Deputy Andrews was in possession and has 14 minutes remaining.
Competition (Amendment) Bill 2005 [Seanad]: Second Stage (Resumed).
Question again proposed: "That the Bill be now read a Second Time."
I wish to share time with Deputy Peter Power.
Is that agreed? Agreed.
As I was saying yesterday, I believe stronger enforcement measures need to be included in the Bill to enable the Competition Authority to engage in more criminal prosecutions in the types of cases in question. It is extremely difficult for a supplier to take a case itself because it would naturally upset its relations with retailers. This is a very serious problem.
The consumer strategy group has said there is a very strong need to radicalise the consumer. That is pushing an open door because every consumer is naturally sceptical about prices and fears being ripped off. It is easy enough to feed into this fear, if not to abuse it. The Hobbs factor over the summer was an example of this. It was a penalty kick and showed that some prices were higher than others, thus trying to prove there is a general pattern by considering specific examples. This is entirely unscientific and normally belongs in the realm of light entertainment rather than in the realm of public discourse, yet it managed to grab the attention of the nation. Having said that, I feel Eddie Hobbs was unfairly vilified at the time by a particular magazine. Nothing has come of the various allegations that were made against him and I do not expect anything will.
We failed to make the point that wages in Ireland have galloped ahead of price increases over the past seven or eight years. Examples of consumers being ripped off can be found but they do not point to a general pattern. Ultimately, the market will correct any imbalances. The example of alcohol is used widely but the inflation of alcohol prices in the rest of the European Union is far in advance of that in the Irish market. This proves there is no general pattern of being ripped off. We have a very open economy and naturally we will import inflation. Energy prices serve as a classic example. All energy prices are increasing and consequently people are noting increases in their electricity and gas bills. This is a consequence of our living in an open economy. Being in an open economy has many benefits but there are also downsides.
The Government has done much to try deal with the issue of increasing prices. The one issue that stood out for me during the last general election campaign was that of insurance costs. Many young people raised it with me and other Deputies. We have tackled it and prices have decreased to 1998 levels in some cases. This is to the credit of the Government. A consumer regulator is proposed to try improve consumer knowledge and this is to be welcomed. The general success of the economy ensures people can afford to pay for products. The fact that wage increases are ahead of price inflation proves this. The best comparison with other European countries can be made using the harmonised consumer price index. On utilising this measure one will note that Ireland matches the EU norm in terms of price increases. This is also to the credit of the Government.
The Bill should provide for stronger enforcement and investigative powers. Some mechanism should be created to make it easier for a supplier to take a case against a retailer. Perhaps an anonymity clause should be stitched into the Bill so a protest or allegation could be made at an early stage without one having to reveal the source of one's information.
We need to take advantage of technology in controlling prices. It was suggested that there should be an Internet portal for comparing prices, particularly in the grocery sector. We need to specify in the Bill bans on certain activities for which suppliers are called on to pay. I have been informed of examples of suppliers being expected to pay for golf outings, putting products on shelves, foreign study tours and promotion. Those practices, if they are found to exist, should be specified and banned in the Bill. I hope amendments can be made in that regard. I support the Bill.
In general, I welcome the Bill. I am happy the issue of below cost selling is being dealt with in the context of competition legislation, which is the proper context. Below cost selling, which was outlawed by the groceries order for many years, beginning in 1956, is not of itself wrong and should not be made illegal, which happened under the 1956 and 1986 orders. However, below cost selling with the specific intention of using one's relative economic strength to drive a competitor out of business in a sustained and targeted way is wrong and anti-competitive. It should be made illegal, but this should be done in the context of competition legislation, not in terms of price fixing legislation or regulations.
Price fixing regulation is not the appropriate method in this regard. It is an anachronism in 2006, and more reminiscent of the type of Government controls which operated in the eastern European economies after the Second World War, when people bought their food with coupons and vouchers at fixed prices, regulated by their governments. Ireland has an open, dynamic and modern economy and that sort of price fixing through Government regulation, for whatever noble reason, is an old-fashioned way of trying to influence the market.
Before discussing the detailed provisions of the Bill, I welcome the process which has brought us to this stage. It was correct for the Minister to set up an intensive public consultation process, bring all the players into the decision-making process and let all have an opportunity to make their case. The submissions made to the Department were detailed, complex and well researched, and the process provided the proper basis on which to bring this type of legislation forward. For that reason, I very much support it.
Given that we have decided the groceries order and price fixing regulations or legislation are not appropriate, we must decide whether competition legislation, existing and proposed, is the appropriate way of dealing with this matter. Whether competition legislation is sufficient and robust enough to deal with the acknowledged fears of the small retailers is what today's debate should be about. We must ask several key questions. What is the nature of the competition? Who is competing against whom? In what market are they competing? There are simplistic notions that once price fixing and below cost selling regulations are eliminated, the multiples will immediately begin a massive price slashing spree in an attempt to take out every small retailer and corner shop in the country. That is an utterly simplistic way to look at the complex market which constitutes retailing in 2006.
We must consider the question of who is competing against whom. It is certain that the multiples compete against each other. Tesco, Dunnes Stores, Aldi, Lidl and Spar are in a massive competitive market all of their own, leaving aside any small shop retailer or member of RGDATA. To introduce the possibility of below cost selling in that market would be a fabulous proposition because the consumer will be the ultimate winner and none of the players in that market will be driven out of business. There is also massive competition in the small retail market. Small retailers and corner shops compete against one another, which is right and proper.
