Dáil Éireann debate -
Wednesday, 8 Feb 1989

Vol. 386 No. 8

Private Members' Business. - Enterprise (Competition and Consumer Protection) Bill, 1989: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

Mr. J. Bruton

This Bill from the Progressive Democrats represents a straight-forward endorsement by them of a Fine Gael policy. Fine Gael proposed this precise measure in the Dáil on 7 December 1987 in the debate on Committee Stage of the Restrictive Practices Bill. We advanced that proposal again in our policy document on 1992 published in June 1988. As a result of our initiative and of the agreement of the Minister this matter is now being examined in detail by the Fair Trade Commission. While I support the Bill I would favour awaiting that body's report before finalising its details.

Our competition law must be shaken up. Prices here are too high. Cosy deals to push up costs abound, particularly in the services sector. Such abuse should be prohibited outright as Fine Gael, and now the Progressive Democrats in this Bill, propose. The present law against these anti-competitive practices does not work. It is too cumbersome, too slow, too narrow in its focus and too uncertain as to its meaning. For anything to be done in regard to any particular anti-competitive practice, first there has to be a complaint made. Secondly, there has to be an investigation by the Director of Fair Trade; third, a report by the Fair Trade Commission; fourth a recommendation from the Minister for an order to be made to implement that report from the Fair Trade Commission; fifth, a decision by the Government to approve that order; sixth a decision by the Dáil to approve the order and, seventh, a decision by the Seanad to approve the order. Only after all of those seven stages have been gone through can anything be done to stamp out an abuse. This simply takes far too long. Even then the order refers to a particular trade only, the trade about which the original complaint was made. Indeed in many cases the Minister is powerless even to make an order after that lengthy process. For example, action recommended by the Fair Trade Commission on restrictive practices in the legal profession and in the travel trade has been ignored because it represents matters for another Minister. That is simply not good enough. An outright ban across the board on unfair trade practices is what we need. Then everybody will know where they stand. They will not be dependent on the vagaries of the seven stage process I have just described.

The Minister, in the course of his remarks yesterday, raised some problems in regard to the provisions of the Bill concerning the role, or lack of role, for the Fair Trade Commission and the need for the Minister to retain his order-making powers and other drafting points of that kind. All of these can be dealt with by way of amendment on Committee Stage. I would hope that we would have a report from the Fair Trade Commission before the Committee Stage of this Bill, or whatever Bill is to be used as a vehicle for implementing these proposals.

In summary, action along the lines of this Bill is needed. It is urgent because we compete with other countries in the EC who have tough competition laws like this. Since December 1987, when I first raised the matter here, numerous other European countries have decided to adopt this exact procedure. This is the case in Britain, France, Portugal and Greece. We cannot afford to be behind the rest of Europe in ensuring that efficiency is the order of the day in our economy and that that efficiency is achieved by a prohibition on anti-competitive practices as we, in Fine Gael, want to see and this Bill proposes.

Mr. O'Donoghue

There is cross-party agreement on the need to tighten up Irish competition law in the context in which such is set out in Deputy Cullen's Bill. The main proposals of his Bill constitute major changes in Irish and EC competition law. They would appear to comprise the introduction of a general prohibition on anti-competitive practices in all sectors of our economy. There is provision for the courts to award damages, amending the present provisions of the Restrictive Practices Acts of 1972 and 1987, in order that the legality of certain practices should be judged solely by reference to their anti-competitive effects, for example, by ensuring that it would no longer be possible to judge a restrictive practice by reference to unreasonably restricting competition. It is also proposed to remove the present limitation of Articles 85 and 86 of the Treaty of Rome which, as we know, apply only in so far as there is a restrictive practice affecting trade between member states. The application of the full rigours of the proposed new competition law should apply to semi-State bodies while allowing them a statutory monopoly which would not be open to challenge but making it unlawful for them to use their monopoly position to discriminate against foreign firms.

Irish legislation currently approaches competition from the base of control of abuse as opposed to a prohibition basis. It has been fairly evident in recent years that a control of abuse basis is not as effective as a prohibition basis. I suppose one could contend that our legislation at present is from based as opposed to effects based. Clearly it would be desirable to have an effects-based form of legislation so that emphasis would be placed on the potential effect on the customer or supplier. There are too many examples here of detrimental effects on suppliers and certainly on customers. It is clear that the legislation obtaining is not sufficiently effective to properly protect the consumer and supplier alike.

It would appear that the best way of achieving the objective of protecting the customer and supplier would be to prohibit agreement and certain practices which are anti-competitive. Everybody is agreed that it would be desirable to prohibit agreements and certain practices which are anti-competitive. That system, as opposed to the present one, would concentrate on agreements and practices which had an effect on the market as a whole. Of course, in a complex area such as this it is difficult to find the perfect solution. There are disadvantages entailed in prohibition as opposed to control of abuse. For example, undoubtedly there would be a period of uncertainty for industry and lawyers, although the argument could be advanced that there is no ample precedent in Europe under Articles 85 and 86 of the Treaty of Rome which could be adapted to the domestic scene fairly rapidly by the Director of Consumer Affairs and the High Court should an appeal be lodged there. It is, to say the least, a difficult balancing act to weigh up the public interest.

The underlying philosophy of Irish trade law should be the promotion of competition and the elimination of anti-competitive practices in so far as that is possible. Article 85 of the Treaty of Rome prohibits anti-competitive agreements if they affect trade between member states. It is true that agreements, which may be purely internal, may still fall within the scope of Community law. For example, when two companies within the same country become involved in anti-competitive practices, and if it has an effect on companies outside that country but within the EC, then clearly such anti-competitive practices will come within the ambit of Articles 85 and 86 of the Treaty of Rome. However, all too often there are concerted practices and anti-competitive practices performed by agreement within the country which are not governed by Articles 85 and 86 of the Treaty of Rome and which do result in detrimental effects on customers and suppliers. There are however certain defects in Article 85 and it has been clearly established in Brussels that under Article 85 there are severe delays. These delays are not ordinary delays but are undue delays. This led France, for example, to reform its own laws.

