Dáil Éireann debate -
Wednesday, 25 Nov 1987

Vol. 375 No. 8

Restrictive Practices (Confirmation of Order) Bill, 1987: Committee Stage (Resumed).

Question again proposed: "That section 1 stand part of the Bill."

Mr. J. Bruton

As the House is well aware, this Bill will make it a criminal offence to sell goods below cost. There is a particular problem at this time of year in that a lot of companies in the retail trade, small and large, have bought in stock for Christmas. They have to do that not knowing how much of the goods they will sell and these goods are not much use to them after Christmas. Even if they are not perishable goods the idea, for example, of retaining a large stock of unsold Christmas cards until next Christmas and, in the meanwhile, paying the interest on the money borrowed to buy them and a lot of other similar goods, is not practical. To avoid that, what people did in the past if they had stock that they wanted to get rid of and could not keep for the following 12 months, was to sell them off below cost to get rid of them before they were no longer relevant for a further 12 months.

The Minister acknowledges this problem in the order and says that seasonal goods are exempt, but seasonal goods are so narrowly defined as to exclude virtually all the actual seasonal goods. The only seasonal goods that it will not be an offence to sell off below cost are Christmas cakes, Easter eggs and Hallowe'en bracks. Excluded are any other form of confectionery which is seasonal, for instance, Christmas puddings which are not included as Christmas cakes, I presume, or Easter chocolate goods which are not in the form of eggs and/or all the other mass of non-food seasonal stock which could represent at this time of year up to two-thirds of the stock of some shops—in fact, a great part of the stock of some shops at present could be seasonal. The overwhelming majority of those goods cannot now be sold below cost before Christmas.

If this order comes into effect before Christmas it will cause a particular problem for people who might have stocked up in anticipation of selling off at below cost if they were to find between the time of purchase and the time of sale or otherwise that the Minister had introduced a new change in the rules in regard to how they can dispose of these goods below cost. We have the problem of principle that the definition is too narrow and also the transitional problem of this year in that the rules will be different from the time the goods were bought to the time that they would normally be sold if this order comes into effect before Christmas. That is my first problem on Committee Stage.

The Minister gave the explanation on the last occasion that he felt that if seasonal goods were too widely defined that could lead to a loophole in the legislation through which a coach and four could be driven. Perhaps that is so, but it is possible to adopt the process which the Minister is doing, by naming goods but having a considerably larger list than just three items. If that is done, there is not the possibility of the abuse feared by the Minister. If he goes for an abstract definition of seasonal goods relating to stocking levels, for example, at different times of the year, then clearly there are possibilities for clever lawyers to prove that almost everything is seasonal. If that is the point which the Minister is going to make I can concede it to him in advance, but it is possible by simply using the Minister's own method but with a longer and more comprehensive list of genuine seasonal goods to avoid the difficulty about which we are talking here.

I tried to introduce a new definition of seasonal goods in the form of an amendment to the Bill and the Ceann Comhairle ruled it out of order. I take it that if the Minister wanted to introduce an amendment to draw up a slightly larger definition of seasonal goods and to include words such as "Notwithstanding anything that is contained in this order, seasonal goods shall be interpreted for the purposes of this Act as including" and then give a longer list than the three given here, the Ceann Comhairle would find it possible to rule such an amendment in order. I hope he would, anyway. I am not asking him to give me an interpretation now. I would ask the Minister to look at this matter because it will cause a number of problems for retailers and it is important if we are to have this legislation, that it be workable and fair.

Mr. Keating

I shall be brief. Is it in order, in the interest of expedition, to make some queries in relation to the order, most of them relevant to what Deputy Bruton has been talking about? The Bill itself, as we know, is a very slim measure but the order is the matter which will give effect to this whole process. I share Deputy Bruton's concern with areas of definition. One clearly is the question of seasonal goods. It is very strictly defined in the order as Christmas cakes, Easter eggs and Hallowe'en bracks. Clearly, there are many other seasonal goods which could fall within the range of this order. Is there any device whereby the Minister can retain unto himself some type of ongoing monitoring of what could reasonably be called seasonal goods, without absolutely defining that? I suspect that if one wanted to get into a definition which was accurate to the nth degree there would be a list as long as one's arm. Would it be possible for the Minister to say that seasonal goods shall include the following or such other goods as might be deemed to be so at a particular time? It is very hard, with the vagaries of modern marketing, to be absolutely certain about being able to circumscribe clearly in words the last, ultimate elements of seasonality. The whole point is to curb abuse. There is no point to doing that if one introduces a definition or states in an order a definition that clearly is inadequate.

Secondly, with regard to paragraph 2 of the order relating to the price of the goods, that is the cost of the goods and how the Department and the Minister under the Act will assess that, it is stated:

For the purposes of this Order the net invoice price of grocery goods supplied by a supplier or a wholesaler to a retailer or by a supplier to a wholesaler shall be calculated having regard to an invoice relating to the delivery of like goods.

A fundamental point of concern for me is the very difficult, if not impossible, task of trying to ascertain the cost price, not just because of the complexity of the manner in which it is set out in the order which includes, for example, the reference that such price shall be calculated net of any allowance or refund that is allowable on the return of the goods container and no account shall be taken of discounts, rebates or other deductions which are not entered on the invoice in cash terms as deductions from the sum due to the supplier or wholesaler.

