Dáil Éireann debate -
Wednesday, 3 Jul 1991

Vol. 410 No. 3

Private Members' Business. - Competition Bill, 1991: Report Stage (Resumed) and Final Stage.

Amendment No. 19 not moved.

Mr. Taylor:

I move amendment No. 20:

In page 6, between lines 29 and 30, to insert the following:

"(3) Costs shall not be awarded against a plaintiff who brings an action under this section unless the court which heard the action certifies that the proceedings were frivolous or totally devoid of merit.".

One has to consider here the position of a person or small company who considers that he, or they, have been adversely affected by a breach of this Bill. He has to consider a number of important items. He considers he has important rights which have been violated, rights granted to him by this Bill. If his claim arises by reason of an alleged breach of section 4 he must go to the High Court. Let us consider that position. He has to consider a number of things before he takes the field of a High Court action and the very serious risks involved in that. He has to carry this burden himself. He has no support from anyone. As I have said, legal aid is virtually non-existent. The Authority are going to do nothing. He is on his own here. Of course, he could just swallow his pride, swallow his losses and just carry on and say that this legislation was passed, it was supposed to protect him but it is doing him no good; or he can say he will have to consider taking the field, a High Court action, solicitors, barristers, consultants, economists, experts, the whole panoply of a High Court action and all the enormous expense involved there. He has to consider further the real possibility that he might win the action and that the big company against whom he is claiming might appeal it to the Supreme Court, an even bigger escalation of risk and costs that could bankrupt him, ruin him and his family and put his employees out of work and so on.

When you contemplate proceedings in the High Court, you have to consider that you may lose and whether to appeal. You have to be prepared for that and take it into account. It does not end there. It is not just a matter of one's own costs in the High Court and possibly in the Supreme Court. If it goes wrong and you lose, you will have to pay the other side's costs as well. There are precious few people faced with that daunting prospect who would be prepared to undertake it. I have tried other measures here in the course of this Bill to alleviate that situation. All have failed except the concession of the Minister in giving a jurisdiction in section 5 to the Circuit Court which is to come into force at a later date. The Circuit Court costs are considerably less than the High Court but still they are not inconsiderable and there would still be the possibility of an appeal to the High Court so that it could be a double effort.

It is possible to have a case of considerable merit but court cases can take strange turns. It is not always easy to predict; in fact one can rarely predict the outcome of a High Court or Circuit Court action with anything like scientific precision. The system does not work that way, I wish it did. There are all sorts of uncertainties and difficulties in interpretation. For example, the court have to be satisfied that the firm you are suing has a dominant position. You may think it has a dominant position but they may bring forward evidence that you could not possibly have discovered suggesting otherwise in a substantial part of the State and then you have to establish the abuse as well. There are a lot of imponderables that would make the case very difficult to predict. What I am saying in this amendment, in a nutshell, is that if the case has merit, even though it may fail, at least costs should not be awarded against the person who brings it. In a sense the person who brings the case is doing the State's work for it. I make that proposition because when the State prohibits something, the State should have a role in enforcing the prohibition itself. The State is apparently deciding it will not have any such role and that it is leaving it to the citizen to enforce what the State is prohibiting. The person is doing the State's work for it and the least we could do is to say: "if the case has merit, even though you fail, you will not be liable for the costs of the other side". That is not such a strange or revolutionary concept. I agree that in these islands, Ireland, Britain and some of the common law countries, it is not normal but in other jurisdictions it is by no means unusual. In the United States, for example, costs are not given to you if you win and are not given against you if you lose. I am not sure about the position in Australia or New Zealand but there are countries where that position does pertain. It is not something that is entirely unknown even to a common law system. It would be innovative in our jurisdiction but then the Bill is innovative, has new concepts and must be at the very least on the borderline between the area of criminal breach and civil breach. One could have come down either way in deciding that issue. The Minister conceded that he spent a very considerable time in making up his mind which it was to be. He came down on the civil side and that is fair enough.

This amendment would give a prospect to some small companies or some people of availing of their rights under the Act without having to run the very serious risk of ruination and bankruptcy if a case that had merit went wrong through no fault of their own.

