Vol. 489 No. 2
2 Mr. Broughan asked the Tánaiste and Minister for Enterprise, Trade and Employment if she will use her powers under the Competition Act, 1991, to instigate an investigation into the Diageo-Guinness takeover of United Beverages; and if she will make a statement on the matter. [7741/98]
As I previously outlined to the House, Guinness Ireland Group voluntarily notified its proposed takeover of United Beverages Holdings to the Competition Authority on 4 September 1997 seeking clearance of the proposal under the competition Acts. This ensured the proposal would be subjected to a thorough investigation by an independent authority and rendered it unnecessary for me to exercise my powers under the competition Acts.
The Competition Authority has not yet finalised its consideration of the proposal and has yet to make its decision. Accordingly, I do not consider it appropriate to comment while the matter is in the hands of the independent statutory authority.
On a previous occasion the Minister accepted responsibility for missing the original deadline for reference of the matter to the Competition Authority. We are faced with a situation where Diageo will have 100 per cent control of the largest drinks wholesaler in the drinks business, a shareholding in the second largest and 100 per cent control of the third largest. Because of its over-reaching power in up to 11,000 outlets it can block the entry of new entrants into the market. The European Commission decided in October that, because Guinness, Grand Met and Diageo had too much power in the distribution market here, with the result that the environment was anti-competitive, they should divest themselves of some of their distribution business. If the takeover of United Beverages proceeds, the decision of the European Commission will be undermined and we will be left with a closed shop in the drinks distribution business. It is critical that the Minister should try to prevent this.
Does the Tánaiste find it disturbing that the Competition Authority has refused to meet some of the key objectors, such as Murphys and Irish Distillers, and other important domestic Irish producers?
The Competition Authority is the appropriate authority to examine the matter. The Minister has two powers under the Competition Acts. One is under section 11 where the authority can be asked to carry out an inquiry or an investigation to establish the practice in relation to the distribution and supply of goods or the provision of services. Under section 14 the authority can be asked to carry out an inquiry if the Minister is of the opinion that someone is abusing a dominant position. Before a Minister can do that, however, they must establish that a company is in a dominant position and is abusing it. Under EU law, a dominant position is considered to arise when one can act independently of one's competitors — in other words, when one's competitors do not matter. I am not certain those circumstances arise in this case. We should await the report of the Competition Authority which has issued its initial recommendation and invited submissions, which it is now assessing, before we make any further comment.
Does the Tánaiste have in her possession a draft of the Competition Authority's decision? Representations made to me suggest that may be the case. Many independent Irish producers want the Tánaiste to re-establish her competitive credentials in this regard. A mistake was made by the Department last summer before the 28th Dáil met and we had a chance to question the Tánaiste about it. However, I commend her for taking responsibility for that. This situation is dragging on and it could lead to job losses. Many smaller Irish brewers and distillers believe that further inward investment will be discouraged if this overweening giant, Diageo, is allowed to dominate the wholesale production business.
Is the Tánaiste concerned that Diageo Guinness-Grand Met is possibly the group with the biggest advertising share in the press? Many small producers believe this issue has not been covered adequately in the media. When Deputy Owen and I raised it on past occasions, we received little media coverage. Small competitors are worried that the media are not prepared to allow a full and frank discussion of this matter because of their fear of losing advertising revenue. The evidence available to me suggests that this take-over should not go ahead. The Tánaiste should ensure it does not happen and that competition is maintained in the drinks business.
The Competition Authority informed me that it was likely to approve this take-over and asked me for observations. It informed me before 5 March that it was its intention to grant a licence in the case of Guinness Ireland Group, United Beverages Holding. I asked it to ensure that competition operates in all sectors of the economy, particularly in markets which, for whatever reason, have been characterised by dominance or high levels of concentration in the past. I wanted such markets to be opened up to the full forces of competition. I also said we trusted that the authority would make every reasonable effort to afford each of these parties objecting such opportunities as they request to express their concerns and to give full consideration to all submissions before coming to a decision. I am satisfied the authority will do that as it is a competent authority with the appropriate expertise.
I usually receive complaints that the authority is too aggressive in seeking to enforce competition or collect information. Recently, a number of Deputies from all sides of the House complained to me about one particular investigation in which it was involved. I do not have any function in relation to those matters. I have every confidence that the authority will take into account the various points made by the Deputy and interests in that sector.
I was not aware that this group is the biggest advertiser. However, that will not influence the authority as it is extremely independent and determined to ensure that competition exists in the Irish market.
The closing date for submissions was 6 March. Is the Tánaiste concerned that the Competition Authority did not meet the principal objectors?
I do not want to be critical of an independent authority which is funded by my Department. Provision was made recently to appoint another member to the authority to assist it in its endeavours. Competition is essential if we want to be able to withstand the pressures which will inevitably flow from economic and monetary union where our scope to manoeuvre will be limited. We will not be able to affect exchange rates, so competition policy will be even more important, particularly to ensure that consumers get value for money.
I would prefer if all parties were met — I do not know if they were met at a preliminary stage — but that is a matter for the chairman, Professor McNutt, and the members of the authority, particularly those carrying out this inquiry. It would be wrong for me to interfere. The important thing is that it makes the right decision, not necessarily that it does what is perceived to be the right thing. I am concerned about the right decision being made and I have every confidence it will do so.