It is clearly desirable then to bring Irish legislation into line with EC law. It is true that agreements can be exempted under EC law. It is also true that the Irish Government may wish to prohibit certain things under domestic law which are not prohibited under EC law. In approaching legislation of this kind, because the country is a member state of the EC, compatibility with European law in so far as that is possible is most desirable. It is fair to point out as well that a general prohibition, while it is certainly desirable, will greatly depend on the way in which the exemption criteria are drawn up and indeed the administrative procedures for operating the law. In this respect the Director of Consumer Affairs would have power to make his decision on what Deputy Cullen describes in his Bill as the rule of reason basis, that is to say, if the pro-competitive features outweigh the anti-competitive features, then no exemption should be granted. Many have argued that a list of specific prohibitions should be drawn up and inserted in any Bill dealing with this area. At first sight that would appear to be the correct procedure but on consideration, while exemptions might be desirable in certain circumstances one would have to become specific and define what circumstances this would apply to and this of course would obviously generate immediate difficulty. The restrictive trade practices policy in several countries have been examined, and it was examined in Great Britain in a report which was presented in March 1988. In that document the people who were investigating the situation in England felt:

the law should state that, in particular, the prohibition applies to the following agreements and concerted practices:

(i) those fixing prices and charges including any terms or conditions (e.g. discounts, credit terms) which determine effective net prices (recommendations by trade, professional and other associations on prices or charges are also included if those recommendations have the effect of determining minimum or actual prices);

(ii) collusive tendering;

(iii) those sharing or allocating markets, customers, raw materials or other inputs, production or capacity;

(iv) those prohibiting or otherwise restricting advertising or the provision of other promotional information;

(v) collective refusals to supply or to deal with suppliers, collective discrimination in the terms on which different customers or classes of customers are supplied, and collective anti-competitive conditions of supply such as tie-ins, aggregated or loyalty rebates and "no competition" clauses.

When dealing with exemptions it is again desirable to have a general test, but if there is to be a general test it would be necessary to publish with the legislation guidance notes in order to inform people or interested parties what is or is not desirable within the context of what should or should not be exempted. Article 85.3 of the Treaty of Rome has an umbrella provision which appears to be broadly followed by Deputy Cullen in his draft Bill. Article 85.3 in its umbrella provision states that it allows otherwise prohibited agreements to be exempted only if they satisfy certain criteria and these are that they must:

(i) contribute to improving the production or distribution of goods, or promote technical or economic progress;

(ii) allow consumers a fair share of the resulting benefit;

(iii) not entail restrictions which go beyond what is indispensable to attain those objectives;

(iv) not allow competition to be eliminated.

Section (1) (3) of Deputy Cullen's Bill says:

(3) The provisions of subsection (1) may, however, be declared inapplicable in the case of any agreement, decision or concerted practice or category of agreements, decisions or concerted practices between individuals, trade associations or companies where the Director of Consumer Affairs and Fair Trade is satisfied that the agreement, decision or concerted practice or category of agreements, decisions or concerted practices (as the case may be) contribute to improving the production and distribution of goods or to promoting technical and economic progress and which do not—

(a) impose on the individuals, trade associations or companies concerned terms which are not indispensable to the attainment of those objectives; and

(b) afford such individuals, trade associations or companies the possibility of eliminating competition in respect of a substantial part of the product in question.

It is fair to say that we have to agree that there are serious administrative difficulties with this part of the Bill. First, one would have to define what constitutes economic progress and, second, what constitutes technical progress. How far then could measures claimed to promote economic progress or technical progress justify the restriction on competition? This poses an immediate difficulty and is one which would have to be deliberated upon for some time. For example, an applicant could say that a restriction is beneficial because of public safety, or he could use a whole host of reasons not hitherto considered or perhaps apparent but reasons nonetheless which he could put forward to justify a restriction. Indeed it is interesting to note that when West Germany considered the law in this area they limited the exemption categories. Some commentators feel that this is virtually impossible and argue for a block exemption; but block exemption or no block exemption, the administrative difficulties of definition in connection with technical progress and economic progress and the reasons or excuses which could be put forward by an applicant under these headings cause problems and this is certainly something which would have to be more seriously considered and worked out in far greater detail than is at present the case.

I think that on balance most people are agreed that block exemptions are desirable and should be introduced. I would say however that any such block exemptions should, in so far as it is possible, be compatible with EC law.

The review commission in England felt that categories such as exclusive distribution and purchasing agreements, patent licensing, intellectual property and know-how agreements, R and D agreements, franchising agreements and, interestingly, exemptions for sectors and professional services should be included in the block exemptions. With the question of sectors and professional services, it was felt that the merits of each individual case should be considered.

It is only fair that the Restrictive Practices Commission be given some credit for making the first suggestion of change in this area. That commission are now known as the Fair Trade Commission. In a 1977 study the Restrictive Practices Commission suggested change. Clearly, the basis of this Bill is to change over to the EC prohibition system and away from the control of abuse system. The Bill is certainly modelled on Articles 85 and 86 of the Treaty of Rome. The Minister in his address here last night said that the Fair Trade Commission are at present looking at the position. He favoured the Fair Trade Commission being allowed to get on with that job and it is fair to say that they are getting on with it. In March 1988 they invited submissions. This entire area is by no means simple. It is, to say the least, extremely complex. In approaching a drive away from a control of abuse system to a prohibition system and in defining what the exemptions should be and the manner in which they should be granted, it is clear that the House would need to be extremely careful.

It occurs to me that the first question that arises in relation to legislation such as this is whether it is constitutional to grant judicial powers, of the kind mentioned, to the director. That is clearly a very important point. This aspect of the matter would need very careful handling and very careful investigation before one could say with any amount of clarity that this House would be constitutionally entitled to grant judicial powers of the kind mentioned to an individual. The director is not a judicial personage. The Bill confers on the director what I would regard clearly as, at the very least, quasi-judicial powers.