Mr. Rabbitte:

I am sure we can anticipate the Minister's response to this amendment is likely to be that surely we cannot expect the taxpayer to fund an action by Irish business or by an individual or whatever, that it would be improper for the taxpayer to bear that burden. I have no doubt that a logical argument can be set out to support that position especially in an economy where the extent of taxation contributed by the corporate sector is a great deal smaller than in any comparable European country, indeed than in any other member state of the EC. The problem I have had with the Bill in this area is that I have never been able to get a fix on how the aggrieved person can vindicate the new rights which the Bill confers. In a great many situations it is not easy to envisage how a person can exercise these new rights through the courts or can be reasonably expected to do so.

Amendment No. 23, which is in my name, is similar in many ways in the sense that it seeks to give the power to the Competition Authority, and provides:

(4) Where the Authority is satisfied that any person has reasonable grounds for action in consequence of any agreement, decision, concerted practice or abuse under section 4 or 5, but lacks the financial capacity to initiate such action, the Authority may do so.

Deputy Taylor has taken a slightly different approach to the same problem. In my case I have put in what might be from the Minister's point of view the saving grace that where the person concerned lacks the financial capacity to initiate such an action the Authority may do so. I cannot understand or see the distinction the Minister is making between the usual functions with which the Authority are charged as somehow being in conflict with the Authority themselves prosecuting an action where they consider that prima facie, there is a reasonable case to do so. I do not see how that would undermine the normal role of the Competition Authority where they are satisfied from the initial case made to them that there is cause for concern under either sections 4 or 5 and that the cause for concern is such that an action may well lie but that the person or small company concerned cannot initiate such an action for want of financial capacity. I do not know what can be done in that situation. Surely it is not beyond the wisdom or combined knowledge of the Government to devise a method of clawing back some costs roughly commensurate with this from the corporate sector if the fear is that it would be putting an unwarranted burden on the taxpayer from the point of view of the Minister?

We have just concluded a discussion on the insurance industry in Private Members' time. The Minister previously held out the prospect in this House that we could expect a better deal for the consumer in the insurance area when the Competition Bill is enacted. There was a reference in that debate to the very considerable contribution made at Christmas by the enforcement of the drunk driving laws, which presumably imposed quite an additional burden on the taxpayer in terms of funding Garda overtime. I would not have any compunction about devising a mechanism to claw that back from the insurance companies. I certainly would not have any compunction about making the insurance companies pay for the resulting improved situation in terms of claims, accidents and so on. Similarly in this Bill the argument that it is an extra imposition on the taxpayer is not valid.

Is the Minister really saying that the very fact that this Bill is on the Statute Book is a deterrent and that it will not be necessary to avail of the existing process through the Circuit Court in the case of section 4 or through the High Court? It would be very naive to think that and I do not believe that the Minister could believe it. It will certainly not deter anybody who may be involved in the kind of anti-competitive practices envisaged in either section. There is no point in conferring rights unless we confer the capacity to vindicate those rights. That is the gap in the Bill as I see it and I do not understand how the aggrieved person, corporate or otherwise, can be expected in all circumstances to be able to do so.

Mr. O'Malley:

I believe that there should be no special rule in relation to the awarding, or non-awarding, of costs under this section. The thinking behind this amendment appears to be that it would make it easier for actions to be taken. However, there are at least two difficulties arising in that regard. First, the plaintiff in an action under section 6 could be a competitor or the undertaking against whom the action is taken. Indeed, the plaintiff could be far bigger and in a much stronger financial position than the defendant and he could take the action for all the wrong reasons. The action could in the circumstances be an almost anti-competitive act or abuse of the dominant position.

The rules which apply to awards of costs should not be specially weighted in favour of one party, particularly where the possibility of the sort of situation I envisaged in that regard could arise. Second, there must be a balance between giving reasonable access to the courts on the one hand, which I am sure we all want to do, and not encouraging excessive levels of litigation on the other, which I am sure we are equally anxious to avoid. This amendment would make a plaintiff immune from having costs awarded against him in almost any circumstances unless it could be shown that his case was "totally devoid of merit". There is a real danger that this test would be too easy to pass and it could and would encourage excessive litigation, sometimes by the wrong people for the wrong reasons.