This is obviously a very convoluted but perhaps necessary device, not just because of the concerns of working it out in normal terms, but also because many invoices in our small, open economy will arise outside the jurisdiction. How will it be possible for a Department, hard-pressed as they are, realistically and diplomatically to monitor in a serious and genuine way the true cost, particularly for goods coming into the country where the invoices arise outside? I want to make that point very clearly. We are all doing a disservice to the public and to this House if we introduce a measure which in our hearts we do not believe will be either policed or effective. Much as some of us would wish this order to be successful, I do not see how it can be if there is that kind of problem.

I should like to know how the Minister is, first, going to define absolutely the question of cost price, secondly, whether there is some deployment of staff to deal with this and how many and, thirdly, particularly the question of dealing with invoices which arise from outside the country. Some people in the industry have been slightly irked at the suggestion that they might be engaged in some kind of profiteering or sleight-of-hand. It is not the intention to point the finger at anybody in that respect. It is simply underlining a difficulty which this Government and Department have in terms of coming to the facts. It does not necessarily follow that there are not bigger sharks and bigger crooks on the domestic scene. One is simply saying that if we are going to introduce a measure, let us see if we can block the loopholes. If a customer goes into a supermarket or shop and seeks to buy goods and they are being sold in an environment which has this regulation in force but it is not able to be monitored properly, particularly in respect of the larger multiples who would be those predominantly importing, obviously it is not just inoperable but it may even be unjust in terms of its effect on the marketplace. The domestic manufacturer and supplier can be monitored because one can insist on access to his data and make an assessment of it.

Mr. J. Bruton

That is right.

Mr. Keating

But it is not possible to do that if it comes from outside the jurisdiction, be it from Northern Ireland, Britain or further afield, and that is a fundamental problem with the measure.

A definition of cost and price is fundamental if we are to get this order right. That is the main point I wish to raise even though there are a couple of minor points which I will raise later on. The definition of goods and the question of obtaining and monitoring the true cost price, particularly in terms of the grocery industry where many goods are imported, leaves many opportunities not so much for abuse but inherent weaknesses, deficiencies and injustice to people who are manufacturing and supplying goods within the country.

Mr. J. Bruton

When I was Minister for Industry and Commerce, I visited all the major supermarkets and major retail distributors. The purpose of this series of meetings which were sponsored by the Irish Goods Council was to get them to stock more Irish made goods. They were an outstanding success because I know from a number of suppliers that the combined effect of the persuasion and the moral pressure involved in a Minister actually visiting individual stores and being seen to take an interest in what they had on their shelves led to groups, particularlly those who are not Irish owned, taking a much more positive attitude towards stocking Irish goods than previously had been the case.

My major worry about this order is that the good which that did which I know had support and followed on other efforts made by other Ministers — I am not claiming it was the only efforts made in this regard although it was particularly successful — will be reversed by this order in that, all that any supermarket which wishes to sell goods below cost needs to do is buy imported goods because the costs cannot be checked in regard to imported goods. If they have a foreign affiliate they can buy goods through that foreign affiliate and import them here. The invoice would be supplied from an affiliate of their own organisation rather than from the original manufacturer overseas.

The effect of this regulation will be, I fear, to divert stocks towards imported goods rather than Irish goods on the part of any retailer who wants to avoid the ban on below cost selling. There is no doubt that if a competitive advantage is to be obtained people will use any means to evade this order. We cannot expect goodwill and kind words to suffice. The order has to be one which will be able to stick and that is my biggest worry. I started off by referring to seasonal goods because they come earlier in the order. That is a relatively minor matter by comparison with my fears in this area.

Minister for Industry and Commerce (Mr. Reynolds)

In relation to what Deputy Bruton has just said, undoubtedly the efforts which he and others have made in regard to getting the supermarkets and the multiples to buy more Irish goods have been very successful and they are being continued. While in past years there were various campaigns to get people to buy Irish, a more effective way was to tackle the problem from the other side. If the goods are not on the shelves for customers to see and buy and if they do not get the prominent places which other imported goods get, undoubtedly it will follow that fewer and fewer Irish goods will be sold. Those efforts have been successful and are being followed up by the Irish Goods Council. Some chains have gone out of their way to liaise with the suppliers in an efforts to help them to identify goods and products which could be import substituted. That is an excellent development and we are giving it all the support we can.

When we look at the penetration of the Irish market over the years, we can see that there is a lot of ground to be made up and many products which are being imported, especially in the food area and in many other areas, could be import substituted. I am giving the Irish Goods Council a more definitive role in the area of linkage. Their approach is more a market led one which is different from the way in which the linkage programme has been developed up to now. Some small firms seem to have the idea that if they know what a firm wants all they have to do is to supply them, but they will have to understand the ethos and the corporate strategy of the large multinationals. They have to make sure that they will get the product on time and in the quantity and quality which they require. There are significant opportunities there and the Minister of State, Deputy Brennan, is tackling that area very vigorously.

To return to the order itself and in relation to the points which were raised on the definition of seasonal goods, I am strongly advised that if I were to widen that definition I would create more loopholes. The idea was to come to grips with the main problems which exist in the marketplace at present and, apart from the recommendation made by the Restrictive Practices Commission, independent grocers, those who represent them and anybody else who would be affected by this order have been long clamouring for it. It is very difficult to ensure when making an order such as this that you close every possible loophole but you certainly take every opportunity you get to ensure that where you see possible loopholes you do not leave them open for people to find their way through.