We had in this House in the last number of years tremendous debate as to whether, for example, the Attorney General could or should make decisions in relation to warrant applications under Irish extradition law. This Bill gives to the Director of Consumer Affairs and Fair Trade considerable powers of a judicial nature. I certainly feel that the conferring of such powers on the director would be questioned under the Constitution. This area needs to be considered extremely carefully.

There are other difficult questions to be answered apart from the question of the judicial powers of the director and whether he should or should not be conferred with those powers. Among the most difficult questions to be answered is which powers at present exercised by the European Community could be exercised by the Fair Trade Commission. That is a relatively complex and difficult area. The next question to be asked is which powers could be exercised by the Minister if those powers could not be exercised by the Fair Trade Commission. The third question is obviously, if it is felt that neither the Minister nor the commission can exercise the powers mentioned, which body could do so.

I will turn now to the most crucial question, having agreed in principle with the broad thrust of what the Bill is designed to do but advising caution until the investigation by the Fair Trade Commission has been completed. A prohibition system of the kind set out in this Bill would be an extremely costly system. The prohibition system, as I said, is clearly desirable but one would have to question whether at this time this country with scarce resources can agree to a proposal by the Progressive Democrats for the expenditure of what would be a very large amount of money in operating the mechanics of the system proposed. The difficulties which this presents at a time of scarce resources have to be examined and the question asked as to whether there are other areas which require expenditure more urgently at a time of great difficulty for the country. That is something the House would have to seriously consider. Public expenditure constraints being what they are at present, it is fairly clear that there are more urgent areas of activity which require funding.

The Bill, while conferring great powers on the Director of Consumer Affairs and Fair Trade — this may or may not be constitutional, seems to be silent for some remarkable reason on the position of the Fair Trade Commission. There is mention of the Director of Consumer Affairs and Fair Trade in virtually every section of the Bill but very little mention of the role of the Fair Trade Commission. Are the Fair Trade Commission to work in concert with the director or is there some other reason behind this? If I had another criticism of the Bill it would be that it is vague as regards where Irish legislation currently on the Statute Book fits into the new prohibition system.

Because of the constitutional factor, the fact that Irish legislation now on the Statute Book is not really considered in the context of the entirety of competition legislation and the fact that a considerable amount of work must first go into ascertaining what powers can be legally exercised, the Fair Trade Commission should at this stage be allowed get on with the job of delving further into this matter which is of such great importance to consumers and employers alike. However, there are many parts of this Bill that are extremely welcome but it would be premature, without having sight of the deliberations of the Fair Trade Commission, to pass a Bill such as this at this time because of the dangers, traps and pitfalls I have mentioned earlier.

Mr. D. O'Malley

I would like to say at the outset, for the purpose of getting the record right, that there is a printers' error in the explanatory memorandum that accompanies this Bill. The last three sentences that appear in paragraph 8 should have been removed and were so marked in the proof copy but unfortunately it was overlooked. I mention it because some of the sentences are actually self-contradictory and would be confusing to someone trying to study it.

An Ceann Comhairle

Thank you for drawing that matter to my attention.

Mr. D. O'Malley

I have to say at the outset that I am profoundly disappointed by the speech which the Minister for Industry and Commerce made last night on this Bill. He does not seem to realise what huge anti-competitive problems there are in the Irish economy and, indeed, deeply ingrained in Irish society as a whole, but exhibiting also serious economic consequences. In short, he does not seem to appreciate that in this country we have a greater degree of collusion, price fixing and concerted improper practices than in any other Community country or in any other OECD country. Time and again we are reminded that things that are apparently regarded as normal commercial practices here, however sharp they might be and accepted as such, can be looked on with great disfavour in other countries and can often not alone be a breach of the civil law in those countries but sometimes a breach of the criminal law there.

Regrettably, the Minister does not seem to realise that we need precisely this sort of legislation to prepare us for 1992. With the partial exception of Britain, all other European Community countries have applied the principles of the competition Articles of the Treaty of Rome to their domestic law. Those two Articles, 85 and 86, are in a broad sense themselves based on the provisions of the Sherman Act in the United States. It is no coincidence that the societies and the economies which least tolerate collusion, price fixing, non-competition and restrictive practices are the ones that are also most successful, most vibrant and most creative of employment.

We have three years to go before the final opening up of Europe to us, and of us opening up to Europe. We heard last night from the Minister a negative, cautious, inward looking and protectionist speech that could just as easily have been delivered in the forties or the fifties as it was delivered by him last night in 1989. Whoever wrote that speech for him — I will give him the credit of assuming that he did not write it himself — has no conception whatever of what a dynamic economy or a dynamic society is. If this is how the Government and their advisers think, God help us.

Regrettably much of what the Minister had to say does not extend beyond somewhat mealy-mouthed nit-picking with the draftsmanship of the Bill. The truth is that the draftsmanship of this Bill or indeed any other Bill that seeks to substitute the realities of the modern world for the inherited protectionism of Irish commercial and professional activity, should not and does not matter. The core of this Bill is in sections 1 to 3 inclusive. The principles are set down there. After that, all the other sections are relatively minor and can be changed or taken out as necessary, or can be amended or expanded as seen fit. I am not concerned about any drafting defects that might or might not be in those sections because they can be put right very rapidly.

We have to produce Bills of this kind without the assistance of any qualified draftsman. We have, on the other hand, the assistance of very highly qualified practitioners in this particular field which has been of invaluable help to us. The drafting is only a minor technical aspect; the principle is what matters. It is the principle we should all be looking at, and the principle is what the Minister should be looking at and asking himself whether he wants to reject or accept that principle. The letter of those sections is of little consequence but the spirit of them is of huge importance, and the spirit of those sections is needed in this country and is a challenge to this House.

The Minister's speech seemed to give the impression that the existing legislation on restrictive practices in this country, consisting of three Acts and a number of orders made under them, is satisfactory and is working well. He seeks to give the impression that anti-competitive practices are kept down and under control and that they are not damaging our economy and the consumer. Of course, the reality could not be more different. Our legislation is minimal. The 1972 Act, as Deputy Bruton among others pointed out, was cumbersome, bureaucratic and extremely difficult to work and extraordinarily slow to produce anything. It has been improved by the 1987 Act but, between them, they fall far short of anything that is needed in a modern economy that is outward looking, competitive and not prepared to tolerate improper commercial and professional practices.

