propose comprehensive legislation to control this, the biggest abuse of all.

A clear perception by the public, backed up by a substantial volume of material, is that there are substantial disparities in price and indefensible additional costs falling on consumers here. Nothing is more urgent in the area of consumer protection than to deal with that. I understand the Minister has asked the Restrictive Prices Commission to look at the allegations which have been made about these unreasonable and unjustifiable price disparities. It has been suggested through the grapevine that the evaluation of up to 160 items by the commission may be invalid because up to half a dozen key items may have been removed from the list. It is suggested that the exclusion of certain key items would have a disproportionate effect on the price of that basket. Their removal would result in a grossly distorted picture being presented and would understate dramatically the cost of the average grocery basket, diminishing for perceptual purposes the true difference between prices in Ireland and elsewhere. I should be grateful if the Minister would clarify this matter.

We feel somewhat uncomfortable with this Bill because we do not believe it will work. We believe that ultimately the answer lies in an enlightened, informed consumer body and the exercise of choice on the basis of an educated approach by the ordinary citizen, who in many cases is able to distinguish between good value and marketing ploys. Nevertheless it must be accepted that it is not unreasonable for the Government to take some initiatives in this area. The banning of below-cost selling is an initiative which has been much talked about over a long period. I would suggest, however, that in the medium and long term we should be more properly concerned about enlightening consumers and providing them with information.

We should also be concerned about including in the school curriculum an element of consumer education and information in order to give young people the wherewithal to make rational and sensible choices so that the most skilled marketing techniques will not con them into the kind of gimmickry which in some cases has given rise to this Bill. There is no substitute for that. If we endeavour to deal at the micro level with management, manipulation and regulation, the situation becomes never ending. What we are trying to do in this Bill — unsuccessfully, I believe — is to stop two or three forms of practice, but they are only permutations of other ways of selling. There is evidence that some people are already well ahead of this Bill and are planning to continue the same practices, except by different means.

The key issue, apart from the suggestion of undue exploitation of consumers, is the concentration of ownership in the hands of very few multiples. That feature is unique in Europe. It has been controlled or tackled to some extent in every other country in the western world. Below-cost selling, which is often indulged in by relatively small shops unattached to the supermarket multiples, is not in itself a problem. It is simply a way of making a special offer which encourages people to come into the shop — an advertising lure. It is a problem only when we take into account the small number of multiples dominating the grocery business. Five of those multiples control almost 8 per cent of the trade. Suppliers and customers have relatively little room for manoeuvre and are not able to deal adequately with the challenge which faces them. That degree of concentration of ownership is the fundamental issue. The problem is considerably greater here than in Northern Ireland or in other European countries. It is unreasonable to allow, absolutely unmonitored or uncontrolled, the unspancelled growth of a very small group whose interests are not necessarily those of the public, although some of them act in the public interest, but whose ultimate interest may very well redound to the detriment of the Irish consumer. That issue is paramount. We must consider whether the existing polyopoly should be dismantled or at least whether the existing multiples should be debarred from acquiring new stores. It is particularly appropriate to raise this issue in the week of the H. Williams demise. It will be interesting to see where these stores go.

Germany decided to introduce a ban on a particular multiple which had an 8 per cent market share. They were banned from acquiring other stores because it was believed such acquisition would not be in the public interest. Two multiples alone control upwards of 40 per cent of the whole trade here and there is no whiff of a suggestion that this will be curbed.

In principle my party do not wish, in so far as it is possible, to be involved in curbing free market forces, but Government is the ultimate guarantor of people's rights in this matter and when the public welfare is perhaps put at risk by monopolistic situations, it is proper and right that Government should act. This is a more fundamental and pressing problem than below cost selling and I should welcome the Minister's comments. It looms much larger than any other issues in this Bill, which I believe will be circumvented with ease by the multiples.

Belgium, Germany, France, the Netherlands, Luxembourg, Austria and Switzerland have acted to deal with undue concentration in the hands of a few in the grocery trade or any other area of business when it is liable to result in the exploitation of the public. I appeal to the Minister to deal with this problem. All those countries have taken steps so that no one group should exercise control.

Very serious questions arise in the wake of the H. Williams break-up and they have not been answered. I refer to questions about how that company was run, about how the cash throughput was managed and about the role of the banks. In that context it is important that we should look at the dominant multiples, remembering that approximately 30,000 jobs depend on that business in the retailing sector and another 40,000 jobs in food processing and manufacturing. They are all bound up in a business which has about £300 million of commercial activity. We cannot simply hope that it will be all right on the day for that business and those people. Other countries have learned some lessons in this respect, unlike us who have apparently not taken those lessons to heart.

I want to ask a number of key questions. I do not believe the Bill deals adequately with the true cost of goods. This is a problem in a relatively small economy when so many goods are imported. There is a reference in the Bill to own brand goods. I wonder how they will be defined. The Bill ignores the fact that some multiples are essentially multinationals and can, therefore, buy goods from their own companies in Northern Ireland or elsewhere. What chance has anyone of obtaining the true picture of cost in that case, assuming we can agree on what is the cost? Is true cost the invoice cost to which the order points or is it something else? We all know that in some cases invoices are just fiction and, undoubtedly, for the purposes of this Bill, in many cases will be fiction.

I do not believe it is possible for any Department to absolutely, with integrity and certainty, judge how invoices which are drawn outside this country can be valid. This means there will be an uneven and unfair practice. For example, it may work relatively well with multiples which are totally Irish-owned where we have the law to force people to comply with the requirements which might arise over a period, but what happens if a cluster of invoices is submitted with the stamp of Belfast, London, or any other city outside our jurisdiction? How can we check them? The basis of fair trading is that we compare like with like.

As far as these multiples are concerned, I do not know how the Bill will work. It may be that the larger groups will benefit to the detriment of the smaller chain stores. This point was accepted by the Restrictive Practices Commission. It could therefore, arguably result in creating a greater disparity between what I would call average sized multiple stores and the larger multiple chain stores, adding fuel to the fire. That, I am sure, is not what the Minister or anybody else wants.

The cost of implementing this Bill should be borne by the grocery trade, but it will not. This Bill will not be implemented properly unless there are to be such severe sanctions that will effectively prevent abuse, and they are not being proposed. The adequate policing of the Bill will involve a comprehensive inspectorate, examinations by the Fair Trade Commission, and hordes of civil servants pouring over thousands of invoices every month or will there be random checks? I want to know what staffing and checking arrangements will be involved.

Unfortunately it appears that under this Bill all those extra — if there are any extra, and it is possible there may not be — devices for ensuring the Bill's implementation will fall on the taxpayer. I do not believe that should be the case. It is possible there will be no additional inspectorate of any kind. If that is so, then the Bill will be a complete farce because the present arrangement for examining prices, evaluation by Departments and so on, do not operate at all. There was an attempt some years ago to create some structure to which people could refer but that was dismantled and as far as I can see it is now open season on the consumer. If the Minister does not make it clear that there will be a substantial increase in staff numbers to pursue this matter vigorously, then this legislation will be a complete waste of time.

The attempt to ban below-cost selling may be welcome. It has been sought by many people particularly the smaller grocery representative bodies, and to some extent by the Consumers' Association of Ireland, who were, and are, very lack-lustre in their support for it. In a document they published in February of this year the association said they were unconvinced that the selling of goods by multiples at less than either the net invoice price or the net invoice price less allowances for the value of credit time secured from suppliers was in the short run disadvantageous to consumers who shop in multiples. They went on to say they were unconvinced of the argument put forward that consumers seeing goods advertised for sale at less than cost were likely to be led to believe that all goods in that store were sold at less than cost and that this was sufficient reason for banning below-cost sales.

The general tenor of their remarks was that somehow below cost-selling was a peripheral device and was not germane to the real issues involved, that is, the capacity of a few to distort the market by their dominance in the marketplace. The truth is that multiples, sophisticated as they are in marketing will easily evade these petty restrictions. They will use a range of other marketing ploys, including so-called free gifts, stamps, vouchers, subsidised toys, raffles, bingo and a myriad of devices which will get around the purpose of this Bill. By and large my party would have no grievance with that.

People in the marketplace are entitled to try to sell their goods using reasonable and fair means. If there is an abuse it should be stopped but it would be unreasonable for us, on the basis of demands which are unreasonable or illogical, to rush to judge in many of these cases. It is normal to produce marketing ploys to try to sell one's goods and services. I imagine this country nationally tries to do it abroad, and I hope the IDA are successful. The principle of using one's wit, skill and sophistication in marketing techniques is not, in itself, a bad thing. It is only bad if a few have the chance to dominate and to abuse the consumer interest by means that are underhand, improper, unethical or open to some form of questioning.

I feel that unfortunately this proposal will be largely ineffective unless it is amended to deal with all unfair trading. I do not believe anyone would suggest that some of the comments I have made are unfair, but we should deal with below-cost selling and the so-called "hello-money". It is like somebody putting their fingers in two holes in a dyke which is already full of holes. I do not believe this legislation will work.

We should remind ourselves that below-cost selling is not in itself a problem when confined to ordinary grocery stores. It only becomes a serious problem in the context of the large multiple chains which dominate the market.

The Bill does not pay adequate regard to a disgraceful practice prevalent in the grocery business which arises directly out of the domination of the market, and that is the inordinately long credit time before the multiple stores pay their suppliers. Based on the figures which arose from the chaos of the H. Williams mess, it is reasonable for us to suppose that there is of the order of £300 million outstanding to suppliers around the country. These credit times are longer than for any other area of business or commerce in Ireland and they arise directly from the fact that there are approximately 1,000 Irish food manufacturers and suppliers having to deal with five or six buyers. In that case it is a buyer's market and they can dictate. It is very difficult for an individual supplier to refuse to supply goods unless bills are paid promptly. That is a serious problem.