I said at the outset that the order will be reviewed every 12 months. Let us wait and see what loopholes appear. In relation to the question raised by Deputy Bruton about seasonal goods I can tell him that Christmas cakes are excluded. He also raised other items such as Christmas puddings. I have often eaten a Christmas pudding half way through the year and it was delightful. I believe and I often see the kids at home——

Mr. J. Bruton

But did you borrow the money to be able to put them in your cold store and did you pay interest on it?

Mr. Reynolds

No. Occasionally, I have seen my wife buy them. They can be a lot more tasty a couple of months after Christmas than if you eat them at Christmas time when people are fed up with Christmas food. However, that is a matter of choice.

Mr. J. Bruton

That is not of much use to the shopkeeper.

Mr. Reynolds

Christmas puddings are not an item which go out of fashion or deteriorate. In fact, the flavour improves in time as I understand it. If you eat one 12 months after you originally bought it, the flavour will have improved so I would not be particularly worried about them.

Mr. Keating

So does my wife's Christmas cake.

Mr. J. Bruton

Does the flavour of Christmas cards improve as we reach Easter?

Mr. Reynolds

We raised the issue of Christmas cards the last time and we all know that Christmas cards can be put away. That is what happens in the trade. I think I suggested here the last day that if the Deputy was worried about someone with an over supply of Christmas cards there are many Deputies in this House who go looking for bargains in Christmas cards coming up to Christmas——

Mr. J. Bruton

There is not much point in sending out Christmas cards at Easter.

Mr. Reynolds

——and if the price was right they could afford to sell them at cost. Not all Deputies in this House like sending Christmas cards and I do not send any. Perhaps the Deputy does not send any either. I have not sent any since I came into this House——

Mr. J. Bruton

I noticed that last Christmas.

Mr. Reynolds

——but there are Deputies who go in for this in a very big way. However, as I have said, I do not think anyone should worry too much about Christmas cards. What is important is to exclude the items which are reasonable to exclude and we should not exclude a wide range of items. I want to make the order as effective as I can and I recognise that people will be looking for loopholes. We have closed all the loopholes that we can foresee at this stage and if the House would bear with me in leaving the definition as tight as possible we can see after the Christmas trade if any major problems arose.

I remind Deputies that if we do not get this order through this House and the Seanad and get the President to sign it very soon, we may not have it in operation for Christmas. The Bill comprises only two sections and normally the House discusses this Bill on the basis that it cannot be amended. It is a short two section Bill which confirms the order made on 25 May. I hope the House will bear with me because this is the third day we have dealt with this Bill. This is not to say that Deputies are not entitled to point to any possible loopholes, or improvements which can be made. I will take them on board and when I review the order 12 months after it has been in operation I will look at it.

Deputy Keating raised the question of cost. I explained on Second Stage that the order spells out clearly that cost is to be regarded as the net invoice price of the goods concerned including VAT. Net invoice price is further defined as the price at which grocery goods are supplied having regard to the invoice relating to the delivery which is the same date as the sale of goods or with the relevant advertisement or, where no such invoice exists, such net invoice price shall be calculated having regard to the invoice which relates to such delivery and which is that issued most recently prior to the sale of goods or the advertisement's publication.

The order further specifies in article 11 that where charges in respect of carriage, insurance or other costs not included in the relevant invoice have to be paid by the retailer to the supplier to obtain delivery, these can be added to the net invoice price and where a sale takes place more than four weeks after the supplier's list price changes and no invoice delivery has taken place in the meantime the best list price will be substituted for net invoice price. That is the clear definition of net invoice price and any LTAs and so on must be taken into consideration in relation to it. Deputy Keating raised some other problem.

Mr. Keating

Invoices that have arisen outside the jurisdiction.

Mr. Reynolds

Importers.

Mr. Keating

I have no problem with the definition.

Mr. Reynolds

The examiner has power to go to importers just as to anybody else. It is possible that invoices could be rigged and we will have to wait and see about that. He can call on the relevant authorities in another jurisdiction to help him. It is not unusual for authorities operating in this area to co-operate with one another. However, there is a change since the last time those orders were made in that an invoice supplied to the examiner by an importer will be taken by the court as showing the invoice price and the onus will be on the importer, or whoever, to prove that it does not. The onus was on the Restrictive Practices Commissioner up to now. Suppliers in their own interest can play a vital part in this. They are in the trade and they have every opportunity to know what is going on. Anybody in his own line of business knows whether people are engaging in this sort of carry on. If the people who want this order brought in and want to restore the opportunity for some level pitch playing for the multiples and the small grocers know from their own business what is going on, they can be of significant help by advancing information which can be checked out, examined and investigated.

The change is that the invoice produced by the Commissioner of Restrictive Practices, or the director of consumer affairs as he will be known, will be taken by the court and the onus will be on the other person to prove to the contrary. That is as far as they can go. Already I have been giving examples of information and how people are setting themselves up in an effort to defeat this order through an importer. The information that has come forward will be extremely helpful. I hope that when this order has passed through both Houses the director will be able to get to work on it.

Mr. J. Bruton

I am not going to pursue the seasonal goods issue any more. However, let me say that the definition is far too narrow and there will be practical difficulties, but we will wait to see what happens. It is not adequate. We could go on talking about seasonal goods all day without much advance. I remain completely unconvinced by the Minister's explanation that this Bill will not lead to a large transfer of imported rather than Irish produced goods.