The Mergers and Monopolies Act, 1978, is quite out of date now because the circumstances today are totally different to those of 11 years ago when that Act was passed. The Act was drafted and passed in an entirely domestic context. The international, and specifically the Community, context is every bit as important today as the domestic context was in looking at the kind of problems the 1978 Act deals with.

The Minister also mentioned 11 orders which had been made since 1972 as representing, collectively with the three Statutes which I mentioned, Irish Statute law on competition. Most of the 11 orders are a joke. Only two of them, the Grocery Order, 1987, and the Motor Spirits Order, 1981, have any real significance or effectual meaning. Even those two, as we well know have very limited effect. The activities of some of the multiples in the grocery trade seem to be no less predatory today than they were some years ago. The position of manufacturers in this country supplying those multiples seems to be as vulnerable and as fragile today as it was some years ago before the latest order was made. Commercial arrangements in the motor spirit trade in this country have an unusual cosiness about them that would hardly win approval in Wall Street or in Washington.

What possible use or relevance is the Cookers and Ranges Order? What is supposed to be the value of the Electrical Goods Order? In each case the ESB are flagrantly abusing their dominant position within the Irish market. They are giving customers 12 months free credit, paid for by the general electricity consumer who funds the crazy retail commercial activities of the ESB which are hugely loss making, by paying an unnecessarily high price for electricity. Has any of this legislation, or any of these orders been used to put any curb on these abuses by the ESB of their dominant position?

The Minister tells us we have a control of abuse system — as he called it — and that this Bill would seek to introduce parallel with that the prohibition system that is modelled on Articles 85 and 86 of the Treaty of Rome. I question whether we have a control of abuse system. What abuses are we controlling under our present legislation?

The restrictive practices legislation has applied to services since 1972. What orders have been made in relation to services? The answer is none in 17 years. At the same time we have a system whereby many services, professional and otherwise, are provided on a notoriously non-competitive basis and where the interest of the consumer comes a bad last at all times. Is it not very much better that we prohibit anti-competitive practices rather than give some sort of theoretical powers to a commission and a Minister to make orders after lengthy inquiries and when in practice, they rarely make such an order, and even when it is made, find it very difficult to take proceedings to enforce it successfully? What has been the value of the order on non-alcoholic drinks when the profit margins on non-alcoholic drinks in certain premises is 150 per cent, 200 per cent and at times 250 per cent and more? Has the order prevented improper concerted practices or improper profiteering? Two years ago under the 1987 Act the list of services covered by the legislation was extended to include banks, communications and electricity. This extension was obviously very welcome on paper but what value has it been in practice? What orders have been made in the meantime curbing improper practices in these fields, of which unquestionably there are many?

Take the banks for example. I pointed out a couple of months ago that the two major banks in this country have engaged in a price fixing agreement that is grossly anti-competitive and amounts to improper collusion by any standards in agreeing between themselves identical interest rates and sets of conditions for Visa and Access credit cards. A smaller bank which also issues Access credit cards does so at a lower rate of interest and is endeavouring to compete but the two major banks have persisted, despite historically low interest rates and extremely cheap money, in charging their customers 24.6 per cent interest on their outstanding balances. This rate of charge is more than ten times the rate of inflation. I remember a few years ago when the rate of interest charged by the banks was less than the rate of inflation, and that happened during this decade. It is nearly four times the real cost of money here and it is a scandal that these banks are allowed to continue in this collusive manner to rip off their customers.

I have written to the Director of Consumer Affairs and Fair Trade about the matter. He has acknowledged my letter but when he can get around to doing something concrete about this remains to be seen. I can sympathise with his difficulties because he is supposed to be the enforcer of this legislation in every field and it is not open, except in very limited circumstances, to injured individuals to take action. The beauty of this Bill is that it allows an aggrieved consumer to take the necessary steps to rectify this improper and anti-competitive practice if he is affected by it. Such a consumer could sue, if this Bill were passed, one or the other of the two banks concerned, or both of them. The damages he would recover would be the difference between the interest he was forced to pay at the exhorbitant money lending rate of nearly £1 in £4 and the amount he would have had to pay at an interest rate the High Court would consider reasonable in the circumstances at the time and given market conditions then existing. In the case of an individual customer of one of those banks that might amount to only perhaps £200, £300 or £400 in a particular case but if these damages of a few hundred pounds were multiplied by 100,000 customers the banks concerned would very rapidly desist from their collusive practice of agreeing together to overcharge their respective customers by the same amount.

One of Deputy O'Donoghue's objections to the Bill was that there would be a lot of litigation in enforcing its terms and, therefore, the expenditure of large sums of money and a huge number of officials would be called for. He misunderstands the nature of the Bill and the enforcement provisions in it. The beauty of the Bill is that you would not have to get the Director of Consumer Affairs and Fair Trade to enforce the law for you: you would enforce it yourself as a civil plaintiff and, of course, you would do that at no cost to the State. That is the way it is done in other countries and it is the way in which it is done in the Court of the European Community. That objection, like some others Deputy O'Donoghue raised this evening, and which I will deal with later, are clearly invalid.

The type of action which I have described, and the examples I have given, are I suggest the kind of action and the kind of legislation we need. The examples I have given show the reasons why we need such legislation. This is what is available to citizens on the mainland of Europe. Why should we deprive our citizens of the advantages of the same approach? The Community confers these rights on our citizens where international trading is concerned. The countries on the mainland of Europe confer these rights on their citizens in relation to domestic and professional activities. Why do we in this country deprive our citizens of their domestic rights? We can stop depriving them if the House passes this Bill.