This Bill in evaluating the cost of goods does not have adequate regard for the use to which that money is put during those extended credit periods. Some multiples were notorious for taking cash at the counter, hanging on to it until the sheriff virtually arrived at the door, and using that money in the meantime. If that is fair trading so be it, but I want the Bill to fully take into account the use of that money and the value gleaned from it in the assessment of cost because that cost is ultimately passed on in price increases. At present that does not appear in the Bill or in the order — in fact the order is extremely vague in that respect. I believe these 1,000 suppliers are somehow mesmerised because they are trying to do business. We have seen how some of them suffered arising out of the problems of the H. Williams chain of stores which, after all, had 8 per cent of the market share. The influence of those five or six buyers is enormous. I should like to ask the Minister to have another look at the Bill and the order and incorporate in them proposals which would oblige multiples to pay their suppliers promptly, in the same way that people in other areas of business have to do.

I wonder why many foodstuffs, particularly fresh foodstuffs and vegetables, are excluded from the Bill. That is an area of interest to the consumer and it is unfortunate that we cannot deal with it. The Bill does not deal with another ploy which is of fundamental interest, the special discounts and bonuses given when target sales are reached. They are often funded off the books. For example, the owner of a supermarket may get a cheque at the end of the year for reaching certain sales targets. I would like to know how that will be taken into account because it is not dealt with in the Bill.

There are a number of inadequacies in the Bill. To some extent the legislation does not hit at the central point which is the dominance by a few. I do not think it would be improper for us to say that some stores have acted extremely well, provide a good service to the public, have clean stores and good shopping environments. They do well and make a profit and more power to them for doing that. However, on balance across the board there is no doubt that the Irish consumer is paying above and beyond the norm for his or her goods and that should cease but it will not cease unless we take action.

I should like to ask the Minister if he has familiarised himself with tax liabilities unpaid by multiple chain stores. I am not convinced that it is a serious problem but there was some indication in the H. Williams fall-out that in the order of £2 million was owed. That might not have been above and beyond normal trading but I would be interested to know if that is a feature of the Minister's concern for the public interest in this respect.

The proposal to ban "hello-money", an insidious practice which is a form of blackmail, is welcome but I cannot see how it will be enforced effectively. I hope it will but in my view the multiples will find other ways of achieving the same end. That ban can be got around in a variety of ways. I was intrigued recently to discover something about the oil companies who are involved in giving so called free gifts to consumers. Of course, they are not "free" because a customer has to buy about £1,000 worth of petrol to get an electric kettle or some other object. What intrigued me was that, as people in the electrical trade told me, the goods which they sell and on which they have to pay VAT are identical to the goods being "given away" by the oil companies who do not pay VAT on them. I was told, and I satisfied myself that it was the truth, that this 25 per cent difference amounts to something of the order of £10 million to £15 million per annum. That is a form of unfair trading which needs to be dealt with. It is bad enough to have the people conned into believing that they are getting something for nothing in the first place but to find out that that conning is aided and abetted by the refusal of the Minister for Finance to extend the same VAT element to those goods is incredible. I cannot understand why that is the case. Unfortunately, it is not just an economic exercise because the tragedy is that the electrical trade has had to let many people go and that arises directly out of this. I am putting that forward as an example of how people can circumvent most measures we introduce. I should like to ask the Minister to refer to that matter when replying because it seems to me extraordinary that such ploys, funded by the taxpayer, can be used to circumvent the spirit of the legislation.

I appeal to the Minister to deal with the issue of the abuse of price margins. We are all aware that there is an abuse taking place. It is evident, and this is implicit in documents produced by the ESRI and the Consumers Association of Ireland and as highlighted on a "Today Tonight" programme. I should like to ask the Minister to say if he intends to take on the few dominant groups —"take on" may not be the correct phrase because I do not want to have confrontation if it can be avoided but there is a need to curb that abuse. I have referred to some of the countries where this has been dealt with. If that dominant market share was dealt with and there was adequate consumer education at every level, including our schools, those two devices would create a self regulating environment where people who are not in the position of dominance adequate to abuse the consumer and where the consumer is adequately enlightened — many of them are — in the broadest sense of the word, including their statutory rights and entitlements, we would not need this type of micro-management which inevitably will result in demands next month or next year for some other device. Next month it may be the banning of bingo in supermarkets or the banning of free gifts or the subsidising of charities, moryah, under the guise of luring people in.

Those who have investigated the grocery trade in America or other European countries will know what I am talking about. To some extent it is like trying to hold back the tide. Perhaps we should go to the source of the problem and deal with it. Undoubtedly, the source is the dominant share held by the few.

Will the Chair clarify a matter for me? The Bill consists of two paragraphs giving legal effect to an order made by the Minister earlier this year and I wonder if it is in order for us to submit amendments which may involve the writing in of additional sections.

An Leas-Cheann Comhairle

The Deputy should look at the Bill and use his imagination to decide how he will offer amendments to two sections.

Mr. Keating

For example, I could offer an amendment suggesting that the Bill should consist of ten sections.

An Leas-Cheann Comhairle

The Deputy should consult with the Ceann Comhairle's office about this. He will get ample assistance from that office on how he should table amendments but I would not like to suggest to the Deputy how he can get suitable amendments to what is before us.

Mr. Keating

I will pursue the matter later but I will be submitting amendments. They will not be that extensive and I do not intend to delay the progress of the Bill. We should try to get the legislation on the Statute Book as soon as possible but the point of the debate is to allow rational and logical argument about the issue. The Bill consists of two sections but if we are not entitled to submit amendments to add to it I will be extremely disappointed because we will be wasting our time. Obviously, we cannot amend the order because that is a matter for the Minister but I hope we can amend the Bill. I wish the Bill well and I hope the Minister will deal with the key issues that are not covered in it.

Mr. Spring

I welcome the Bill although I have some reservations about it because it does not go far enough in certain areas. There is a necessity for its provisions which are long overdue. I am in agreement with much of what has been said and there is little point in repeating remarks made by other speakers. In the course of this speech the Minister said that while he does not normally favour intervention into the market place in this case it is necessary. I put it to him that it is quite unreal not to favour intervention in our marketplace because of the size of the market, the vulnerability of consumers and manufacturers as highlighted in what has happened in that sector in recent months.

Likewise, in relation to the abolition of price control, the Minister knows my views. There are tomes of correspondence on file — which he will have read in detail no doubt — in his Department and we should be strengthening price control instead of abolishing it. The Minister should ask his Department to report to him on the effects of price control in many areas where competition was meant to be a substitute. It is quite obvious to everybody that in many areas it did not have the desired effect. Is the Minister now prepared to ask his Department to look at the effects of price control, especially in relation to petrol and drinks where cartels are in operation? Even small cartels have been formed to maintain prices for the benefit of the industry rather than the consumer although the abolition of price control was meant to safeguard industry.

The Minister also spoke about the prospects for our economy which had been greatly improved by the new spirit of optimism which is evident. I wonder if Longford-Westmeath is in a different country from that in which I live.

Mr. Keating

The Minister did not specify the country to which he was referring.

Mr. Spring

That is correct. While the Minister itemised things which the Government are attempting to achieve, if he spends any time in the country he will not find the effects to which he referred in his speech. Perhaps some of his officials are inclined to believe this as it has been said so often over the last couple of months. If the Minister has discussions with anybody in the retail trade in towns in rural areas he will find that there is no commercial activity there at present. Trading figures are down and will be even lower at the end of the year because spending power has been cut. Nervousness is rampant throughout the public service, the teaching profession and the Department of Agriculture and others because people are faced with the prospect of losing their jobs at a time when no others are available. I totally disagree with the Minister's comments in relation to optimism which I certainly do not detect in rural areas where people have their backs against the wall. The Estimates for 1983 and the so-called plan for national recovery are not getting the warm welcome which the Minister indicated this morning.

This legislation is necessary but I wonder if it goes far enough. Perhaps the Minister will address the question of the effects of the cutbacks and the reduction in allocations to various offices, including the office which will be monitoring the implementation of this legislation. We are bringing in legislation which, ab initio, has limited teeth.

Much has been said about the share of the market by the large companies and it certainly warrants the attention of the Minister. The Minister should address his attention to the question of the purchasing power and the power to control the markets being vested to the extent of 49 per cent in two major companies. Anybody involved in supplying these companies has a tale of woe in relation to the method of settling a price and of then reducing the price at a time when they have no choice because they are fully committed to the large buyers. A figure of £300 million was mentioned. If that is true, many people are in very precarious positions, especially small manufacturers who have a very restricted cash flow. At the back of this is the whole need to protect the consumer. There are lessons to be learned from consumer protection which the British Government introduced some years ago in the United Kingdom. Perhaps we are a little behind in this regard but we should learn from the mistakes which have been made. "Hello-money" and "loss leaders" are a scandal and certainly not in the interests of the consumers generally. Perhaps when this legislation is effected there will be a more rational and balanced pricing policy which, in the long term, will benefit consumers.

I should also like the Minister to refer to the débacle in relation to H. Williams. I do not know if the Minister has met the group who requested a meeting. Whatever misgivings we may have in relation to the management of that company, my concern is that the State is in a position where it will lose substantial sums of money which, obviously, the Minister for Finance can ill afford. I am also concerned about jobs in practically every town in that there are 33 different centres. There is also a heavy responsibility on the banking centre not to pull the plug if there is a possibility of saving any part of the company. I ask the Minister to urgently intervene in the interests of saving what is owed to the State and jobs. The Minister, wearing his other hat in terms of attracting industry here, must readily admit that there are no great job opportunities being created. If the banks act responsibly in relation to the saving of this company there may be a chance because if this company go out of business there will obviously be another 6 per cent of the national share up for grabs by the Dunnes and Quinnsworth groups. Therefore, I ask the Minister to personally intervene and to use whatever clout he can in relation to ensuring that the banks take a longer term view in this matter. The Minister need not be shy in relation to his approach to the banks because large sums of money are involved, credit lines were extended and the banks have a lot to answer for. They are an intrinsic part of the present difficulties experienced by the company and they must be responsible in ensuring where possible that something can be saved.