Let me explain. Two large retail chains in this State have branches on the other side of the Border; and both of them have shops on this and the other side of the Border. Take a company in this jurisdiction producing biscuits and another company in Northern Ireland also producing biscuits. Both retailers want the freedom to sell biscuits below cost without being prosecuted. Any sensible retailer, even if he does not intend at the time he is buying the goods to sell them off below cost, would like to know that if he had to he would be able to do so with impunity. What do these two large multinational — in the sense they are on both sides of the Border — retailers do to avoid the purposes of this order? They get their outlet in Northern Ireland to buy all their biscuits for sale as own brand biscuits from the Northern Ireland manufacturer, not the Southern Ireland manufacturer. The Southern Ireland manufacturer is scrubbed out. Having bought the biscuits at a price which is privately arranged between their Northern Ireland branch, their Northern Ireland purchasing manager and the Northern Ireland manufacturer, they concoct another invoice at a lower price and the Northern Ireland part of the retail chain sells them to the Southern Irish part of the retail chain, a perfectly legitimate transaction except that the price is different.

Mr. Reynolds

And you could not eat them.

Mr. J. Bruton

They are then imported in the South and all Irish biscuits are taken off the shelves of these two large outlets because they want at least the freedom to sell them below cost if they wish. The director of consumer affairs says this is terrible and must stop, that we have information, suggestions, rumours that this is happening. What can he do about it? Absolutely nothing. He goes along to supermarket chain D or Q and says: "What about this? These biscuits are being sold at a price well below the price at which Irish Biscuits in Tallaght can supply them. Surely you must be selling these below cost." He is told: "Not at all. These were supplied by the Northern Ireland branch to us and we have an invoice here which shows that the price at which we are retailing them is above the invoice price in accordance with the order." The director of consumer affairs says that he does not believe a word of it, that that is a fraudulent invoice and that is not the real price. The purchasing manager of supermarket D or Q says that is an outrangeous statement, that the director has absolutely no right to make it and that he must prove it in court.

The director of consumer affairs then decides to go and ask the Northern Ireland Department of Commerce if they will help him to see if this is the true price. The Minister, being very friendly with his colleague in Northern Ireland, will get a friendly reaction to this. That having happened the Northern Ireland Secretary of State for Commerce will have a good laugh up his sleeve at this naive request from the Minister for information so that he can ensure that the biscuit manufacturer in his jurisdication would lose business and the Minister could get it for a manufacturer down in the South, the Northern Ireland biscuit manufacturer having captured his market as a direct result of this order. That is my fear.

It is naive of the Minister to say, as he said, that we can get co-operation from people in other jurisdications. People and administrations in other jurisdications will certainly co-operate with you when it is in their interest and yours to do so as is the case in regard to security under the Anglo-Irish Agreement. There will be no shortage of co-operation in matters where there is an interest on both sides of the Border that there should be co-operation. If, as a result of this order a Northern Ireland biscuit manufacturer is creating more jobs in Northern Irelands because he is able to put his produce in here and the people here are able to sell them below cost and if that were rectified jobs would be lost in Northern Ireland which might recently have been created by virtue of this order. You will get no co-operation from anybody in an enforcement process of that kind. The only thing you will have is the invoice and you will be totally unable to go behind that invoice by virtue of the fact that this order does not confer, and cannot confer, extra-territorial jurisdication on the examiner or the Director of Consumer Affairs. Essentially may worry is that this will lead to a diversion of supplies in terms of imports.

The Departments of Industry and Commerce have been totally opposed for years to the idea of interfering with the market in this area. I know that that Department have believed down through the years that once you got into this area you were straight into a quagmire and you would end up remedying loophole after loophole. The Department, in their wisdom, foresaw exactly the sort of difficulty I am now adverting to, wherein there is the possibility of imports being substituted for domestically produced goods where one cannot force the below cost ban on imports but can enforce it on domestically produced goods. I do not think that the Confederation of Irish Industry and all those other people who have been clamouring for this have throught out this aspect of the matter at all.

Mr. Lynch

I have a few observations to make. If we take the biscuit manufacturers which Deputy Bruton mentioned, Jacobs have 1,000 people employed and their annual turnover would be in excess of £50 million. Dunnes Stores, one of our major stores, would account for a quarter of the sales of the biscuits produced in that factory. My information is that they do not account for it and that what Deputy Bruton has referred to is happening and has happened right across the country. With regard to seasonal goods anybody in business could tell us that the mark up is such as to allow for over supply. The norm in the retail business is that——

Mr. J. Bruton

The markup will have to be higher now.

Mr. Lynch

It will not. Quick sale goods have a low markup and seasonal goods have a very high markup. That is the reason that if there is an after Christmas sale on any of those goods, excluding Christmas cards which are normally stacked away because they are well covered in the profits from those Christmas cards that have been sold, they could be given away for little or nothing. These would include toys and so on.

On 25 May 1985 in the Seanad I called on the then Minister, who was Deputy Bruton, to implement this legislation. We have a duty and an obligation to cater for the small business people of this country. I have witnessed over the years the whole sector being eradicated and eroded by the malpractices of the supermarkets, the chain stores and their buyers. I realise now why my request was not adhered to at that time or indeed the request of the Joint Committee on Small Businesses. It was very obvious to me that Deputy Bruton did an indepth study of this but why did he not go ahead and do it? The legislation is long overdue.

Mr. R. Bruton

I have been explaining that for the past three years.

Mr. Lynch

I compliment the Minister in bringing in this legislation. There are people out there wondering what we are doing that we have not this order and this legislation implemented. I appeal to this House to get this legislation through before Christmas. It will not have much effect if we wait until after Christmas to bring it in.