There is competition at national and local level but we must remember that price competition is not the only type of competition, as has been suggested. Many other forms of competition exist, such as location competition. Given that Brown Thomas has a state-of-the-art shop on Grafton Street offering non-competitive prices, there would be no point in a competitor setting up in Navan, with all due respect to Navan, offering the same product at half the price. Nobody would buy its products and it would go out of business. There is also competition in the way service is provided, in regard to the diversity of the products provided and, importantly, there is serious competition with regard to the convenience of the consumer, leaving aside the aspect of price.
Many retailers express the fear, which I acknowledge, that the Bill will result in a sustained period of anti-competitive pricing by the national multiples against small retailers throughout the country. I am not convinced by this argument. While researching this matter, I was much taken by the 1999 report of the Competition and Mergers Review Group. Having carried out an exhaustive analysis of the market, the report stated the group concluded it was extremely unlikely that a firm with a market share of the larger Irish grocery multiples could mount a successful campaign of predation, at least on a national level. The fears of small local shops are unfounded in respect of a price war by the national multiples. However, if such a war was resulted, we would have to consider it.
We must take account of the well-founded advice of the Competition and Mergers Review Group. Having said that, it expresses no concern at national level. My concern and my main focus is anti-competitive practices at local level. My constituency contains a good example of these practices. A huge multiple outlet, Dunnes Stores, competes with a corner shop just 10 yards from it. In that microcosm of the market, there is no doubt that Dunnes Stores is in a dominant position, notwithstanding its share of the national market. In a sustained way, I have no doubt that it has the financial muscle to take out its competitor. Across every range of product, it could slash its prices, put the competitor out of business and then raise its prices. We must ensure competition legislation guards against such practices, but I am not convinced it does. This is the question we must address and be satisfied with before we complete this legislation.
There are two ways of approaching the issue. The aggrieved party — the small corner shop — could take its case to court. However, we all acknowledge that difficulties arise with regard to compiling economic evidence, notwithstanding the cost and the possibility the shop is fighting a price war. I acknowledge it is difficult for local shops to fight multiples in a legal way. The best way to approach this issue is to give vastly increased powers of policing, protection and enforcement to the Competition Authority. While I acknowledge some resources have been made available to the authority, I strongly suggest these are not enough. The Minister should consider giving the authority vastly increased powers to ensure it polices this area.
The Minister and his Department have a major role in this regard. They should police the Competition Authority and question it as to what is has done to police various areas, whether it has compared prices, how many complaints have been made, what it has done to follow up those complaints and whether the authority has compiled evidence to bring a case to court. One of the best ways to avoid competition like that which occurred between the multiple and the small corner shop 100 yards up the road from my home, which could occur in towns in my area like Nenagh, Abbeyfeale and Newcastle West, is to ensure that if multiples slash prices across a range of products, they do so in all their stores. This makes it much less economically viable for a multiple to engage in sustained predatory pricing to the detriment of small outlets. Such a change would also benefit the consumer. I ask the Minister to examine this proposition closely. If multiples engage in below-cost selling, which will now be legal, they should be forced to apply it in all their stores to prevent them from taking out small retailers in the manner I have previously described. However, in general, I welcome the fact that the Government proposes to introduce competition legislation which deals with price fixing rather than mere price-fixing regulations. I commend the Bill to the House.
I am pleased to have the opportunity to speak about this Bill. I am very concerned about the impact of this legislation on consumer prices. The submissions upon which the Minister chiefly relied to make his proposed changes to the competition legislation came from the Competition Authority and the consumer strategy group. The consumer strategy group argued that if the Minister revoked the groceries order and made the necessary changes to the Competition Act 2002, it would result in a 9% reduction in prices almost immediately. A few months later, the chairperson of the consumer strategy group decided that this figure might be too high, indicated that a figure of 3% might be more accurate and argued that such a figure might be achieved within 12 months.
Dr. John Fingleton, the former chairperson of the Competition Authority, stated that €500 million would be put back into consumers' pockets if the groceries order was revoked. This is an amazing figure. If this Bill is the Government's answer to Eddie Hobbs, we can look forward to new episodes of "Rip-Off Republic" for every year that this Government remains in office. The Government has done almost nothing to improve the lot of Irish consumers. It has presided over an appalling lack of competition in every area: energy, insurance, transport and communications. It was not until the momentum behind Fine Gael's Rip-Off Ireland campaign helped to spawn public outcry and a television series that the Government decided it needed to give the impression that it cared about consumer rights. Nothing could be further from the truth as the present Administration is responsible for no fewer than 41 stealth taxes in the past three and a half years.
This Bill is short in terms of words and benefits to consumers. The Minister can be assured that because of Fine Gael's total opposition to predatory pricing and market dominance, it will not support the Bill in its current form. It has become clear to him from the debate that many of his Fianna Fáil colleagues on the backbenches support what we have stated. In addition, the suppliers of indigenous Irish produce to particular multiplies and retailers will be forced to outsource to remain competitive. The consequent reduction in employment in the food sector is a worrying feature for many people. What consequences will this have on employment in areas across the country such as Mitchelstown, Charleville, Tipperary, Wexford and Kilkenny which produce milk, beef and other agricultural products? These potential consequences have not been debated or even touched upon in this debate. Given that agriculture is declining, there must be considerable anxiety in the food production industry. We have not addressed the consequences of the Bill for this industry.
Fine Gael believes that we cannot accept the Bill as it stands because it weakens a number of key protections for consumers and relaxes certain regulations dealing with the relationship between suppliers and the major multiples, with no benefit to the consumer. My party has no difficulty with reviewing the groceries order given that it has been in place for 17 or 18 years, but some provisions of the groceries order, which were of considerable assistance in achieving a level playing pitch, should have been included in this Bill. Fine Gael wanted to see rebates and discounts and a guarantee that they will be passed on to consumers. This all-important provision should be the major plank of this Bill, but there is nothing in it to suggest this will happen.
