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Dáil Éireann debate -
Wednesday, 26 Jun 1996

Vol. 467 No. 5

Written Answers. - Imported Goods Prices.

Mary O'Rourke

Question:

9 Mrs. O'Rourke asked the Minister for Enterprise and Employment the action, if any, he proposes to take following his meetings with the distributors of magazines, recorded music and books regarding their pricing policies for goods brought in from the United Kingdom; when a director of competition enforcement will be appointed to take control of this alleged pricing scandal; and if he will make a statement on the matter. [13735/96]

I refer the Deputy to my reply to her Question No. 9939/96 of 16 May 1996 (Vol. 465 No. 5, Cols. 1368-1378). As I stated then I asked the Director of Consumer Affairs in February to investigate the prices of magazines imported from the UK.

The director's report, which I published on 22 April, concluded that, inter alia, the single biggest factor influencing the price differential was the differential VAT treatment of magazines in Ireland and the UK.

However, the report also concluded that VAT does not fully explain the price difference. Two other factors are at work: sterling/punt conversion; and what is known in the trade as a margin for "uplift", which is designed to cover distribution and other costs associated with the sale of British magazines in Ireland.
A formula for this uplift was agreed with the now disbanded National Prices Commission back in 1983. It was fixed at 5 per cent at a time when the Irish pound was worth only 85 pence sterling. In the meantime the importers have, to their own benefit, increased the 5 per cent uplift to effectively 10 per cent. There appears to be no justifiable reason for this and it means that Irish prices are higher now than they would be if the original National Prices Commission formula of 5 per cent was being adhered to strictly.
In addition, the report of the Director of Consumer Affairs referred to procedures whereby the importers make available to retailers a ready reckoner or conversion tables, which result in the same Irish retail price for the same UK cover price on a uniform basis throughout the country.
Since the publication of the report I have considered the matter in some detail. I have met the two main importers of British magazines, Easons and Newspread. They have also made written submissions and supplied further information. I have also met, and have had detailed and extensive discussions, with the two bodies representing the newsagents in Ireland, the Irish Retail Newsagents Association and the National Federation of Retailed Newsagents.
The Director recommended that the matter be investigated by the director of Competition Enforcement to be appointed under the Competition (Amendment) Bill, 1994. The Second Stage of the Bill was taken in the Seanad on 5 June and the Committee Stage in the Seanad will be taken tomorrow, 27 June. It is the intention to appoint the director as soon as possible and the arrangements for pricing magazines will constitute a priority task for the director.
In addition I am advised that I have the power to make a maximum prices order under the 1972 Prices Act. I have decided to make such an order, fixing the wholesale price of British magazines according to the formula:
UK Sterling Cover Price ÷ rate of exchange of purchased currency plus 5% + VAT = Irish selling price.
Further I have asked the consultancy unit in the Department to advise me as to the question of appropriate margins having regard to the findings in the report of the director.
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