Dáil Éireann debate -
Thursday, 2 May 1991

Vol. 407 No. 8

Competition Bill, 1991: Second Stage (Resumed).

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

Mr. Rabbitte

In concluding, I wish to refer to the remarks of the Minister for Industry and Commerce, Deputy Ray Burke, in the House on 7 February 1989 when he was replying on behalf of the Government to a Private Members' Bill introduced by the Progressive Democrats on this issue. In the course of that contribution the Minister referred to the fact that the Fair Trade Commission had undertaken an investigation into the merits of the move from a control of abuse system to the introduction of a prohibition system. He said that the report "will be available to me within the next few months". A couple of months ago I had cause to ask whether the report of that Fair Trade Commission investigation was available, and I was told it was not. The first I heard of it being available was when the Minister, in his speech on Second Stage, referred to the fact that the report had been published simultaneously with the Bill.

I have since had an opportunity to glance at the report of the Fair Trade Commission on this matter and suffice to say that it is a great deal more illuminating on the arguments of this important and critical area than is the explanatory memorandum which the Minister chose to accompany the publication of the Bill. I regret that the Minister did not decide to make reference in the explanatory memorandum to the fact that the investigation results of the Fair Trade Commission had been published simultaneously. It would have been of great assistance to the spokespersons, and other Members of the House, if the Minister had done that. Many of the matters I raised on the last day have been dealt with to my satisfaction in this report. I cannot see why the Minister would have any interest in concealing the existence of this report, and I am sure that was not his intention.

Deputy Barry started this debate by pointing to the fact that he, like the rest of us, had minimal time in which to study this critically important legislation dealing with a very complex issue. That seems to be the trend now. It happened with the Social Welfare Bill and the Finance Bill. It has added to the obfuscation, that a report like this is available and the Minister only chose to announce it in his Second Stage speech.

It is interesting to refer briefly to the remarks of the Minister for Industry and Commerce on this matter during the debate of 7 February 1989, when he listed, presumably with the active encouragement of the departmental officials, a list of disadvantages about introducing the prohibition system. The Minister referred to the huge volume of agreements notified to the commission with the ensuing long delays and the necessity to issue negative clearances. The Minister dealt with the question of which of the commission's existing powers could be transferred to the Fair Trade Commission and which of them could be operated by the Minister. He referred to the EC prohibition system and said it would be likely to be extremely costly in terms of its operation and enforcement. That point was made in 1977 and now by the present Minister for Industry and Commerce who was also Minister for Industry and Commerce in 1977. Deputy Burke, as Minister for Industry and Commerce, went on to say in the debate in 1989 that the absence of an efficient and adequately staffed authority would result in an extremely onerous and expensive burden of litigation being placed on business. I presume the Minister's response then had the full support and encouragement of the Department officials. Do we take it that the attitude of the officials in the Department has changed, that the arguments adduced in the report of the Fair Trade Commission have convinced the Department officials, and the Minister, that whatever about the down side of introducing the prohibition system, the advantages outweighed it?

A number of points were raised about which I am curious, although I did not have time to study this in the detail I would have liked. For example, I refer the Minister to the letter of March 1988 from the chairperson of the Fair Trade Commission to the Assistant Secretary of the Department of Industry and Commerce, which was reprinted in the report of the Fair Trade Commission, setting out the matters on which he felt it necessary to seek the advice of the Attorney General. One of the matters raised in the letter was one to which I referred on the last day. The chairperson said:

We are at present undertaking the study requested in the terms of reference and considering the merits and disadvantages of the prohibition system. One view is that under the Irish Constitution it would not be possible for the FTC to be granted powers similar to those of the EC Commission because this would mean the carrying out of a judicial function. Another view is that some of the powers of the EC Commission such as the granting of exemptions under Articles 85/3 are administrative procedures and that the FTC could, if legislation permitted it to do so, grant exemptions. All decisions by the FTC, whether to grant or not to grant exemptions, could, of course, be appealed to the courts by aggrieved parties.

That pertinent point, which we dealt with the last day, has to do with the competence, scope, role and powers of the Authority, what the Authority may do constitutionally and what they may not do, and the burden of litigation that will be imposed on business in the unequal circumstances that sometimes arise.

In the introduction to the Fair Trade Commission report, in paragraph 1.12, the following is recorded:

In March 1988, advice was sought from the Attorney General on a number of points in relation to the study. At the time of completing this report, this advice has not been received.

I am curious to know why, on a matter that is very pertinent to this legislation, the advice of the Attorney General should have been sought as long ago as 1988 and here we are with the Minister of the day explaining to the House that one of the reasons for the delay in the report was that some matters were of such legal complexity and in need of clarification that they were referred to the Attorney General. The report, when it was eventually published, included a note that says that the Attorney General had not yet responded. I would like the Minister to outline the reason for that.

The Bill published by the Progressive Democrats in 1989 differs from the Bill the Minister has now brought before the House in a number of respects. I do not know the reason for this. Perhaps the Minister has been more influenced by departmental officials since his party introduced the original Bill but there are a number of differences which can be teased out on Committee Stage. The proposer of the Progressive Democrats Bill in 1989 referred in particular to the area of professional services and the fact that under the law, as it stands, it is lawful for people offering professional services to engage in price fixing and collusion. The man in the street regards himself to be at the mercy of a great many professions who it would seem to him, very often arbitrarily fix a scale of fees.

Recommendation No. 15 on page 176 of the report states that the commission should consider preparing a block exemption for professional services. I would like the Minister to outline his views on this matter and to state if it is his intention, in the context of the Bill before the House, to make such an application to the Competition Authority.

Mr. Cullimore

I commend the Minister for bringing the Bill before the House. It forms part of the review of competition policy and consumer protection which has taken place over a number of years. As part of the review the then Minister for Industry and Commerce, Deputy Reynolds, initiated the Restrictive Practices (Amendment) Bill, 1987, the purpose of which was to extend and tighten up the system of competition legislation then in operation. During that debate Deputy Reynolds promised that the system of competition would be examined by the Fair Trade Commission. The Bill before the House today largely reflects their findings.

The Commission stated that a fundamental change was needed in Irish competition law. The Government in the Programme for Economic and Social Progress outlined their commitment to reform competition law to ensure that our business and companies are well prepared to take advantage of the completion of the Single European Market. At European Community level, the decisive importance of new competition legislation has been emphasised time and again. In 1987, the Commission published a report on competition law. This Bill is part of Ireland's response and policy to ensure that the opening of the market will yield the best results for our business and they will be able to take full advantage of the new European market. Members on all sides of the House would agree that the anti-competition legislation in existence at present is confusing, unworkable, patchy and complicated. Indeed, it can involve extreme costs for the economy. Some reforms have been implemented in this area but they have only tinkered with the system. Indeed, certain sectors are excluded from the existing legislation.

Businessmen operating in the context of the broader European Community have to deal with a system which in most cases is based on Articles 85 and 86 of the Treaty of Rome and not on a system which is derived from the Restrictive Practices Act, 1987, which forms the basis of our domestic system. The new system derives from Articles 85 and 86 of the Treaty of Rome.

The creation of a single market means far more than just a removal of tax barriers. In the new single market businesses will have to operate in a flexible, dynamic and efficient way. I welcome section 6 of the Bill which will enable anyone who has been adversely affected or aggrieved by the anti-competition actions of others to go to court to seek damages. The Bill will provide new mechanisms to deal with the so-called price wars of recent years in a way which will protect the interests of the consumer, the producer and the employee and at the same time allow freedom in the marketplace.

Competition is very healthy in any economy. We have all seen economies fall where competition did not prevail. Not only does it result in greater care and attention and a better deal for the consumer, but on a productive level it encourages effectiveness, efficiency and improvements. However, competition legislation must be based on a set of fair principles; in other words, while the marketplace should be encouraged to generate the lowest prices as a result of an efficient and fair system of competition, we must also ensure that certain regulations are in place and that the market is not reduced to the corruption of price fixing or the manipulation of prices by cartels. Such practices are not in the interest of the consumer or producer who wants to be effective and efficient. The true interests of the consumer and producer are two sides of the same coin; in other words, competition is not an end in itself, it is tied to the need to address the question of greater efficiency in production and greater choice and value for the consumer.

While the marketplace must be free it must also be regulated in a fair and just way with the stress on the word "regulated" as opposed to "controlled". Many small companies are frightened off by the larger players who exert excessive influence. I mention this because of the recent controversy surrounding the sale of bread and milk. Recently vital commodities were used by the multiples to maintain their first place in the retail sector. The consequences of their actions are not known at present but as a result of their actions we will possibly see the closure of many small bakeries in the future as well as a lowering of prices in the current year. The possibility is that in future the bakery business will be controlled by a very few small companies who will be able to determine the price by themselves. I welcome this Bill and I am grateful to the Minister for introducing it because I feel this legislation will prevent the closure of small bakeries and similar companies in future.

I welcome the provisions of sections 5 and 14 which qualify the old definition of "monopoly" by a new one, the abuse of dominant position. It is important at this stage to state that companies who are in a dominant position will have nothing to fear from this legislation provided they do not abuse the dominant position. I am not here to adjudicate on the rights or wrongs of management or the workers involved in the ESB strike, but I wonder if it is possible to include the ESB monopoly in this Bill. The ESB themselves have a dominant position. When things went wrong last week the views or rights of the consumer were hardly taken into account. The international credibility which we have built up over the last four years was damaged. My colleagues, Deputy Kitt and Deputy Cowen, queried the adverse competitive effect of the use of the ESB billing system in promoting the sale of electrical goods through ESB shops. We all know our own constituencies. In the constituency of Wexford many small retail outlets have had to close because of competition and the abuse of the ESB's dominant position in using the billing system to facilitate consumers. The OECD has urged that policy in respect of such regulated sectors should be reviewed in order to justify or otherwise whether they should be exempt from the norms of competition policy. I understand energy is one of these areas.

The building societies have the major share of the mortgage market. Recently I was researching the cost of mortgages and I found a great amount of hidden cost to the mortgage holder. For example, on a £30,000 mortgage there could be a difference of £3,000 in repayments over a 20 year period. I ask the Minister to give serious consideration to bringing the building societies under the new Bill.

I welcome this legislation and I think it will have a number of very positive effects. It will protect the consumer, the producer and the employees, and it will encourage efficiency and effectiveness in the marketplace. It will prepare our companies and businesses to compete in the Single European Market in which many of our companies are already competing under Articles 85 and 86 of the Treaty of Rome. I wish the Bill a speedy progress through the House.

