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Dáil Éireann debate -
Thursday, 10 Oct 1996

Vol. 469 No. 7

Written Answers. - Magazine Pricing.

Mary O'Rourke

Question:

151 Mrs. O'Rourke asked the Minister for Enterprise and Employment the reason the prices order has been lifted in spite of the fact that consumers continue to be overcharged in relation to the purchase of magazines imported from Great Britain; the new information, if any, he expects to receive from an economic analysis; the reason the clear findings of the Director of Consumer Affairs on this magazine pricing issue have been set aside; and if he will make a statement on the matter. [18207/96]

As the Deputy is no doubt aware, I asked the Director of Consumer Affairs some months ago to undertake an investigation into the prices of magazines imported from the United Kingdom because of the widespread perception that the benefit of the appreciation of the Irish pound vis-à-vis sterling was not being reflected in lower cover prices.

In his report submitted last April, the director found that:

— the two main importers/distributors determined the retail prices for such magazines on the basis of a variation of a formula first agreed by the National prices Commission (NPC) in 1983.

— in contrast to the inclusion of an "uplift" of 5 per cent agreed by the National Prices Commission, to compensate for the additional costs associated with the distribution of these magazines here, the distributors had in the meantime increased the uplift to 10 per cent.

— it was no longer valid for the distributors to rely on a formula which is 13 years old, and which had not been reviewed, to justify current prices

— the operation of the complex formula operated by the distributors resulted in the retailers charging the same price, and

— newagents are given a guaranteed margin on each magazine and do not complete on price.

On receipt of the director's report, I met separately the two principal importers/distributors and with the interests representing retail newsagents. On all those occasions I invited the interests concerned to justify the current pricing arrangements, having regard to the findings of the director. In addition, I subsequently afforded them the opportunity to make written submissions to me in support of their position.

Subsequently, I decided to make the Maximum Prices (Magazines) Order, 1996 on 9 July 1996. Before the Order could take effect the principal importer/distributor, joined by one of the retail newsagents' interests, applied to the High Court seeking an interlocutory injunction and judicial review. The principal distributor had claimed in an affidavit that the order would result in their sustaining losses on the sale of UK magazines alone of approximately £1 million per annum with the consequent potential to cause up to 200 job losses on the wholesale distribution side of their business.
Following the issues of legal proceedings and on the basis of the legal advice available to me, I decided to revoke the order. I have also decided that the consultancy unit in my Department shall undertake an investigation of the cost structure, both wholesale and retail, and operating margins underlying the prices of home as well as imported magazines. Such an investigation shall comprehend the distribution arrangements for such magazines and the extent to which they are connected with those for newspapers.
It is clear I have not set aside the findings in the report of the Director of Consumer Affairs on magazine prices.
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