Fine Gael believes, and has consistently stated, that the groceries order should be replaced with a new law such as this legislation which would take account of the necessary changes to the Competition Act and modern trends in the grocery trade. The new law, when enacted, should protect our communities from predatory pricing by multiples and ensure we have choice and diversity in the food sector where multiples and local shops can compete on a level playing pitch. This is where the real concern lies. The local shops found in every village and community across the country are concerned about the abolition of the groceries order. These people provided credit when people could not afford goods or did not possess credit or laser cards when the country was less well-off and people needed to feed their families. Local grocers and local shops maintained and protected those families. These people sponsor local credit unions and GAA, rugby and camogie clubs. I am concerned for their future. They employ students in the summer, work long hours, and contribute significantly to our communities. We are not addressing the needs of these people, who have been burdened with a considerable amount of stealth taxes by the Government.
Ireland is crying out for change in the context of competition. Some 41 new stealth taxes have been imposed on everything from energy to stamps. We have suffered a drop of 22 places in our international competitiveness ranking. Dublin is now a more expensive city than Paris and Ireland is one of the most expensive countries in Europe. Some nights ago on the news we saw that Dublin is now a more expensive place to live than New York. That represents Government action in terms of imposing additional charges and taxes in order to make the country uncompetitive. Government inaction on the consumer agenda is undoubtedly part of the reason we are in this grave mess. However, if we really want to tackle the root cause of our high cost base — that feature will be more vital in the years ahead — it is time to take on the anti-competitive behaviour and rid this country, once and for all, of the cartels and agreements that work against the consumer interest. The Minister has set out his objectives to do that, but he is doing the opposite.
The Bill fails to do it in this case. Not surprisingly, it has all the hallmarks of having been hastily drafted and presented, and there are many flaws in it. The abolition of the groceries order and the introduction of these changes are clearly meant to take the heat off the Government for its inaction towards Irish consumers over a long period. Faced with the ever increasing costs, particularly those in the State sector, and in the context of considerable consumer concern about being ripped off, this administration has demonstrated inaction and neglect in terms of the plight of consumers. Aside from direct increases in costs of goods and services within the State, the Government has consistently failed to give consumers the benefit of competition in key sectors. Instead of truly taking a positive and pro-consumer stance on consumer issues, all we have had is lip service.
For example, we have a new national consumer agency, which has been presented as the saviour for Irish consumers, but it has very little power. All I have seen in recent times has been the spending of plenty of money on soft public relations initiatives. This is to present the agency as being on the side of the consumer. Few who have witnessed the activities of the national consumer agency since its establishment on an interim basis would be inspired with confidence that it will be the saviour of Irish consumers.
In particular, it has failed to give any indication of the areas it intends to tackle on behalf of consumers. It seems to be considering many areas. That is hardly surprising, given that the Consumers' Association of Ireland was ignored when the members of the agency were being appointed.
The Competition Authority's record in the area of enforcement has been dire. There is no evidence that it has successfully deconstructed any cartels in the economy, or taken on any hard cases in a manner that has benefitted consumers. The authority's approach to the financial services industry, which resulted in a weak and mealy-mouthed report, can be contrasted with the work of the National Consumer Council in Northern Ireland, where a hard-hitting and focused report had the banks in that jurisdiction in a state of crisis as they sought to stave off an investigation by the Office of Fair Trading.
It is clear the authority is not operating as an effective body. It does not have a chairman and there is no sign of a new chairman being appointed. There are vacancies in key areas of its membership. For example, the head of its anti-cartel division left that position some months ago. The Minister is relying on some of his officials to ensure the authority has a quorum to do its business.
This Government does not seem to care about the poor performance of the Competition Authority and the impact this is having on consumers and businesses. He seems content to allow the authority to perform at a low level. By giving it new powers in this legislation, the Minister is placing his faith firmly behind the authority. He has shown his hallmark unwillingness to take measures beyond those contained in the manila covered brief handed to him by his officials. Fine Gael has published some constructive policy proposals which will make the Competition Authority more resourceful and effective. I request that the Minister examine our well thought out proposals on Committee Stage.
The Minister's approach to competition policy is illustrated by the provisions of the legislation we are debating, which has been presented on foot of a consultation process on the future of the groceries order. I have mentioned some of the problems I have with the Minister's report and his subsequent legislation. It is interesting to review the manner in which some of the submissions which were received by the Department of Enterprise, Trade and Employment have been presented in the Department's report. It is clear from the report that the Department decided to remove the groceries order before it received any submissions on the matter. Having read the report, I must express strong concern about a policy decision being taken on the basis of one side of an argument.
There is particular concern about the legislation presented on the basis of what it states about predatory pricing. This is the nub of the matter and an important aspect of the legislation. The Minister has consistently stated that existing competition law is sufficiently robust and appropriate to deal with the issue of predatory pricing. I presume he has a legal opinion from the Attorney General, who changes his mind regularly and has done so on several occasions.
Protecting the consumer is uppermost in any legislation moved in the House. The people in the smaller shops in country towns throughout Ireland who have given a service are those who are most concerned about this matter. Various people in the food and drinks industry have made submissions, and the debate has been long with many views taken on board. The multiples and bigger stores are emerging the winners all the time, however. I implore the Minister and the Government, in examining the Bill, to consider favourably the people who have given a service to our communities throughout the country.
I have been listening to the debate and the contributions from Deputies on all sides of the House. There is a broad welcome for the provisions in the Bill. I have strong views in that I would have supported the retention of the groceries order. This is not necessarily because the order, as it was, functioned perfectly, but I felt it should have been retained until such a time that we had legislation indicating what would occur after the order's abolition.