Mr. Hogan

I regret that we did not get sufficient time after the publication of the Bill to research it more fully. I am also bewildered as to why the Minister for Industry and Commerce is seeking to rush this legislation through the House in advance of an examination of the report of the Fair Trade Commission on the 1987 Restrictive Practices (Groceries) Order in relation to many aspects of fair trade and competition. Maybe there is a hidden agenda in relation to the speedy implementation of this legislation. This Bill has been signalled for quite some time but, in summary, I think it is a rationalisation of existing law, merging that with implementation of Articles 85 and 86 of the Treaty of Rome.

The Fair Trade Commission, who reported on a study of competition policy around the same time as the publication of this Bill, have detailed many of the advantages and disadvantages and respective merits and demerits of a prohibition and control of abuse system for the regulation of competition. I suppose the primary purpose of the considerable degree of publicity the Minister for Industry and Commerce has signalled in this matter is to outlaw anti-competitive practices to the benefit of the consumer and of further growth and employment and to remove barriers to growth and employment in the marketplace. In the context of the developments of the EC and the completion of the internal market it is vital that our industry and our business generally are competitive, cost effective and able to cope with transactions that are taking place right across the frontiers of the various member states of Europe, particularly when one considers the huge disadvantages the Irish economy has to encounter because of our distance from the consumerism in the centre of the EC and access to 320 million people during the completion of the internal market which is ripe for a strategic marketing assault by the Irish business community. Anti-competitive practices in the Irish economy are a barrier to growth and employment and it is essential that these be eliminated.

This Bill set out in a glorious blaze of publicity over a period of time to remove all the anti-competitive practices in the economy but I think the Bill's objective will fall far short of the general publicity this legislation has received. There are many benefits in having the same law applied at national and European level and this is well explained in the report of the Fair Trade Commission. This is hugely important in the context of 1992 and thereafter where it makes sense to have one law and one set of rules for export and import companies throughout the entire Community. This can only be helpful to Irish people establishing businesses in other member states which have similar laws to our own. Above all, it will mean that domestic companies will be familiar with competition law as already applied to them in their own home market. This will make it easier for the European courts also to make easier and fast decisions on a European-wide basis. The opening up of all areas of business life to competition by prohibiting agreements which restrict or distort competition cannot but be good for consumers of goods and services.

However, I am not convinced that this Bill tackles some of the many examples which have built up over the years of distortion in trade and anti-competitive practices. Probably the best example we have had in recent years is the meat industry, which through the intervention of one individual has enjoyed a dominant position and has developed. I think that is part of the reason the Minister has signalled a section in the legislation to prevent the abuse of this dominant position. In addition, there is a cartel between all the major players in the meat industry which has existed in relation to prices paid to producers for many years. For example, there is no recourse in the legislation for a producer, to initiate an action in order to take a case before the courts in regard to this legislation and to bring to the attention of the Director of Consumer Affairs and Fair Trade or to the courts that there is abuse of a dominant position to the detriment of the price being paid to the producer. In spite of the huffing and puffing in relation to this matter while in Opposition, the Minister has failed to tackle the fundamental problem of the dominant position in the meat industry. His failure to define what is meant by dominant position, is a major flaw in the Bill.

Questions must also be asked about the activities of oil companies and the manner in which they treat retail outlets. The marginal profit enjoyed by retail outlets is minuscule and many retailers are under great pressure to meet their commitments, particularly when their outlets are located on less lucrative routes.

The Minister should spell out the impact of this legislation on the semi-State and public service sector generally, particularly in the light of the recent wildcat strike by ESB workers. In view of the importance of electricity supplies and other essential services, it is essential that monopolies should not abuse their position. Telecom Éireann and An Post have recently issued anti-consumer proposals. The boards of these semi-State companies would seem to be allowed to do whatever they like, with total disregard for the consumer.

A major flaw in the Bill is the lack of any vehicle to allow the Director of Consumer Affairs to initiate an action on competition grounds against a semi-State body. The Consumers Association of Ireland, which represents a broad range of consumer interests, should be able to initiate an action through the Director of Consumer Affairs if it is felt that the consumers' interest is not being represented. We are all aware that actions are sometimes taken by individuals simply for the sake of it and we must ensure control of the kind of actions that can be taken by an individual. I suggest that the Consumers Association could act as a filter. The Bill is not giving the necessary teeth to the consumer, who should be the main beneficiary.

Companies do not react in a positive manner to voluntary regulation and pleas for some by the Minister for Industry and Commerce. The life assurance companies decided some time ago to introduce a code of ethics governing sales techniques in that business. This is not working and there is evidence that it is still common practice to offer inducements to intermediaries to sell a particular product, irrespective of its merits or demerits. This is an abuse of a dominant and privileged position and it is not in the best interests of the consumer.

When the Companies Bill, 1987, was being debated in the Dáil and Seanad the question of the powers of the Revenue Commissioners and their treatment as preferential creditors in the event of the winding up of a company was examined. I took serious issue with the then Minister for Industry and Commerce and strongly opposed the continuation of the preferential position given to the Revenue Commissioners. They have great powers at their disposal today which they did not have some time ago through powers of attachment and the sheriff's collection system. It is inexcusable if taxation revenue is allowed to fall behind because of the inefficiency of the collection system.

There is an in-built incentive for the Revenue Commissioners to stand idly by. This could compound the financial difficulties of a company if they were not aware of it in sufficient time and it could eventually result in the winding up of the company. The Revenue Commissioners are quite sure they will get whatever money is due to them if the company is liquidated, due to their preferential status. This is another example of the State's dominant position and I appeal to the Minister to review this question in the context of the Companies Act and to protect small suppliers who may go out of business because they are unable to collect debts due to them, being too far down the list of creditors.

It is ironic that the State should make such a major contribution to anti-competitive practices through the black economy. We are all aware of the disincentives to work and the fact that people are drawing social welfare benefits while working. Existing laws are not enforced to eliminate the black economy. The taxation and social welfare systems can, because of their independent nature, promote an escalation of black economy practices. The State plays a major part in the system which prevents contractors from competing when faced with competition from the black economy. I hope the State will examine this matter in the context of legislation banning anti-competitive practices. The State must take up the challenge of cleaning up the appalling legislation mess which is sapping the spirit of the PAYE worker and causing tremendous anger among legitimate beneficiaries of the social welfare system.

This Bill does not mention how we can force companies to compete in the marketplace. It is wrong, for example, that very few companies in the motor insurance business are prepared to give a quotation for males under 27 years of age. The State has protected the general lack of involvement by further foreign companies in the non-life insurance market due to the derogation from the 1988 non-life directive to protect the PMPA and the ICI. Now that these rescues have been largely completed, I call on the Minister to open up the motor insurance market to foreign companies and make it more competitive. While I appreciate that this will not mean a major change in the quotations being given to many motorists, the high risk element of the market can benefit from further foreign competition. I am aware that 75 per cent of the insurance market is taken up by foreign companies but the fact that we have secured a derogation from the 1988 directive is preventing further foreign companies from entering the market. It is not the most lucrative market to contemplate entry, particularly in relation to motor insurance.

The banks and buildings societies operating through the Central Bank have a cosy cartel arrangement and do not compete for financial business. This is not in the best interests of the consumer.

The Progressive Democrats have long espoused the removal of State agencies from involvement in policing the marketplace and have declared themselves to be in favour of a large degree of self-regulation. The pursuit of this objective was of paramount concern in the drafting of this Bill. The Minister drew on extensive non-Civil Service expertise in drafting the proposals. It is known that two or three of his advisers were practising barristers. I suppose it is important to have a legal opinion on such matters but their influence is evident in the extensive emphasis placed in the Bill on recourse to the courts as the prime means of achieving redress and preventing the continuance of anti-competitive practices. Not only is the Bill a lawyers' oasis but it is bereft of any real commercial input. It contains wide-ranging far reaching proposals, formulated in private, by and large, without consultation. I call on the Minister to undertake wide-ranging consultation with many industries, one of which should be the food trade.

Generally, the food trade must welcome the concept, intent and thrust of this Bill. There are measures inherent in it which will have a negative impact on the food trade. The trade must feel extremely vulnerable in so far as this Bill is proceeding so quickly, without consultation, and without the input of an indepth report by the Fair Trade Commission to be published in the summer. As drafted, its provisions do not include a ban on below-cost selling, something with which I want to deal for a few moments.

The Restrictive Practices (Groceries) Order, 1987 was introduced as a result of a number of practices in the grocery trade in particular. It was felt that small, independent grocers were not getting fair and equitable shares of or indeed opportunities to compete in the marketplace.

Various investigations and court cases have taken place. In particular there was the 1980 court case in respect of the supermarket chain known as "3 Guys", which constituted the beginning of the process and led to the adoption of the Restrictive Practices (Groceries) Order 1987. That was the culmination of a long investigative, gestation period begun in the seventies and finally became law in 1987. Few sectors of trade or industry have ever been subjected to the same degree of scrutiny as has the grocery and food trade generally. There have been no fewer than six inquiries or reviews, in addition to a special review contained in the report of the 1984 Oireachtas Joint Committee on Small Businesses on the grocery trade. Undoubtedly part of the reason for the involvement of the Fair Trade Commission every six or seven years is the dramatic changes that occur within that trade.

There will be almost 81,000 persons in the food trade affected immediately and directly by the provisions of this Bill. For example, there are 39,243 people employed in grocery and convenience stores around the country. My source for this figure is the Central Statistics Office. In addition, there are 38,000 people employed in the food and drink industry and 3,700 employed in the wholesale industry. Those people have provided a tremendous service, particularly by way of neighbourhood shops and convenience stores, to the consumer. We must take cognisance of their contribution to the service industry here.

There is at present a constant battle for market share here, with multiples ever increasing their share at the expense of neighbourhood shops in small towns and villages, the impact of which on life in rural areas has been enormous over the past ten years or so. The negative impact of the development of the multiples in the short term has been of some benefit to consumers resulting in lower prices for some commodities but, by and large, the consumer pays for the benefits they gain in respect of some products by ever greater margins being sought and achieved on other food products offered within the same chains. This has resulted in many small businesses and shopkeepers going out of business. Some large operators have gone out of business on this account also. The best example of that was the H. Williams company who went out of business before the implementation of the Restrictive Practices (Groceries) Order, 1987.

