Vol. 387 No. 10
asked the Minister for Industry and Commerce if he will outline the Government's attitude to the current bread price war between the major supermarket chains; his policy in relation to the use of Minimum Prices Orders, especially in relation to bread; and if he will make a statement on the matter.
112.
asked the Minister for Industry and Commerce whether the recent bread price war is in the interest of consumers; if he is aware of the possible effects of predatory pricing on the food industry; the action, if any, he proposes to take; and if he will make a statement on the matter.
I propose to take Oral Question No. 11 and Written Question No. 112 together.
The consumer is entitled to purchase bread or any other commodity at the cheapest possible price. Where an undertaking avails of the opportunities to produce and market commodities according to the most efficient methods it cannot be argued that the consumer should be deprived of any of the benefits. In the bread industry market forces have been allowed to prevail and this has resulted in a fall in the price being paid by the consumer for bread.
I am not aware of any predatory pricing in the food industry. In so far as the so called bread price war between the major supermarket chains is concerned it is not Government policy to interfere in the day to day operation of the market place. Our policy is to provide the legislative and economic framework that will allow competition in the market place to operate in a free and fair manner. As I have previously stated, I do not have power vested in me under the Prices Acts to make minimum prices orders.
Can the Minister tell us under what provisions he made his order freezing prices some weeks ago? Could he also indicate why, once he had issued this order, he did not ensure it was enforced and what circumstances lead him to believe that he made the wrong decision in issuing that order freezing bread prices?
When my attention was drawn to the alleged below cost selling of bread by some of the major multiples in early January I asked the Director of Consumer Affairs and Fair Trade to investigate the matter. I also asked for a freeze at the pre-Christmas price at that time. The director then reported that he found no evidence of a breach of the order by the multiples concerned and that therefore there was no basis for the director to institute a prosecution. The order was then lifted.
In view of the Minister's assertion that he has no evidence of any predatory pricing in the food industry, can he indicate whether distribution costs are taken into account at present in determining the actual price and cost?
As I informed the House in the course of the Adjournment debate on predatory pricing last week, the Director of Consumer Affairs and Fair Trade gave me an initial report which indicated there was no below cost selling. He then went to take another look at the position and gave me a further report last week which showed, on the basis of findings of two sets of consultants brought in to examine the companies involved, that not only was there no evidence of below cost selling but also no evidence of predatory pricing of any sort. However, he is continuing to examine this matter and I expect to receive a report from him next week. I have no doubt that matters such as the ones raised by the Deputy will be covered in that report.
Having regard to the report by one of the chain stores that it might be possible to retain the 800 gramme sliced pan at a price of 39p for approximately a year, would the Minister see in that an indication of an increase after certain aspects of competition have been omitted from the market?
I would see that the days of bread at over 70 pence are well and truly gone, and that should be a matter of satisfaction to this House and to the general public. Let me ask if the Deputy or anybody in this House is seriously suggesting to me, when you consider somebody on unemployment benefit or unemployment assistance or on a low wage with a family of three or four children who would normally take about two sliced pans a day, that even if there was a minimum price order, we should implement it and drive the price up? Take the difference between 39p and 69p for a sliced pan, and the average price was higher than that. In regard to a family in the circumstances I have mentioned, you are talking about a saving of 60p a day over seven days a week, that is a £4.20p a week saving.
Will the Minister accept that his catchphrase in this "benefits to the consumer" is very narrowly focused and relates only to the price of the bread? He is not taking into account the quality of the bread, the range of bread available, distribution and all these areas. Will he not consider those factors as in the area of what should be benefits to the consumer? He is simply only talking about the cheapest possible cost for the sliced pan with total disregard to all the other factors. Secondly, is it his intention to introduce no legislation whatsoever to lay down ground rules for competition vis-à-vis Articles 85 and 86 of the Treaty of Rome? In the last three or four weeks he has not alluded to this area except to say he wants to see competition in it. Is it his intention not to introduce legislation in the whole area of competition?
With regard to cost alone being taken into account, this question relates to cost. In regard to quality, range or type of bread, there are people who do not like the sliced pan, who would prefer to buy a batch, and that they can do. They can go and buy a Swiss roll or what they want. That is their business, it is the choice of the consumer, and I have no intention of interfering in that. We live in a democracy. Regarding the introduction of further legislation, the Fair Trade Commission are looking at the question of the implementation of the groceries order. I expect a report from them by the end of the year. We have already had a debate in this House as to whether the proposal of a prohibition system should be implemented. That is to be decided after I get the report of the FTC some time near the end of the year.
No. 12 please. Too many Deputies are offering. I will hear a final brief supplementary from Deputy John Bruton.
Would the Minister agree that the urgent thing for him to do at the moment is to get the IDA to get the bakeries together to map out a long term strategy for that industry with a view to rationalising, promoting exports and getting the distribution system down to a more competitive level? Would he take a hand in getting that under way now as a matter of urgency rather than standing back from the problem as he appears to be doing?
My colleague, Deputy Joe Walsh, Minister of State with responsibility for Food, has been very active in this area in relation to an IDA strategy for the food industry of which bread is a part. I know from conversations with him that he is very actively involved in the rationalisation of the bread industry. I recognise that Deputy Bruton is as anxious as I am that there be rationalisation, for example, the need for modern technology to be used which will be in the long term interest of employees in the industry and of the consumers as a whole. That should be brought forward as fast as possible.
A brief question from Deputy O'Sullivan.
Has the Minister made an assessment of the cost in terms of likely job losses in the industry as a result of his inactivity?
I do not accept the allegation of inactivity. We are providing the framework in which the bakers can operate and from which the consumer can benefit from whatever reductions result from the opportunities taken to produce and market commodities in an efficient manner. I do not see that we can deprive the consumers of the benefits of that efficient production. The Deputy must be aware, because it has been said often enough in this House, that there is no statutory basis on which I could make a minimum prices order even if I wanted to, which I do not. I regret the losses in that industry or in any other industry because I have one of the key responsibilities in Government in relation to job creation, but you cannot hope to see an industry survive if there is not investment in modern plant and machinery, using the best available plant. I saw one plant close. I happened to see the TV pictures of it where in this year of Our Lord 1989, the sliced pan was being handwrapped individually by a worker. Surely in this day that is no way for management to hope to be able to keep viable jobs going for their workforce. Surely it is important for management and companies generally to invest so that we can have a viable industry giving long term, viable jobs to employees.
No. 12, please.
Does the Minister see any role for traditional skills?
Yes, I think there is tremendous opportunity for individual skills——
Traditional skills.
Traditional skills. I hope management will see and corner niche markets of the bread industry rather than trying to have their workers compare and compete with new high technology companies as they are doing at present.
No. 12 has been called.
There is no point in trying to stop the tide coming in.
Does the Minister eat bread?
With my waistline, like the Deputy's, it is quite obvious I eat a great deal of bread.