I was concerned about the revoking of the order because the Irish retail market has changed substantially in recent years. There have been large changes, with multiples coming in and own brand products being sold on their shelves, and the investment being made in the small retail shops around the country should be protected. In any part of rural Ireland one can see small retail units being developed and forecourts being built, which is a positive development. We should encourage and foster such action to ensure local economies remain vibrant. That is a positive development and something we should foster to ensure that local economies remain vibrant, so that people have access to butchers' shops and petrol and so that money made locally is spent locally. Notwithstanding rural development policies and decentralisation, we should encourage the small shops that exist in almost every village and town, in which their owners have invested substantially in recent years. I was concerned that the abolition of the groceries order would have a negative impact on them, but the legislation as published gives me comfort in that regard.
It is an accepted fact that multiples have abused their position in the retail market for many years. The Competition Authority, whether it was unable to do so because of a lack of legislative back-up or some other reason, has failed to stop that. The use of hello money and advertising budgets to sell below the net invoice price has been widely known to have taken place in the retail sector for many years and nothing was done to address it. The multiples will say they were operating within the law and were passing on price cuts to consumers but that is not true. Below net invoice pricing was not allowed under the groceries order, but advertising budgets and hello money contributed to their profits and could not be passed on to consumers. The Competition Authority did not explore this abuse of position. The legislation will work if the Competition Authority is given teeth and has the resources to allow it investigate any abuses that may occur.
The changes that have taken place in the retail sector are amazing. In recent years we have seen 24-hour shopping, large multiples and huge investment across the country. That has happened against the backdrop of an increasing population and our new-found prosperity. The range of products available to the consumer has also increased substantially.
One area of concern which I do not know how to address is the way multiples give their own brand products preferential treatment on the shelves. That could stymie innovation and the development of small, indigenous, cottage-style companies, such as those producing yoghurt or cheese. Own brand products are more profitable to multiples than providing shelf space for other products. I know of cases where dominant shelf space is provided for a multiple's own brand and other products are relegated to the back of the store or less accessible places, which has an impact on businesses' ability to access the market. I do not know whether to address this by legislation or by empowering the Competition Authority.
There is a cap on the size of supermarkets. As we and our infrastructure develops I am concerned that large multiples will become involved in selling petrol, insurance and almost everything else, and that by stealth we will have the hypermarkets that have caused problems in France and elsewhere. People will drive large distances to hypermarkets, taking money out of the local economy and preventing further development and investment in retail in rural Ireland. Instead of doing a weekly shop people travel large distances to do a fortnightly or monthly shop, spending large amounts of money in the process. That might sound like a great idea in the short term, in that it might provide competition and cheaper products to the consumer, but in the long term, as in other countries, the local economy suffers retail closures and suddenly there is a vacuuming of money into certain multiples.
Let us be under no illusions, the multiples are not here to service the community but to make a profit. There is nothing wrong with that but we have a duty to ensure the retail sector is regulated to foster competition and protect a very important part of Irish social fabric, namely the small corner shop or little forecourt in the villages and towns throughout rural Ireland.
The Minister made reference to the existence of ghost towns in Britain because there is no groceries order. Some would agree with the Minister but others would say he was factually incorrect. In my experience of driving through France I have noticed that, in many areas, the small shops and bakeries that were traditional in that country have gone to the wall in recent years. In some villages in the southern part of France one can travel for miles without finding a shop where one can buy the weekly household provisions. We should be conscious of that and keep an eye on the position here.
The consultation process undertaken prior to the Minister making the decision to revoke the restrictive practices order was broadly based and wide-ranging. The main players, however, had made their mind up prior to the process even beginning. The outcome would probably have been the same but it did not give the process the credibility it deserved. The process should have invited submissions but it was regrettable that the major players commented prior to it commencing. People who genuinely believe the groceries order should be retained, not for profit motives alone but for the protection of the small shop and forecourt, felt involved in a process where the decision had already been made. We should address that if we initiate a consultation process in the future.
The technical detail of the Bill is straightforward. Its purpose is to deal with anti-competitive practices such as predatory pricing. Another important part of the Bill addresses the dominant position of multiples, not just nationally but locally. Even in a population of 4 million it is important to regionalise markets and examine dominant positions within local areas. Below cost selling, as referred to by many Deputies, happens for many reasons. For example, a trader might advertise a price cut to get publicity in a newspaper and suddenly customers will come into the shop. Predatory pricing, however, to kill off competition also exists and it remains to be seen if the Competition Authority has the ability to deal with this under the legislation.
I wish to address the long-term prospects of the Competition Authority. The authority did not have the stomach to take on certain institutions over the years. Reference was made to financial institutions and reports and anecdotal evidence suggest that for years there has existed some form of monopoly. I do not know at what level it operated but I learn from people in the banking industry that the two main players, the AIB and the Bank of Ireland, were involved in a false war of competition, whereby they put on kid gloves and appeared to the public to be boxing with each other. Behind it, however, there was no effort whatsoever to engage in healthy competition for the benefit of the consumer. Only in recent times, since Bank of Scotland Ireland and others have entered the market, have we seen the beginning of genuine competition in the financial sector. The Competition Authority failed to address that. It chased a few farmers around County Louth and elsewhere, yet huge financial institutions were not forced to engage in any form of competition because a corporate gentleman's agreement was reached between the two major players not to undermine each other in a manner that would be healthy for consumers.
