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Dáil Éireann debate -
Tuesday, 26 Feb 1991

Vol. 405 No. 6

Ceisteanna—Questions. Oral Answers. - Goodman Rescue Package.

Pat Rabbitte

Question:

6 Mr. Rabbitte asked the Minister for Industry and Commerce if he will outline the basis on which he approved the recent Goodman rescue package; the steps he intends to take to ensure that there is no element of price fixing in regard to cattle prices, as a result of the package; and if he will make a statement on the matter.

Mervyn Taylor

Question:

8 Mr. Taylor asked the Minister for Industry and Commerce the reason he did not refer the Goodman Group rescue package to the Fair Trade Commission under the monopolies legislation; if he will outline his estimate of the implications of the failure to do so for (1) the farming community (2) consumers and (3) employees having regard to his obligation to protect the national interest; and if he will make a statement on the matter.

Peter Barry

Question:

10 Mr. Barry asked the Minister for Industry and Commerce if, prior to his acceptance of the Goodman rescue package, he satisfied himself that the company would in the future be able to satisfy the financial commitments involved.

I propose to take Priority Questions Nos. 6, 8 and 10 together.

The first point that needs to be clarified is that the decision I announced on 14 February 1991 in respect of the Goodman Group under the Mergers, Take-overs and Monopolies (Control) Act, 1978, was not acceptance or approval of the rescue package in spite of widespread assertions in the media and elsewhere to that effect. The decision to accept or approve the rescue package was for the High Court under the terms of the Companies (Amendment) Act, 1990.

I made a decision, specifically under the 1978 Act only, to allow a proposal notified to me under that Act involving a change in control of the group, which is no longer controlled by its former owner. This proposal arose from the package put together by the examiner and approved by the court. In taking my decision I had to consider the substance of the proposal, that was to enable 60 per cent control of the group to change from its then owner to the bank group.

Given that this proposed change in control did not entail any increase in the market share of the existing group, I felt that there were not sufficient grounds to refer the case on competition considerations, especially as the Fair Trade Commission had relatively recently reported on the relevant position of the group.

As Deputies will know, in order to protect competition, I made orders under the 1978 Act, preventing the transfer of the assets of Master Meat Packers (Bandon) Ltd, and of DJS Meats Ltd to the Goodman Group, until the four other Master Meat plants are disposed of as going concerns to unconnected third parties. These orders are still in effect.

Indeed, it is probable that the alternative to the proposal notified to me would have had negative implications in the short term at least. The alternative was probable liquidation.

Because of these considerations I considered that there were insufficient grounds to refer the proposal to the Fair Trade Commission.

My role did not involve passing judgement on the commerciality of the restructuring proposals and I made this clear in my statement. I express no view therefore on the question of the company being able to satisfy the financial commitments involved.

Price fixing will be made unlawful under the new Competition Bill, which I hope to publish shortly.

Will the Minister not agree that it is really a semantical difference to suggest that the question of control has been transferred from the principal to the banks, as the banks themselves have agreed that Mr. Goodman remains cental to the entire operation? Is it not inconsistent for the Minister to have quite properly raised the fears of a monopoly and now that the monopoly continues to exist, to fail to do anything about it? Is not the import of the inordinate profits that are imposed now by the deal worked out with the banks, which was designed to ensure that the international banks got their pound of flesh for their own imprudence, that margins to the producer in particular must be reduced, that therefore the farmers will pay for this deal, and that if price fixing went on in the past, it is likely to go on in the future?

That is a long series of questions. It would have been better if they were put individually rather than together in the manner in which they have been put. In so far as I can think back to the start of them, the first one was to ask me whether or not I thought it was semantics that control had changed in this group. It is not semantics at all. Sixty per cent of the voting equity in the company is now in the ownership and control of somebody else. Whoever has 60 per cent of the equity and a majority on the board of directors exercises control. The situation is different from what it was previously. It could not be described as semantics that that has happened. As far as I recall, the Deputy said that in the past I expressed concern at the fact that this group had such a large market share and he asked me why, when I had the opportunity to do something about it, I did not. I would refer the Deputy back to my reply. I did not have the opportunity to do anything about it. I had jurisdiction to answer one specific question or proposal put to me under the 1978 Act, which was whether to allow the change of control from Mr. Goodman to the banks. I had no jurisdiction to do anything else.