I should also like the Minister to inform the House of the financial provisions which have been made in relation to the powers and functions being transferred when this legislation is effective. It is necessary to know this because we are not very good in this country at regulating situations. We are not very good at monitoring and following up situations mainly because of weaknesses in our administrative system and in delays which take place because of long lists in district courts in particular. As has already been said this morning, there are loopholes and no Bill is perfect at the initial stages. The position will become much the same as it was in the last few years with people trying to avoid regulatory orders in relation to, for example, the drinks trade. It will become an exclusive area for certain practitioners who will try to find ways for large companies in particular to avoid and evade the terms of this Bill. Obviously, money is no object, as has been said. Even the adverse publicity which one would attract in avoiding or evading the terms of this Bill could be the best form of advertising they will ever get in terms of attracting customers to their stores.

Not only must the penalties be punitive and be seen to be of a magnitude that will be a deterrent but it will also be necessary for the Minister and the Department to ensure that the offices in question are in a position not only to monitor the report but also to ensure that action is taken. I am a little alarmed with what has happened to the Office of the Ombudsman which has practically been rendered hopeless and brought down to its knees. In my book, justice delayed is justice denied. This is what will continue to happen if lists of problems arise and the Minister, the Department and the offices under this legislation are not in a position to take immediate action. The Minister should, from the start, be in a position to assure this House that action will be taken. There is little or no point in bringing in this legislation if we are not in a position to ensure that people will not set out to avoid and evade the terms of the legislation, and we should be under no illusion, they will set out to do so when there is money to be made.

I welcome the Bill in that it is long overdue and necessary. On Committee Stage there will be an opportunity for looking at what I see as the weaknesses in the Bill. I will ask the Minister to consider looking at a far wider area in relation to monopolies and powers to regulate and control monopolies that have existed right across the board since the foundation of the State. Many of the professions have total control in monopoly situations and the same is true of many of the trades, ranging from opticians to lawyers and so on. Access to these professions is ever becoming restricted at present. The Minister should direct his attention to a general review of these areas with a view to ensuring that these practices are discontinued.

I welcome the Bill. There will be an opportunity, on Committee Stage, to tease out some areas where I consider there is a lack of teeth in the Bill and a lack of ability to deliver on its general intent. I will be making the views of the Labour Party known section by section on Committee Stage.

Mr. Lynch

First, I compliment the Minister for introducing this Bill to the House. It is a most important Bill in that it will go a long way to protect the 40,000 jobs in the food and drink manufacturing industry and the 35,000 jobs in food retailing and wholesaling. I hope, too, that it will stabilise prices in market gardening which has gone through some dramatic periods.

At the outset I wish to refer briefly to other areas where the Minister should take immediate action. One area was referred to by Deputy Dick Spring and I fully agree with him. First, I wish to refer to the area of the legal profession, the entire question of legal fees and charges and, secondly, the banking institutions and the entire area of bank charges and fees. Both the legal profession and the banks have become a law unto themselves and they have such a grip on their clients and customers that the customers are powerless to offer any challenge. Government action alone can redress this situation. Deputy Spring was right when he asked the Minister to take note of these areas. I am now asking him to bring in legislation to deal with these two problem areas if it is within his remit to do so and I am very confident that the Minister will respond.

I have been involved in the retail trade in one form or another since my school days. It could be said that I have my finger on the pulse of these matters. Deputy Bruton mentioned earlier that the Bill was being introduced in the absence of proper research. I would like to remind Deputy Bruton that the Oireachtas Joint Committee on Small Businesses carried out an indepth study into the retail and distribution sector both at committee and sub-committee level. That committee issued a very significant report on retail and distribution. That committee was under the very able chairmanship of Deputy Ivan Yates who is sitting across from me. I want to take this opportunity of paying tribute to him for the tremendous work he did on that committee. We burned the midnight oil. It was one of the greatest committees ever formed. There is still much work to be done in that area so the committee should be resurrected. The committee's reports made good, commonsense reading and any action that was taken as a direct result of those reports has borne fruit and at no cost to the State. Deputy Yates was a very able chairman, very dedicated and worked very hard. Many of the recommendations of that committee have not been implemented and I hope that those reports will not gather dust. This legislation is totally in line with the report of the Joint Committee on Small Businesses.

It is well known to this House, and even more so to the Members of the Upper House, Seanad Éireann, that the Oireachtas Joint Committee on Small Businesses issued a detailed report on retail and distribution. The report was debated by way of a motion in the Seanad in May 1985. As vice-chairman of that committee, I contributed to that debate and early in my speech I quoted from our report. I will quote once again, for the benefit of the Members of this House, what I said then:

A deep sense of depression coupled with a very low level of business confidence is widespread among those operating within the retail and distribution sector reflecting the difficult trading conditions prevailing. The traditional wholesaler and retailer are being decimated by the pincer effect of large multiple stores on one side and on the other by casual traders and those operating in the black economy. These changes are dramatically aggravated by an acute economic recession and high taxation rates. The combination of these factors has severely demoralised many such businesses resulting in closures, job losses and a feeling of helplessness among politicians.

It might also be worthy of note that in the region of 770 small businesses were struck by this in 1984 alone, judging by figures given to that committee. This is an alarming figure and reflects the concern of that committee with regard to the whole area of retail distribution.

Unlike industry, agriculture and tourism, retail distribution is not a direct generator of wealth and for that reason has never been the subject of any official policy for its overall development. If anything, this sector has been seen merely as a revenue gatherer for the Exchequer. Being involved in the bar trade, I know all about that. The committee compiled a report including the burden of taxation, State-imposed paperwork, casual trading, legitimate cross-Border trading, smuggling, the black economy and the serious and dangerous problem of below-cost selling and "hello-money". While this sector is in the front line in having to cope with the effects of the decline in disposable income, the problems I have just outlined could be mitigated if the recommendations of the committee were fully implemented.

It would be no harm to put on record that the committee were very much aware of the role and responsibility of the sector in promoting Irish-made goods. The committee welcomed the discussions that were taking place at that time between the Minister for Industry, Trade, Commerce and Tourism and the grocery trade with a view to getting more home-produced goods on the shelf. The committee also made specific recommendations with regard to a trade linkage council involving all interested parties to provide a two-way flow of commercial information to ensure the maximum market share for Irish consumer products. They were also very concerned about the huge losses being incurred because of the cross-Border trading situation which existed until the budget was introduced this year by the Minister for Finance, Deputy MacSharry. I want to place on record my compliments to the Minister for the very efficient way in which he dealt with that problem. Places like Clones and Cavan were ghost towns but immediately that measure was brought into effect these places came alive again. Shopkeepers could not believe their eyes, they were so busy. Measures like this help the business sector and any improvement in this area is welcome.

Recent events clearly underline the fact that unless a degree of stability is brought into the food trade more jobs will be at risk. Unfortunately they have been neglected by successive Governments. The steps taken by the Minister to abolish below-cost selling and the use of "hello money" by the major supermarkets have been received with great acclaim by small shopkeepers and family businesses. I agree with the Minister that at the end of the day the people who will benefit most from this move are the consumers. It is well known that a monopoly such as has been achieved by the multi-nationals here cannot but be detrimental to the Irish economy in the long term.

It is sad that so many of these major firms import their supplies and factories outside this country are working around the clock to produce goods to sell at what appear to be bargain prices. We must remember that these big firms operate in a very special climate of their own. When they make a special offer which appears very attractive to the housewife this product is termed a loss leader. In effect, that means the product will be sold below cost while, at the same time, 20 to 30 items will be increased in price by anything from 1p to 2p per item to offset the loss on the item offered at a special rate to the consumer. Many of our Irish producers have been virtually put out of business because they were forced to sell goods to the multinationals at a price for which they could not afford to even produce the goods. If one were to ask any housewife or shopper coming out of a supermarket what their goods cost, they could not say; yet they will remember the price of the special offer, the goods sold below cost. They do not know the price of 50 or 60 per cent of what they have bought and they do not check it.

To keep a cash flow system going, the producers complied with the wishes of the supermarkets, sold their goods below cost and eventually went out of business. The committee came across several examples of people being put out of business due to the pressure put on them by the multinationals and the big supermarkets chains.

I doubt if any business has changed as dramatically in recent years as the retail grocery trade. There were thousands of independent grocers 20 years ago but now nearly 60 per cent of the market is held by the large multiples. In Dublin alone the multiples have over 80 per cent of the business. I acknowledge this is a problem compared to the remainder of Europe. We have the largest area controlled by multiples in the grocery trade of any country in Europe. At least 25 per cent of the total trade is controlled by foreign-owned multiple stores. The concentation of so much of the grocery trade in a small number of groups only gives those groups enormous purchasing power and scope to re-arrange prices. This is not in the best interests of the Irish food processing industry or of the consumer. Figures available to our committee at that time showed that the number of family retailers had declined from 9,000 in 1977 to 7,700 by 1985. This was due mainly to competition from the multiples. The independent wholesalers see their business declining at an accelerated rate for the very same reason and, as one who lives in a small rural area, I see the adverse effects on local trade when multiple stores in large towns take cash from other smaller towns and villages. This is a very serious problem.

We acknowledged that the solution to the problem for independent retailers probably lies to a large extent in their own hands. I have in mind here the highest standards of quality control, presentation, competitive pricing, selection, hygiene and efficient allocation of shelf space. However, price manipulation in the form of below-cost selling as practised by the multiples is not in the public interest. The use of loss leaders will not ultimately affect the overall profit of the multiples. That will be made up on the other goods. However, the practice has caused major upsets in the food industry and the independent trade. The recent bread war is another example of what I am referring to here. The housewife attracted to a multiple store by the very low cost of one or two items does not always realise that what is being given with one hand by the multiples is being taken away by the other and that she has really gained nothing in the long run.