Mr. Keating

I do not think Deputy Lynch's exhortations were necessary. We are here to assist. He would be the first to agree that there is not much point in putting through legislation if it is to be ineffective. It is our job and our obligation to examine legislation carefully, not just to accept some form of "top of the head" assurance about matters. I should like to ask the Minister two questions and with the permission of the Chair I would like, depending on the replies, to make an observation. I asked initially——

An Leas-Cheann Comhairle

Is the Deputy assuming that the replies will not be satisfactory?

Mr. Keating

No, I am not assuming that. I specifically said, depending on the replies. I might even send one of these seasonal goods to the Minister if the replies are sufficiently positive.

Mr. Reynolds

The Deputy will not get a Christmas cards for sure.

Mr. Keating

The Minister apparently does not send them. If this order is effective perhaps they will be cheaper this year although I doubt it. First, in relation to the staffing arrangements, what is the structure for monitoring this order? Secondly, how are invoices arising outside the jurisdiction dealt with in Europe? I have looked at the literature and there are devices of one kind or another, according to my information, in a range of countries——

Mr. R. Bruton

Market share.

Mr. Keating

——in Belgium, Germany and France. They are specific.

Mr. R. Bruton

On market share.

Mr. Keating

No, it is on below cost selling. They may call it different things in different places. In those countries they talk about loss leader offers and so on and I wonder how it is handled there. I have glanced at the Restrictive Commission report of Review of Restrictive Practices (Groceries) Order, 1981 where that point is also raised. They also made the point that the invoice is the basis for assessment of true cost. Of course we all know that an invoice is a human creation and in itself does not necessarily tell the true cost but we are accepting for the purposes of this order that it is a true cost. Paragraph 9.10 of that document which deals with the question of restrictive practices in the grocery industry, under the heading of "Net Invoice Price" states:

The invoice does not, in many cases, reflect the real net price of the goods. In some cases, for example, suppliers pay "long term allowances" which are not reflected in the invoice price.

It goes on but there is no need for me to dwell on the point. Even with the best will in the world the invoice can mask true cost and where there is not the best will in the world — as inevitably will be the case when human greed enters the picture — the Minister's order will find itself faced with, as indicated in his opening remarks, an immediate rush to contrivance by people who want to get their way around any order. It is compounded by the fact that the invoices, even if it was to accept them on face value, are for a large supply of goods.

No matter how much we might regret and deplore it, the facts are that a large supply of goods originate outside the jurisdication and those invoices are not open to scrutiny here. I wondern whether the Minister should consider going beyond those invoices, make some assumptions about the costs and shift the onus of responsibility by saying, "we assume this is the cost and you must disprove it." Perhaps that is too harsh. What I am saying is that there is a problem and there is no point in pretending that there is not. Ironically, and most unfortunately and I am sure nobody would want this, it could actually result in doing specific damage to Irish manufacturers and suppliers vis-à-vis those who are selling into the country. That would be an outcome which none of us would want and was probably undreamed of when this order was conceived but it is a possibility.

I am asking the Minister if he would be good enough to comment on those three points. First, what precisely are the structures of staffing in place to monitor the order? Secondly, what do other European countries do in terms of access to the raw data needed to make an adjudication on true costs, and, thirdly — the question which has remained unanswered — the question of invoices which arise outside the jurisdication and in respect of which there is not any serious facility for us in terms of examining them. Should we implement something stronger and compel people on the basis of assumptions that we should make in our jurisdiction that they come forward and disprove what we assume, on the basis of economic criteria, are likely to be the true costs?

Mr. Reynolds

I will refer to the Deputy's last point first. I am sure the House is well aware of the keen competition which exists between various multiples in the trade. Clearly even when this Bill is signed into law, the multiples are going to try to continue as much competition between themselves as is possible. Problems arose in this area because the multiples used every device they could think of to gain a larger market share. Below cost selling was held out to consumers as being a benefit to them. As I said in the House before, the only way consumers could get any benefit from below cost selling would be to take the number of loss leaders in each multiple and drive from one multiple to the other. That is the only way consumers will get any benefit.

Mr. J. Bruton

That is not what we are arguing about.

Mr. Reynolds

We are talking about below cost selling. That is what this legislation is all about. Below cost selling is being held out as a benefit to consumers when in effect the opposite is the case. Housewives who look at the number of items that are sold below cost in any particular store will find that no more than a handful of items are sold below cost even though the store might sell 300 or 400 items. If she monitors prices from one week to the next, she will find that when one item is reduced in price, another is increased. It is a total misrepresentation to say to consumers that below cost selling is to their benefit. It is not and never has been. I took part in a radio debate with a representative from one of the multiples and in the final analysis he had to admit that below cost selling was about market share and not about selling for the benefit of consumers. That is one part of the exercise this legislation deals with. The other part of the exercise deals with "hello-money". Nobody in this House could convince me that "hello-money" is a practice which should be allowed continue.

Mr. J. Bruton

That is not what we are arguing about.

Mr. Reynolds

The Deputy should not try to get away from what is involved in what we are doing here.

Mr. J. Bruton

We are arguing about a principle at this stage. This is a Committee Stage.

Mr. Reynolds

If the Deputy keeps quiet I will come to the other points and deal with them individually. Deputies should not lose sight of the reason this legislation was brought in. If Deputies are native enough to assume that CII, RGDATA, the consumers association and everybody else do not know what the business is all about, they are living in cloud cuckooland. I know what that trade is all about and I know what malpractices exist. I am not going to renege on my responsibility and let small suppliers be put out of business one after another as has happened during the past number of years. Regardless of what efforts may be made by way of imports to replace them, I will keep the independent grocers in business and restore a level pitch between them and the multiples. The independent grocery trade accounts for 40,000 jobs approximately and this House has a responsibility to those people. All I can do is restore a level playing pitch so that each of them will have the same opportunities as the multiples.