Deputy Taylor makes it hard for any Minister, even one sympathetic to the underlying idea of what he is trying to do, to be sympathetic by putting down an amendment of this kind. Unless the case is totally devoid of merit it could be found by the court to be devoid of merit and taken for all the wrong reasons. They would still be in the position where they could not award costs against the plaintiff.

Mr. Taylor:

I would not mind dropping the word "totally".

Mr. O'Malley:

It is indicative of the Deputy's approach and it is not on.

Deputy Rabbitte made several references to the taxpayer and seemed to assume that I would refuse to accept this amendment on the grounds that it would cost the taxpayer money. The taxpayer very rarely enters into this and would not be a factor. It is not to save the taxpayer; it is to try to achieve equity between parties who litigate. Deputy Rabbitte asked how an aggrieved person can vindicate the rights conferred on him by this Bill. He referred to amendment No. 23 and he talked about the role of the Authority. He will appreciate that this does not arise on amendment No. 20, which is being taken on its own.

Mr. Rabbitte:

I merely have an eye on the clock.

Mr. O'Malley:

The possible role of the authority was discussed here today and it was also debated at considerable length on Committee Stage. It was decided that this should be a civil Bill and should not be a Bill of criminal sanctions. Like any branch of civil law, the vindication is a civil process.

Deputy Rabbitte also asked whether I considered that the Bill will be a deterrent. It certainly will, the great majority of people will obey the law and the remedy for the small minority who do not is in section 6. I am not naive enough to think, as the Deputy suggested, that because this is on the Statute Book it will not be necessary to use the provisions to enforce it or to vindicate rights. Of course it will be necessary, but we must also make sure that the process of vindication is such that only real rights and a genuine sense of grievance are vindicated. The Bill should not be used as a means of trying to get at competitors in one way or another, particularly by bigger people to get at some of their smaller competitors. For example, if you gave a large supermarket chain a virtual indemnity against having costs awarded against them, they could certainly afford to pursue some small supplier who might have annoyed them. It is better to allow the court to have discretion in regard to these matters and let them operate it in the usual way instead of forcing artificial rules of this kind on them.

Mr. Taylor:

I will reply briefly to what the Minister said. He posits the position of what he calls a major supermarket chain going after in the courts a small supplier — those are his words and not mine — presumably trying to make out that the small supplier was abusing a dominant position in the market. If those facts are disclosed, quite clearly no court would have difficulty in deciding that it is totally devoid of merit. If, as the Minister said, a major supermarket chain was going after a small supplier, that would be totally devoid of merit and costs would be given against them, notwithstanding my amendment. Therefore that does not add up. To say that the adoption of my amendment would lead to excessive levels of litigation does not hold up either. Even without the risk of costs being given against a person, to undertake a major action in the High Court or even the Circuit Court is a very serious matter and would involve huge expenditure to that person, whether they won or lost. That is not something that would be lightly undertaken. I cannot see that that would give rise to excessive litigation. It might be a small factor where a person is in doubt as to whether or not to avail of their rights under this Bill, but apparently even that small matter is being denied them.

Amendment put and declared lost.

An Leas-Cheann Comhairle:

We now move to amendment No. 21. Amendments Nos. 23, 24 and 26 are related. It is proposed therefore to take for discussion purposes amendments Nos. 21, 23, 24 and 26 together. Is that agreed? Agreed.

Mr. Hogan:

I move amendment No. 21:

In page 6, between lines 34 and 35, to insert the following:

"(4) The Authority shall have a right of action in respect of an agreement, decision or concerted practice or an abuse which is prohibited under section 4 or 5 for the relief specified in subsection (3) (a).".

This amendment basically seeks to give the Authority more legislative power, independence and autonomy in pursuing matters in their own right and taking action in respect of any agreement, decision, concerted practice or abuse prohibited under section 4 or section 5. In this Bill many powers of investigation are being given to the Competition Authority, but the Authority are not being given sufficient powers of enforcement. The system of remedy and enforcement is weak. Section 6 gives power to an aggrieved person to take action in the High Court as a result of activities undertaken contrary to the provisions in the Bill, and relief may be granted by way of injunction. The Minister also has power to apply to the court for an injunction in respect of the continuation of activities prohibited under section 4 or section 5. I cannot understand why the Competition Authority are not being given the same powers, in the event of complaints from aggrieved parties, to apply to the court for relief by means of injunction against activities that are considered to be in contravention of section 4 or section 5. Fine Gael put down this amendment so that some autonomy would be given to the Competition Authority to take an action in court on behalf of an aggrieved person.