The committee looked at the situation in various other countries and found that with the exception of the UK all countries, whether with socialist governments as in France or governments totally committed to free enterprise as in the UK, operate controls on the development of the grocery trade in the public interest. The committee believed at that time that some controls should be brought in here to restore fair competition between the multiples and the independent wholesale and retail trade. In this regard our recommendation was modest enough compared with other countries, but it would be sufficient for our country. Our recommendation was that a ban should be imposed on below cost selling. We believed that such a ban was being sought by the food processing industry and the independent retail trade and should be implemented. We took evidence from each of the four multiple groups and they stated they would not object to such a ban at that stage.

I reiterate the strong and unanimous views of that committee that below-cost selling is a pattern that benefits no one, does real damage and should be banned. We also asked that no one retail multiple should control more than 25 per cent of the market and that teeth should be given to the Government's planning and general policy direction of 1982, to the provision indices and ratio square footage per head of population in the planning and development of any future supermarket or multiple store. In making those recommendations we fully accepted that the multiples under any restricted system retain a competitive advantage by virtue of their purchasing power and economies of scale. However, this competitive advantage should be exercised in a fair manner.

In their May 1987Consumer Choice magazine, the Consumers' Association proposed that the Government prohibit any further increase in market share of the retail grocery market by any multiple or distributor who currently held 7 per cent or more of the market. That would be in line with the thoughts of the committee.

Some interesting statistics that I have come upon recently will show that the number of family retailers is now down to 7,000 based on trade information. Food imports in 1985 amounted to £995 million. At least £100 million of this amount could have been replaced by indigenous home produced goods. Some of the supermarket chains have 60 per cent of their products in own label brand most of which, sad to say, is imported from countries as far away as Belgium. I have no direct figures for the percentage of imports, but I know that there are factories in other countries working around the clock producing biscuits and the like to sell to the Irish housewife.

Let us take Jacob's biscuit factory, for example, which employs 1,000 people and sells approximately £50 million worth of biscuits per annum. Messrs. Dunne's Stores on their sales record should account for a quarter of the sale of Jacob's brand biscuits if they were to support that company. My information is that they do not do so. I have no say in the matter but I believe that Irish enterprises working together, combining efforts to support each other in all areas would improve the situation. I believe in buying everything in my own town if at all possible. I buy Irish, wear Irish, eat and drink Irish and play Irish. If more people did that, it would generate wealth and jobs.

Another example of the monopoly situation that exists at present is that Dunne's Stores and Quinnsworth are each ten times bigger than the Jacob's firm in monetary terms. Multiples have now become so great that they dictate their own terms so it is very easy to understand why the multiples can sell products at their price when they can purchase the product at their price of asking. In other words, they are so strong that they dictate their terms of purchase. It is astonishing to find that this country's multiple supermarkets owe anything from £170 million to £300 million at any given time to their suppliers, due to the excessive credit terms that they now enjoy.

Before leaving the subject of the multiples, coming up to Christmas I would make a special plea to our food processors and the Confederation of Irish Industry to examine why advertisements by our food processors consistently advise consumers on radio and television of the various products available in their local supermarket. There is an independent retail trade as well and that should be given consideration. Surely it would be more equitable if advertisements had a more neutral wording such as "now available at your local food store".

In conclusion, I am fully convinced that the Bill before the House will bring stability to the retail and distribution sector, will restore confidence in the trade, will preserve jobs and stimulate further employment; will create further stability within the economy because no longer will the concentration of buying power be in the hands of a few megastore chiefs and, more importantly still, the concentration of selling power will no longer be in the hands of the same megastore chiefs. When I despaired of getting a response to the committee report after the debate in the Seanad in 1985, I was delighted to see that Deputy Yates was drafting his own Bill for banning below-cost selling with a view to introducing it in this House. I would have given my full support to that Bill. It is quite in line with the Bill that the Minister is introducing here today. That Oireachtas joint committee made very specific recommendations in many areas, especially in relation to retail and distribution. We see that as an area of great potential for employment. Unfortunately, there is no grant aid and that would be the subject of another debate. The IDA will not permit factories unless they can grant aid them and they will not be grant-aided for the retail and distribution business. Many aspects need to be tackled. There are factories lying idle across the country for five, six and seven years and people want to start up some type of commercial enterprise in them. However, they will not be allowed to take over these factories because they are not manufacturing companies and cannot be grant-aided. That is a pity and is probably the subject of another discussion in the House.

Mr. Yates

First, I should like to thank Deputy Lynch for his very gracious comments. I enjoyed working with him for four years as Chairman of the Oireachtas Joint Committee on Small Businesses. I should like to put on the record the work that he and our colleagues on that committee did on this and several reports that we produced. We see from month to month more and more of the recommendations being implemented but, as he has said, different points have not yet been taken up to date and we hope that they will be taken up by the Government. I thank him publicly for his kindness.

I have been very immersed in this issue since 1984. I first studied it as Chairman of the Oireachtas Joint Committee on Small Businesses, took evidence from everyone involved in it, from suppliers, retailers, both independent and multiple stores, to experts in competition law, former Examiners of Restrictive Practices, different people involved in different spheres, civil servants and so on. From that time I have been absolutely committed to the view that if you allow a totally free market, laissez-faire approach to the retail and distribution sector, that is a recipe for chaos, a recipe in the short term for oligopoly and in the long term for monopoly which is not in the consumer's interest and not in the interest of Irish employment or Irish trade. I am very strongly of the view that the delay with this legislation is extremely regrettable.

I published a Private Members' Bill not only in the lifetime of this Dáil but of the last Dáil and would commend the Minister for his initiative in bringing forward this Bill. I shall later on deal with the advantages and disadvantages of the ministerial order versus a Bill such as I have proposed. The fact that the Minister has grasped the nettle is important and he is worthy of support.

I should also like to place on record my appreciation of the efforts of the former Minister for Industry and Commerce, Deputy Noonan, who at all stages was supportive of my Bill in a personal capacity and brought the proposal before Cabinet, which resulted in the RPC inquiry into the grocery trade. There are many people who have changed their minds in regard to this issue and that needs public appreciation. I am mindful of the fact that in 1980 the RPC published a report which was strongly against a ban on below-cost selling and instead went for a ban on advertising. The official view of the Department of Industry and Commerce consistently over a period of several years was one of total opposition to this Bill and I was told so in no uncertain terms, based on the gospel of the RPC report. I am glad to see that many people have now seen the light on this issue.

The reasons such a ban on below-cost selling is necessary are very simple. Below-cost selling has to be banned, because, firstly, it puts intolerable pressures on Irish manufacturers and suppliers and because of the pressures of market share they are forced to supply goods at unsustainable terms. A second reason why a ban on below-cost selling is essential is that below-cost selling is misleading to the consumer. During 1985 and 1986 I carried out a survey of consumers to show that they were being misled by the practice of loss leading and the selling of a small range of items below cost while at the same time the supermarkets were selling many other goods at a rate higher than they needed to have been sold at. Therefore, the housewife was induced into the supermarket in order to buy a number of goods that she recognised were exceptional value only to find that the total shopping basket was in fact a lot dearer than it should have been. The third reason why below-cost selling should be banned is that the practice of below-cost selling allows for a modus operandi for the most gross distortion in any trade and that is unprecedented in this country.

Many people are asked to buy goods from wholesalers and suppliers at a price above which their competitors are selling them to the public. This morning, we heard one definition of unfair trading practice. It is totally unfair for someone to have to buy a product at a price above which someone else is already selling it. In other words, they cannot compete and that is unfair. The principle of below-cost selling is the same as that which was enshrined in the Restrictive Practices (Groceries) Order, 1981. I moved a Private Members' Bill because of the High Court decision which found that order to be defective.

Deputy Lynch also referred to the fact that the Oireachtas Joint Committee on Small Businesses carried out a very detailed study of the international scene. In 25 of the 50 states in the United States there is a ban on below-cost selling and in a number of countries in Europe such as France, Belgium, Luxembourg, Austria and Switzerland the controls which we are now seeking to introduce here are in place. In simple terms below-cost selling is anti-consumer, is detrimental to employment and prohibits a fair trading environment in the retail sector.

I would now like to deal with some of these issues in detail. Some of the comments which were made this morning were lacking in a detailed knowledge of the sector. This sector employs 35,000 people and has a turnover of £2.6 billion per annum and it seems extraordinary that the State has no policy on that sector. A White Paper on the retail and distribution sector has never been published. Recently I paid a trip to Japan and the reason why their unemployment figure stands at 3.3 per cent is that they have very heavy employment in the service sector. It is estimated that by 1990 60 per cent of all employment in Japan will be in the service sector. They think in terms of getting jobs in the service sector and they realise the limitations which having 23 per cent of the labour market employed in manufacturing puts on them.

We look to the IDA to produce jobs but the fact is they cannot produce them. Likewise, in America the millions of jobs which have been created during the recent boom have all been in the service and value-added sector. It is high time that we pursued measures which deal with competition policy, which have an overall view of where the service sector is going in Ireland and which ensure that it creates the maximum number of value-added jobs. This Government should take this very large and important sector seriously and should not see it as a source of VAT, PRSI and PAYE returns.

I would like to refer to the price awareness survey which I carried out. It showed beyond any doubt that the practice of loss leader and the practice of selling a few small items below cost is misleading to the consumer. I should point out that the resources which were available to me to carry out this survey were such that I could not hire the MRBI or one of the more expensive research companies. It was carried out on a voluntary basis. Five hundred shoppers divided between the north side and south side of Dublin were asked to identify the prices of a number of wellknown products. One of the interesting results of that survey showed that 109 shoppers could not remember any of the prices of 79 frequently purchased items such as sugar, butter, jam and corn-flakes. Therefore, over one-fifth of shoppers could not remember the price of any of the goods.

Two hundred and sixty shoppers or two-thirds of those who could remember any of the prices could only remember the prices of between one and ten items, such as biscuits, dried fruit, processed peas and so on. We must remember that in any supermarket there are somewhere between 2,000 and 4,000 different items, if we take into account the product range, the choice between brands and own brands. A simple conclusion can be drawn from this survey and that is that shoppers cannot remember the prices of all the items in their shopping basket. If they cannot remember the prices it gives a marketing tool and technique to the multiple stores. They may say that if the housewife cannot remember the price of, say, dog food they could sell the products, the prices of which she remembers, such as biscuits at a lower price and they could charge her more for the dog food because she will not know whether she is getting good value or not. Because of this lack of awareness, the marketing tool of the loss leader has been enormously successful.