When this Bill has been put through this House multiples will still want to try to gain market share. They will try to do so by having the LTAs that Deputy Keating referred to and all discounts shown on the invoice price so that they can keep the invoice cost as low as possible. When this legislation is passed the multiples will look for all discounts and LTAs to be shown on the invoice so that they continue to sell at cost and not below.

We have spoken about what we can and cannot do in relation to those outside the jurisdiction. I cannot subscribe to the view of Deputy Bruton, or anybody else who may be naive enough to think that we cannot get at those people. I have had experience in business of markets which have been rigged. Before I came into this House I had the experience of buying certain quantities of packaging in this country and packaging from another jurisdiction. Anybody who is involved in the business knows that there is a double pricing structure between the UK and Ireland. If a person wants goods to be delivered ex-factory to an English address he will get one price and if he gives a Republic of Ireland address he will get a different cost structure and a different price.

Mr. Keating

Higher, presumably.

Mr. Reynolds

Much higher. Companies in Northern Ireland and parent companies in England will invoice goods at higher prices into the Republic.

Mr. J. Bruton

That is exactly what I said.

Mr. Reynolds

I am talking about the reverse situation. I have been able to crack that. I will be able to give the Director of Consumer Affairs a few tips on how he can go about tackling this problem. He can do it in the very same way I did it. All he will need is one invoice which he can get quite easily. I am not going to disclose my hand to the House but I will be able to give him a few tips on where he will be able to find a true invoice.

Mr. Keating

He has to go behind the invoices.

Mr. Reynolds

He will then be able to go to the importer and say that it was a true invoice at a certain date. When he goes to court on a prosecution the one invoice he produces will be taken as the true invoice and the responsibility will be on the importer to produce evidence to the contrary. That is the change that is being brought in by this order. The onus will now be on the importer or the supplier to prove that the information supplied by the Director of Consumer Affairs, which will be taken in court as a proven fact, is wrong. There will be seven inspectors monitoring this. The Deputies may not accept what I have said but I am giving the House the benefit of all the information I have.

Mr. Keating

How many backup staff will there be?

Mr. Reynolds

There will be seven inspectors involved in this operation. CII have had many seminars and conferences about this. It is a matter for suppliers to run their own businesses. I cannot run their businesses for them. I am sure Deputy Bruton subscribes to that as much as everybody else does. Suppliers can see the benefit of what is being done in this House to assist them to run their businesses more properly but at the end of the day they run them and the consumer has to watchful. We can only do so much. We are trying to eliminate the malpractice of below cost selling because it is not to the benefit of consumers but to the benefit of large multiples who are trying to gain more and more market share. They will admit that when they are put up against the wall in a sound argument. The Bill also deals with the problem of "hello-money".

I do not think the House should unduly hold up the Bill any longer. We want to try to get it through this House and the Seanad and into law before Christmas so that it will give people an opportunity of earning a living the same as are the few big people who are trying to expand their share of the market all the time.

Mr. J. Bruton

I found it rather difficult to have to listen to the Minister making a Second Stage speech in favour of the principle of this order. We are not involved in that. We are talking about the way in which particular aspects of the wording of the order will work. I hope that I will at least stay within that constraint.

I want to concentrate further on the way in which the use of the invoice price could assist imports. The Minister says he has ways of finding out the true invoice price. I am talking about invoices which are not supplied by the manufacturer but by another part of the same organisation which, in turn, bought from the manufacturer. How will one obtain the true invoice, reflecting the price at which the manufacturer sold the goods to the supplier? Not easily. It is not sufficient to obtain the invoice at which that manufacturer sold it to another supplier because, as we all know, prices vary, depending on volume, convenience and so on. It is quite clear that the manufacturer or the multi-national retailer will not leave stray invoices lying around in respect of their transactions. The invoice prices will not be obtained because the invoices will be known to the manufacturer in Northern Ireland and the retailer at his branch in Northern Ireland. It is quite possible that this will be rigged and I do not believe the methods which the Minister referred to could work in this case.

In practice it is different because there is not the intervention of the third party, that is, the company operating in the State that has a branch in Northern Ireland which is buying from the manufacturer in the first place. I believe that in practice this order will lead to a diversion to imports. Its enforcement will be haphazard given its complexity and the fact that there are only seven staff involved. There is a severe risk of a diversion to imported goods in order to avoid the possibility of a prosecution for below cost selling. It would be much easier to conceal the true cost of imports than the cost of domestic goods. Even the Minister admitted that to pursue below cost selling, one would have to go to much greater lengths and use all the methods one has learned in the trade to prove cost in respect of imports.

Even assuming — and I do not agree — that you could find the true information, the extra effort involved in getting the information on imports would tend to effect a diversion in favour of imports. That is my fundamental worry about the Bill. I do not want to delay the Bill at all, although the Minister may think this is the purpose of my remarks. The Minister keeps repeating that he wants to get the legislation through the House quickly. We all want to do so. The Government could have ordered the time if they wanted to.

Mr. Reynolds

This Bill is in the House for the fourth time. It is a two section Bill that cannot be amended. The order also cannot be amended. One has to wonder why it has been held up deliberately for the sixth week. The Restrictive Practices Groceries) Order was signed on 25 May 1987. We are now within weeks of Christmas and repeated and superfluous arguments are being made.