There have been references to Dunnes Stores, Aldi and Tesco, all of which are welcome. A greater concentration of multiples may develop as the market grows and companies such as Wal-Mart are looking around. The current cap on retail space has been a positive development and should not be removed. Any question raised with regard to its retention deserves a focused debate because, while the Ikea development was sanctioned, we could face a dangerous route of hyperstores and large multinationals which would bring short-term gain to consumers but long-term pain to local economies.
The general thrust of the Bill has been widely welcomed, although some in the Opposition do not share that sentiment. I am not sure whether the latter are for the retention of the groceries order as it was, the Competition (Amendment) Bill as it stands or some objective in between. As someone who supported the intention behind the groceries order, I think it failed in certain areas, particularly in terms of advertising budgets, hello money and the fact that net invoice prices were not passed on to consumers.
If we are to ensure a healthy and vibrant retail market, we cannot simply pass legislation and hand it over to the Competition Authority but should monitor events on a continuous basis. A mechanism should be developed within the Department to keep an eye on trends in the retail sector and to ensure that the aims of this Bill are achieved on the ground. If, due to a lack of resources or legislative support, the Competition Authority does not have the ability to address problems such as predatory pricing, we could then immediately resolve these issues.
Agencies like the Competition Authority should be accountable to this House and should be obliged to appear before committees on a regular basis. By making these matters a reality for the politicians who enter the Dáil to pass legislation, such an obligation would represent a positive development. Statutory provision could also be made that agencies make reports available to Oireachtas committees on a frequent basis. Over the years, the Competition Authority appeared before various committees, during which time the issue of banks and financial institutions were to the fore in terms of public representation.
RGDATA had significant concerns on the removal of the groceries order but has given a guarded welcome to the legislation. I hope and trust the aims of this Bill will be met. In the event of the authority's inability do deal with anti-competitive practices, we should be expeditious in addressing the issues, even if that requires that further legislation be passed. I also give a guarded welcome to the broad thrust of the Bill but will wait to see whether it will provide a healthy retail sector without forcing out the small corner shops which have formed part of Irish communities for many years. We may be emotional about the matter but the reality is that small shops the length and breadth of the country provide families with incomes and a great deal of part-time employment opportunities. Some have sponsored local football or soccer clubs and, while others have not sponsored any clubs, all are part and parcel of communities. They should be given every encouragement because they answered the call by making major investments in their facilities.
I wish to share time with Deputy Catherine Murphy.
Is that agreed? Agreed.
It is often said that the main legacy of Margaret Thatcher is Tony Blair. That comment encapsulates the move to the right in the UK over the past generation. Sadly, however, another of Margaret Thatcher's main legacies was the death of towns and villages across England, Northern Ireland, Scotland and Wales because she encouraged competition and, by doing so, allowed the main players to take over the retail sector with large out-of-town shopping centres. Not only did that kill off small family retailers and corner shops but it drained the life blood that allowed towns and villages to survive. As a previous speaker noted, a similar process has taken place in other countries over the past 20 to 30 years.
If we engage in the race to the bottom proposed in this Bill, we will end up with a small number of large players in control of the retail market here. That is not good for communities, family businesses, towns or rural communities. Unless we are careful, the joint legacy of the Taoiseach, Tánaiste and Minister for Enterprise, Trade and Employment will be the death of small retailers in Ireland. As Ireland becomes a more open and globalised economy, it is becoming more important to nurture and protect that which makes us special. If we are not careful, we will go from the small towns that we know and love to the American mall in the space of a generation, a transformation which will have taken place on this Government's watch.
The irony is that international literature makes a strong case for the protection of villages and small towns and argues that we should allow people to live above their shops and enable them to make trips on foot or by bicycle. However, Ireland is going in the opposite direction by opening up larger supermarkets, getting more people into cars and SUVs, pumping an oil-driven economy and forcing people to spend more time travelling and less time enjoying life.
We need to protect consumers by preventing this race to the bottom. This Government has to be stopped from walking into the room at every opportunity with Wrigleys, Shell or Ikea and allowing big business to walk out with the better deal. We have to protect the small people but this Government has no interest in doing so. The triple back flip performed by the Minister for the Environment, Heritage and Local Government, Deputy Roche, when he was asked to jump to facilitate Ikea in Ballymun demonstrates that this Government simply wants to protect big business. It is remarkable that the stores Ikea was forced to build in London are a third of the size of the ones elsewhere in Europe, yet in Ireland the Minister leans over backwards and says "take me now".
We have to protect our unique character, which includes villages and towns and smaller businesses and retailers. It is a simplistic argument to say that we should open up to competition and allow big business to do what it wants. This Government stood idly by at the rise of the super pub. It banned magic mushrooms, yet allows the free sale of the two most dangerous drugs, nicotine and alcohol, which kill thousands each year.
The Government only intervenes when it feels it is in its interest to do so.
We need controls to protect the existing retail environment. I am not suggesting we go back to the days when the bell rang when one pushed open the door of the small shop and one's choices in there were limited to marrowfat peas or spaghetti in a tin. I am not suggesting that consumers' choices should be limited, but we should not allow a laissez-faire policy to prevail, which will bring us to the car park of a Wal-Mart within a few years. I am suggesting that small businesses should be supported. I am further suggesting that an older person should be able to walk to a corner shop and find that it is still open and not boarded up, but that requires Government intervention. It requires that the Government does not lift the cap on retail outlet size, is committed to proper planning or simply believes that planning is a good thing in the first instance, although I have my doubts as to whether the Minister for the Environment, Heritage and Local Government, Deputy Roche, believes that. It requires some variation of the groceries order, but I see no evidence of commitment on the part of the Government.