If you did not do that you would not have tackled the first problem.

I cannot properly tackle one question relating to control by answering it in terms that are irrelevant to that question but which relate to competition. If I were to do so and that was seen to be the case, as it would be, then my decision would be open to challenge in the High Court. I pointed out in my reply that so far as competition and the protection of competition is concerned, I made an order on 11 April 1990 requiring this group to dispose, as a going concern to unconnected third parties, of four master meat plants, before they would be allowed to legally acquire two which they appear to have gone into possession of already. That order is still in effect. It expires on 10 April 1991. If it is not complied with by that date the whole transaction has to be renotified to me de novo.

Would the Minister not agree that the present market share of the Goodman group is some 43 per cent, that that is giving rise to extremely serious concern among the farming community, that it is not in the public interest; and that he would have been quite entitled to refuse the application to refer the matter to the Fair Trade Commission, resulting perhaps in liquidation as he suggested it might? Did he consider the advantage that might well have flowed from that, which would have led to a break up of this conglomerate holding 43 per cent of the market share, which he regards, I think, as unsatisfactory?f Why did he not do that? He was perfectly entitled to do so.

As I pointed out already, I am not entitled to make a decision on one matter for the purpose of achieving my objectives in another matter which is not connected with the first matter. If I were to do so, I would show that I was taking the wrong matters into account in making my decision and I am quite sure that in those circumstances, my decision could be challenged in the High Court and could perhaps be declared invalid as being an excess of jurisdiction or as being ultra vires. This group at the moment, including the Master Meats Group and DJS Meats, has about 42.3 per cent of the market. If the other two groups were removed its market share would be somewhere between 31.5 per cent and 32 per cent. It is not possible, therefore, to say what precisely its market share will be until 10 April when, if it has not complied with the terms of the two orders I made on 11 April last, the whole matter will have to be renotified. The effective market share at that stage will be under 32 per cent, which I regard as far preferable to the market share it had while controlling all three groups.

Bearing in mind the Minister's comment that Deputy Rabbitte asked him a series of supplementaries rolled into one and that he had difficulty in responding to them for that reason, I will address my questions one at a time and hope the Chair will facilitate me in getting separate replies. The Minister said his concern was short term employment and the danger of liquidation of the group if he had referred it to the Monopolies Commission. Does he not see the same danger in the future because of the company's ability to achieve the targets which have been set?

I have many more concerns than short term employment. That is just one of them. In this case I had to consider whether the common good was adversely affected by allowing the removal of control of this large group from Mr. Goodman to another group. I concluded that the common good in the widest sense was not adversely affected by allowing that to happen. So far as the commerciality of the proposals is concerned and the ability of the group or the company to satisfy various financial commitments involved, I would refer the Deputy to the second last paragraph of my reply where I have chosen my words very advisedly.

Perhaps the Minister would remind us of them because we have the same problem in retaining the entire reply as he has in retaining supplementary questions.

My role does not involve passing judgement on the commerciality of the restructuring proposals and I made that clear in my statement on 14 February. I, therefore, expressed no view on the question of the company being able to satisfy the financial commitments involved.

Let us not forget the time limit which applies for Priority Questions. That time is fast running out.

Did the Minister not say earlier that one of his concerns was that if he had not okayed it the company would have gone into liquidation? Surely that must be a concern for the future, just as it was a concern on 14 February?

I am not necessarily saying it was one of my concerns but it was one of the realities I faced. On 14 February there would have been certain liquidation. I am not to be taken as agreeing with the point implied in the Deputy's question that this is necessarily simply a question of postponing the liquidation.

A brief supplementary.

Sorry, Deputy, I have called the next question.

You allowed Deputy Barry a number of questions.

The Deputy had his series of questions also.

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