Mr. J. Bruton

A Leas-Cheann Comhairle, could I appeal for protection against interruptions?

An Leas-Cheann Comhairle

Before this intervention I was going to say that since I arrived in the Chair, having listened carefully — and I have memories of when this Bill was previously before the House — I had decided we had reached the point where there did not seem to be any special purpose in refining the presentation of the points beyond that which had occurred already. Bearing in mind the expression and acceptance of the need to expedite the proceedings I venture to put that point to the House. Perhaps we could accept that: (1) there does not seem to be any great purpose in pursuing points already made; and (2) if there is need for the legislation we should try to expedite it.

Mr. J. Bruton

On a point of order, could I plead for protection from interruptions by the Minister? It might assist in expediting matters.

An Leas-Cheann Comhairle

The Deputy will accept that I would do likewise in reverse situations.

Mr. J. Bruton

I want to move to the provisions of paragraph 15 of the order which I am concerned about. I wish to read the provisions of paragraph 15 into the record:

If the Examiner is satisfied that the operation by a supplier of the terms and conditions contained in the statement prepared by him pursuant to Article 13 of this Order constitutes unfair discrimination in favour of or against any wholesaler or retailer or any section of the grocery trade comprising the business carried on by wholesalers and retailers, the supplier shall, at the request of the Examiner, make such amendments of the terms and conditions aforesaid as may be specified by the Examiner being amendments calculated to eliminate the alleged unfair discrimination.

That provision gives the examiner carte blanche to insist on any changes he likes in the terms of a contract between two private individuals on the grounds that he, the examiner, in his own right, without review by this House, and without any legislative guidance, has decided that these are “unfair”. I do not believe any functionary has the right to decide that something should be stopped because he says it is “unfair”. Unfairness is the ultimate subjective matter. We in this House, should not give unlimited powers to the examiner to stop any particular contract on the basis that the examiner, in his own right, thinks it is unfair. Clearly this order attempts to eliminate practices which the order specifies as unfair. That is fine because it is a deliberate decision of the House. However we are not, or at least, we should not be creating a whole new area of power for an examiner to add on all sorts of additional provisions.

Mr. Reynolds

I have listened to these points time after time. It is not a new provision.

Mr. J. Bruton

Whether it is new or old I believe we should not give this power to the examiner.

Mr. Reynolds

Would the Deputy explain to the House why he wishes to hold up the Bill? The Deputy was going to reform the House.

Mr. Lynch

Why is the Bill being held up?

An Leas-Cheann Comhairle

We have to allow your constituency colleague to proceed without interruption.

Mr. Reynolds

I do not want to get into Meath politics.

Mr. J. Bruton

The Minister may be out of Longford politics if another Deputy who is also a Minister has her way — with all the photocalls she is having in Longford.

Mr. Reynolds

She has a long way to go yet.

Mr. J. Bruton

Exclusive photographers are supposed to photograph only one politician at an opening at which two Ministers are present.

Mr. Reynolds

That does not worry me.

An Leas-Cheann Comhairle

This example of parochialism ill becomes the Members present. Could we proceed to deal with the matter?

Mr. J. Bruton

I have deep connections with County Longford. I have relatives living there who, I am afraid, do not support the Minister — a tribute to their good sense.

A provision giving open ended power to a functionary to decide that particular things are unfair, unfairness being such a subjective matter, is essentially something which should not be in an order. Whether it is in an old order is irrelevant. If the provision was in an old order I am sure it was not used. It should not be used in the future because it is delegated legislation, which is not proper.

Mr. Keating

I am bearing in mind your earlier exhortation. Let us hope we will all be out of here within the next three quarters of an hour or so. I asked earlier about staffing, about invoices arising from outside the country and about international practice. The Minister handled the question of invoices arising from outside the country by saying that in the context of his professional extra-political experience there are things one can do. I accept that, but it is an imponderable and a basic difficulty. It is a weakness in the nature of things that one cannot force compliance when one is depending on material supplied from outside. I am also perturbed about the principle of accepting the invoice as the bedrock of true cost. There is much creative accountancy and fanciful writing and sometimes an invoice might not be worth the paper it is printed on in terms of its relevance to the truth.

On the question of staffing, the Minister said there were seven inspectors. Are these seven new members of staff or have they been redeployed? Whatever chance the order has of being successful, it has none if it is not meant seriously. I am not optimistic about the impact of seven people working in an industry of this size.

Mr. Lynch

It is only necessary to watch half a dozen.

Mr. Keating

I am not sure about that. The report of the Restrictive Practices Commission for 1986 quotes the examiner as saying that in 1981 his office had a staff of 14 plus a full time examiner, but that in 1986 there were only seven staff plus a full time examiner. Are these the same people the Minister is talking about? Are we introducing a complex order with international implications and not seriously applying the resources?

I also referred to international practice and it was suggested that perhaps no other country bothered about this. That is not true. In accordance with Belgian law it is prohibited for any retailer to offer for sale or to sell any product to a consumer at a loss. In Germany there is no specific recognition of the concept of a loss leader but the law against unfair competition in effect covers what could be described as loss leader offers. In France, on the basis of the Finance Act, the resale of any unchanged goods below an actual wholesale price, plus a sales tax arising from the resale, is prohibited. There are international precedents. Rather than trying to reinvent the wheel, every time we try to do something, we should consider how these countries handle the question. Once in Luxembourg I saw fish being beautifully packaged and sold and I realised that they do not even have a coastline. Luxembourg must sell produce which is largely imported and I wonder how they tackle the matter of below-cost selling.