Once the marketeers have established that consumers do not remember prices, and they have a lot more resources at their disposal than anyone in this House or the Examiner of Restrictive Practices, they can ingeniously increase their market share and sales. Therefore, leader pricing and loss leaders are nothing new. They are used as a psychological marketing tool and are very effective throughout the world. The Stanton report of 1985 in America went into great detail on how this marketing tool is used to win over different market shares. The consumer will be the first to benefit by a ban on below cost selling. How will the supermarkets attract new customers if there is to be a ban on below-cost selling? What they will have to do is sell at cost a wider range of items and that would mean that the net cost of the total shopping basket would be cheaper to the public, and they would have a wider choice of better-value goods and that is directly in their interest. Therefore, instead of being mesmerised on a limited number of heavily promoted and heavily marketed goods they will get better value across the whole range of 2,000 to 4,000 items.

The second area which is extremely important is jobs. We pay a lot of lip service to jobs but, when it comes to doing something about the problem, there is great reluctance. I have seen many different studies, some confidential, some public, of the effect of the current situation in the retail trade on Irish manufacturers. It has to be said that the fact of economic commercial life to most of our traders, suppliers and manufacturers, no matter how big they are, is that they have two choices when dealing with Quinnsworth, Dunnes and other large supermarkets. Their first choice arises when their contract comes up for renewal and when they can be told: I am very sorry, we will have to renegotiate your contract, extend your credit terms, reduce the price, or in some way, negatively affect your line of business.

That is one choice. One trades on their terms, the most favourable anywhere in Europe because of their inordinate buying power and dominance in the retail trade. The second choice is to be de-listed and taken off their shelves. Because there is such dependence, because there is such a strong market share in so few hands the supplier and manufacturer cannot be at the loss of that market share. Therefore, there are two choices open to one. One can either go out of business by losing market share, sales and turnover or by selling at a loss. That may sound interesting rhetoric. But when we look at the IDA Report on the Food Industry 1985 we see clearly that the type of conclusions they came to bore out that these practices were and are taking place. In Autumn 1985 the IDA published a statistical profile on the significance of different sectors of industry in Ireland. This survey was compiled by Stokes Kennedy Crowley. The imporant facts to emerge were that sales, per employee in the food industry, were 89,000, in comparison with 72,000 in electronics and 56,000 per employee, as an average in manufacturing industry. In the area of Irish services used the food sector led with 93 per cent. Therefore, it will be seen that there was more indigenous benefit to Ireland in the food sector than any other, the average in Irish industry being 77 per cent. In terms of raw materials 87 per cent were Irish compared with 17 per cent in electronics and 49 per cent in furniture.

Here we have a sector very important to our economy in terms of the money made in the Irish food industry which will remain here, will not go through any black hole out of the country. The important point of this survey was the fact that the food sector was the second last, after clothing, in profit as a percentage of sales, due in no small way to the dominance of the entire sector by multiples. Profits, as a percentage of sales in the food sector, were 1.85 per cent. That bears reflection because what does one do when one's profits are that low? One is faced with a number of choices. One tries to export but one does not have a base from which to finance those exports, and we all know the cost of market entry abroad. If we look at CPC, Rowntree Mackintosh, Cadburys, Beechams, Batchelors, Birds, Nestlé and all of those we see that what happened was that a lot of those parent companies in the United Kingdom decided there was just no point in trying to compete in terms of an Irish production unit and haggle with the purchasing managers of the large multiple stores. They decided they would retreat out of Ireland and sell from their main headquarters plants. They decided to insist that if these large multiple stores wanted to deal like big fish in a small pond they would have to get into a bigger pond and deal with equally bigger fish. Therefore, if one is dealing with the Coca-Cola Corporation or with the head office of a multinational one will not kick them round in terms of being knocked off a shelf, or laying down terms in relation to credit, discounts or whatever; one just will not get away with it. In my view that is a direct consequence of multiple store dominance. We have seen a retrenchment, a moving out of Ireland of jobs and manufacturing plants, owned by British multinationals especially, who were not prepared to put up with this predatory dominance that was taking place. Undoubtedly the biggest single reason for this measure is to ensure that the Irish food industry has some viable future in terms of domestic sales. If the present position went unchecked there would be a very slim future — as per that IDA report of 1985 — in relation to its profitability.

I should like to say a few words about the study we conducted in the Oireachtas Joint Committee on Small Businesses in this area in 1984. When one studies the retail sector here one of the most striking things one notices is the change that has already taken place because, to some extent this legislation — and even my Private Members' Bill — is closing the stable door after the horse has bolted. This horse has certainly bolted when one observes that in 1971 multiple stores accounted for 50 per cent of the total trade in Dublin and 30 per cent of the trade in the Republic of Ireland. One sees very quickly how the situation had changed three short years later when multiples were controlling not just 30 per cent but a whopping 58 per cent of the national grocery trade, when the relevant percentage in Dublin city and county had risen from 50 per cent to 81. In three short years that can happen. Yet it took another three years for this measure to be introduced.

Someone earlier this morning questioned the validity of any statistics in relation to sales. Here I am quoting from Attwood Research of Ireland Ltd. on sales ending the week of 23 March 1984. I predict confidently that we will continue to see, within the Irish retail trade, a growth in the strength of the position of Dunnes Stores and Quinnsworth. We have already seen Tesco and H. Williams go under. I believe more will go under for the simple reason that effectively they will be unable to compete.

One of the most galling things as far as I am concerned is that when one hears one's friendly supermarketeer interviewed on the radio, his response to a ban on below cost selling is to turn around and say that this will be awful for the consumer, that they will be criminalised for selling below cost. What they are endeavouring to do is bring about a situation in which H. Williams will go bust, one in which their market share will increase to a point at which they can do a little cartel arrangement with the one other big multiple that matters. Having obtained terms that nobody else can get from their suppliers they will say: now that we have taken the heat out of the situation, now that we have turned the hose on our competitors and got rid of them it is time to make some serious money out of this business. As sure as night follows day that is what will happen. Therefore not only does the consumer have a short-term interest of being misled into a concept of value but there is also the long-term factor that they have adopted a long-term strategic plan, which is to wipe out major opposition, knowing that the only people with whom they will be competing will be small storekeepers around the corner who can only buy in goods at a more expensive price than that at which they are retailing. Effectively that moves a monoploy of five into a monopoly of two or one who will operate as a cartel. No other country in Europe or the States has allowed such a practice to take place because they have realised the importance of the Legislature playing a role in competition. If we think, in a small consumer market of 3.5 million people, that we can adopt a totally free market approach to this area we are codding and deluding ourselves because there will not be the essence of free market, there will be a controlled market by very few.

We looked at the breakdown figures from Neilsen on the grocery market scene, No. 6, 1982. If one looks at those and the updated figures one will see, within the multiples, the changes that have taken place and the type of cartel that is shaping up.

People tend to throw their arms in the air about the food import figures, blaming farmers and others. I do not wish to apportion blame but I have direct experience, for example, of the National Potato Co-Operative where there was a genuine effort made to try to deal with their food import bill and it collapsed. I have seen other people launching small consumer products on the Irish market; they so desperately needed some shelf space. I have seen them go to the IGC and others to try to get in. The fact of the matter is that the market dominance of so few people renders this very difficult. I believe that the graph we have seen, in terms of growth of multiple domination in the retail trade, is mirrored exactly by the growth in food imports in these countries for the reason I have said, that multinationals would rather — if this practice continues — deal with their head offices than screw some local production plant out of existence.

Food imports which have shot up in areas where we cannot substitute the products directly have a great deal to do with the purchasing patterns of the Irish retail trade. International comparisons indicate the share of multiple stores and the figures are very revealing. One notable exception is the UK who have a laissez-faire free market approach but the essential difference there is that they have 50 million consumers and with their cheap food policy this can work for them. However, in Belgium the share of the multiples is 23 per cent; in Germany, a very strong free market power, it is 8 per cent; in the Netherlands it is 28 per cent; in Switzerland 11 per cent and in Italy 24 per cent. They all have a complexity of local and national regulations relating to planning, objection rights by appellants — existing local business — to controls on the trade, turnover and market share. We have not had control in this country prior to this legislation. I do not need to list all the individual pieces of legislation; it is all there in the appendix to the small business report. In America the Robinson-Patman Act works and there is effective control of the free market.

I wish to draw the House's attention to something which has a profound effect on the APC members in drawing up their report. This related to the OECD report on buying power in June 1980 and outlined in ideological and practical terms the consequences of lack of a competition policy. From reading the report anyone would be convinced that the arguments used by representatives of the food industry and independent grocers are the same as those used in many countries and are worthy of support, given sanction by the OECD. Therefore, it is not just an Irish problem or one of Irish individuals having this predatory attitude. It is a worldwide problem and is part of global trade. That report was very significant.

Comment was made this morning that competition policy regulations have never worked. There is an argument that price control regulations have never worked in the long term. They have worked for a while in rising inflation. However, I have an open mind about re-establishing the NPC. There is no doubt that competition policy legislation both at EC and national levels has worked and will work in future.

I turn now to the order itself. It is regrettable that the Department did not proceed with the legislation along the lines I proposed rather than by order. While an order is more flexible, legislation is a stronger indication to all those out there who are affected by this that the Government mean business and will take whatever steps are necessary to ensure that this will be properly enforced. Already there are extensive plans by way of collusion between suppliers, manufacturers and members of the retail trade to get around this legislation and there is no limit to their ingenuity. However, Irish manufacturers are going to have to make a stand. In many areas — for example, the wholesalers and bottlers in the drink industry taking on Guinness — if they do not stand together will be wiped out. We have seen in that area of competition policy how the acquisition of C & C, Savage Smith and Dwans effectively pins down the whole drinks trade. In the retail trade there is a need to ensure that the competition policy is effective to curb this predatory power.