Our economy at domestic level particularly, and our services which are nearly all provided domestically, are riddled with inefficiencies. Up to now instead of regulating these restrictive actions and agreements and these abuses of dominant positions we have, both in our laws and attitudes, tended to institutionalise them. We have sanctified things like the scale fee as if no alternative could ever be contemplated. Our lawyers in particular have sought for generations to bury their heads in the sand. They are not perhaps unique in this; British experience up to fairly recently was not dissimilar. The result of the British experience was the action taken by the Lord Chancellor in Britain within the past few weeks which is doing more, and will do more, to change the practice of the law in Britain than anything else that has happened during the past 350 years. As always happens when reasonable change is resisted, it bursts out like a floodgate. That is what has happened in Britain during the past two or three weeks and it may well happen here if we are not prepared to accept the sort of changes I am talking about and the different, more open-minded and outward looking attitude that this Bill represents. I will give other examples. Consultant medical practitioners in certain branches of medicine — and not least one has to think of the branch of pathology — have sought to preserve in some areas the indefensible at the expense of the public. Trade unions have sought to impose and enforce agreements relating to deliberate and gross overmanning, as many firms and companies, including semi-State ones, well know and we still in some curious sort of way still seem to pine for that and think that in some respect it is admirable.

The official Government view here, as exhibited by the speech of the Minister for Industry and Commerce last night, is that we will move very slowly towards the regulation of these matters, that we will pooh-pooh the basic tenets of the European Community rather than let them upset us or introduce them unnecessarily without compulsion into our domestic law. Articles 85 and 86 of the Rome Treaty are among the great success stories of the European Community. People like Commissioner Sutherland and others have demonstrated time and again in their speeches and actions what can be achieved in the development of the European economy by the introduction of competition and the suppression of restrictive practices. Are we really open for business? Are we open to take on all-comers and to let all-comers take us on or is this only Government propaganda when in reality we are trying to retain our protectionist practices? This question I have put will be answered by whether or not this Bill passes through the House. Drafting problems in it need not and cannot be used as an excuse for not passing it. Any drafting defects can be and will be made good. The spirit and principle of the first three sections of the Bill are what count. Are we for those or are we for lingering protectionism, collusion and restriction?

In the Federal Republic of Germany there is really only one sector in the economy, whereas in Ireland there are two. There is the internationally traded sector here which has to operate under the principles of Articles 85 and 86 and there is the domestic sector which is still heavily protected, if not by tariffs, at least by all sorts of restrictive agreements and practices and official and unofficial nods and winks. The result is there for anyone to see, our internationally traded sector is relatively efficient. It has to be, otherwise it would disappear.

On the other hand, our domestic sector is extremely sluggish and this includes the provision of almost all services that are supplied in this country. The purely domestic trading sector is feather-bedded and protected against the cold reality of life in the real world of Europe where anti-competitive practices and the abuse of dominant position are forbidden.

The net effect of the Minister for Industry and Commerce's speech last night is to seek to pour cold water on Articles 85 and 86 of the Treaty of Rome so far as one might seek to apply them in this country. In doing this, he is running directly counter to his contentions that he is making Europe efficient. The particular feature of Articles 85 and 86 is that they are civilly enforceable by the award of damages. We would like to see the same here. The Minister asked last night if we intend that sections 19 and 23 of the 1972 Act which allowed the director to apply for an injunction should be retained. I see no objection whatever in retaining them, for what they are worth. I put this question: how often have they been used by the director since 1972 to obtain an injunction? Is it not infinitely more valuable and more salutary that an aggrieved and injured individual can get damages or get an injunction himself?

It should be borne in mind that this Bill, like the relevant Articles in the Rome Treaty, stays in the realms of civil law only. It does not extend into the field of criminal sanctions. Many will argue that it should. The effect of the efficient anti-drugs laws of the United States, extensive and worthwhile as they are, were found not to be sufficient when their jurisdiction was confined to civil damages and injunctions only. It was found necessary to create a criminal jurisdiction as well and to enforce it, and it is enforced. People go to jail in the United States of America today, and have done for years past, because they agreed with their competitors to fix prices or to restrict supplies, or to supply certain people only, or otherwise to rig a market. These practices are neither criminal offences in this country nor even civil wrongs. They become amenable only if the Minister makes an order and the House, the Oireachtas, has to confirm that order by legislation. It is not effectual until that is done. If the Minister makes an order on the advice of the Commission after investigation by the director, even then, how often are these orders enforced? How relevant are some of them today, as per the list obtained from the Minister for Industry and Commerce last night.

Only four years ago in this House we had a Bill brought forward called the Air Transport Bill, which made it an offence to compete in the airline or travel agency business. For the appalling offence of giving 1 or 2 per cent off a fare by way of discount, the travel agent or airline operator faced two years in jail under that Bill or a fine of £100,000 or both.

At the same time in the same business in the United States, one could face two years in jail or a fine of up to $0.5 million for not competing and for charging the same price as one's competitor. Who was right? Was it the Americans or was it us? It has since been proved that it was the Americans and we have accepted that.

The Bill before us tonight is another instalment in the same saga. Are we going to be as slow to learn our lesson as we were in 1984 and 1985? This present Dáil is full of people congratulating themselves on their wisdom in allowing competition to be introduced into air transport in and out of this country. In 1984 and 1985 there were four Divisions held in this House in which 165 people voted on each occasion for protectionism and one voted for competition. We have seen the benefits of that competition since, even if it is our own emigrants who are the main beneficiaries.

We need above all else to foster an enterprise culture. This Bill gives us an opportunity to take a fundamental step in regard to it. For many people their whole upbringing and outlook is anti-enterprise, anti-competitive and protectionist. We have never broken away from that fundamental attitude that has been instilled into so many of our people. We have to make the gesture and it is in the passage of this Bill that we will more effectively and more practically make that gesture than in any other way. If we really mean what the Government and others say about 1992, we cannot afford not to pass this Bill.

The Bill represents a commitment towards progress, competition and European success. Defeat for the Bill represents a negative introspection and an anxiety to retain outdated practices of restriction and protectionism. I think we should vote for progress.

The failure of State enterprises here to compete, and their abuse of their monopoly or dominant position have been severely damaging to the economy. It has hugely increased our manufacturing costs, particularly. It has accentuated our natural disadvantages as a manufacturing centre. It has made us uncompetitive and thereby lost to us a vast quantity of employment.

