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.