This Bill, as Deputy Kelleher pointed out, will facilitate hypermarkets, increase travel times, reduce our sense of community and force people into cars to drive to supermarkets because their local shop is closed. That is not the way we should go. This process is starting with Ikea, but can it be long before we see representatives of Wal-Mart going in the door of the Custom House and coming out with a grin on their faces? I do not think that day is too far away and I am not sure where all this will end. I suspect it will end in the kind of retail environment that exists in the United States, where towns are ghost towns and there is a Wal-Mart or a similar store on the outskirts, to which everybody drives. While the smaller players can have a loss-leader product on sale for a few weeks, some of the multinational retailers can afford to allow Ireland to be a loss-leader for years, while they watch the smaller businesses die — such is the scale at which they operate.
I note that this Bill intends to ban the demanding of hello money, but it spells goodbye to the corner shop. We need a cap on retail outlet size, a proper planning environment and some form of groceries order. If I can make a plea for anything in this debate, it is that we recognise and cherish the sense of community that we have here, the towns with varied shops that we can walk around and where we can chat with neighbours. We should be very wary of simply opening the door to all players who wish to come in and allowing them to build their hypermarkets on greenfield sites. This will consign all of us to having to drive to do our weekly shopping. It will mean that the most vulnerable people in society, older and young people, will not be able to walk to a corner shop and, for that reason, my party will oppose this Bill.
There has been much discussion about the repeal of the groceries order and this Bill is introduced in that context. Instead of totally relying on the so-called experts, it would be useful to ask people what is making them fearful about retaining their local shops and why we are seeing so many such shops disappearing. It is interesting when one hears at first hand from people on these issues. It is not difficult to see that the independent retail sector is in a state of decline. This is often because of location, accessibility, convenience and so forth. This decline was happening prior to the repeal of the groceries order and we must ask why, whether we care about it and whether we want to retain the independent outlets. Independent retailers, many of whom are not in the grocery trade and are therefore not covered by the order, are a dying breed. One only has to look at our towns and villages and the number of multiples operating in them. Petrol stations are becoming more like convenience stores.
The decline is not simply because competition from multiples affects independent retailers. Such retailers are not part of the planning system and are not valued as part of that system. There are plenty of pious platitudes in town and county plans about supporting independent retailers but when one looks closely one sees that there is precious little practical support for town, village and neighbourhood centres in such plans. If a car park is to be built, for example, it is usually done by the private sector in conjunction with a significant new shopping centre. The approach by planners is a hands-off one.
It is often much more expensive to construct a retail outlet in a town centre than on a greenfield site on the periphery and the latter option is generally preferred by the larger retail operations as it makes traffic planning easier and does not confine them in terms of size. Such developments are car dominant but we need to encourage people to get out of their cars and into the shops. If we do not provide for that and recognise that ready access must be included in the planning system, the policy becomes car-driven by default.
Our development pattern is not based on deliberate forward planning but on controlling development, based on the premise that big is beautiful. Many of our towns and villages cannot support large scale shopping complexes because their centres are so constrained. Rather than having a mixture of medium-sized developments, where each town is self-sufficient, we have larger retail developments on the periphery of towns and the car becomes essential for travel to such developments because often there is no public transport available. That has a knock-on effect, particularly for those people who do not have private transport. They cannot avail of the economies of scale of such outlets, thus reducing their shopping bills and often they are the people who need to do so.
An article in the The Irish Times today referred to the fact that, from a tourism perspective, Ireland has become less attractive because there is a sameness about the country and it has lost a certain amount of individuality. Such individuality comes from individual shops, whether they be grocers, drapers, booksellers or whatever. The vibrancy that comes from many people mingling, going in and out of varied shops, adds to the character of a place. While we should not solely focus on tourism, shopping is a serious part of most tourists’ experience. Very few people go on holidays without including shopping at some point. I am not a big fan of retail therapy but I acknowledge that shopping is important.
The small neighbourhood outlets that cater for day-to-day needs cannot compete with the large bulk buyers and their goods are therefore more expensive. The comments of organisations such as Crosscare and the Combat Poverty Agency should not be ignored in that context. The anti-poverty strategy introduced during the term of the rainbow Government required poverty-proofing of policy. That does not integrate with this policy because the organisations saying there is a difficulty are those that articulate the difficulties of the poorest of society.
The multiple outlet can provide car parking, late night opening, security and other peripherals. A shop owner on the main street in Maynooth told me that of the shops on the street 20 years ago, only two remain. There is a new shopping centre up the road with car parking and she said that she would have to move there to compete. Her difficulty, however, was that she would need to mortgage her house to do it because she cannot front-load money in the same way as the multiple operators. That is how the individual is disadvantaged. Many people were coming into the shop, perhaps because there was a sale, but this demonstrates the difficulties for the individual shop owner.
This does not necessarily mean each town gets a large multiple. In Leixlip there is a population of 18,000 but until Lidl opened a store 18 months ago, there was no multiple. Scale did not bring the requisite shopping centre. Instead of towns with character, however, where people go into shops, main streets are dominated by estate agents, banks, accountants and solicitors during the day and at night by activity around bars. A whole segment is missing, leading to a loss of character. The smaller individuals who cater to specialist taste are being lost, meaning that we must go to a deli counter in a supermarket to get some things.
This has an impact on the quality of people's lives but it is not regretted until it is gone. We cannot be passive about this. There must be a proactive approach where we deliberately stress the importance of this sector. We must do more than protect it in an academic sense, we must do it in a practical way by giving these retailers an opportunity to continue in business. It is not just about retaining grocery stores but also craft stores, book shops and clothes shops. Provision must be made for people getting to them, civilising our streets and making them attractive, and for traffic management. I have mixed views about the groceries order in that context because there has been a decline in these areas since it has been in place.