The difficulty arises on the question of enforcement of the legislation. For example, a person supplying milk to a large supermarket chain may be dependent on that supermarket for his living. It is very unlikely that such a small supplier will take an action against a large supermarket chain because of the cost involved and the risk of losing the contract to supply the product. In those circumstances if the Authority is satisfied that a person has a grievance they should have power to take action and bring the matter to court. Perhaps the Director of Consumer Affairs and Fair Trade could be given such a power also. It is important that the Competition Authority have sufficient powers to take such action in court. The aggrieved party may not take the action because of the reasons I have just outlined. It would cost a lot of money to take a large supermarket to court and the case would surely end up in the High Court. That would involve a lengthy and expensive procedure, and by the time the matter is heard in the High Court the aggrieved person would probably have gone out of business. That is the anti-employment feature of this section.

I am not happy with the question of enforcement. The Competition Authority are not being given sufficient powers to act promptly in arresting whatever problems arise and to take action on behalf of the aggrieved person.

Mr. Rabbitte:

My amendment No. 23 is related to this amendment, and I have already spoken to the amendment. I agree with the thinking that Deputy Hogan has outlined. I cannot see where the conflict arises in terms of the necessity to have enforcement procedures commensurate with the powers in the Bill. I would draw the attention of the Minister to the wording of my amendment, which requires the Authority to be satisfied that a person has reasonable grounds for action and that in such a circumstance the Authority may initiate the action. It does not impose an obligation on the Authority to do so. It says that in circumstances where the Authority are satisfied that any person has reasonable grounds for action in consequence of any agreement, decision, concerted practice or abuse under section 4 or section 5 but lacks the financial capacity to initiate such action the Authority may do so.

That amendment is very well circumscribed because there are a great many obstacles that must be surmounted by the person in question. He must have sufficiently reasonable grounds for action and must satisfy the Authority that there is a basis for action. He must certainly satisfy the Authority that he lacks the financial capacity to do so. Other than vesting this power in the Minister, I am not clear how a person in that circumstance is expected to vindicate his rights. I have listened very carefully to what the Minister had to say on this matter. I know what he said about the civil process and so on, but the fact remains that it will inevitably arise that the aggrieved person will find himself precisely in the circumstances envisaged by this amendment and will not have the resources to initiate the action and vindicate his rights. That must happen; it will inevitably happen. I do not understand why it is necessary to distinguish between the role of the Authority as conferred elsewhere in the Bill and the enforcement role provided here for use by the Authority if it so wishes and if it feels that the grounds are sufficiently compelling to warrant its use. I look forward to the Minister's reply.

Mr. Taylor:

I agree with the comments made by Deputy Hogan and Deputy Rabbitte. My approach to the issue was pretty much the same, although I went about it in a different way by purporting to add in that the Authority as well as the Minister would have the right of action. It seems to me that that could do no harm. It is possible that the Authority would be the appropriate body to do that, they would have expertise in the field and they would be involved in it. I do not foresee that such provision would be used very often. It is not an ideal solution to the difficulty anyway because the remedies that would be open to either the Minister or the Authority would be somewhat more limited than those open to an ordinary citizen in the sense that an ordinary person who was affected could get damages, but presumably the remedy of damages would not be open to either the Minister or the Authority if they were to bring proceedings because they themselves would not have suffered any damage. The remedy by way of injunction or declaration would of course be open to them, but I do not suppose that the remedy of exemplary damages would be available to them either. That would not be an ideal way to go about the enforcement of the Bill, but it would be some improvement of what we have.

Mr. Enright:

I shall speak briefly on this matter because of the constraints on time. I go along with the points made by Deputy Hogan, Deputy Rabbitte and Deputy Taylor. In several aspects people for one reason or another do not have the financial resources to enable them to seek legal redress to defend their position. The Competition Authority should be given the power to go into courts and act on their behalf and make sure that a case is made.