The collusion I have referred to is not of willingness by both parties to enter into it; it is an obligatory collusion for the party who is the supplier or the manufacturer. They are told they will lose market share otherwise. The food, drink and tobacco section of the CII have a unique role to take a stand and to make it clear they will not be able, in areas of surplus capacity such as in the bakery business, to manipulate the situation, to play one off against the other. This is the most difficult aspect for manufacturers. When they are supplying one component to the retail trade as against another, how are they to decide to whom they should give preferential terms?

In relation to the collusion the Minister said in his speech that the situation would be reviewed in relation to supplementary terms within 12 months of commencement of the Act. I hope that a loud and clear message will go out to all concerned that whatever loopholes are found will be suitably plugged and that a clear message will go out that this matter will be rigorously pursued. The fines and penalties of £10,000 or six months in jail are an excellent deterrent in this regard.

It has been suggested that the advertising ban would be adequate. We know that this has been kicked out by Mr. Justice Lardner. The definition that is required of a net invoice price plus any taxes, VAT or whatever as defined in the ruling of Mr. Justice Keane in the High Court on 20 December 1979 will be satisfactory, but maybe at an early date Mr. Jim Murray will have to take a case to make an example of some people. I hope the media will take the right attitude in portraying them for what they really are, people who are doing a major PR exercise to delude the public that something is in the consumers' interest when it is not in their interest.

Net invoice price is essential, but the point in relation to collusion and enforcement is that manufacturers will have to stand up and be counted. They will have to be self-policing in relation to that. They will have to furnish unambiguous data to the powers that be in order to ensure this is properly curbed. If they take an attitude similar to rats and mice and try to hide behind this they will not get what they want. They must take a very tough stand indeed.

I should like the Minister to clarify whether the consumer will benefit from discounts at the end of the year in the case of long-term agreements. There is a strong case for the consumers to enjoy these benefits. I should like the Minister to confirm that those LTA concessionary discounts will be passed on to the consumer and will not be confined by the provisions of this order to the retailer.

As far back as the general election of 1981 my party promised to introduce this legislation. While there have been varying views of different kinds it has been significant for those in the retail trade who have been decimated that Fine Gael have taken a consistent stance. It is a matter on which there should have been all-party consensus at an early stage.

I do not wish to delay the House unduly since I will be speaking again on Committee Stage. I hope this measure will have the early effect of safeguarding jobs in the food industry and will allow that industry to have a real basis from which to expand its exports. We must remember that 80 per cent of indigenous small firms do not export at all, even if one includes Northern Ireland as an export market. Instead of jigging around with the edges of the retail trade and introducing totally vague Bord Pleanála style guidelines which can be interpreted differently by two different planners, we should set out a legal framework for the retail trade creating an environment in which all segments of the trade can compete fairly and competitively. If the consumer wants the benefits of the supermarkets such as a high standard of cleanliness and hygiene, a wide range of goods and good parking facilities, I am fully supportive of them.

I have said time and again to representatives of small traders that no legislature can prop up inefficient or badly run businesses and that the extent of resources and time they commit to training is too low. I have suggested that perhaps their organisations could do more to compete with the multiples by arranging joint insurance, joint book-keeping and accountancy facilities and many other services. Much lies within their own hands and legislation on its own will not protect them.

We are setting out to create an environment conducive to trade. From international experience I am strongly of the view that this will allow all segments of the trade to prosper and grow freely, so that there is the opportunity to set up new businesses and for people to buy at similar prices to those offered by the multiples, even taking into account economies of scale, but not disproportionate to that.

If this legislation had been introduced earlier it might have been enough but it may be the case that the horse has bolted and that we need to look at statutory controls in terms of market share. The report of the Oireachtas Joint Committee on Small Businesses recommended a 25 per cent limitation on any one retail chain. That has since been exceeded by at least one group and, depending on how the H. Williams division takes place, it could be exceeded by more. The question then is whether any two multiples should control more than a given percentage. The Restrictive Practices Commission should consider the most suitable market share desirable between independents and ranges of multiples with a view to getting the optimum value for consumers, lowest prices and best quality of service.

Some people have tried to depict a measure like this as anti-consumer. That is facile and simplistic and a total distortion of the truth. I am working on a consumers charter covering a wide range of issues such as particular professions who cannot display their prices, the ripoffs in door to door selling, lack of proper labelling and product identification in relation to certain alcoholic drinks, meats and other goods. In some cases the consumer is being flagrantly misled. My credentials in the consumer area are such that I would not have supported this measure were it not for the benefit of consumers. I hope it will be passed unanimously by this House. I realise there are major complexities in the Bill but to ignore the problem further, or to rely on an advertising ban that was made a mockery of, will simply result in 80 per cent or more of the grocery trade being held by perhaps two multiples. Individual traders will be able to survive only in very isolated rural areas which do not have the density of population to justify one of the large multiples setting up.

I commend this Bill to the House and assure the House of my full support.

Mr. T. Kitt

I pay tribute to Deputy Yates for the valuable work carried out while he was chairman of the Oireachtas Joint Committee on Small Businesses. I also pay tribute to the members of that committee. Deputy Yates mentioned that some surveys indicate that shoppers cannot remember prices and I would hope that the introduction of this Bill will lead to a greater awareness of real costs in the mind of the consumer. A consensus is emerging in this debate that this is the real problem. In many cases a shopper comes out with a basket of 30 goods and all he can remember is the bargain in the basket.

In the light of the economic circumstances at home and abroad the Second Stage of this Bill is most timely. The stock market is volatile and we have witnessed the troubles in the H. Williams chain. We have also seen an increase in unfair business practices by certain companies which dominate the food market here. These events are occurring while we as a Government are planning a national recovery which will get costs down on all fronts. Now more than ever we need to take steps to set things right. We need to strengthen the institutions that preserve fair trade practices and are on the watch for those who continue to deal unfairly. Intervention in the marketplace can be considered unhealthy for business and competition but that is not the case now when marketing practices themselves are unhealthy for the economy.

Cutthroat practices have been going on for the last ten years but they are being carried out more openly now. Cutthroat practices encourage bullyboy tactics and in the end promote monopolies and destroy competition. They must be curbed. Healthy competition is important and must be preserved by ensuring that companies compete cleanly and fairly. If this is not done it can only be to the detriment of the consumer, the small businessman and the economy in the long run.

This Bill makes illegal certain questionable business practices such as "hello-money" and below-cost selling. Below cost selling, which is banned in France, Belgium, Luxembourg, Switzerland and half of the States in the United States of America, will be banned with the passage of this Bill. I see this as a necessary step in the protection of small business people who are put at a disadvantage by companies which have greater buying power.

The OECD Report, Buying Power 1981, warns of the power of dominant buyers and claims they can threaten to eliminate from the market firms that would otherwise be competitive. This is unacceptable. It was also unacceptable to the committee on small businesses when they came out in favour of a ban on below cost selling in their report of September 1984. The prohibition of “hello-money” is also an important step. The allowance of “hello-money” leaves too much room for abuse by the large companies or food chains which dominate the market. This point seems to be widely acceptable by anyone who is familiar with the subject.

The problem of extending credit has been raised in the debate in this House and in the Seanad and seems to be showing itself more than ever with the collapse of the H. Williams chain which owed approximately £18 million. Who is to pick up the final bill in such cases? This £18 million is owed by a company with approximately 6 to 8 per cent of the food market. Dunnes and Quinnsworth control over 50 per cent of the market and are estimated to owe over £120 million between them to Irish food suppliers at any one time. This is unacceptable to the suppliers and to the taxpayer who might find himself picking up part of the bill at the end of the day. This should be unacceptable to any person or institution who has to, or might have to, deal with such a debt problem. The whole question of extended credit should be addressed by the Minister at a future date as a matter of urgency, and also by the banking institutions.

Might I refer briefly to the role of the Bank of Ireland in the collapse of the H. Williams chain? The role of the banking institutions comes into question when we look at their involvement in this case. The bank did not demonstrate any social or moral responsibility to the business community. Times were tough for H. Williams, and the banks, I understand, gave a commitment to the company. They were fully aware of the difficulties being experienced by H. Williams, and when the price war started, just as we saw in the stock market recently, panic ensued. There were massive drops in sales and without too much consideration the Bank of Ireland pulled the plug. This is not good enough. As we all know, the banks make considerable profits from the business community and I would see their role as an institution which should assist and advise, especially when the pressure is on.

In these difficult times I would look to the banks for a greater sense of altruism in relation to their role in the affairs of the nation. The message should go from this Chamber that in future the banks should be more caring, more advising and assist the business world, because while Governments can do a considerable amount with regard to policy directions, the banks must play their part. Having witnessed the Bank of Ireland's involvement with H. Williams I believe much more can be done. I hope the banking institutions will learn from that debacle.

I believe this Bill will be effective. A potential fine of £10,000 and/or six months in jail is a powerful deterrent. The inclusion of the buyer in any breach of the law is a step in the right direction and at the end of the day the consumer will gain considerably. He or she will obtain more items at cost rather than being conned and manipulated into purchasing a few loss leader products.

There is a major role for the media in this debate. Hopefully certain programmes on radio in particular will play a positive role in the event of another crazy price war emerging in the future. The media must play their responsible role, just as the banks and the Government must do, and not get immersed in the frenzy we all experienced in recent times.

This important legislation will lead to a more positive, honest and stable relationship between the supplier and the retailer. What we all wish to see are good products selling on their own strengths, properly priced, presented and delivered on time. I have no doubt this legislation will result in a healthy and vibrant trade atmosphere, a quality trade that will grow in strength within the internal market of Europe.

Proinsias De Rossa

I do not believe the case for or against banning below cost selling or cut price wars is open and closed or that there are absolute arguments on one side or the other. Experience will show whether this form of regulation will work. Nevertheless I welcome in general terms the attempts which are being made to regulate the retail trade.

