Dáil Éireann debate -
Tuesday, 19 Oct 1993

Adjournment Debate. - Drinks Industry.

Mr. R. Bruton

I thank you, Sir, for giving me the opportunity to raise this matter on the Adjournment, a matter which is causing concern particularly in Dublin city. We are all aware that under the Competition Act it is illegal for two or more businesses to come together to agree a price rise. Is it reasonable to expect the ordinary drinker to believe that the announcement by the Licensed Vintners Association to increase the price of a pint by 3p and the price of a half one by 3p is not collusion? It is unreasonable to expect them to believe otherwise. The Director of Consumer Affairs stated on public record that he believes there is aprima facie case that some collusion is taking place. It is regrettable that only the Minister can deal with this matter and that the director cannot do so himself.

This 3p increase is being imposed on top of a 2p increase imposed by Guinness during the summer. At that time the publicans tried to block the increase imposed by Guinness and it is disappointing to note they have switched from gamekeeper to poacher in such a short time. According to the consumer price index, the price of alcoholic drink increased by 3.3 per cent during the last 12 months, more than twice the increase of any other consumer product. The latest increase will push that figure up to 6 per cent, at least three times the rate of inflation. All other business had to honour commitments under theProgramme for Economic and Social Progress and deal with rising costs, but they have been able to avoid such large price increases.

The present increases are not due to increased taxes because for the first time in a number of years the budget did not impose a tax on drink. At that time the Minister for Finance indicated that he hoped the trade would follow his lead, but in this case his words have proved hollow. It is difficult not to believe there is an element of collusion attached to the increase. It is only two weeks since the wage increase that is supposed to have triggered the increase in the price of drink was accepted, and it is difficult to believe that the Licensed Vintners Association is unaware of what is happening on the ground. It is much more likely that it is trying to give a lead to its members in a collusive manner.

This matter illustrates how toothless are the consumer watchdogs we have set up, because neither the Competition Authority nor the Director of Consumer Affairs have the power to deal with the problem. Instead, the law quite unrealistically expects the aggrieved drinker to take a case to the High Court. Our only fallback is if the Minister can indicate tonight that he will investigate the matter and take action if necessary. The enforcement of competition law should not lie in political hands. We should give our consumer watchdogs power to act without fear or favour, they should not have to look over their shoulders to see if the Minister will promote an investigation or take action in a matter.

Another matter of concern during the past week is the fact that the giant Irish Distillers Group swallowed up Cooley Distillers with the loss of 29 jobs. It is evident that the sole aim is to reduce competition in the drinks industry, because they immediately closed down the operation of the Cooley distillery. That is an equally worrying trend in the spirits market. Is it good for the consumer or this country that such a competitor should disappear? I would like to hear the Minister's views on that matter because that type of takeover requires ministerial approval before a decision is taken.

In the past the price of drink has brought down Governments. Therefore, we cannot take this issue lightly; it is important for many consumers and I would like to know how the Government proposes to deal with the matter.

Minister of State at the Department of Finance (Mr. N. Treacy)

At the outset let me say that I, as well as Minister Quinn and the Government as a whole, share the concern of the Deputy in this matter. The outrage reflected in newspaper comment over the past two days is certainly justified as the licensed trade has once again proposed to raise its prices.

The rules of competition, which are now generally well known, prohibit price agreements and concerted practices which restrict competition. The prohibition includes decisions by associations which directly or indirectly fix purchase or selling prices and applies to price collusion or any arrangement to raise prices in unison. Price fixing in any of its guises is manifestly unacceptable and shows a blatant disregard for the competition law and for consumers. Although the price of alcoholic drink can and does vary between licensed premises, a decision by the trade association which causes prices to increase by a uniform rate needs some explanation.

It is certainly not in the interest of the consumer. We are not satisfied that the increase is warranted or can be explained or justified on the basis of any objective criteria. The latest proposal by the Licensed Vintners Association raises serious questions about competition and, as the Deputy suggested, the possibility of anti-competitive practices in the drinks industry.

What is also a source of concern is the fact that the vintners take the opportunity around this time of year, each year, to put up their prices. This annual round of price increases seems to operate like clockwork. It is time for the vintners to show responsibility towards consumers in matters of pricing and to fulfil their obligations and duties under our competition laws. Based on the past three budgets, the Government has shown responsibility in its attitude to taxation on drink and we expect a corresponding response from the vintners.

It should be pointed out that excise duty rates for alcohol products generally have not been increased since 1989. This was in recognition of the Single Market and the greater harmonisation of prices. There has therefore been a significant real decline in the tax element of drink in recent times. The Government is certainly playing its part. It is regrettable that the retail trade has not responded with equal restraint and regard for the Irish consumer and our tourist trade.

The procedure and methods used by the vintners in their pricing policies certainly need examination. For this purpose, my colleague, the Minister for Enterprise and Employment, has asked the Director of Consumer Affairs to let him have a full and comprehensive report on all aspects of this issue. It will then be for consideration what action to take under the appropriate legislation.

I will refer the other matters, to which Deputy Bruton alluded, to the Minister for Enterprise and Employment, Deputy Quinn, who will take appropriate action, if he has not already done so.