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.