The Bill before us is simply confirmation of a ministerial order to try to stop the payment of so called "hello-money", to prevent boycotts of a particular companies or suppliers by trade groups and to prohibit payment or receipt of "hello-money". "Hello-money" in particular cannot be acceptable. It is unacceptable for multiple supermarkets to use their purchasing strength to effectively bribe companies, suppliers and manufacturers, by telling them they will take their goods provided they give them a certain amount of money.

We have seen recently reports of attempts to overcome the regulations we are dealing with today where companies, manufacturers and suppliers are being asked to advertise in company newsletters and are reported to be asked for sums of £10,000 to do so. That is an attempt to get around the regulations we are looking at today and seeking to put into effect.

I do not believe it will be possible to eliminate the abuses we are talking about simply by having a Bill passed here today and putting regulations into force. There has to be ongoing monitoring of what is happening in the grocery trade and ensuring that, where necessary, the regulations are tightened in the future.

There is no doubt that the supermarket chains exert a great deal of pressure on suppliers. It can happen that manufacturers depend for 20 per cent of their output on supermarkets. Supermarkets, on the other hand, depend for 1 per cent of their turnover on goods supplied by a specific manufacturer. Clearly, there is an advantage on the side of the multiples in that case and there is pressure to maintain turnover on the part of manufacturers and suppliers by giving in to those demands.

It has to be said that if manufacturers and suppliers as a body had resisted those demands in the first place they would not have got off the ground, but given the nature of business and trade, there will always be the inclination to do deals behind closed doors. The practice of demanding "hello-money" is restrictive in that it can prevent new companies getting off the ground. It can prevent companies getting shelf space for new products. Clearly, a small company trying to get off the ground is not in a position to pay "hello-money" to multiple stores and, therefore, is excluded from getting an opportunity to offer their goods to the public. That, in turn, will hinder the creation of new jobs in manufacturing and food processing.

The order, in so far as it deals with direct demands for "hello-money", is welcome but it appears that ways will be found of getting round it. We need to be vigilant to ensure they are not successful. I have heard reports about so-called requests for advertisements in supermarket newsletters and reports in the drinks trade of companies offering expensive gifts to managers of licensed premises to promote certain products or to refuse to stock the products of rival companies. There are many ways of getting round regulations and we need to be vigilant.

The question of the boycotting of suppliers and manufacturers by multiples is important. I wonder to what extent the regulation will prevent a multiple from carrying South African goods. That has been a matter of public concern for a long time. I am aware that the previous Government introduced regulations to prevent the importing of certain goods from South Africa but a wide range of goods from that country are coming into the State. Will the Minister indicate if the regulation will restrict the supermarkets handling those goods?

The question of below-cost selling is of more direct interest to the consumers although the other aspects of the regulation affect them indirectly. There are many arguments for and against below-cost selling and it is difficult to come down on one side or the other. I tend to come down on the side which says that in the long term it is best to outlaw it but it is extremely difficult to convince those in my constituency of that, those whose income does not enable them to spend money on what we might regard as normal purchases but which they regard as luxuries, who spend the bulk of their income on essentials such as bread, butter, potatoes or meat. There is a need to ensure when we are banning below-cost selling that we do not appear to give the right to multiples to charge exorbitant prices for basic foodstuffs. It can be argued that competition will ensure that will not happen but I am not too sure that competition applies that well in the grocery trade.

There is a lot of noise about advertising and the large amount of advertising by the multiples appears to indicate there is competition between them but one will find that they compete not on specific cost savings but on the image they want to create, that they are cheaper or give better value. I have seen comparisons which indicate there is no real competition or difference in prices except on a few items. It is important that while we are trying to outlaw unsavoury practices in the grocery trade we should ensure through the re-establishing of the National Prices Commission that the multiples do not take this as an indication that we are prepared to allow them to charge what they like at the upper end of the price range.

For example, there is evidence that consumers in the Republic are being overcharged, vis-à-vis Northern Ireland prices for a wide range of goods, even taking into account the difference in the exchange rate. We should look further than the question of below-cost selling and “hello-money”. We need to ensure that there is real competition in terms of prices and that there is not a tendency for the supermarkets to move their prices upwards at a time when people are finding it difficult to make ends meet.

The whole question of below-cost selling must be considered against the background of the changes that have taken place in the retail market in the past 20 years. In 1970, the total number of supermarket multiple outlets was just over 100 and it is now in the region of 175. In the early seventies, the main multiples had about 31 per cent of the grocery market and that figure has more than doubled since to about 64 per cent. At the same time, the share of the market held by independent grocers decreased from 34 per cent to less than 20 per cent and the symbol groups went from 35 per cent to 17 per cent. Clearly, there have been major changes but they have not occurred because the supermarket chains wanted it that way. They have responded to the demand from the consumer for the kind of shopping facilities they have offered. Indeed, I wonder to what extent the H. Williams collapse is as much the result of their failure to respond to market demands and needs as it is to the question of a price war. Certainly questions must be asked in relation to the management of that company but, given that we are in a private enterprise society and the weakness of company law in the State, directors of private and public companies have virtually a free hand in running their companies and in choosing to develop them.

The workforce have very little effect on that. In a free and private enterprise society the consumer can dictate whether particular enterprises survive which is unfortunate for the people who worked for H. Williams and indeed for the suppliers, who find their jobs disappearing overnight, as a result of lack of control and regulation of how companies run and operate and what rights and obligations directors of companies have to their employees as well as to their suppliers.

It must be kept in mind that we are a free enterprise society and that regardless of all the regulations we may introduce, the drive of private enterprise is towards greater company size in the grocery trade towards larger and larger multiples and monopolies, which is inevitable in the kind of system under which we operate. The regulations, presumably, are intended to restrict that in some way and, as I said earlier, devices will be found by these companies to overcome them. The experience in Britain, the United States and other places where they have attempted to restrict the activities of monopolies and cartels in the public interest has been that they have failed to do so. It is only very occasionally that monopolies and cartels are caught circumventing the law. They are interested in making big money and are quite ruthless in their approach. As Deputy Yates indicated, the inputs from other major supermarkets in the State at present are not to save H. Williams but to see them go down the tubes because they want to control a larger share of the market and they will use whatever means they have at their disposal to do so.

I have no problem in regard to supermarkets and large shopping centres. They provide an excellent service to consumers and certainly their goods are cheaper than the corner shop about which I have no remantic notions. Corner shops in their own way provide a service and those who do so at reasonable prices survive. However, people who are at the mercy of the corner shop — just as they may in some cases be at the mercy of the supermarkets — pay higher prices than in any other part of the country. There is only one supermarket in the Ballymun estate and prices there are higher than in any other supermarket of its own chain or indeed of any other supermarket in the city. The poorest section of the population in Ballymun are paying higher prices overall than people buying from the same chain in the Foxrock area. Clearly, competition means selling at the highest price the market will bear and competition only emerges when a number of different multiples operate side by side. That is not the case in Ballymun and people there have to travel outside the estate for lower prices. They also depend, to a large extent, on mobile shops in the area which, because of their nature, charge very high prices for milk, bread and so on. They provide self-service at night and at odd hours of the day and people who are on the lowest incomes in the State are paying the highest prices. I do not have any nostalgia about corner shops but there is a need for the small shop which can provide a certain type of service and also for the multiple supermarket to provide a balance.

We have a responsibility to ensure that there is price control as well as preventing goods from being sold under cost price. There is also an obligation on us to ensure that the consumer is not robbed simply because of the way the market operates. We must also ensure that there is price control at the other end of the market.

The other point about the question of abolishing below-cost selling which concerns me is that we are likely to see a spate of trading stamps, bingo games and a whole lot of other devices to encourage people to shop. We know, from experience with the petrol companies, that that is not competition and does not provide cheaper prices. For a number of years now, virtually all the oil companies have been advertising at huge cost — presumably to themselves — and it must be paying them to do so. They have offered all sorts of goodies but one must buy hundreds of pounds worth of oil products before qualifying for a gift which may be worth a couple of pounds. The companies give the impression that they are giving value for money but recently the Minister had to force them to lower their prices because, despite the offers, the razzmatazz and advertising, the oil companies had gradually pushed up their prices. The gifts were only froth and were not providing value to the consumer.

The danger with these regulations is that there may be a similar development in the grocery trade which will start to offer gimmicks which do not give value to the consumer. In the long run, this practice would hit those on the lowest incomes because they spend the vast bulk of their money on essential food items.

I welcome the regulations generally and the attempt to abolish "hello-money" as it will enable companies, particularly those struggling to get off the ground, an opportunity to get shelf space which they might not otherwise get under present conditions. The question of outlawing the boycotting of certain traders is important but the Minister should address himself to the question as to whether this would prevent supermarkets from refusing to handle South African goods. On balance we should support the idea of below cost selling but in tandem with that we should have a system of price control.

The question of company law also has to be addressed. It is unsatisfactory that companies, whether they be in the grocery trade or in any other business, can go out of business overnight and the owners of the company can wipe their hands of the results of that closure. They can amass personal fortunes while runing the company, can dissolve the company overnight putting possibly 1,600 people out of work and establish themselves in some new enterprise without any problem whatever. We have an obligation to consider that aspect of the matter.

Mr. Nolan

I welcome the opportunity to speak on this Bill. I congratulate the Minister for introducing it into the House. It is legislation we welcome not alone on this side of the House but on all sides, judging from what previous speakers have been saying. It is an opportunity also for this House to debate some of the things that have been happening in the grocery trade in Ireland. The grocery trade, as the Minister pointed out, is worth over £2.6 billion annually to the Irish economy. There are roughly 20,000 people working in the retail side of the business and on the food processing and manufacturing side there are 40,000 people employed so by any standards it is a major area of the economy.