Turning to the Bill I suggest that the Minister re-examine the provisions of section 4 in order to allow consumers initiate action rather than merely leaving it to the competition Authority to invite any Government Minister to offer observations on the granting of a licence or certificate of negative clearance. Consideration should be given to a time limit for the consideration of the granting of such licences or certificates such as applies in the case of a planning authority.

The available list of anti-competitive practices and abuses is incomplete. It should include below-cost selling as one form of abuse because of the numerous investigations and inquiries held into the grocery trade over the years.

Section 5 deals with the abuse of dominant position. Will the Minister say whether these provisions cover beneficial involvement or ownership? Will that be taken into account under the heading of "abuse of dominant position" or how will that matter be dealt with?

Section 11 deals with studies and analysis by the competition Authority. I agree with Deputy Rabbitte in his concern about this section in that I contend this section politicises this Bill. We have had sufficient experience recently to believe that Fianna Fáil, in particular, are not capable of being apolitical when dealing with sensitive matters in regard to legislation of this kind. I ask the Minister to re-examine this section in view of that experience and amend it accordingly. It is not appropriate that the Minister only can initiate an investigation into abuse of a dominant position under the provisions of this Bill, when they could become highly politicised dependent on who are the independent players within the market at any given time. There is a vagueness in relation to the term "dominant position" which is unacceptable and renders the provisions of sections 5 and 14 very weak, warranting clarification.

There is a further contradiction in relation to the objective of the Bill. The challenge of the Single Market in Europe is the reason this Bill has been introduced in that it is important that we have strong companies capable of competing in the European marketplace after 1992. The provisions of this Bill could effectively render many Irish firms dominant under Irish law. For example, there is a danger that its provisions could reduce companies' incentives to achieve such measure of competitiveness.

Another example of anti-competitive practices is the fact that the medical and legal professions here can prevent people from entering their professions by restricting the numbers who can become qualified practitioners. That is anti-competitive and not in the spirit of the free market. This practice is urgently in need of review. For example, it is not acceptable that nobody can police the legal profession except their own members through the Incorporated Law Society. There is urgent need for lay, consumer representation on the boards of certain subsidiary committees of professional bodies, established by law or charter, or recognised by law. In addition, scale fees should be abolished whether statutory, mandatory or otherwise. The ban on advertising by professional bodies and the placing of an obligation on such bodies to introduce codes of advertising which must meet certain minimum information requirements should be removed. All of these matters have been the subject of Fair Trade Commission reports and to date the Minister for Industry and Commerce has failed to act on them.

Undoubtedly, the enactment of this Bill will be a bonanza for the legal profession. There is urgent need to establish a small claims court to alleviate the expensive actions envisaged under the Bill and prevent them ending up in the High Court. From the consumer's point of view it is not acceptable that all actions must go to the High Court. This means one is immediately involved in a very expensive legal procedure and may well render the provisions of the Bill inoperable in terms of any small grocer or individual who, because of lack of finance, will not be able to undertake the expensive process of taking a case, through the Director of Consumer Affairs or otherwise into court.

No small supplier can expect to compete with multinational companies or multiples of any description to take a case to the High Court under this legislation. It is essential to establish, under consumer legislation, a consumer claims tribunal and a small claims court which would operate in an informal way and without legal representation to deal with small claims. This would make it possible for the ordinary consumer to find it financially feasible to contribute to the process of removing anti-competitive practices in the marketplace.

The Competition Bill in itself does not address the real issues of the consumer. It has weaknesses in so far as it does not include the continuation of the ban on below cost selling which, as I stated earlier, was part of many investigations and inquiries over the years. There are glaring anti-competitive practices in various walks of life in Ireland at present on which I need clarification. The term "dominant" has not been defined in the legislation. The abuse of a term that is not defined is too vague. I welcome the Competition Bill and legislation to outlaw anti-competitive practices but there are deficiencies in the Bill which I wish to have clarified and amendments made accordingly in the course of Committee Stage.

Mr. Browne

(Wexford): I would like to say a few words on the Competition Bill. I welcome the fact that the Minister has introduced the Bill to this House. We have had much debate and discussion over the last number of months in relation to the need for competition and some type of legislation to deal with it. Indeed, we had a Private Members' Bill from the Fine Gael Party prior to Christmas when we discussed the possibility of competition in food processing. That occasion gave many Deputies an opportunity to discuss the need for the introduction of legislation. I am glad that the Government have now decided to introduce the Competition Bill, 1991. The primary purpose of this Bill is to prohibit anti-competitive practices, agreements and abuse of dominant positions in the market. These provisions are based on Articles 85 and 86 of the Treaty of Rome and will apply to all undertakings in the State engaged in trade in goods and services.

In view of the major media attention that has focused on the milk industry over the last number of weeks in relation to Dunnes Stores and their efforts to sell milk below the normal price per pint, to which we have become accustomed, this is an opportune time to discuss the situation.

I would like to pose a few questions to the Minister in relation to this Bill on how it will enable the Minister and the Government generally to look at areas such as banking, co-operatives, amalgamations such as the bread industry, the milk industry and other areas which need to be seriously examined. For example, if one looks at the operations of banking it is plainly obvious that a nice cosy cartel is operating within the banking groups in Ireland. Bank of Ireland and Allied Irish Banks operate more or less the same charges for cashing cheques, lodging coinage, and for access cards where we have the highest interest rates in the EC. The same interest rates are charged to farmers and other business people in this banking system. That is not competition. I would like to see the Minister intervene in conjunction with the business people, the farmers and the other consortia to take on the banks and break up the cartel which is operating particularly in relation to interest rates. I have no doubt that the interest rates being charged to farmers at present are exorbitant. It amuses me that the same interest rates are charged by the different banks. This is one area in which the Government will have to become directly involved. I do not know how it can be done but if the building societies and other financial institutions and if some financial institutions from outside Ireland were invited in we could have more reasonable interest rates charges particularly for business people and the farmers who are trying to provide jobs and a decent salary for their employees.

Motor insurance was referred to by Deputy Hogan. The prices charged to young drivers in this country are exorbitant and are way above what is being charged in the UK. The reason given by the insurance companies is that young drivers are a high risk, that they are more prone to accidents and that, therefore, the cost of providing cover is very high. In some cases sums ranging from £1,400 to £1,500 are charged to young drivers under 25 years of age. Surely in the UK also young drivers are a high risk and are prone to accidents. Young drivers here are being ripped off by the insurance companies operating in Ireland. They can give us all the reasons they wish for charging such high prices but they do not stand up if one looks at the situation in England and in the other EC countries where young drivers can get insurance for as little as £200, even allowing for the fact that they are under 25 years of age. It is time the insurance market was opened up completely to companies in the EC and that we broke the monopoly that seems to exist in Ireland which is totally unfair to young Irish drivers and is prohibitive in their securing insurance. It is one of the main reasons many young drivers are out there driving without insurance. I would not condone that situation. I know many young people in low paid jobs who have to travel ten and 20 miles to work who need a car but because of insurance rates they find it practically impossible to pay the premium. That is another area the Minister should examine.

We heard a criticism from the far side of the House today about the new Bill, that it does not go far enough, that it will not meet all the problems that exist in relation to competition, below cost selling and the dominant position that may exist in the market. It would be very difficult to introduce a Bill to legislate for all the cowboys who operate in the market at present. There is no doubt that under different guises supermarkets, retail outlets, shopping outlets and co-operatives are all able to get around the legislation that exists.

This Bill will go part of the way in solving the problem. It may not go all the way but it is a step in the right direction and, hopefully, some of the people who operate in a cowboy fashion in the market will be brought to heel and we will not have the situation that has existed over the last two or three years in the market place.

The food industry has been mentioned. It appears that this industry is open to abuse, such as the creation of monopolies and below cost selling. It is very difficult to solve all the problems in this industry. If we cast our minds back to the bread war two years ago, we will recall that it had a devastating effect on jobs and resulted in the closure of many bakeries around the country. Indeed in my own county of Wexford a substantial number of bakeries which had been in existence for up to 100 years were forced to close down because of the supermarket price war. It is not just good enough to criticise the supermarkets for mounting the bread war because they had to get their supplies from somewhere and obviously some of the bigger bread producers wanted to squeeze out the small bakeries. If that had been their purpose, they certainly achieved it but at the cost of a substantial loss of jobs. People lost their jobs and had to go on the unemployment register and have had to live on unemployment benefit, which brings its own hardship. While the consumer may have benefited initially, if one considers the loss of jobs in the industry it was a short term gain. Indeed bread is now back to the price it was before the price war.

During the debate on the Fine Gael Private Members' Bill I said that the price of milk was too high. I still maintain that position. The price paid to the farmers for a gallon of milk has dropped by 20p to 30p over the past two years, but this is not reflected in the cost of milk to the housewife. I think the price of a pint of milk had dropped 1p since Christmas when the Bill was discussed in this House. I believe there is still room to drop the price of a pint of milk by 2p and I would ask the Minister to investigate this. I do not go along with the notion that Dunnes Stores should be allowed to drop the price of a pint of milk by 10p or 11p but I believe that Avonmore, Premier, Tir Laighean, Snowcream and the other milk producers in this country are operating a cartel to keep up the price of a pint of milk. There should be ministerial intervention, and a price order should be introduced if necessary to force down the cost of a pint of milk. I said in December, and I repeat it today, that the housewives of this country are being ripped off by the milk suppliers. I hope that the public pressure that is brought to bear will result in a fall in the price of milk as soon as possible.

We now hear a lot of criticism of the monopoly created in the marketplace by Mr. Larry Goodman's Food Industries. However any farmers in the real world will tell you that it was the intervention of Mr. Goodman's company Food Industries that brought competition into the beef, sheep and milk trade. They forced up the prices substantially. The price paid to the farmers at the farmgate was forced up. They also introduced payments on the same day a farmer sold his produce. Everything that the Goodman group did was not bad but they found themselves in serious financial difficulties because of circumstances, the Gulf War and what was happening in Iran and Iraq etc. I have no doubt that they introduced an element of competition into the food industry which benefited the farmers and which in turn was passed on to the consumer.

