First, may I refer to my reply to a related question by the Deputy on 25 September 1996, as reported in volume 469(1) at columns 435-438 of the Official Report, when I reiterated that the only investigation initiated by me in the case of the products concerned relates to the retail prices of magazines imported from the United Kingdom.
As regards magazines, I informed the Deputy in reply to Question No. 151 on 10 October 1996 that I had 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-á-vis sterling was not being reflected in lower cover prices.
On that occasion I enumerated the principal findings in the Director's report to me, which were 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 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distribution of these magazines here, the distributors had in the meantime increased the uplift to 10 per cent; it was no longer valid for the distributors to rely on a formula which is 13 years old, and which had not been reviewed, to justify current prices; the operation of the complex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 newsagents are given a guaranteed margin on each magazine and do not compete on price.
I also recalled the circumstances, arising from my consideration of the Director's findings and the outcome of consultations with the two main importers-distributors and retail newsagent interests, culminating in my decision to make a maximum prices order for imported magazines on 9 July 1996; the action by the principal distributor — which in an affidavit had claimed the order would result in an annual loss of profits of £1 million and the consequential loss of 200 jobs on the distribution side of their business — in conjunction with one of the retail newsagent interest, in applying to the High Court seeking an interlocutory injunction, before the order could take effect, and a judicial review; and that the legal advice available to me, was that I should revoke the order.
I revoked the order on 14 October 1996. I have also arranged that the consultancy unit in my Department would undertake an investigation of the cost structure, both wholesale and retail, and operating margins for Irish as well as imported magazines. This investigation is now in progress and comprehends the practice by the distributors of imposing delivery charges, the distribution arrangements for such magazines and the extent to which they are connected with those for newspapers.
May I draw the attention of the Deputy to the recommendation on page 10, paragraph 4.7 of the report by the Director of Consumer Affairs which states "The Directors view is that there is enough to be concerned about in this matter to justify an investigation by the Director of Competition Enforcement...".
The Director of Competition Enforcement is now seized of the matter.