I realise that the issue came up earlier when the matter of the abuse of dominant position was debated, but I wish to refer to one group of people in particular. The Minister knows of the position in relation to electrical dealers. The matter came up during debate on the Second Stage of the Bill. A serious problem exists in that the ESB have a dominant position in relation to their method of billing. This is a matter of public policy and it is a matter deserving of detailed investigation in order to reach a resolution. Electrical dealers are certainly not in a position to act and to bring a case on their behalf. A large number of electrical dealers have lost out and a significant number of them have closed down in the past few years. The Minister understands the seriousness of the problem. I suggest that it would be perhaps in this kind of instance that the Competition Authority would be able to act.

A similar position exists in relation to very large dealers. Deputy Hogan mentioned the likes of supermarket groups as against small grocers, small milk suppliers and so on. A serious situation arises there also and the Minister has acknowledged that on several occasions. The matter of petrol deliveries presents another problem. Dealers do not agree to provide deliveries to some of the smaller stations around the country. I ask the Minister to see what can be done in that regard. The issue is worthy of attention.

The establishment of the Competition Authority is a very important part of the Bill, but the Authority should be given more extensive powers.

Mr. O'Malley:

The four amendments under discussion are essentially the same. They have the same objective: they seek to give the Authority the power to take action on behalf of itself or someone else. During debate on Committee Stage I stated at some length and several times that the principal task of the Authority was to consider applications for exemptions and for negative clearance and to issue or not issue, as the case may be, licences and certificates as a result. Under the Bill that has to be the central function of the Authority. The daily task of the Authority will be to investigate and adjudicate on such applications and it would therefore, in my view, be wrong and inappropriate to give the Authority the further role of prosecutor. That would be something akin to there being a preliminary investigation in the District Court and then the District Court being asked to take over the prosecution in the Circuit Court or the Central Criminal Court.

One of the core features of the Bill is its enforcement mechanism, which is based on an equitable balance between regulation on the one hand and the need to preserve and safeguard economic liberty on the other hand. Under this Bill enforcement will be through private action for the most part. I would have to reject any suggestion that would seek to unhinge that balance.

It is worth noting that apart from the single phrase "the Authority" amendment No. 21 is exactly the same as section 6 (4). The Minister already has all of the powers that Deputy Barry would seek to give to the Authority. I think that it is really enough for one public authority to have those powers.

The other point that I want to remind the House of, because all Deputies who spoke referred to the need to take action to get damages, is that under the amendment that has been moved, which is an exact copy of section 6 (4)——

Mr. Hogan:

It is not.

Mr. O'Malley:

——damages would not be available because the Authority would be able to get only the relief specified in section 6 (3) (a), relief by way of injunction or declaration. In the example given by all of the Deputies who spoke to the amendments, that relief would not apply anyway, even if the amendment were accepted.

I myself was of the view that it would perhaps be preferable in certain circumstances for the Minister to have the right to damages under section 6 (4). In some cases the obtaining of an injunctive relief comes too late, the damage has been done. I put it to the Office of the Attorney General that I should like to delete (a) at the end of section 6 (4), which would allow the reliefs provided by section 6 (3) (b). I was very strongly counselled against that idea and was told that in our law a plaintiff by and large cannot get damages for loss that he himself does not suffer. As a rule, one cannot get damages on behalf of someone else. There are certain very limited exceptions to that rule, but unless within the Bill there is set up a rather convoluted system of representative or class actions or something of that kind that the Minister could take and some method whereby he could either distribute the damages to injured parties or, alternatively, pay the damages into the Exchequer, then the damages aspect simply could not be pursued. The kind of provisions that Deputies have been arguing for could not be granted under their own principal amendment, amendment No. 21. I draw the attention of Opposition Deputies to the fact that they specifically confine relief to the relief specified in section 6 (3) (a). For that reason, Deputies may, on reflection, agree that these amendments would not in fact be appropriate, whatever the intention, and they might not pursue them.

An Leas-Cheann Comhairle:

I am sorry, but I must now put the question as it is 10 o'clock.

Mr. Hogan:

I want to strongly oppose the use of the guillotine on this Bill. We have 40 more amendments to deal with and the Minister says it is important legislation. Surely we should get an opportunity to discuss the other amendments.