Section 10 (9) applies the terms of the Bill to most of those commercial bodies. Many of them are worth looking at. For example, as consumers and manufacturers of food in this country have we been that well served by the Irish Sugar Company monopoly? Have industry and the travelling public been well served by the statutory provisions underpinning CIE? Should legislation dating back to 1932 continue to be retained as the principal legislation governing the provision of internal transport and travel in this country?

One of the few real successes in commercial terms in this country, in the public sphere, the Irish Life Assurance Company, continue to have one of their hands permanently tied behind their backs? Should the ESB be allowed to continue to treat all their consumers in an arrogant take it or leave it fashion in the years to come? Should Telecom Éireann be allowed to retain their monopoly? Is it in the public interest that their charges are so incredibly high? Are RTE not in a healthier position when subject to competition than when there is none? Why did they resist competition for so long and why were they allowed to keep down that competition for so long? Why were Aer Lingus allowed to operate on a non-competitive cartel basis for their first half century? Have not the economy and the consumer enormously benefited, as well as Aer Lingus themselves, since they partially at least gave up these anti-competitive practices? Have RTE not improved since competition began to become a reality? Will CIE not improve if competition of a real kind is allowed?

Why should different companies and people not compete for the business that local authorities, Government Departments, State boards, etc., can give them in fulfilment of their statutory duty? Why should local authorities and so on all seek to do work themselves that can be done much more efficiently and more cheaply by others, particularly when the others have to compete for the business?

Whatever way we look at it, we have to accept that Ireland at present is fundamentally out of step with European law in these matters. With the advent of the single market in 1992, it is imperative that we update our law dealing with anti-competitive practices of all kinds and thereby prepare this country for the greater competition soon to emanate from Europe. This Bill will protect both traders and consumers from anti-competitive practices and create a much more competitive environment for the business community.

At present, strangely enough, there is no general ban on anti-competitive behaviour in Irish law and this factor is seriously hampering our economy from expanding. It is wrong that price fixing and price collusion are prevalent, particularly in the professional services sector. The Irish consumer is not being offered the proper range of choice that is available throughout most countries in Europe and is, therefore, being forced to pay in many instances substantially higher prices for goods and services than he or she have to do if a proper competitive environment existed. That is the bottom line of the Bill.

I am grateful to Deputy Bruton for indicating his support and I am hopeful of support from the other Opposition parties. I see reason that they should not support the Bill. I particularly seek the support of the Government. I have dealt with most of the points made by the Minister for Industry and Commerce last night. He was mainly concerned about drafting points and these are minor matters which can easily be rectified in a very short time. The principle contained in this Bill is one with which neither he nor anybody in the House or outside it will quibble. It is a principle which should be accepted and this Bill should be given a Second Reading.

Mr. Roche

In the last contributor's speech there was a great deal of rhetoric and an insistence that the suggestion that there should be some prudence at this point was in some way detrimental to the economy. There was the assertion that there are huge anti-competitive problems and that we have a greater degree of collusion in price fixing and of abnormalities in commercial practice than any other OECD country. It was a fine contribution in terms of debate, but the only thing missing was evidence. With the exception of the banks, where I accept that there are unacceptable cartel arrangements which should be terminated, not a scintilla or shred of evidence was produced. Not a shred of evidence was produced to uphold the suggestion that the expansion of the economy is being prevented by current practices. If that is the case, we were not enlightened as to when the prohibition on the extension of the economy was commenced.

The assertion throughout the contribution was that the Minister had set his face implacably against the principles outlined in the Bill. My reading of the Minister's contribution makes it clear that this is not what the Minister suggested. He suggested that it would be prudent to wait until the investigation by the Fair Trade Commission into the possibility of incorporating Articles 85 and 86 into domestic legislation was completed. Deputy O'Malley and his party suggest from time to time that independent tribunals and groups should make welcome contributions and I cannot see why he should finish in such high dudgeon and should whip himself into such a frenzied fury. The Minister suggested that there is no compulsive argument in favour of a leap in the dark but rather that it is worth our while waiting until the study which was commenced is completed. That would be a more prudent way forward.

I welcome the opportunity to debate the inclusion of Articles 85 and 86 in domestic law, even if that debate is somewhat premature. The proposals in this Bill are not particularly new. It is sad that Deputy O'Malley has just left the House because I could remind him were he still here that the last time these proposals emerged in this House and were subject to common debate was when a report was made in 1977. It was suggested then that a new direction should be taken and that the prohibition approach adopted here should be considered. The Restrictive Practices Commission suggested that we should move from the "control of abuse" means of preventing anti-competitive practice and should look instead at a prohibition system. That is what is proposed in this Bill. Deputy O'Malley knows as well as I who was Minister for Industry and Commerce in 1977 and who was in Government. The then response from Deputy O'Malley and others was that this would impose a huge burden and would be costly and bureaucratic. Those are the arguments which can be adduced now, as they were adduced then, against the prohibition system. I am not saying that those arguments are persuasive, nor am I saying that they are arguments we should accept. Those arguments were proposed, among others by Deputy O'Malley at that time. They are arguments which are current.

I must admit to being in something of a quandary regarding this Bill. Deputy Cullen dealt in his contribution with a specific type of abuse which is not at all uncommon and does require attention. The abuse I have in mind is the type of abuse which commonly occurs among the so-called liberal professions. I note that Deputy O'Malley referred also to the professions and their concerted and collusive practices. Deputy Cullen referred to the problems encountered by solicitors. One of the difficulties here is that a private citizen who runs into problems with a solicitor will find it difficult — in rural areas well nigh impossible — to get another solicitor to act on his behalf. The point is that the kind of collusive practice and closed shop practice which causes most problems for most people is not adverted to in the Bill. I can give many examples from my constituency case work; so too can many other Members.