I question the merger of the large co-operatives. We are told that big is beautiful. The Industrial Development Authority believe that co-operatives will not exist in the EC after 1992 unless they amalgamate. I do not go along with that concept. The Avonmore and Waterford co-operatives are in the process of amalgamating. Amalgamation usually means rationalisation the month after. Rationalisation is a fancy word for job losses. I believe there is no need for the amalgamation of major co-operatives. It amazes me that the farmers are going along with the amalgamations because there is no doubt that in 12 to 18 months time, three or four major co-operatives will have a monopoly and then they can have a cosy cartel and set a price for all produce. They will see to it that farmers are paid the same price for their cattle and milk, and there will be no competition. The small farmers will lose out and they could be forced out of business completely.

We already know that it is the unofficial policy of the Department of Agriculture and Food that the small farmers should be squeezed out. It is uneconomic for the co-operatives to send their lorries ten or 15 miles to collect 100 gallons of milk. In a very underhand way the co-operatives are going to force the small farmers out of business. I believe the small family farms should survive and that the small family farmer is entitled to a decent standard of living and they should not be forced out of farming by unofficial monopolies created by the amalgamation of co-operatives. I would have to say to the farmers and the farm organisations that they have lost control of their co-operatives which were set up to look after the vital interests of farmers. Co-operatives are now being run as a business by a chief executive and a team of managers, and accountants and the legal profession are advising farmers what is in their best interests but I think it is plain to see that monopolies are not in the best interests of farmers, particularly the smaller farmer.

I wonder if the provisions of the Competition Bill will stop the amalgamated co-operatives from creating monopolies and stifling competition. I hope the Minister will spell out clearly his views on the mergers of co-operatives and the resulting monopolies they are creating.

Snowcream employed 55 people in Wexford. Recently Waterford Co-op who owned this company closed it down, even though it was in profit, because they wanted to rationalise the operation and move it to Waterford. Politicians from all sides met the management and workers of Snowcream and we pleaded with them at public meetings to stay in County Wexford. We thought we were winning the battle but big business and big money won the day. Eventually I, and I am sure other politicians in the county got the same message from the workers to back off, they no longer wanted us to save Snowcream. Waterford Co-op, because of their sound financial position, had come up with a wonderful redundancy package, much better than any redundancy that had been paid in County Wexford or in any other county in recent times. In other words, they bought off Snowcream and the workers in Wexford. When that kind of thing happens with major co-operatives, it is time for some Minister — and the Minister for Industry and Commerce has the ultimate responsibility — to investigate the matter and ensure that this is not allowed to continue because if it does, there will be thousands more on the dole queues in the months and years ahead when these co-operatives merge and the monopolies become more prevalent.

Section 6 provides that any person who is aggrieved by actions prohibited under sections 4 and 5 of the Bill shall have the right to bring an action in the High Court for relief. I wonder how many people will be able to afford to go to the High Court. Perhaps the Minister will explain this in more detail. The general public are concerned that the onus is being put on an aggrieved person to take action, but people will not have the financial resources to do this. As a result of the monopoly in the legal profession it is very expensive to bring a case to the High Court. This matter certainly needs further explanation.

The establishment of the Competition Authority is set out in Part III of the Bill. Who will be on this Authority? Will it be made up of people who have the knowledge and ability to make decisions? I hope the position will not be as in the past — I am not criticising this or the last Government; all Governments have been guilty of this — where when boards or authorities were set up and political hacks appointed, some of whom in my opinion would not be capable of running a huckster shop let alone making decisions that would be of major importance to the country.

Mr. J. Mitchell

Hear, hear.

Mr. Browne

(Wexford): I hope that when the new Competition Authority are established the members will consist of people with knowledge and who will have a key role to play. This Authority will have their work cut out to deal with the operations and the problems relating to competition, monopolies and dominant forces. People of the highest integrity will be needed, people with the knowledge and ability to be able to deal with these cowboys who are operating in the market at present.

The Bill is a step in the right direction. Hopefully, if Deputies put forward suggestions and amendments that may improve the Bill, the Minister will take them on board and will listen to what people have to say. No one has a real answer to the problems. For the last seven or eight years there has been a lot of talk to the effect that we should have a Bill, that we should be prepared to do something about the monopolies, the need for competition and the need to deal with below cost selling. I welcome the fact that the present Government have decided to do something about this matter by introducing this Bill. I compliment the Minister, Deputy O'Malley, and the Minister of State, Deputy Terry Leyden, for the work they have done in this area. I would ask them to consider seriously the points I have made.

Some of the problems that exist will continue and will become even greater, particularly in the food industry, if operations are carried out as at present. There is a cartel operating in the food industry and the prices paid to farmers are not as high as they should be. Prior to Christmas the Minister for Agriculture and Food got approval for a special intervention scheme for farmers because of the problems they face, but the meat processors did not pass on the prices to the farmers. They paid at least 6p to 7p a pound less to the farmers than they should have done. This in many ways defeated the whole purpose of the major fight by the Minister for Agriculture and Food in Europe to get this special intervention. I hope that in future when special deals are negotiated in Europe, the meat industry, or indeed any other industry, will not be allowed to scupper them. The Minister and the Commissioner in Europe should follow through to ensure that the farmers benefit.

I welcome the Bill. I hope it will be passed as quickly as possible and that the Minister will take on board some of the suggestions that have been made. At the end of the day the monopolies, dominant forces and unfair trading, should be taken on board and dealt with. The new Authority should have complete power to deal with the probems that exist at present. If we are to ensure the protection of existing jobs and the creation of new jobs, we must have competition. Competition is healthy, but over the past few years in some of the major areas where many jobs could have been created, due to the lack of competition and the existing monopolies, a sufficient number of jobs was not created. I welcome the Bill and hope it will go some way towards resolving the problems that exist.

Mr. J. Mitchell

I come in to participate in this debate because I am very unhappy with this Bill. Whatever the views of the other Members, I have the greatest reservations about the motivation of the Bill, which I believe is ideological. Competition has been ideologically hijacked by parties of the Right. In this case we have a Competition Bill from an ideological Minister who is the head of an ideological party, and for that reason I have the most serious reservations.

I am not against good competition but the definition of competition is in the eye and the mind of the beholder. I very well remember — I will advert to this later — the Minister, Deputy O'Malley, when in Opposition, opposing the Air Transport Bill and promoting absolute competition regardless of any controls or consequences at the time and despite the history of aviation the casualties from unbridled competition.

This Bill is included in the Government programme on the insistence of the Progressive Democrats; its motivation is right-wing. As I said, of course competition in its place is good but competition is in the mind of the beholder. Regardless of what we understand by the term "competition", let it be understood that competition disrupts and absolute competition disrupts absolutely. Let it also be understood that what some people mean by "competition" is one of the primary causes of unemployment in the European Community and in this country which, among the Twelve, has the awful record of having the highest rate of unemployment and emigration.

I have prepared three memoranda on unemployment. This debate is taking place within a month of the worst unemployment figures in the history of the State; the unemployment figure for March 1991 was 254,966, which includes over 8,000 people aged 60 years or over who are on pre-retirement allowances or credits. That record register of unemployment represents 19.55 per cent of the electorate and is the result of four years' emigration. These figures are supplied by the Central Statistics Office. For the four years up to mid-April of last year, 136,000 people emigrated, which was twice as many as in the preceding four years, when 71,000 people emigrated. Since the Taoiseach, Deputy Haughey, came to Government in 1987, 136,000 people have left the country, twice as many as in the preceding four years. If we add that number to the figure on the unemployment register it comes to a ghastly total of 391,000 people or 29.99 per cent of our workforce. It is an appalling legacy but, what is worse, our media hail it as economic success.

Competition, as understood by the Minister, Deputy O'Malley, and his colleagues in Fianna Fáil, has led to unparalleled unemployment and emigration; they do not understand the meaning of competition. The reality is that the Taoiseach, the Minister for Finance and the Minister for Industry and Commerce were members of the Front Bench which advocated unbridled political competition in 1977. It was the political equivalent of below cost selling; it is the main burden with which the country is still living and the main cause of the legacy of unparalleled unemployment and emigration. That is competition O'Malley-and Haughey-style; it is competition 1977-style. It has destroyed this country and has left a whole generation without jobs or prospects at home. The deplorable fact is that this is seen by the media as economic success.

Irish competition is impeded by the Government. An examination of any sector of the economy will highlight this fact. Let us take the transport sector, about which I know something as I was Minister for Transport for four years. In 1986 I proposed a five-year plan to eliminate the competitive disadvantaged of the road haulage sector in this State compared to the road haulage sector in the United Kingdom. The proposal was virtually accepted by the Government of which I was a member but it was thrown out when the Taoiseach, Deputy Haughey, came to power. Therefore, the 27 per cent disadvantage which the Irish road haulage industry have compared to the Northern Ireland and British road haulage industries, has widened in the past four years because of the Government's policies in relation to VAT, excise duties and taxes generally. Moreover, because of the appalling state of our roads the maintenance costs for the Irish transport industry are much greater than those in Northern Ireland or Britain because of the damage to vehicles caused by the state of the roads.

The Irish road haulage sector, one of the areas which has most opportunity to expand post-1992 has been impeded — not by their own inefficiency, lack of energy or creativity — but by the Government. The 27 per cent disadvantage which the Irish road haulage industry suffers compared to the Northern Ireland and British road haulage industries is simply because of Government policies. We should have been phasing out those disadvantages over the last four years but we have not moved a single inch to improve the competitiveness of our road haulage industry. This is very sad, because we could create 10,000 or 20,000 jobs in the road haulage sector over the next few years in a post-1992 frontier-free European market to the whole of which our haulage industry will have access. They can do cabotage, in other words, point-to-point deliveries and collections and return pick-ups throughout the European Community but they cannot do it competitively if the taxes under which they operate are much higher than in the other 11 member states, particularly if they are higher than those of our nearest neighbour. They cannot do it competitively if the trucks are much more expensive here than in the UK or France; they cannot base their business here if repairs and insurance cost much more than in other member states.

That is the situation after four years of Fianna Fáil Government and two years in Coalition with the Progressive Democrats. The distortion of competition is mainly caused by the Government. It is not just a matter of concern to the road haulage sector; I merely use them as an example.

Before the 1990 budget The Irish Times of 16 January 1990 carried an article written by me which included a table. I have it here in front of me. This article illustrated all the governmental interventions before a person gets his pay packet, the net disposable income of a person in employment, what he would get on social welfare and the gross cost to the employer of giving him that net amount. I wrote a similar article in 1989 for the Irish Independent before the budget and was congratulated on it by the Minister. I thought the budget next day would have the effect of eliminating the distortion or at least closing the gap.