Particular reference has been made to the two sides of the grocery retailing business in Ireland, namely, the independent grocer and the multiples, and to the effect that an imbalance in sales as between those two sectors would have on the industry in general. The Minister is to be commended on trying to bring some sort of regulation and discipline into this whole area of grocery retailing. It is difficult to say what is the perfect mix between the independent grocer and the multiple. I certainly would not try to give an answer to that. The manner in which both the independent grocers and the multiples approach their business will level off at some stage. They are two distinct and completely different operations.

The problems being experienced by the independent retailers are well known to the Minister and to all Members of this House. During the past ten years or so the retail grocery trade has changed enormously and we now have a new generation of independent grocers who are, with a few exceptions, a very competent and professional body. They need to be so in order to survive in today's highly competitive market-place. They have adapted their business to suit a particular niche in that trade, be that one of diversifying to sell products which one does not normally associate with the general grocery trade, or by providing a service such as the "eight 'til eight" concept where shops open early and stay open until late, or by providing a service such as delivery of groceries or by combining services such as can be seen not alone in rural Ireland but also in built-up areas where a sub-post office is allied to a grocery business. I have the utmost confidence that the good industrious independent grocer will survive and prosper in the market as we know it, even with the high competition they have encountered with the recent price war.

On the other side of the coin are the multiples. Much comment, some of it good and some not so good, has been made of late about the large Irish multiples. There is very healthy competition between the multiples and the public are benefiting from this situation. This competition is also benefiting the multiples themselves. By having to trade in this competitive climate the multiples are becoming more professional and it is becoming a case of the survival of the fittest. The example which has been quoted today of the collapse of the H. Williams chain is perfect evidence of this. From comments and reports which we read and hear about I think it was not the competition which eventually sounded the death knell of this group but a lack of serious management. It was also a result of the recent price war not just this year but over a number of years.

Special note should be made of the assistance which the multiples give to small food processing units and manufacturing businesses in Ireland. It may not be known publicly but companies such as Dunnes Stores and Quinnsworth go a long way to help small manufacturing businesses and food processors. They spend much time and money working with the manufacturers in order to successfully bring on stream new and diversified products and they must be commended on this. While we hear much talk about the pressure that multiples bring to bear on the food processors and manufacturers little light is thrown on the positive side and the help they give to many small businesses around the country. I detect, from speaking to manufacturers, that there is a genuine interest on the part of the larger multiples in seeing small Irish manufacturing units succeed. The Minister and the Minister of State with responsibility for trade and marketing, Deputy Seamus Brennan, are to be commended on the help they are giving and on highlighting this area for the small processor.

The recent collapse of the H. Williams group again brings into the public focus the role of the banks in Irish business. Because this Bill is being introduced after the collapse of the H. Williams group I ask the Minister to look at the role of the banks in business today. Banks in Ireland today enjoy a very privileged position and this became very evident in the H. Williams collapse. A bank is privileged in so far as a banker will not make a loan to a company unless he is sure that the loan and the facilities which the bank offers to that company are well secured, be that security in the form of a charge on the company's property or, as has happened of late, personal guarantees from the directors of the company. A bank will not give a loan to a business or a company unless they get two or three years' business accounts from that business. The bank would also have to have sight of an up-to-date balance sheet.

In the case of H. Williams we understand from Press reports that the Bank of Ireland had charges on their property and also personal guarantees from some of their directors. We should compare that with the unfortunate suppliers who, in the case of H. Williams, were not privy to the accounts for the previous two or three years, were not privy to an up-to-date balance sheet and, while they did not give the loan in the form of pounds and pence, gave stock which, because that company trade in stock, was similar to a bank giving a loan or other facilities.

I am sure that if many of the companies that are in dire financial circumstances today because of the collapse of that group had had the privilege of seeing the books of the H. Williams group at any time up to two years ago, they certainly would not have gone down the road they did in giving extended credit, credit to the extent that they were forced to in order to maintain the business of that group. I would ask the Minister at some stage to investigate the situation whereby banks have this privileged position.

It is opportune to mention some of the positive points about the grocery trade here and the attitude of the Irish retailer to Irish goods. I am aware of a general realisation among the major retail and wholesale buyers in the grocery business of the importance of supporting Irish manufacturers. This support is not based on any patriotic feeling for Irish products but on a pragmatic approach to the business; by giving an Irish manufacturer an opportunity to quote and supply for their particular business they are creating some movement in the economy in which they themselves are trading. In giving the Irish manufacturer this business and by helping him establish a firm domestic market for his product, the company can now look with confidence towards the export arena. After all, we are being told repeatedly by the Minister and others that we should now approach all marketing on the basis of the domestic market being the whole EC market, a domestic market of 500 million people. But without a firm foothold in our own local domestic market, that is Ireland, manufacturers will not have the confidence to look further afield.

In conclusion, I compliment the Minister on introducing this legislation. On a general note, I must also congratulate the Minister and the Government on the policies they have been adhering to since they took up office in March of this year. The Government are to be commended on their achievements in that area since then. The Minister has taken a very positive role in that line on his recent moves towards the reduction in the price of petrol and oil. If we can, as a country, achieve more economies in the way we run the country and the State itself, then everyone concerned, not just those in the grocery and manufacturing trades, will be moving towards a very healthy state. I have the utmost confidence that this Government can achieve that.

Mr. Sheehan

I welcome the Bill with cautious optimism. I hope it will achieve the results for which it was drafted. As a small nation with a population of between three and four million people we cannot allow international combines to dominate the retail food trade to such an extent. Their use of "hello-money" and below cost selling will ultimately result in companies going into liquidation, bringing down countless numbers of small manufacturers and suppliers. The grocery trade is dominated by a few international combines. This has a serious effect on consumers who are highly susceptible to the gimmicks of the superstores. Sale gimmicks do not effect a saving to the consumer. I am pleased to see that section 35 of this Bill makes it an offence to sell or purport to sell short measures. It is clear that many of these gimmicks involve short measures. One wonders if customers are aware whether they are getting good value for money. The reverse might be true.

Over the years the Irish grocery trade has taken a drastic downward trend. At present the multiple combines have 58 per cent of the market in the whole country; in Dublin city alone they have 81 per cent. This is a shockingly high percentage for any monopoly that can force its way into the retail market and convince consumers that by shopping with them they are getting the best value for money. The simple groups have 21 per cent of the market share in the whole country and only 5 per cent in Dublin and the independent family grocers have only 21 per cent of the market share in the whole country and 14 per cent in Dublin. These figures are alarming because this will not effect any saving for the consumer. One needs only to look at the trail of havoc that situations such as I have outlined can wreak on our environment. We had the débacle of the H. Williams collapse when many small manufacturers were bankrupted. This may be only the thin end of the wedge as far as the retail business here is concerned.

I am pleased that the Minister saw fit to introduce this Restrictive Practices Bill. It will go a long way to curb anomalies in the retail trade. We must introduce a degree of stabilisation to the £3 billion retail food trade. We must protect the 40,000 jobs in the food and drink industry and the 35,000 jobs in the food retailing and wholesale industry. Above all we must ensure that the family grocer, butcher, publican and baker get a chance to survive. They are part and parcel of our heritage. They have given a service over the years to the general public that is second to none. But in the past two decades we have seen the total annihilation of the family grocer, butcher and baker. These people gave vast employment, but modern techniques have changed the trend of the retail trade. We seem content to proceed along the road to disaster as far as those people are concerned. It is alarming to realise the volume of business now in the hands of a few business magnates. It certainly is not to the betterment of the people involved. By no means is it to the betterment of the consumer. The 7,000 independent family grocers trying to bring up families and survive will breathe a little more easily if this Bill is implemented fully. More importantly, they should be able to invest with confidence in their businesses knowing they will have a future if they are competitive and maintain a high standard.

It is vital in this modern day and age that high standards be maintained by all and sundry in the retail business. We must realise that only the fittest survive. When one sees the service that has been given down through the years by the small family grocer and the small outlets one realises why it is hard to take them over. Unfortunately, they seemed up to now to be swimming against the tide because there was no legislation to prohibit selling below cost price. Everybody knows that if there is to be a future in the retail trade there must be a certain margin of profit. Let the people not fool themselves; money will not come down from heaven like manna. Statistics will show that for combines to try to oust other combines in an effort to attract a greater portion of the retail sector is a recipe for disaster. Their directors who may be living in sunny climes may have no need to worry; the people who worry are the small manufacturers, the small baker, the butcher, the mineral water supplier and others too numerous to mention. They are the victims of that misadventure. These people are carrying the can because of the anomalies created by the super combines who are trying to wrest the retail market from the private individual, from the person who has given service down through the years.

I admit that the consumer also needs to be protected but competition is the life of trade. The hallmark of competition is the protection of the consumer. When this Bill is enacted I hope that the Minister will ensure that it is implemented to the level of the law. In the recent past, one major combine fell due to a major price war. The directors of that combine stated that their downfall was brought about by unfair trading, price cutting and loss of retail margins, which had a disastrous effect. This Bill must be expedited in its passage through this House. That will ensure that consumers obtain more items at cost rather than just a few products at a loss leader level.

Five European countries have already banned loss leader pricing due to its negative, manipulative effect on consumers. For the record, the countries are France, Belgium, Luxembourg, Switzerland and, to a lesser extent, the Federal Republic of Germany. It is also illegal to sell below cost in 25 states of the great USA. Surely that alone should be a headline for every nation. Sanity must prevail among the retail outlets worldwide. That would ensure that no further collapses would occur in our jurisdiction. Serious collapses have plunged the small manufacture, the small man, into serious financial difficulties. If the Bill did nothing more than prevent that, it would have gone 95 per cent of the way towards achieving the desired goal.

Down through the years the retail grocery trade has been subjected to many attacks from these combines, from the power of dominant buyers. If a law to deal with buying power by directly controlling certain forms of price discrimination is desired, it should concentrate on those forms of price discrimination which systematically favour large buyers or threaten to eliminate from the market firms that would otherwise be competitive.

It is a sad state of affairs that five multinational outlets have between them 65 per cent of the national share of the retail trade; indeed, if the figures were updated one could put on another 10 per cent since these figures were analysed about two years ago.

Debate adjourned.