One case highlighted for me the blatant ineffectiveness of the manner in which the professions compete. Some time ago a constituent engaged a well-known Dublin solicitor to assist in the purchase of some property which was to be her retirement home. In due course my constituent completed the purchase and sought to retire. Oddly enough, her solicitor retired at the same time. His practice was then taken over by a reputable firm of solicitors. At the same time that the takeover occurred, my constituent discovered that there was a problem with regard to rights of way, secondly that the house had no planning permission, thirdly that there was no by-law approval, fourthly that there was a major problem with the title and finally that the structure, which had been passed by a member of another liberal profession, was in a dangerous condition and was about to fall down. The new firm of solicitors confirmed at the outset that they had taken over the business of the first solicitor. Then they discovered that there was a time bomb in this part of the business of the first solicitor and they indicated to my constituent that the firm was no longer representing her. Naturally the firm denied any liability in the matter.

A third solicitor was brought into the act and after the passage of an inordinate amount of time and having run up very considerble fees this solicitor withdrew from the case, having reached the conclusion that as there were two solicitors involved in the action my constituent had better save herself any further anxiety or cost. At least he was candid. A fourth solicitor was consulted and at least on this occasion there appears to have been some considerable sympathy for my constituent, but there was no progress. The Law Society was consulted, at first by my constituent and subsequently by me. That was an interesting experience. The Law Society are the watch dogs but their efforts were derisory in the extreme. The constituent was advised to take advice from a fifth and then a sixth solicitor. Ultimately the constituent was advised by the Law Society to take the matter to court.

I refer to all of this because in the ordinary lives of ordinary people the considerations which bear most heavily are not the sort of considerations which we discuss in the context of Articles 85 and 86. The problems of collusion and malpractice which are undoubtedly there are not the type of thing dealt with by this Bill or by the Treaty of Rome. We simply do not police well enough services provided to the public. In this case the legal profession operated like a cosy club and closed ranks. This is the case with other professions. Deputy Cullen referred to this last night but did not say how this Bill would seek to address the problem or help us along the road to improvement.

The Bill seeks to bring into law a system of regulation which is based directly on Articles 85 and 86 of the Treaty of Rome. These Articles were intended primarily by the drafters of the Treaty of Rome to address a pan-European problem of collusion, not so much between members or individuals of professions but among firms. This is the intention of the Bill. I do not criticise it because it does not deal with the type of collusion to which I referred. I simply make the point that the kind of collusion that causes maximum problems and abuse in the lives of ordinary people is not addressed by this legislation.

Articles 85 and 86, which lie at the core of the Treaty of Rome, are aimed at assisting in the creation of a common market in which goods, services, capital and labour circulate without impediment by the Government, commercial operators or commercial conspiracies of private operators. Deputies Cullen and McDowell made much of the Bill's value in contributing to what was referred to by one of those speakers as a dynamic economy. That is indeed the free market theory on which the Treaty of Rome and Articles 85 and 86 are based and that is why it is timely that we should be considering when and how we import Articles 85 and 86 to domestic legislation. However, other than to assert that the proposals contained in the Bill would create a better future — no great proof of that assertion was provided — I argue that in the last contribution, which was good from a rhetorical and debating point of view, the only evidence produced was in relation to a banking cartel. No other evidence was produced to support the inflated charges made that anti-competitive practices, collusion and price fixing have reached a situation where we could be regarded as the most abnormal economy among the 24 OECD member states. It is worth emphasising this point because, if we are to move in this direction, we should do so for the right reasons. The right reasons are the timeliness of the movement; the wrong reasons are the rhetoric put forward here tonight.

As I said, no proof of the assertion was produced last night. Neither Deputy Cullen nor Deputy McDowell sought to produce evidence of the problems which the measures would resolve. Anyone who read their contributions carefully would not assume that there was such a significant need for progress at this stage that we could avoid waiting until the commission's report, which is in train, is produced. They did not produce any evidence that concerted practices exist to the point where they impede in any way the emergence of the dynamic economy. If there was something in Deputy Cullen's contribution last night which I missed I apologise. However, reading the contribution I do not feel that this imperative need, to act now and to hell with the consequences, is evidence of that sense of urgency. I am not saying that we do not need to move in that direction but we do not need to move precipitously because medicine prescribed for non-existent illness — particularly strong medicine — can be dangerous and could be fatal.

I was surprised at Deputy Bruton's willingness last night to go along with this. It struck me as opportunistic because it is not long since Deputy Bruton held the portfolio for Industry and Commerce and if all these anti-competitive practices, these dreadful dangers, exist now they did not start yesterday nor the day before, they existed while he was there and there must be a question mark over why he did not act then. I do not believe that the case was made tonight or last night for precipitate action in this direction. I am not saying that we do not need to move in the direction outlined in the Bill and that we will not move in that direction. It is my belief that we will move in that direction. When the prohibition system proposed in this Bill was suggested in 1987 it was not picked up. The main reason was that it was felt by the Department of Industry and Commerce and by the Minister for Industry and Commerce that a prohibition system would require a very extensive bureaucracy. That concept was pooh-poohed here tonight by the very man who felt it was the case in 1977. If that was the case in 1977 when law and business were far less complex than in 1989 I wonder why he pooh-poohed that line of argument tonight.

The introduction of this type of prohibition system would be costly and we should not avoid the fact. One of the major weaknesses in Deputy Cullen's contribution and in the Bill is that that fact has been overlooked. The fact that an extensive bureaucracy will be needed is avoided. The fact that there will be costs to be met by the enforcement of these measures is also avoided and that is a weakness. I am sympathetic to the argument that in Opposition one does not have available all the panoply of draftsmen and so on, which means that errors inevitably occur. I do not condemn this Bill simply on the basis that it includes very significant drafting errors which were admitted by Deputy O'Malley and I do not want to labour the point. A very significant fact is that the Bill does not look at the costs of implementing the measures it proposed and that is why I was so surprised at Deputy O'Malley's contribution tonight and Deputy Bruton's contribution last night. There would — and I will advert to these later — be major costs to be carried by industry and by the individuals who constitute and contribute to a dynamic economy. As the Bill draws so heavily on Articles 85 and 86 of the Treaty it is worth while to examine them and their impact.