The situation is that a married couple with two or more children who have the average industrial wage or less as income are worse off at work than they would be on social welfare, even though they would be badly off on social welfare. Before the 1990 budget a person with four children was about £10 a week worse off at work than if on social welfare, and this is solely because of Government policy. Two budgets later the chap is £23 a week worse off in employment than if he was on social welfare. The people on social welfare do not enjoy being on social welfare. They are trapped in poverty.

Acting Chairman (Mr. Wyse)

I have no objection to passing references but I cannot allow a debate to develop on social welfare or unemployment. It is the Competition Bill that is before us.

Mr. J. Mitchell

My submission is that the Government do not understand that a lot of what they are doing in other departments is affecting competition.

Acting Chairman

Social welfare and unemployment are for debate another day. I cannot allow a debate on them. I will have to bring the Deputy to order if he continues to develop that. We are discussing the Competition Bill.

Mr. J. Mitchell

My main point is that the political establishment do not understand the effect of their policies on competition. Nobody is taking an overview of the situation.

One of the biggest causes of higher prices here as compared with the UK is the gross cost of pay. Despite a higher gross pay than in the UK we have a lower net pay. That is because of taxes, social insurance and other policies and this has a significant bearing on competition. I have been making that argument for five or six years, even when I was a Cabinet Minister. It was seen as an attack on social welfare, but we have this ridiculous situation of so much work having to be done — potholes by the million is an example — and so many tens of thousands unemployed. The main cause is that the political establishment do not understand the overall effect of their accumulation of policy. The Government are causing a distortion of competition; they are spending hundreds of millions of pounds causing unemployment.

Acting Chairman

We have to have some order in this debate. You are talking about taxation and budgetary matters which have no reference whatsoever to the Competition Bill.

Mr. J. Mitchell

You cannot be serious.

Acting Chairman

I cannot allow a discussion on any subject other than what is before the House at the moment, and I ask for your co-operation. A number of Deputies tried to indulge in that kind of debate and were brought to order. I have to follow that example and I am asking for your co-operation. You must confine yourself to the Competition Bill.

Mr. J. Mitchell

Of course I will endeavour to observe the rules of the House. I do not wish to fall out with you. The primary purpose of this Bill, according to the explanatory memorandum, is to prohibit anti-competitive practices and agreements and the abuse of dominant positions in the market.

These provisions are based on Articles 85 and 86 of the Treaty of Rome and will apply to all undertakings in the State engaged in trade in goods and services. However, the positions of those undertakings are gravely distorted by Government policy. The Government are chiding industry for anti-competitive behaviour when in fact the main cause is Government policy. I think it is well within realms of order in this House for me to cite Government policy in so many other areas which are causing record levels of emigration and unemployment. Nobody can dispute the figures. It is our job on this side of the House to highlight the distortion and unco-ordinated nature of Government policy.

The Minister for Labour came into this House to answer questions. He eventually admitted that my arguments of four years standing were correct, that a person with £217 gross pay was actually worse off than somebody with £106 social welfare. Four weeks ago when the Minister for Finance came into the House I highlighted the position that somebody on £3,000 could be better off than somebody on £12,000. An employer must add 35 per cent to the £12,000 he gives to the employee to cover costs which include holiday pay, sick pay, public liability insurance and employers social insurance. That means another £6,000 can be added to the £12,000 to get the gross cost to the employer. It, therefore, costs the employer £18,000 to make his employee worse off than if he was on the dole. This is all because of Government policy.

Mr. Flood

You increased taxes — 25 per cent VAT.

Acting Chairman

I am sorry to have to intervene again. I would like to be as helpful as possible. I am allowing passing references but it is the Competition Bill that is before the House. We are talking about establishing a Competition Authority. I would ask you to confine yourself to the sections of the Competition Bill.

Mr. J. Mitchell

The Competition Bill will fail if the Government do not understand that the main distorter of competition, the main cause of unemployment, the main cause of emigration is the Government themselves.

Acting Chairman

You have already said that.

Mr. J. Mitchell

What is more they are spending hundreds of millions of pounds doing it.

Acting Chairman

The Deputy has already said that and I did not object. I think he should please now confine himself to the Bill.

Mr. J. Mitchell

I have made my point and I hope it has been heard. I hope you, Sir, and your party understand it as well because your party hold the Ministry of Industry and Commerce.

Acting Chairman

Deputy, you cannot involve the Chair when you mention parties.

Mr. J. Mitchell

The Minister for Industry and Commerce, the Leader of the Progressive Democrats — a party who are ideologically to the Right and believe in the latest fad from Right wing thinkers as the solution to every problem — demonstrated this ideology amply when we dealt a few years ago, with competition in air transport, competition which I introduced. As a result of my policies as Minister with responsibility for air transport, there was enormous growth in air traffic which brought about great reductions in the price of travel. At that time the present Minister for Industry and Commerce, Deputy O'Malley, wanted unbridled competition, despite the fact that there had been casualties in aviation throughout the world every year because of unbridled competition. I warned that competition had to be guided and balanced. As I said earlier, competition always disrupts to some extent and absolute competition always disrupts absolutely.

There cannot be unbridled competition. If we had unbridled competition there would be serious casualties, as happened in regard to air transport, for example, the unfortunate incident in relation to Avair, the first independent Irish airline, licensed by me, and the difficulties being experienced by Ryanair. There would have been even more acute difficulties if the policies advocated by Deputy O'Malley, when in Opposition, had been agreed. For example, Ryanair would not have lasted until now. There have been enormous casualties in air transport where unbridled competition was allowed, for example, Air Florida, People's Express, Air National, Pan Am, and so on. As I said, absolute competition disrupts absolutely. Competition has to be balanced and it should not be invoked for ideological reasons.

I do not wish to fall foul of the rulings of the Chair again, but we have to understand the complete picture of what is causing anti-competitive pressures. Sometimes influence outside their remit cause companies to be uncompetitive. I contend that the uncompetitive position of many Irish industries has nothing to do with industry; it has to do with Government.

I do not know how many pubs per square mile there are in Ireland but certainly no one would argue that we have a shortage of pubs. Will this Bill bring down the price of drink? Will it improve the service in pubs where there is competition and very high prices? Would anyone argue that we are short of banking outlets? Has "competition" between the banks led to lower interest rates, lower service charges and a better service for the public? Will this Bill bring about any of these improvements? My strong contention is that the price of drink will continue to increase, the service given by banks will be as bad and service charges will continue to be as high as they are today.

There is competition in the newpaper industry both from within and outside the State. However, newspapers are extremely costly here. Competition has not brought down the price of newspapers. Will the Bill bring down the price of newspapers and thereby benefit consumers. I am certain that the Bill will not have the slightest impact on the price of newspapers because the price of newspapers is affected by other factors such as the price of labour which, in turn, is affected by Government policies such as tax, social insurance and means testing policies, transport costs and so on.

I know it is unfashionable to talk in these free market times about price controls but I suspect that if a poll was carried out among the women of Ireland, Mná na hÉireann, the overwhelming majority of them would vote for a return of a price control mechanism. I know there are arguments for and against price control and that we have had low inflation for the past six years. In 1985 the Government of which I was a member brought inflation down to 3 per cent from the 21 per cent they had inherited from Fianna Fáil in 1982. The rate of inflation has been about 3 per cent ever since. Yet that low inflation does not seem to have been manifested in the shops. The average housewife is absolutely appalled at the price of goods in shops. Even though the rate of inflation in the United Kingdom since 1985 has been much higher than it has been here it seems possible to buy a wide range of goods in Newry, Belfast, Liverpool or London at prices which are much cheaper than they are in this State. This is happening despite our low rate of inflation and the sacrifices made by the workforce and unions in accepting low pay increases.

Will this Bill change that competitive position? Will the Dublin branch of Marks and Spencer be able to sell goods as cheaply as their Belfast branch? The answer is that this Bill will make no difference because it does not address the factors which distort competition such as Government policies on health, social welfare changes, tax, differential rent and so on. Most people do not realise that it is these added cost factors which distort prices ultimately. This Bill will have no impact whatever.

This Bill is being introduced simply to satisfy an ideological craving on the part of the Progressive Democrats. It is an ideologically inspired Bill which will do little for prices, nothing for unemployment and absolutely nothing for emigration. For those reasons the Bill is not worth the paper it is printed on.

Mr. Clohessy

I want to make a number of points on this Bill which I believe will prove to be one of the most important Bills to have been introduced into this House in many years. The Progressive Democrats take particular pride in the introduction of this legislation. The Competition Bill, 1991, honours one of the key commitments secured by the Progressive Democrats in the negotiations on the agreed programme for Government. However, the genesis of the Bill goes back not to July 1989 but to February of that year when the former Deputy Martin Cullen introduced the Enterprise (Competition and Consumer Protection) Bill on behalf of the Progressive Democrats as a Private Members' Bill in this House. Ironically that Bill — which proposed much of what we now have before us — was opposed and was defeated. It is particularly satisfying, therefore, that we should be witnessing the introduction of this legislation as Government legislation this week.

The Bill also marks a second key piece of reforming economic legislation introduced by Minister O'Malley in recent weeks. I believe that this Bill and the recently passed Companies Act will play key roles in creating a more efficient, more capable and more open economy to benefit all the people of this country. The development of both pieces of legislation, however, holds important lessons for this Oireachtas which we must try to ensure are heeded in the coming months.

The Companies Act began its marathon journey through the Oireachtas many years ago and took the best part of a full decade to pass from Bill into Act. This Competition Bill has been subject to a number of delays since the formation of the Government and has taken almost two years to be introduced into the House.

Both examples highlight the pressing need for a comprehensive programme of Oireachtas reform to put in place a system which will allow for the speedy and detailed processing of legislation without bringing all other business of the Oireachtas to a halt and which will encourage a progressive and, indeed, aggressive attitude on the part of legislators towards the search for new and better ways of doing things and for new and better regulations to govern our economy and our society.

The Competition Bill, for example, may be mould-breaking in this country but it is commonplace in the stronger economies of the world. Similar legislation in the United States of America dates back over 100 years. The European Community incorporated competition legislation on its foundation as key elements of the Treaty of Rome. Why then must this country always be left lagging behind? Why must we always be the last to realise the need for change and improvements? Why must we always be the trend followers and never the trend setters? What sort of parliamentary and political system has developed here that not only obstructs progress but positively militates against it?