I remember the day the Liffey Valley centre opened. Someone noted on the radio that we spent 800 years getting the British to leave, only to discover that they had come back to Liffey Valley, where all the British multiples were located. That describes the situation well. If we want British high streets, let us go there but let us keep some element of individuality to describe ourselves. That was humorous but it reflects what is happening.
Deputy Cassidy will be taking two minutes of my time. He has done considerable work in his committee on the background to this Bill and the issue we are debating today.
I hope the Minister of State and his officials will report the suggestions made in this debate to the Minister, that those suggestions will be taken on board on Committee Stage and that the Government will accept some amendments to the Bill. Listening even to speakers on the Government side, it is hard to know how Deputies would vote in an open vote. Some have hedged their bets on this legislation. That is significant because there is obvious concern about the content of the Bill and the ability of the Competition Authority to enforce its provisions. The finer detail of the Bill reveals huge challenges for the authority and I hope it is up to them.
I am one of the few in this House who has served behind the counter in a shop, in the 1970s and 1980s. We served a community that relied on credit. Purchases were made by the quarter pound and precise numbers were counted out on the slicing machine. That was how the retail trade functioned. It relied heavily on the local cash and carry to ensure whatever special offers were being delivered by it could add to the profit margins or to the attractiveness as a retail outlet in that locality. During that time, I traded successfully with the support of that local community.
Despite the groceries order, however, I saw huge changes in the trade. The country moved from the position in the 1970s, with 20% interest rates, to where we are now with rates of 4% and little or no unemployment, with a huge focus on the consumer, competition and value for money. People vote with their feet, passing the small shops and going to the superstores.
I call the groceries order the restrictive practices order, because the groceries order sounds like a mechanism to protect those in the trade and prevent competition but it actually refers to price fixing, unfair discrimination, below net invoice price selling and hello money. Despite the order, the multiples still grew hugely, Lidl and Aldi came into the marketplace, Tesco developed and there was competition. A change took place whereby the corner shops no longer sold groceries, gas canisters and briquettes, and there was a greater spread of product in response to consumer demand. They are almost fast food outlets now with sandwiches and coffee to go.
They are able to survive on that basis. The Restrictive Practices (Groceries) Order 1987 acted as a deterrent in that it was a statement about this country to companies coming here to trade. It indicated that we were interested in our communities and in protecting and developing society. To use modern terminology, it told them that we were interested in social infrastructure and capital. Local authorities are now paying consultants to produce ideas on how to create social capital. We used to have it but have decided to trade it in for something which appears sexier. Consumers are being encouraged down the route of retail therapy at a time when social infrastructure is under threat of being wiped out.
I fear the Bill does not go far enough in terms of giving teeth to the Competition Authority, laying down a framework to govern the Tescos of this world and affording corner shops, which most speakers have praised as making a valuable contribution to society, protection from predatory pricing. Corner shops provided a sense of connection in local communities. They gave communities credit in the context of day-to-day living and functioned almost as a social centre in which information was exchanged. Birth, death and marriage announcements were made from my house because it was the only telephone in the locality. The current trend, on the other hand, is one of disconnection and I hope the Minister will take action to counter it in the Bill.
People doing their shopping will have several lists, perhaps one for Lidl or Aldi and another for Tesco, and will have some money left over to buy items they need in an emerging type of retailer, namely, the Centra or Spar type shops. I am informed the true independent sector, which consists of the shops being forced out of the market, employs more than 40,000 staff. These shops were the cornerstone of what we knew as local communities, each of which had a sense of place in a larger urban or rural setting.
In light of changes in the retail sector, I was not surprised that a debate would take place about the removal of the Restrictive Practices (Groceries) Order 1987. However, I expected the legislation to amend the Competition Act to provide protection from the rapid pace of change.
What do I wish to happen? I do not want one player to become dominant in the marketplace. I want competition as well as a degree of protection for independent retailers and small corner shops because I believe in the value of this kind of social infrastructure and capital. It is political nonsense to pay a consultant to create social capital when we are losing it elsewhere.
My problem with the Bill is that it focuses on dominance in the retail trade. The critical issue is the need to determine how one defines such dominance in order that a court case could be built should a retailer breach the legislation. No single retailer enjoys market dominance, as defined as a market share of 35% or 40%, whereas they all enjoy it when it is considered collectively. What will happens if a retailer finds he or a number of small shops are being targeted by predatory pricing? Will the Competition Authority step in on foot of a complaint and take a court case? Given that the authority has failed to show much bottle in this regard in recent times, I am not confident it would go to court. The other question is whether the Competition Authority has sufficient funding.
Reading legal opinion on both sides of the argument, it becomes clear this legislation will have the makings of a great court case at some point. Do we really expect an ordinary corner shop owner to take a major multiple or retailer involved in predatory pricing to court? He or she will have gone bust before the case is heard. We are providing for a complete open market. How can we introduce in legislation a definition of a dominant position and a procedure regarding requests to the Competition Authority concerning predatory pricing, hello money or any other practice which might come into play to guarantee a supplier, control prices or facilitate a retailer in becoming the dominant player in a locality? I am most concerned about this aspect of the legislation.
I read legal opinion indicating that the Competition Authority has not been particularly effective in enforcing competition law to date and retailers will have to be prepared to bear the heavy burden of enforcement. What steps will the Minister take in the Bill to ensure this burden does not fall on retailers? Other magazine reports indicate that Tesco is tipped to clean up in terms of market share. Although Deputies receive this type of information from those who lobby us, it should also be noted that Tesco reported a €2 billion annual turnover in Ireland in 2003-04, yet the company has not yet extended its network to every county and is only now gearing up to take on new consumers and become the dominant player in the market. If this transpires, we will have real trouble because the product on offer, including credit card and other facilities, will damage the retail trade here.