An Leas-Cheann Comhairle:

Deputy Hogan, I am afraid that you are only wasting your sweetness. What has been decided has been decided.

Mr. Hogan:

I am not wasting my sweetness. Obviously the Minister wants to get something before the programme for Government review during this month and he wants to push through this Competition Bill very quickly. We have heard nothing for the past few years.

An Leas-Cheann Comhairle:

I withdraw the word "sweetness" and we will call it the opposite. I must put the question now.

Mr. Hogan:

I want to object to the way this Bill is being rammed through the Dáil.

An Leas-Cheann Comhairle:

I must put the question. The question is: "That the amendments set down by the Minister for Industry and Commerce are hereby made to the Bill, that Fourth Stage is hereby completed and that the Bill is hereby passed."

The Dáil divided: Tá, 71; Níl, 40.

Tá

• Ahern, Dermot.
• Ahern, Michael.
• Aylward, Liam.
• Barrett, Michael.
• Brady, Gerard.
• Brady, Vincent.
• Brennan, Mattie.
• Brennan, Séamus.
• Briscoe, Ben.
• Burke, Raphael P.
• Calleary, Seán.
• Callely, Ivor.
• Clohessy, Peadar.
• Connolly, Ger.
• Coughlan, Mary Theresa.
• Cowen, Brian.
• Cullimore, Séamus.
• Daly, Brendan.
• Davern, Noel.
• Dempsey, Noel.
• Dennehy, John.
• Ellis, John.
• Fahey, Frank.
• Fahey, Jackie.
• Fitzpatrick, Dermot.
• Flood, Chris.
• Flynn, Pádraig.
• Gallagher, Pat the Cope.
• Geoghegan-Quinn, Máire.
• O'Rourke, Mary.
• O'Toole, Martin Joe.
• Power, Seán.
• Quill, Máirín.
• Reynolds, Albert.
• Roche, Dick.
• Smith, Michael.
• Harney, Mary.
• Hillery, Brian.
• Hilliard, Colm.
• Jacob, Joe.
• Kelly, Laurence.
• Kenneally, Brendan.
• Kirk, Séamus.
• Kitt, Michael P.
• Kitt, Tom.
• Lawlor, Liam.
• Lenihan, Brian.
• Leonard, Jimmy.
• Leyden, Terry.
• Lyons, Denis.
• Martin, Micheál.
• McCreevy, Charlie.
• McDaid, Jim.
• McEllistrim, Tom.
• Molloy, Robert.
• Morley, P. J.
• Nolan, M. J.
• Noonan, Michael J.>
• (Limerick West).
• O'Connell, John.
• O'Dea, Willie.
• O'Donoghue, John.
• O'Kennedy, Michael.
• O'Leary, John.
• O'Malley, Desmond J.
• Stafford, John.
• Treacy, Noel.
• Tunney, Jim.
• Wallace, Dan.
• Wallace, Mary.
• Walsh, Joe.
• Wilson, John P.

Níl

• Ahearn, Therese.
• Barnes, Monica.
• Belton, Louis J.
• Boylan, Andrew.
• Bradford, Paul.
• Browne, John (Carlow-Kilkenny).
• Bruton, Richard.
• Connaughton, Paul.
• Connor, John.
• Cotter, Bill.
• Creed, Michael.
• Crowley, Frank.
• Currie, Austin.
• D'Arcy, Michael.
• Deasy, Austin.
• Deenihan, Jimmy.
• Doyle, Joe.
• Durkan, Bernard.
• Enright, Thomas W.
• Fennell, Nuala.
• Finucane, Michael.
• Flaherty, Mary.
• Flanagan, Charles.
• Harte, Paddy.
• Higgins, Jim.
• Hogan, Philip.
• Kenny, Enda.
• Lee, Pat.
• Lowry, Michael.
• McGahon, Brendan.
• McGinley, Dinny.
• McGrath, Paul.
• Mitchell, Jim.
• Nealon, Ted.
• Noonan, Michael. (Limerick East).
• Owen, Nora.
• Reynolds, Gerry.
• Sheehan, Patrick J.
• Timmins, Godfrey.
• Yates, Ivan.

Tellers: Tá, Deputies V. Brady and Clohessy; Níl, Deputies Flanagan and Boylan.

Question declared carried.