The necessity for widespread Oireachtas reform is unanswerable and the Progressive Democrats will be focusing on a package of reforms as a key aspect of the forthcoming review of the agreed Programme for Government with Fianna Fáil in July.

I hope that the delays which we have seen in this House in processing previous economic legislation will not be repeated on this occasion and that this Bill will be processed as quickly as possible because this legislation is of crucial importance to the Irish economy, to Irish consumers and to the future growth of many Irish companies.

The key aim of this legislation is to ensure the most efficient and the fairest possible workings of the marketplace to benefit those who operate within that marketplace, who aim to operate within that marketplace and those consumers who depend on that marketplace.

Some commentators seem to think that competition law is incompatible with the free market. The reality is that without competition law, the market will never really be free. This has been recognised by the most successful economies in the world such as the United States of America and Germany. It has also been recognised by the most important and largest trading bloc in the world, the European Community. All of these economies have recognised the need for proper competition law to ensure the smooth operation of the marketplace and to facilitate the development of strong, vibrant and fair businesses.

Running an economy without proper competition legislation is like running a car without oil. It is only a matter of time before it seizes up completely. In the absence of competition legislation heretofore, that seizing process has been one of the major obstacles to a more efficient, fairer and stronger economy in this country.

Even as we speak, the ongoing milk war, the fears of beef producers at the threats posed by dominant operations within the agricultural sector and the ongoing problems within the bakery industry testify to the shortcomings of our existing legislation. The persistence of companies with domineering positions within the economy and the inevitable disadvantages faced by would be newcomers to the marketplace are actively dissuading new enterprises from competing in the marketplace. Like a vicious circle, the absence of the competition which would follow increases the dominant position of existing companies and further militates against newcomers.

In the absence of stout domestic competition, existing companies get complacent, lazy and inefficient. The companies suffer, the economy suffers through lack of innovation and sharpness, through excessive costs and the consumers suffer because they are forced into an unreal dependency on the status quo and have little choice or option in what they can purchase, where they can purchase it or how much they should pay for it.

The lack of competition is also placing our domestic companies at a serious disadvantage in the growing European marketplace. Unused to the disciplines of competition, they have no training in how to compete in the hugely competitive international marketplace. They are less able to compete on price or quality and our marketplace will become vulnerable to leaner, more efficient and more hungry competitors from abroad.

This aim to have more companies and greater competition has to be balanced by the need to encourage domestic companies to expand to the size necessary to allow them to compete on the international stage. A myriad of small producers would be as damaging for this country in the long run as the uncontrolled rampage of a few. This Bill strikes this balance by the prohibition which it places on the abuse of a dominant position while not outlawing a dominant position in the first place.

It is not size about which we have to worry; it is the abuse of that size. By all means, let companies expand, but what we must not allow is for those companies to abuse their size to the detriment of other companies in the same market or to the consumer.

In recent months farmers have rightly expressed worries about the potential threat which a huge agricultural enterprise poses for their livelihood. They fear that the very size of this competitor will allow them to unfairly dictate to the market exactly what they want and that the market will have no option but to agree. That fear has been answered in this Bill. Under this legislation an aggrieved party — whether competitor, consumer or representative association — may go to the courts to restrain an unfair practice or abuse of market position and to secure an award of damages. At last this legislation will mean that companies who abuse their positions will have to consider the very real possibility of losing money because of their actions. Yet large companies who are not abusing their position will have nothing to fear and will be allowed to further expand to strengthen their position.

The Bill is based heavily on the competition legislation governing the European Community; Articles 85 and 86 of the Treaty of Rome. It is particularly valuable, to base our legislation on these articles as it will ensure that domestic companies gain an intimate knowledge of this crucial area which will benefit them in 1992 and the opening of Europe.

The legislation has also been identified as necessary by the social partners and by many independent commentators. Most importantly, our experience shows the need for this legislation. I, and my colleagues in the Progressive Democrats, welcome its introduction and look forward to its early implementation.

I congratulate the Minister, Deputy O'Malley, and his junior Minister, Deputy Leyden for producing this Bill.

Mr. Lowry

The explanatory memorandum of the Competition Bill, 1991, tells us that the primary purpose of the Bill is to prohibit anti-competitive practices, agreements and the abuse of dominating positions in the market. These are noble sentiments and I doubt if anybody in the House would disagree with the basic principle underlying those sentiments.

One could get the impression from the introductory speech of the Minister for Industry and Commerce that he, and he alone was unique in recognising that anti-competitive practices and the abuse of dominant market position are detrimental to the common good. It is a concept that has been widely expressed throughout the various levels of industry and commerce, particularly when the common good of the community has been placed at risk by the actions of a minority interest. It is an important fact of life that the greater good of the community has been regularly placed at risk in this country by sectional interests. The House does not need to be reminded of the widespread effects of the recent electricity cuts, the end result of the actions of a minority interest. Does this amount to the abuse of a dominant position to which the Minister referred and which the Bill will prohibit? I fear not and that a great opportunity has been lost given the manner in which the Bill has been cobbled together. It resembles the Chinese paper tiger; all bluster and no bite. Whatever good intentions the Minister may have had in originally promoting the concept of a competition Bill it would appear that the daily grind of holding together the frail and fragile coalition of ideologies within Government has resulted, in this instance at least, in a gestation which has been long and painful where the embryo has been born without any of the vital organs.

Competition is fundamental in a growing economy. It is the lifeblood of an efficient market, a dynamic regulator without which everyone suffers — so said the Minister last Tuesday in his introductory remarks. He went on to say that without competition cosy cartels can emerge to share markets to the detriment of the consumer and supplier. In that one sentence the Minister revealed many of the weaknesses in the Bill. In so doing, he blatantly ignored one of the basic tenets of service industries in Ireland. We cannot set aside the fact that the major public utilities are all monopolistic industries, partly owned by the State and consequently subject to State control, but it is not clear whether they will be subject to the provisions of this Bill.

The explanatory memorandum states that the Bill will apply to all undertakings in the State engaged in trade in goods and services. It appears that the Minister has conveniently forgotten the extent of the monopolistic service industries and their influence on the life of this country and has chosen instead to view one segment of goods and services as being the target of this Bill. How can you segregate the provision of an essential service and products such as electricity or telecommunications from the provision of a daily necessity such as bread or milk? Yet, it seems the Minister has conveniently chosen to do so in putting this Bill together.

It seems strange that, on the one hand, the Minister introduces to the House proposals to prohibit the abuse of a dominant market position, while at the very same time, in another place, the Minister for Labour makes a statement about the need for a code of practice to prevent a recurrence of the recent ESB strike. Are the Ministers not on speaking terms or do they not know what is going on in Government? One seeks to end the abuse of a dominant market position by introducing a code of practice, while the other seeks to achieve the very same objective through the enactment of legislation. Is there a point here which is being lost on the rest of us?

In this context, let me say categorically that I fully support the right of any worker or group of workers to withdraw their labour as a legitimate negotiating strategy, but if, by so doing, the livelihood of thousands of non-participants and the greater good of the entire community are threatened and put into jeopardy, then a serious issue is involved and serious questions must be asked and answered. This Bill has skirted many of the issues involved and the opposing views of the two Ministers indicates the presence of a tunnel vision which will ultimately lead to faulty and inoperable legislation. The abuse of a dominant market position can stem from management or from labour and if a dominant market position can be manipulated for the good of the few by any stratum of its workforce, then there must be legislation to curb such practices. It is my belief that the bill does not allow for this and the question which must be asked is, why? Competition is competition whether it refers to the transmission of data or entertainment on national or international airwaves, or to the selling of a loaf of bread to the corner shop.

There is another point which seems to have been lost on, or missed by the Minister. Let me refer back to his introductory statement that, in the absence of competition, cosy cartels can emerge to the detriment of consumers and suppliers alike. If the Minister is saying that suppliers can be the victims of cosy cartels, while being incapable of forming their own cartels then surely he is mistaken. Supplier cartels are not unknown in Ireland in recent times and the consumer is generally the loser. When suppliers arbitrarily withdraw their products from a section of the consumer market, then surely this is a cartel in operation, not the normal idea of a cartel operating at national level and manipulating vast sums of money but a cartel nonetheless.

We have recently seen such a situation when milk supplies were withdrawn from particular outlets because of an attempt to introduce an element of competition into the price structure. Without making a case for either side, surely this was a cartel in operation? We would like to be assured that the Bill will cater for such situations and that the rights of the consumer to have free access to products in whatever area he or she chooses will be protected by this Bill.

The Minister states he is convinced that a properly competitive economy can be achieved by constantly exposing all Irish firms to the stimulus of competition. We can only assume the Minister is referring to competition from outside the country, since he has already referred to the fact that this proposed Bill owes much to Articles 85 and 86 of the Treaty of Rome and to the fact that next year will see a further and perhaps final stage in our absorption into the EC system of inter-nation trade. In many ways this Bill would not be necessary if existing legislation was properly implemented. The point which must be stressed is that competition cannot be imposed on an economy; it must be a healthy and vibrant thing, it must spring from the economy itself and be the result of common consent within all the different disciplines involved. Fine Gael believe that just as interference by minority interests in the operation of any dominant market force is to be abhorred, so also is any legislative interference by Government or, worse still, by the inability or the unwillingness of Government to impose existing legislation in situations where much is clearly called for, and where the interest of the final consumer demands it. Laws are good only if they can be effected and if their implementation leads to the common good. When legislation merely adds to the spiders' web of confusion as to whose rights are being protected, as this Bill seems to do, then we should look for much more clarification than the Minister has offered or than the Bill seems to provide.

There can be little doubt about the need for competition and for legislative guidelines for manufacturers, suppliers and consumers. I think we are all agreed to that, but that need must be filled from within ourselves, albeit in the context of our role as members of a European partnership. The Bill, as already stated, owes much of its thrust to two Articles taken from the Treaty of Rome, Articles taken in isolation from a document which, however well-intentioned, referred in principle to an integrated Community located on mainland Europe. Despite out steady progress towards complete integration into the ethos of a united and integrated economy, there will always be problems peculiar to our country as an island nation and the removal of these problems can only be carried out by consensus from within ourselves, from all sections of trade and industry and from all sectors of the market. It cannot be done by unilateral application of legislation either from within or without, which is what this Bill seeks to do. There must be consensus from all areas if any competition Bill is to work properly but it does appear that consensus was neither sought nor desired by the Minister. The question has to be asked, for example, whether the Minister for Labour had any input into the Bill or whether he was consulted at all at any stage of its preparation. As may be apparent from my earlier remarks, it would appear that the Minister for Labour did not believe that this Bill would provide the solution in at least one example of the abuse of dominant market forces.