The Minister said this matter would be reviewed in a year. I assure him that there is no intention to obstruct or be difficult. This Bill has been around in one form or another since the beginning of the year and both the discussions we had on it in recent weeks were brief, truncated by the Order of Business and other matters that arose. I do not believe we have spent two hours on the Bill.

Mr. J. Bruton

We might make more progress if we did not get Second Stage speeches from the Minister every time he intervened.

Mr. Keating

The Minister made a point about below-cost selling not helping people. We cannot blame multiples for wanting to make money. Below-cost selling is about attracting customers. Anyone who thinks otherwise is being extremely naive. When we try to persuade people to buy our modest wares, we use every reasonable device. It is simply business practice and it is our job to give reasonable standards of protection and to put resources in place which will afford the consumer that protection. They have done it abroad and I wonder how they handle some of the problems we might now have to confront. I also wonder if we are serious enough in our approach to make the necessary resources available.

Mr. Reynolds

Other countries have to handle this matter within their own laws. I have to do the same thing here. Regarding staffing, the allocations have been increased from 1986 for 1987 and in the 1988 budget. The inspectorate are quite confident of being able to handle the problem since it is not widespread.

Mr. Keating

Are these extra staff?

Mr. Reynolds

No. We have staff there and when the other legislation goes through the House we will have a combined staff of 30 in that section.

Mr. J. Bruton

Prices staff.

Mr. Reynolds

They were redeployed. In relation to the question of fairness as decided by the Restrictive Practices Commission, if it is not felt to be fair the matter goes to the court. It is not a new provision. There must be some means of adjudicating. If a person is not satisfied that what is decided is fair, he has the option of going to court. This is the third time I have answered this question.

An Leas-Cheann Comhairle

Repetition is not allowed.

Mr. J. Bruton

On what criteria will the court decide? They will look into their heart and make a commercial judgment.

Mr. Keating

There is a precedent for that.

Mr. Reynolds

Judges are there to decide. When somebody has a complaint against another person, only they can adjudicate.

Mr. J. Bruton

Judges make decisions about the law, not about fairness.

Mr. Reynolds

The law is there. Let them decide what is fair or unfair. The law has existed since 1953. Deputy Bruton was himself a Minister for three or four years and if he did not like the law he should have taken steps to change it.

Question put and agreed to.

SECTION 2.

Question proposed: "That section 2 stand part of the Bill."

Mr. J. Bruton

Regarding the review which it is proposed to carry out, how formal will this review be? I should like this order to apply for a limited period. There is a reasonable case for what is called "sunset legislation" which applies only for a period and must fall to be renewed or dropped at that stage. Would it not be reasonable that this legislation should apply for, say, three or five years rather than indefinitely so that the review would be given some legal teeth?

Mr. Reynolds

I dislike interfering in the marketplace just as much as Deputy Bruton does. The malpractice was such that I felt interference was necessary at this point. I said I will review the workings of this order 12 months after it comes into operation. I am anxious to get it into operation as soon as possible. I will be the first to withdraw from the marketplace if the marketplace behaves in a responsible manner. I take action only in the common good.

Mr. J. Bruton

Assuming this legislation goes through the Seanad in the next few weeks, it will come into operation just before Christmas. This will create some difficulties for people who bought goods for the Christmas trade in the absence of a below-cost selling ban and who will have to dispose of them under the terms of this legislation. Does the Minister not see any difficulty in this?

Mr. Lynch

Before the Minister replies, I can assure the Deputy that the means at their disposal are such that they will not have any problem in this area. When the Minister is reviewing this order he might also look at the situation of the multiples. Multiples control the largest percentage of the grocery trade here and that is not the position in other European countries. In my view the practices of the multiples have resulted in the Minister having to introduce the order under discussion. In reviewing this legislation the Minister should look at the banks and their charges and the legal profession and the fees they charge. Government action alone will redress the position in those areas.

Mr. Keating

When one looks at the Bill and the terms of the order one cannot help wondering why it is necessary to have such Bills or discussions. I would have thought that in a normal civilised society a Minister for Industry and Commerce, or an appropriate Minister, should have the power to intervene without having to get the approval of Parliament for everything he does in carrying out his work. In my view this amounts to defining a trading practice. I accept that the Minister for Industry and Commerce has to come to the House regularly with Bills to increase borrowing and so on but they are about detail and not about principles. As far as I am concerned I would be in favour of some way of getting out of that and permitting the Minister to get on with his job.

An Leas-Cheann Comhairle

I accept the question put by the Deputy but I should like to remind him, and the House, that section 2 deals with the short title of the Bill. I will permit the Minister to make one short comment on the questions put to him.

Mr. Reynolds

I would love if the position was as Deputy Keating has suggested because I could have had a lot more work done since the Dáil reassembled. This order was signed on 25 May and has been in and out of the House on many occasions since. Everybody is aware of the contents of the order. I should like to tell Deputy Lynch that bank charges are dealt with in another Bill that is before the House. Hopefully, we will be able to get it through the House before Christmas. I accept that it has taken a long time to get it through and I do not deny that the House has every right to deal with it in detail. I will be reviewing the position in 12 months and, if necessary, I will be only too happy to improve it.

Question put and agreed to.

Title agreed to.

Bill reported without amendment.