Mary Flaherty
Question:16 Miss Flaherty asked the Minister for Industry and Commerce if he will make a statement on the recommendations of the International Energy Agency that Ireland should now drop price controls on oil.
Ceisteanna—Questions. Oral Answers. - Motor Fuels.
Seán Barrett
Question:17 Mr. S. Barrett asked the Minister for Industry and Commerce when the final report of the Fair Trade Commission on the distribution of oil products on the Irish market will be published; and if he will make a statement on the urgent need for this report felt by Irish industry.
Tomás MacGiolla
Question:29 Tomás Mac Giolla asked the Minister for Industry and Commerce if he will outline his response to the report of the Fair Trade Commission into motor fuels supply and distribution; the steps he intends to take to ensure that the removal of price controls does not lead to a jump in prices; and if he will make a statement on the matter.
I propose to take Questions Nos. 16, 17 and 29 together.
The final report by the Fair Trade Commission of their inquiry into the supply and distribution of motor fuels was published on 6 May 1991. Copies of the report are available in the Oireachtas Library. My response to the commission's report is contained in a press release issued at the time the report was published and I have arranged for it to be placed in the Oireachtas Library.
I have accepted the commission's main recommendations and that of the International Energy Agency. I propose to lift price control on petrol and autodiesel when there is the security against anti-competitive practices which the enactment of the Competition Bill, 1991 will provide. However, I intend to keep the option of reintroducing price control under review to ensure that the benefits, which the commission believe will accrue from the measures now proposed, are realised.
I also agree with the commission's view that the enactment of the Competition Bill will make a revised restrictive practices order on motor fuels unnecessary. The Competition Bill will prohibit anti-competitive practices and the abuse of dominant positions in the market.
The removal of these various controls which apply in the industry should enhance efficiency, eliminate trade distortions and facilitate vigorous competition in the industry, all of which should benefit consumers and were recommended by the Fair Trade Commission for that reason.
Is this not a total policy change? Does the Minister recollect his statements on coming into the position he holds at the moment when he promised he was going to take on the industry using the mechanism to reduce prices? Is this, in effect, not a total turnabout in his approach to this industry?
I take it the Deputy is referring to views I expressed in 1978 and 1979.
Later than that.
I am glad to be able to tell the Deputy there has been a great change in the oil industry since those days.
It is not the only place.
Happily, the oil companies are not in the dominant position they were then. They are much easier to talk to than they were a decade and a half ago.
I am not referring to the Minister's comments of a decade and a half ago. I am referring to his comments of 1987 or that period and the great change he expected to bring about when he managed to wrest control from a Government he claimed were doing insufficient in this area. Will he outline to the House what he believes this will do for prices? Will he confirm what he stated publicly, that he does not really anticipate or is not confident that the net effect of this will be lower prices?
The commission have set out their views. They anticipate that will be the outcome, not perhaps in the very short term but within a short period. As I pointed out in my reply, if that were not to be the outcome I reserve the right to reintroduce the controls. I hope that will not be necessary because I hope the companies, once they are freed of the many restrictions they are subjected to at the moment, will wish to compete properly with one another.
Is the Minister aware of the fear of many proprietors of small garages and sales persons that the consequence of his action will make them totally uncompetitive and put them out of business? What assurances can he give to those people, many of whom are serving rural areas? Effectively it will render the sales of petrol in rural areas on a far more limited base than at present. Does the Minister not accept this would be a retrograde step in relation to the difficulties facing rural Ireland at present?
We are having an injection of new matter into this question.
We are spreading the base.
I think so. I do not accept the view that that is what the outcome would be. It is quite possible, and the commission forecast this as something desirable, that the abnormal number of retail petrol outlets will reduce somewhat. About half of them are not full-time petrol retailers, but are part of a larger business, be it shop, pub or whatever. For those who are full-time in the business I think their throughput will increase and as a result they will be in a much better position that they are now.
I preface this question by saying I will never attribute naivety to the Minister. Nonetheless, I ask the question. By putting so much faith in the new Competition Bill, is it not naive to expect the companies who are dominant in this sector to engage in real competition and that there will be any move away from the suspected price fixing and collusion that has occurred in the past?
The choice is theirs. If they want to engage in collusion and price fixing, as undoubtedly they did in the past, the more distant past anyway, then they have a choice of doing that and having these old, laborious, complex, bureaucratic controls reimposed on them, but if they are sensible they will not choose that. That is what they assure me, and I will wait and see. I am not naive. I am well aware of what oil companies are capable of. I had unhappy experiences with them in the seventies, as had others, but we wil see now, in the nineties, whether they honour their word. If they do not, we can go back to doing what they do not like.
Does the Minister foresee the possible development of a monopoly? In view of the fact that a considerable degree of success in relation to the Companies Bill will depend on reference to the courts, does he see that as a cumbersome method of dealing with the situation which might give rise to a monopoly?
I do not foresee a monopoly arising at all in petrol and autodiesel sales. There are about ten or 11 companies competing with one another in supplying retailers. That is more than there were ten or 12 years ago. None of them has 15 per cent or 20 per cent of the market. From that point of view the position is at least potentially healthy.
In view of the fact that the Minister is replying to a number of questions, two of which are from this side of the House, am I allowed two succinct supplementaries? In relation to the reply the Minister gave Deputy Spring on the important issue of the impact on small rural stations, does the Minister accept that those who are not full-time in the industry may very well close their retail outlets over a period of time? Is he aware this is a major concern to those in tourist areas? Many of these small stations that operate part-time are situated in towns and villages in tourist areas.
I was referring to those who have a petrol pump as a sideline. If some of those close as the commission envisage, I doubt if they will cause any difficulties or hardship either to local residents or to tourists. If the demand is there, obviously they will not close but where demand is not there — as is often the case at the moment — they may close. I think it will be healthier all round and help those who are full-time in the business.
Will the Minister's decisions effect the INPC's operation and the quotas they have to deliver to the petrol companies?
No, I do not think it will have but, obviously, the INPC will have to look at the position they find themselves in whereby there is a compulsory 35 per cent take-up. There is no guarantee that that can last indefinitely.