We have to ask also whether the Minister for Agriculture and Food was involved in the preparation of the Bill. It is evident from what we have seen and heard so far that the stimulation of competition is one of the prime objectives of the Bill. Yet the whole area of food production and marketing in this country is a minefield of restrictive practices which could almost demand a separate competition Bill of its own. What input did the Minister for Agriculture and Food have into the preparation of the Bill, and is he happy that supplier-led cartels will be a thing of the past with the enactment of this Bill?

Will the price fixing which has been part and parcel of the distribution scene now be laid to rest and will the supermarkets and stores, with the willingness and the ability to stimulate real competition at the checkout, be allowed to implement consumer-oriented policies under this Bill, without having the burden of imposed price structures? Massive profits are being generated in the food sector distribution system because of the manner in which supply cartels dictate the terms. Genuine efforts by many outlets to bring about price reductions are frustrated time and again by market forces and the consequence is that the Irish supermarket trade is in a very lucrative state indeed and will be viewed with covetous eyes by our European neighbours when the final restrictions are limited. I firmly believe that it will be open season on all Irish distributive outlets in the next two or three years and whether this is good or bad is anyone's guess. My belief is that, ultimately, the consumer will lose out, which defeats the whole purpose of what we are discussing today.

It is my belief, contrary to the impression given through the media and particularly by the independent retailers, that the supermarket trade in Ireland is enjoying a very lucrative position at present and I am convinced that when the markets open up in 1992 many of our supermarkets will be the subject of takeover bids. That will be bad in the long term for the consumer.

Another long-held bone of contention which does not appear to have been tackled by the Bill is the situation regarding the drinks industry. Will the Bill encourage competition in the retail end of the trade, the area which most needs the stimulus of competition? Again, while individual outlets compete with each other as to the peripheral areas of presentation, decor, service and so on, there is no competition in the area where it should really count, which is in the area of price to the consumer. This is principally because of the obvious unwillingness of the vendors to enter into meaningful price competition, indeed to circumvent any attempts to remove agreed price structures. I could ask the Minister whether the Bill will provide an avenue for meaningful competition in this area but I think I already know the answer.

As is usual with proposed legislation emanating from the Government, there is an element of humour contained within these proposals, although I strongly doubt whether the Minister had any such intention when putting this document together. I refer, of course, to the escape hatch of the licence, what I call the planning Act, section 4, of the Competition Bill. The very idea of introducing an escape clause in the form of a licence provision is a total negation of the whole thrust, the ethic behind this Bill. It is indeed a typically Irish solution and should have no part to play in this document.

In summary, therefore, let me say that I and my party welcome the concept of a competition Bill and that we will support it heartily when it arrives, but this is not the Bill we perceive to be the one needed in the present climate having regard to events in Europe in 1992. It is flawed in its structure and lacks the breadth of vision required to meet universal approval. I suggest that the Minister rethink his position, involve more of his Government colleagues in arriving at a broader picture of what is required at all levels of Irish business life, and initiate meaningful discussion before presenting his ideas to the House. The Bill as it stands, might well succeed in a "green field" situation where no problems existed and where a fresh start was being made, but problems exist and the Minister must seriously question whether this Bill can prevent other problems arising, as well as solving present ones. I respectfully submit that the Bill can do neither in its present flawed state.

There are other matters the Bill has not addressed but my principal concern is in the food and drink sectors and the monopoly in areas under State control such as telecommunications and An Post. Competition is needed in these areas because the systems in place at present are not sufficient to ensure the consumer is getting a proper deal.

I hope that by the time the Bill has passed through both Houses it will be amended and will bring about a satisfactory solution to the problems that exist.

Minister for Industry and Commerce (Mr. O'Malley)

I am grateful to Deputies for their contributions to this debate on Second Stage. There is no doubt from what has been said that cases of perceived or actual anti-competitive behaviour have come to everyone's attention. Existing legislation has not produced satisfactory solutions or, in some cases, any solution whatever. The need for reform is clear accordingly and is borne out by what Deputies generally have said. The direction that reform should take, given the example of the EC and its component parts, can hardly be questioned. Articles 85 and 86 guarantee competition at Community level over decades while the Community has expanded its membership, its population and its economic dynamism. It is a working, practical model of competition law and not a theoretical, academic thesis.

Deputy Rabbitte asked if Articles 85 and 86 provide an appropriate model for a small country. Those Articles are based on the principle of prohibition which has been adopted in many member states of the EC with further notable examples outside the Community. Within the Community the prohibition countries include France, Greece, Luxembourg, Portugal, Spain and Germany. Outside the Community the most striking examples are the US and Japan.

Of course, it should not be seen as just a new regulatory system replacing the old one. It is much more than that. It is a component of economic policy aimed at producing growth and expansion. It will hamper certain types of activity certainly, but only those activities which amount to a conspiracy to deprive others of a fair chance to do business. It will free business from the imposition of anti-competitive constraints which are at present all too common here. The new freedom will foster business development by small, medium and large enterprises.

I propose to respond briefly to some of the specific points made by Deputies in the course of this debate. Deputy Barry damned the Bill with faint praise. While he said he was not opposed to it in principle, he dismissed it as "scissors and paste" and as a potentially disastrous cocktail for industry in Ireland. Of course, the Bill extracts Articles 85 and 86 from the Treaty of Rome. That is my intention, and I thought, on the basis of earlier proposals from the Deputy's party which were put before this House in Private Members' time, that they want to do precisely the same.

Deputy Barry also spoke of widespread concern and unease. This has not been made known to me or to my Department. Some specific points have been made to me and the Department but to describe some specific points and suggestions for possible amendments to be considered on Committee Stage as "widespread concern and unease" would be an exaggeration. The converse is much more the case. There is a great deal of support for the Bill. The Bill is a confident and bold approach to competition policy. It has been seen as such and only those who fear the demise of certain types of cosy business arrangements which were almost endemic here need be worried about it.

The Bill is quite different in its approach from the sort of Bills usually brought into this House to amend existing legislation or rules, in as much as Bills of that kind normally accept what is there and simply make changes. This, to a large extent, sweeps away what is there on the basis that it is unsatisfactory and applies a different approach which has not been traditional here but has been proven beyond doubt to work well in other countries, particularly in the most economically progressive countries. One of the important reasons that countries who have this type of competition policy are economically successful is that they enforce it stringently through the courts, in the way we propose to do. The obvious examples are Germany and Japan and particularly the United States, which has had it longer than anyone else and has enjoyed economic success for longer and for a more sustained period than anyone else.

Deputies Barry and Taylor asked about the scope of the Bill. It is designed to apply to all sectors of the economy and there is no differentiation between the public and the private sectors. Several Deputies seemed to have the impression that it would not apply to public sector activities. Of course it does. The same competition discipline that currently applies in the internationally traded sector of our economy will be extended to all sectors. The Bill applies to all undertakings, large and small.

Deputy Barry indicated that the Bill was not sufficiently comprehensive. It covers all sectors of the economy, unlike the Bill introduced last year by Deputy Barry's party relating to competition in the food processing industry. That Bill was confined to one sector and on examination it clearly did not cover all the food processing industry but only part of it.

This Bill does more than introduce Articles 85 and 86 of the Treaty of Rome into Irish law. It sets out how they can be applied and repeals what will be irrelevant in the Restrictive Practices Acts and Orders and amends the existing law relating to mergers and monopolies. Events in the past couple of years have made it abundantly clear that changes have to be made in some aspects of the mergers and monopolies law.

This may not be a long Bill but it covers a great deal of ground and lays down general principles of general application. Some Deputies criticised the length of time it took to produce the Bill. I too would naturally have preferred to see it produced earlier but there are complex legal aspects involved to which one cannot apply instant solutions. A great deal of thought and consideration had to be given to it. In spite of the relative length of time it has taken to publish the Bill, it is worth reminding ourselves that it would have taken at least as long to bring into effect a single restrictive practices order dealing with a single sector of trade. It should also be remembered that it is only 21 months since this Government came into office.

There has been some misunderstanding, particularly by Deputy Barry, regarding the licences which may be granted by the Competition Authority. They are not of the same nature as taxi licences or public house licences. Licences will be issued by the Authority in respect of agreements that have anti-competition elements but whose benefits from the public point of view outweigh these negative aspects. The criteria for these decisions are clearly set out in section 4(2).

Deputy Lowry seemed somewhat sceptical about the granting of licences but his point of view was different from that of Deputy Barry. He described this as a typically Irish solution, not I think to an Irish problem but to a general problem. He said we should have absolutely blanket prohibition and should not allow any form of agreement to escape that prohibition. In the real world of business that would not work. This idea is not a typically or specifically Irish solution. The Commission in Brussels issue these exemptions or licences all the time and it is a feature of the prohibition system in all countries which have it. We could not in practice have a situation in which we outlawed every possible agreement. If we did so some of the basic services would break down. Every country recognises that, not least the European Community. The matter of licences is specifically referred to in section 3 of Article 85 of the Treaty of Rome.

Mr. Taylor

Would it not be better if prior public notification were given that a licence might be granted rather than publishing the information afterwards? A person might want to make a point about it.

Mr. O'Malley

That is a detail we can discuss on Committee Stage. We can look at how other countries operate the application system. I would think that if the Competition Authority were in doubt as to the efficacy or otherwise of issuing a licence and as to whether the public benefit would outweigh the anti-competitive aspects, they could call for the views of other people.

Deputy Rabbitte asked a pertinent question about the role of the consumer under the Bill. The authority can grant a licence in respect of an agreement which as section 4 (2) specifies "Allows consumers a fair share of the resulting benefit" from the agreement. The report of the Fair Trade Commission states in summary that "competition leads to lower prices and better service". Where that happens there is a clear benefit to the consumer.

Deputies Rabbitte and Hogan were critical of section 11, implying that it undermines the independence of the Authority. This is simply not the case. The essential task facing the Competition Authority will be taking decisions on applications. The Minister for Industry and Commerce has no role here. The Competition Authority take the decision. If a Minister dislikes a decision, like any other aggrieved party, he can appeal to the High Court under the provisions of section 9.