Article 85 renders null and void all agreements in restraint of trade. I am sure we all concur with the rendering of agreements which restrain trade as being null and void. We would also accept that there will be a need for exceptions as contained in Article 85. Article 86 prohibits all abuses by dominant firms of their dominant positions. There are no provisions for exceptions or exemptions from this Article. The system of control and regulation introduced in these Articles is a prohibitive one. The aim is to say to firms and individuals: "You go thus far and you go no further." In theory this has much to commend it. Deputy O'Malley said tonight that it makes it clear to individuals how far they can go. He rejected Deputy O'Donoghue's view that there would and could be confusion. Deputy O'Malley and the members of his party know that that is an untrue assertion. We all know that the implementation of Articles 85 and 86 in the member states has given rise to not just a huge bureaucracy within the Commission to implement and police those Articles but also a whole new service industry such as lawyers who specialise in European Community law, who interpret Articles 85 and 86, and who see their way around those Articles, and spend a good deal of time, at great expense, advising clients on whether they are in line with Articles 85 and 86. If one reads Articles 85 and 86 of the Treaty of Rome, particularly Article 85, and the report produced in May of last year for the Department of Trade and Industry, Review of Restrictive Trade Practices and Policy, and paragraph 4.13 which was highlighted by Deputy O'Donoghue, it seems to be very clear what is prohibited and what is meant by a concerted practice. No doubt at some stage we will move down that line. It is disingenuous in the extreme to suggest that simply putting this on the Statute Book ends the problem. It does not, it creates many additional problems.

As I said, in theory the system proposed in Articles 85 and 86 has a great deal to commend it. However, in practice, there may be many drawbacks. Deputy Cullen, who I have no doubt is sincere when he proposes these measures should address them. By establishing global prohibitions certain inflexibilities inevitably creep into the prohibition system. If one tries to introduce a prescriptive remedy as suggested in Article 85 or in paragraph 4.13 of the report, or as arises in the law of other member states, inevitably one will create inflexibilities.

The first point that should be made about these inflexibilities is that on all occasions that companies come together are not necessarily detrimental. Certain agreements may be positive and may contribute to the development of a dynamic economy. Article 85 and the Commission recognise that this may be the case and a body of exemptions has been introduced. When a body of exemptions is introduced the crystal clarity of global prohibitions goes out the window. Deputy O'Malley suggested here tonight that one could pooh-pooh the arguments put forward by Deputy O'Donoghue that there is less than crystal clarity, and that there are difficulties for firms in this course of action, it becomes obvious because if the clarity that he argues exists goes out the door, then confusion arises. When the exemptions are introduced the prohibitions are no longer global and when this happens, clarity goes, and whether a practice is acceptable or unacceptable becomes a matter for debate. If this becomes a matter for debate delays can occur, with the result that economic dynamism to which this is supposed to contribute, can be impeded.

Something else will happen when exemptions are granted — doubt enters the picture. When this happens firms become cautious and this inevitably creates a need for further bureaucracy. This has been the experience in Europe with Article 85. There is a layer of bureaucracy in the Commission not just to police Article 85 but to advise and consult with firms and say whether practices are acceptable or unacceptable. We now have the extraordinary system, referred to here last night as letters of comfort, which have no effect but which are frequently given by the Commission to firms to encourage them to move.

Because of the sheer volume of applications for exemptions and the sheer volume of applications for advice to the Commission, proposals which should go forward and which would be beneficial are frequently delayed. The Commission has had to seek ways around these problems by introducing block exemptions. In spite of these, the EC experience with the Treaty provisions has not been an entirely happy one. There have been many complaints about delays in the Commission's handling of applications which businessmen said have impeded progress. It strikes me as wrong that the proposers of this Bill should seek to ignore these facts. It also strikes me as wrong that Deputy O'Malley should seek to portray everybody who wishes to draw attention to these facts as being some form of latter day Luddite who is opposed to progress. Prudence, provided it is balanced, is never ill advised, and this is certainly a case where the prudence suggested by the Minister is advisable.

The undoubted costliness of proposals in the Bill and their potential to impede rather than assist economic progress are only two of the problems with the Bill. There are others. I do not think the proposers of this Bill can ignore, and I do not think Deputy O'Malley would have sought to ignore tonight, the possible unconstitutionality of the proposed powers of the expected office of the director of consumer affairs. Deputy O'Donoghue drew attention to this earlier, that there was a good deal of concern among the ranks of the Progressive Democrats and the diminishing ranks of Fine Gael with the constitutionality of allowing the Attorney General to review evidence. It strikes me as incongruous, to say at least, that these arguments of concern about the constitutionality of a relatively modest set of proposals could be put forward in this House and propagated in this land while at the same time ignoring the very real constitutional problems with regard to the office of the director of consumer affairs proposed in this Bill.

As I said, there are significant drafting errors which cause serious concern. Deputy O'Malley admitted two errors in drafting. These are not only minor as he suggested, but rather they shake confidence in the edifice. Section 9 (1) would abolish the powers of the Minister to make restrictive practice orders. No reason has been given for this. Section 8 contains another serious drafting error — this was adverted to by the Minister and I will not deal with it again. The Bill's failure to make any reference to the role of the Fair Trade Commission goes unexplained. Perhaps when replying, Deputy Cullen will deal with this matter because I am mystified as to why the Fair Trade Commission should have been ignored altogether.

It is true to say that the present system requires review. This cannot be denied. The control of abuse system is slow and cumbersome, and that needs to be pointed out. There is no point in trying to hype one against the other. The present system has problems. It is valid to suggest that we must consider incorporating Articles 85 and 86 into domestic law, and for this reason I have welcomed the Bill. The investigation by the Fair Trade Commission into the possibility of incorporating Articles 85 and 86 into domestic law is well in hand. I cannot understand why the Progressive Democrats and their leader should get so het up about this matter. If the Fair Trade Commission are examining the measures proposed in this Bill, where is the need for urgency and why is there a need for us to jump in the dark at this stage?

The commission invited submissions from interested parties and representative bodies in connection with the study in March last. It does not strike me that there has been an inordinate delay. If I believed that the FTC, who have been given additional powers, were dragging their heels, then the speed of action being proposed here would have something to recommend it. I do not believe that is the case.

Debate adjourned.