Dáil Éireann debate -
Wednesday, 11 Dec 2002

Vol. 559 No. 2

Adjournment Debate. - Dairy Industry Cartel.

Mr. Eamon Ryan

I appreciate the opportunity to raise this issue. Anyone who saw the "Prime Time" programme last night would have been shocked at the exposure of such an organised cartel, the object of which was to defraud the Irish people by having higher prices and controlled marketing of that basic commodity, milk. I do not know if it shocked people or confirmed their worst suspicions about what is happening in the country at present. It seems that no matter what area one turns to one is subject to incredibly high prices. We are becoming uncompetitive from inflation. It is also a difficult country in which to live due to the exceptionally high prices in areas like insurance, where again there are concerns about cartels, banking costs and professional services. I could list a range of areas where we seem to be willing to let large business interests set the agenda in terms of price and market conditions.

I congratulate the programme makers for going about their work so furtively. It highlighted something which we all know is there but feel we can do nothing about. It makes us deeply unhappy about the way the country is run. I raised the matter to ask the Minister what he feels can be done about it. It is not that I expect the Minister to come out tomorrow and start sorting out the Irish milk industry or any other industry. It is impossible for the Minister to completely interfere in set market conditions. The job is most properly taken on by the Competition Authority, which has been working hard in this area and in a number of other areas. While the Competition Authority may huff and puff and act as an advocate for open and perfect competition, we have an atrocious record on enforcement. We cannot apply the legislation we have introduced to actual final effect. That is what I wish the Minister to address. How do we now move the three pieces of legislation we have enacted in swift order, the 1991, 1996 and 2002 Competition Acts?

This is an amazing amount of legislation in one area over a short period of time. However, the legislation is failing to work because, like in so many other areas of Irish life, we are seemingly unable to enforce it. I know it was not highlighted on the programme last night but the Competition Authority used whatever resources it had to try to pursue enforcement in the case of the dairy industry. A case for criminal proceedings was sent to the Director of Public Prosecutions but because of the difficulty in pursuing evidence, the director decided not to proceed. I have been told that the Competition Authority is pursuing a civil case against some of the people who operated in this case and I am glad of that. However, a civil case has little teeth and will only result in an injunction or a rap on the knuckles rather than a real move towards change.

A European directive on competition law enforcement has just been passed and it is opportune for the Opposition to ask the Minister how we will proceed in terms of enforcement. Why are we failing in court to bring about change in sharp practices engaged in by big businesses which are becoming increasingly apparent in the cement industry, insurance, banking and other areas? I do not wish to presume guilt until a case has been proven but the public is aware that it seems to be the victim of certain market conditions that support the business community rather than the customer.

In regard to a philosophical point about competition, our party welcomes the work done by the Competition Authority in trying to create perfect conditions in the domestic market. That is welcome.

An Ceann Comhairle

The Deputy's five minutes have concluded.

Mr. Eamon Ryan

We are wary of competition in other areas where natural—

An Ceann Comhairle

I ask the Deputy not to go over his time at this hour of the night as it is unfair to the staff.

Mr. Eamon Ryan

I appreciate that.

Minister of State at the Department of Enterprise, Trade and Employment (Mr. M. Ahern)

I thank Deputy Ryan for raising this matter. I am aware of the general contents of last night's RTE "Prime Time" programme which carried a report on possible cartel activity in the liquid milk sector. Allegations of this type give rise to concerns with regard to the effective operation of competition in this sector and the negative consequences for consumers arising from alleged restrictions in the sector.

It is necessary to state that it is not my Department's function to investigate allegations of anti-competitive activity. The Minister for Enterprise, Trade and Employment is responsible for competition policy. Responsibility for the enforcement of competition law is a matter for the Competition Authority.

Cartel activity and the elements which constitute it is a serious offence. It is one of the hard-core offences set out in the Competition Act, 2002. It consists of price fixing, limiting output or sales or market rigging. It is a criminal offence and there are serious sanctions for those convicted of such activities.

The issue of price fixing in any area of the economy is a serious one for producers and consumers alike. It stifles the market, producers become locked in and are prevented from increasing market share by offering a better deal and consumers cannot avail of the benefits which lower prices can bring. Producers become inefficient and consumers lose out.

Earlier this year the Competition Act, 2002, was passed by the Oireachtas. This Act consolidates and modernises the statutory arrangements for competition and mergers. The enforcement of competition law has been strengthened by a number of measures including powers of arrest and detention for hard-core competition law offences. Tougher penalties have been introduced for hard-core competition offences such as price fixing and market sharing. The maximum imprisonment penalty is increased from two to five years in the case of the more serious category of offence such as price fixing. The category comprises agreements between competing undertakings, a decision made by an association of competing undertakings or a concerted practice engaged in by competing undertakings, the purpose of which is to directly or indirectly fix prices with respect to the provision of goods or services to persons not party to the agreement, decision or concerted practice, to limit output or sales, or to share markets or customers.

As I have stated, implementation of the Competition Act, 2002, is a matter for the Competition Authority which is an independent enforcement agency. The remit of the authority extends to all areas of the economy. It has the power to investigate breaches of the competition law by virtue of section 30(1) of the Competition Act, 2002, which provides for the authority, "to carry out an investigation, either on its own initiative or in response to a complaint made to it by any person, into any breach of this Act that may be occurring or has occurred".

Section 31 of the Act provides that the authority in its investigations may summon witnesses to attend before it, examine on oath the witnesses attending before it and require any such witness to produce to the authority any document in his or her power of control.

Section 45 also gives enhanced powers to authorised officers of the authority when carrying out investigations. These powers include, inter alia, enhanced search and entry powers, powers to seize and retain books, documents and other forms of records and powers to inspect and take extracts from any such books or records.

The authorised staffing levels in the authority have also increased substantially over the past few years, from 29 in 2000 to its current level of 47. The majority of the additional resources are at professional level, economists and lawyers, to assist it in its enforcement and advocacy functions.

I urge anyone with evidence of price fixing or any other anti-competitive offences to give that information to the Competition Authority. To deal with anti-competitive activity one needs to obtain evidence which can be used in court which is the final arbiter in deciding whether the Competition Act has been breached.

There are two alternative ways in which action can be taken. Any evidence of price fixing should be passed to the Competition Authority and those with allegations to make should use the public enforcement system via the Competition Authority. Section 14 of the Competition Act, 2002, provides that any person aggrieved in consequence of anti-competitive activity has a right of action in the courts for relief by way of injunction or declaration and damages including exemplary damages.

An Ceann Comhairle

The Minister of State's five minutes have concluded.

Mr. M. Ahern

I would again encourage anyone who has evidence of anti-competitive activity to come forward as it is only by acting on hard evidence that the authority can make progress in rooting out anti-competitive activity which has such negative effects on industry and consumers.

An Ceann Comhairle

I have asked the Minister of State to conclude. In fairness to the Deputy I asked him to conclude and we must have fair play on both sides.