Another role of the Competition Authority under the provisions of the Bill will be to examine proposals for mergers referred to them just as the Fair Trade Commission do at present. In this respect I am glad Deputy Rabbitte drew attention to the practice in Germany where in such cases there is transparency. Under existing legislation here — that is, the 1987 Act — there is no such transparency. However, the provisions of section 17 (4) will change that so that in future reports of the Competition Authority will be published. Decisions taken subsequently by the Minister for Industry and Commerce can be judged in the light of those reports.

When the Competition Authority examine a possible abuse of a dominant position under the provisions of section 14 they will, of course, act independently and will carry out such examination at the request of the Minister only. That does not limit any aggrieved party's right to take action. Such a party, under the provisions of section 6, can seek appropriate relief in the courts and no permission of the Minister, the Competition Authority or any official organ, is necessary. Of course, at present it is not possible for an aggrieved party to do any of those things.

Section 11 does not involve the decision-making process of the Competition Authority. It is a provision that allows studies and analyses to be undertaken by the Competition Authority at the request of the Minister and is more in the nature of a consultancy role than anything else. The meat of the Competition Authority's functions is to be found elsewhere in the Bill. What I am saying is borne out by the fact that in section 11, for example, the Competition Authority would be allowed carry out studies and analyses of developments abroad for the information of the Minister, the Oireachtas and the country generally as to how certain things work elsewhere and how they might, or might not, be applicable to our circumstances.

A number of Deputies criticised the fact that the provisions of the Bill place the onus on those aggrieved to seek remedies in the court; as it were, the Bill placing a burden on them which Deputy Taylor described as intolerable. If that argument were correct we would see very little litigation here, much less than we all know exists. I can offer the example that happens every single day of the week, many times over, of small, private individuals suing insurance companies who have vast resources

Mr. Taylor

That is a very different type of situation from that envisaged under the provisions of this Bill.

Mr. O'Malley

Many plaintiffs in this country are quite impecunious but, by and large, are well able to assert their rights because of the system obtaining here.

Mr. Taylor

That is dependent on the kind of action; in a "running down" case, yes.

Mr. O'Malley

The Deputy is wrong to say that, simply because a system is new, everybody will be terrified to seek to vindicate their rights. The courts appear to give an equal hearing to all parties, whether large or small, and I am confident they will continue to do so. Where people feel strongly aggrieved at the way they have been treated commercially, they will seek to vindicate their rights under the provisions of this Bill.

Cases do not have to be taken simply by individuals. For example, they can be taken by associations of different kinds whose resources can be quite extensive. One group within our economy who have complained frequently about improper commercial practices being exercised against them are farmers. In appropriate cases I would not envisage just a couple of individual farmers taking cases of that kind against, let us say, meat companies. Rather I would envisage the Irish Farmers' Association, the Irish Creamery Milk Suppliers' Association, or some such body, doing so on their behalf, as they are entitled to do.

On the other side of the argument it can be said that the provisions of the Bill open up business to some danger of being sued. However, there is a balance struck in the Bill. For example, it provides the freedom for someone suffering damage to seek a direct remedy without relying on any organ of the State, such as a Minister or an authority. That is a useful direction in which to move because, for too long, somebody who felt a sense of grievance in this respect thought almost exclusively in terms of going to see the Minister with a view to having their grievance rectified, with all its attendant problems and difficulties both for the individual and the Minister. It is correct that the emphasis be placed on the initiative of those who are affected by anti competitive behaviour. Who is better placed to judge whether that action is justified than the one who suffers its consequences?

Neither am I in favour of introducing a system of fines to be imposed by the Competition Authority. The primary task of the Competition Authority will be to grant, or refuse to grant, licences or certificates. The strength of the Bill is that it is self-policing. It is more consistent with natural justice that an undertaking be penalised in terms of the damage caused by its anti-competitive actions than by some abstract system of fines.

Obviously I gave quite some thought to the whole question of whether this Bill should be based on the civil law or on the criminal law, or on a combination of both. At an early stage I came to the firm conclusion that it should be based on the civil law only. If you like, we are different in this respect from most other countries with a prohibition system because they rely quite heavily on the criminal aspect. In the United States, in particular, as well as the right to seek civil damages, people have the right to have prosecutions brought. They are brought by the Department of Justice, or by the Attorney General, at federal level. As Deputies will be aware, quite severe penalties are imposed by their courts including, frequently, long terms of imprisonment for engaging in some of the practices that would be encompassed or prohibited by the provisions of this Bill but which have not been prohibited to date.

We have decided not to go that far, not to introduce a criminal element but rather to ascertain how the civil enforcement will work. I believe it will work very well. There is, within the EC, a system whereby the Commission can impose fines for practices or activities they regard as anti-competitive without any recourse to a court at all. Such fines are imposed frequently. Sometimes, by our standards at least, they are astronomically high. For example, within the past year the Commission imposed on a small group of companies a fine in excess of IR£50 million for engaging in price fixing as a cartel. There will be no power under the provisions of this Bill to impose fines directly by the Competition Authority, by the Minister or through the courts. This will be a purely civil system. I believe it should work well once people get adjusted to something that is new and not, I hope, condemn out of hand something that is new, different and better because it is unfamiliar and because many people inherently are conservative.

Of course, it would be possible to establish an elaborate enforcement agency that could be as big as one liked but it would have to be paid for. The questions then arise: how efficient would it be? How much of their time would be devoted to explaining why they did not take up certain cases rather than investigate actual cases? The Government and I, as Minister, made this choice. Although section 6 (4) allows the Minister for Industry and Commerce to take action on the civil side, Deputies are correct to interpret the provisions of the Bill as largely placing the onus for action on those who are themselves affected by breaches of the provisions of sections 4 and 5.

Sections 4 and 5 are designed as indicative rules. I am not in favour of detailing long lists of examples — I do not think it necessary — other than those listed in section 4 (1). The reason we listed those is that they are the same examples as are listed in the Treaty of Rome. Deputy Barry, who raised this matter, I am sure knows well that business practices often change quite rapidly. Any detailed rules that we would make today in respect of specific, definable, identifiable practices would quickly go out of date. Indeed, that has been the experience with restrictive practices orders. It is preferable to have general rules leaving it open to the regulators to calculate rationally the probable social advantages and/or costs of whether current practices offend the rules of competition.

One has only to look at the list of restrictive practices orders made over the years, particularly those made under the earlier Acts in the fifties and sixties, to realise how irrelevant so many of them are now. They have not, in fact, been formally repealed to the best of my knowledge, but they are totally ignored because they were made to deal with business practices that are no longer current and are of no consequence. It appears that in the fifties there was a major commercial row in Ireland about sewing machines and detailed rules had to be made on what you could do in buying and selling sewing machines. That was designed to calm down some agitation at that stage. I am not aware that there are any problems in the sewing machine market today.

A further point raised by a number of Deputies, particularly Deputies Barry and Hogan, was the question of below cost selling. Under the Restrictive Practices (Groceries) Order, 1987, below cost selling is not permitted in that sector or in large parts, at least, of that grocery sector. Let everyone be clear that it is only in that sector that a restrictive practices order bans below cost selling. It is not, as might be gathered from some commentators, a general rule of our laws even in that sector. There are exceptions in regard to certain products liable to deterioration such as fresh fruit, vegetables, fish and meat.

A ban on below cost selling constitutes a serious interference in the play of market forces. If a grocer wishes to sell goods at below cost for the purpose of promotion I see no basic reason the consumer should be deprived of the resulting benefit. Predatory pricing on the other hand is one form of abuse of a dominant position. The abuse of a dominant position in any sector is prohibited by section 5.

The point has been made that I am proceeding with this legislation without waiting for the Fair Trade Commission's review of the 1987 groceries order. That review was supposed to have started in 1989. It has only now commenced and I cannot delay the whole Bill for that purpose alone. It would be unreasonable to do so but, as the House will appreciate, none of the existing orders will be repealed until after this Bill has been passed and until the relevant sections have been brought into operation by order. They do not come into operation automatically on the passing of the Bill. Commencement orders have to be made under section 2.

A number of Deputies claimed that the provisions of the Bill will be onerous for business. Any business which is not a party to anti-competitive practices arrangements or decisions or which is not engaged in the abuse of a dominant position is in full compliance with the requirements of the Bill and need do nothing. Any party to an anti-competitive agreement must seek a licence for it to continue or, if they do not seek a licence they must desist from that practice. Anti-competitive arrangements impose burdens on others and the onus, in my view, should be reversed and the Bill provides for that.

The abuse of a dominant position has no justification and must cease. The existence of a dominant position where there is no abuse remains untouched. A business can seek relief by way of damages, an injunction, or a declaration without any intervention from the Minister, the Director of Fair Trade, the Competition Authority or any other official organ. Such a course is not without cost but it is open to the free choice of the business concerned.

Deputy Rabbitte said there had not been an opportunity to debate industrial policy and does not see when this will happen. I expect he will have such an opportunity on an industrial investment Bill which I hope to introduce in the House before the summer recess.

As I said in my contribution on Tuesday last at the opening of the debate on Second Stage, the system that will be introduced by this Bill will not give complete satisfaction to everyone at all times in respect of all the issues that will fall to be dealt with under its provisions. No competition law can produce such perfection. This is particularly so when the outcome of individual cases is often looked at through partisan rather than through objective eyes. What I might regard as a reasonable arrangement to ensure market stability might appear to someone else as unjustified price fixing and may appear to yet another as nothing less than a near criminal conspiracy to defraud business rivals of customers. This Bill means that competition issues will be decided openly and objectively. There will be nothing partisan in the way it operates.

Finally, let me repeat that the Bill is not just a regulatory measure. It is fundamentally an economic instrument that is a key contribution to overall industrial policy objectives. I think there are some more individual points that were raised which I have not dealt with. It might be more appropriate if I dealt with the specific individual points in the debate on Committee Stage rather than take up the time of the House going into them now. On that basis I commend the Second Reading of this Bill to the House.

Question put and agreed to.

Acting Chairman (Mr. M. Barrett)

When is it proposed to take Committee Stage?

Mr. O'Malley

On Wednesday, 15 May 1991, subject to the agreement of the Whips.

Committee Stage ordered for Wednesday, 15 May 1991.