Mary Harney
Question:6 Miss Harney asked the Minister for Enterprise and Employment the plans, if any, he has to impose limits on the market share controlled by any one company in the retail grocery trade. [10783/97]
Priority Questions. - Retail Grocery Trade.
I have absolutely no plans to impose limits on market share controlled by any one company in the retail grocers trade, nor in any other sector of the economy.
The Competition Acts 1991 and 1996 do not adopt such an approach nor does the competition law of the European Union. The approach favoured by domestic and European legislation in this area concerns abuse of dominance. Section 5 of the Competition Act, 1991 outlaws the abuse of a dominant position. In 1996, I strengthened the Competition Act, 1991 by giving substantial enforcement powers to the Competition Authority, the power of self-initiation and, also, expanded their professional staff. Abuse of a dominant position is now subject to substantial criminal and civil sanctions.
The imposition of limits on market share, as suggested in the Deputy's question, would be anti-competitive and contrary to the Single Market.Such limits would also constrain the capacity of businesses to grow to their potential and be hostile to business development; they would be inimical to consumer interests arising from reduced competition and undoubtedly promote inefficiencies. The imposition of limits on market would be a retrograde step.
Given the Tesco take-over of Quinnsworth/Crazy Prices, is the Minister concerned at the prospect of market dominance by a few powerful companies in the retail sector?
The issue of dominance within the Irish retail sector does not arise at present, there is no party dominance but there is a large number of suppliers within that sector. If and when a party became dominant and abused that position, it would be subject to competition law. That is the approach adopted in Irish law following on Articles 85 and 86 of the Treaty; in other words, it is not an offence for a company to grow large by successful business conduct but it is an offence for it to abuse that position. That is a very clear line drawn in Irish law and is the correct approach we should adopt in respect of matters such as these.
How does this differ from the Statoil take-over of Jet about which the Minister expressed concern last year in relation to market dominance?
The Statoil case differs considerably from this case. In the first instance, it fell to be considered within Irish law, not within EU competence. Secondly, Statoil proposed to enhance the market share of an individual player. That issue was a cause of considerable concern. This case is not proposing to enhance the market share of an individual company but rather a new company is taking over an existing company. The prime issue is that it falls into competence outside the State and does not fall for competence here. The approach adopted in Ireland of banning abuse of dominant position is the correct one. It ensures we have a vibrant and competitive market where companies can compete fairly and succeed.Equally, if, for example, Quinnsworth or Tesco propose to acquire further market share, as in the case of Statoil, that would fall due for assessment under Irish law, if the company they were proposing to acquire fell below the thresholds.In other words, the expansion by merger is restricted in Irish law but the expansion by good business is not restricted unless the person involved abuses a dominant position.
In response to Deputy O'Rourke the Minister referred to the commitments he has received to the Irish suppliers. Given the centralised purchasing practices of Tesco how does he envisage enforcing those commitments?
He has not a notion of enforcing them.
Tesco has given a clear commitment it will locate its buying office in Ireland so that it will be purchasing in Ireland. It has also indicated it will be increasing its purchases. These are solemn commitments to Government. No company of the nature of Tesco, who is seeking to make a future in the Irish market, is likely to ignore such commitments. I am confident the commitments being made and which are being underpinned by agreements entered into with Forbairt and An Bord Bia will be substantial and real. We will see the fruits over time as Irish suppliers have an opportunity to increase their sales as a result of this change in the marketplace.
What is the nature of the support from An Bord Bia and Forbairt?
There is no support to Tesco from An Bord Bia or Forbairt. An Bord Bia and Forbairt are sitting down with Tesco to look at sub-supplier programmes which Tesco would develop with Irish suppliers. Naturally Forbairt, representing the development side of support to Irish producers, and An Bord Bia, representing the marketing support to Irish producers, would be well placed to develop the details of such programmes to ensure they are effective. Also, they have worked out the volume of purchases being secured by Quinnsworth from Irish suppliers and are agreeing targets for the future which, in turn, could be benchmarked to see the progress being made. It is important that Forbairt and An Bord Bia act in loco of individual small sub-suppliers to ensure the systems developed are real, substantive and worthwhile.
Does the Minister consider it appropriate that the Government appointed head of An Bord Bia would make a political attack against an opposition party? I have never heard of it before. Given that he is of the same political persuasion I am sure the Minister considers it appropriate.
I do not know to what the Deputy is referring and I will not be drawn into such comments.
The Minister permitted him to do it.
The Deputy is descending in scatterings.
I have got a letter about it which I am publishing tomorrow.