The retail sector extends far beyond corner shops and includes, for example, cash and carries. Viewed from this perspective, the numbers of employees who would be affected if the sector were to be damaged would begin to add up. A solid area of trade which has shown creativity and makes a significant contribution to indigenous employment would be damaged, its turnover reduced and its ability to compete in the marketplace called into question. This form of competition is essential.
Organisations which supported the Restrictive Practices (Groceries) Order 1987 have stated that these types of small shops are vital given the make-up of communities. Despite our prosperity, some people do not have sufficient income to afford a monthly shop, while others will always find managing their domestic budgets a challenge. This group relies on the corner shop. This will force them into a different method which they are not capable of following. As legislators we must be aware of that. I do not see enough in the Bill in terms of the funding or the teeth the Competition Authority requires in this new situation to defend in court what this Bill sets out. That will be detrimental to our society. I have reservations about the Bill. I hope the officials, Minister and Minister of State will acknowledge what is being said in this House and will bring forward some serious amendments to deal with the issues raised by the Members and by RGDATA.
We discussed this in the Joint Committee on Enterprise and Small Business, of which I am Chairman. Although the committee was unanimous in support of retaining the groceries order, the Government and the Minister have made a decision. That is their democratic right and we must accept and support it as democrats and members of the Government. When it comes before the committee on Committee Stage we will tease it out. As someone from rural Ireland who knows the importance of the villages and rural setting in which we are fortunate to live I want to correct one item in this data. It reads: "since 1990 the rate of inflation in Ireland has been three times the rate in the UK and almost twice the EU average". That may be true but in the past two years grocery prices here have fallen by 1.2% while in the UK they have increased by 1.4%. In the past two years there has been a 2.6% differential in the UK compared to Ireland.
I thank the professional industry representatives who assisted the committee in its deliberations over many days. Everyone, with the exception of Dunnes Stores — Tesco, the Irish manufacturers, the Meath and north Dublin growers and the quality food producers — genuinely opened their hearts, their experiences and their books to us over many days. I was struck that the Minister said he has a serious obligation with regard to below-cost selling. Below-cost selling is unfair and I do not want to see thousands of Irish jobs lost to it. All fair-minded Members of this House want to know what protection this Bill gives to manufacturers and producers of Irish goods from below-cost selling. If there is no protection, thousands of Irish jobs will be lost three, five or seven years down the line.
As we all know, the big area of growth is the convenience store. The officials and the Minister are in agreement on this. The next biggest growth area is own-brand shopping. Own-brand products may be manufactured in the same place as branded goods and labelled differently. Own-brand products do not have to show the place and date of manufacture. We all know that approximately 40% of all groceries bought in Ireland are own-brand. This is where below-cost selling can occur and pose a danger to the entire food manufacturing industry. I represent as many people as I can in my few words today. All colleagues including the Minister of State are concerned. This is an important Bill which can have far-reaching repercussions in the market place.
Irish people have six shopping choices. Tesco and Dunnes Stores control almost 47% or 48% of the market while 22% is controlled by the symbol groups such as Centra. The family stores give meaningful employment, with 70, 80, 90 or 100 staff. There are the convenience stores and the corner shops, which are responsible for the social fibre of our villages or towns and with which everyone can identify. The danger of this Bill is that in the future if one does not have a car one will need to hire a taxi or mini-bus to do one's shopping. That would be wrong. In the committee we said "if it is not broken, why mend it?" If there is a good reason for various amendments we will support them. Everyone will support the Bill if there is an obligation to ensure that own-label goods display the date and place of manufacture.
I live in Castlepollard, the capital town in north Westmeath. While we have a second-level college and the council services have been decentralised there, Castlepollard has no filling station. In the 12 miles from Finnea village to Donnelly's, five miles from Mullingar, which the Leas-Cheann Comhairle knows well, there is no filling station because of what is happening in the market place. I predict that if it continues to go this way in three or five years there will be no filling station in all of north Westmeath and people will have to travel 25 miles to buy fuel for their cars. This is wrong. I represent a rural county only 55 or 60 miles from Dublin. We cannot preside over legislation that allows a security van to reverse up to a megastore at 7 p.m. or 8 p.m. on 23 December and bring the hundreds of thousands of euro back to Dublin from where it could be in Switzerland before the following morning. All our social welfare, pension and children's allowance cheques are built into this Bill and there are serious decisions to be made. While I will support the view of the Minister and the Government, the committee has concerns regarding certain sections of the Bill.
This is a dual-purpose Bill. It revokes the Restrictive Practices (Groceries) Order 1987 and brings about changes arising from that in the Competition Act. I agree with much of what has been said by speakers from both sides of the House. In recent years I have seen huge changes in retail practices in rural Ireland. The groceries order was the target of the multiples for a number of years for some reason. They wanted to get rid of it. After the consultations and reports the Minister has eventually agreed. While I have no serious disagreement with the Minister, as a representative of a rural constituency I want to know if the Competition Authority will have enough power, muscle and influence to prevent what could happen as a result of this Act going through. I cannot understand why the multiples were so anxious to get rid of the groceries order. These changes were taking place without any amendment to that order. In my county and constituency I have seen that these changes have taken place before the order has been revoked. I go through villages in my county and I see shops closing down that were in existence for more than 100 years. Last year, I was in the village of Creeslough, which everyone has heard of in song and story, and a shop that was there for 105 years had closed down. The village of Laghey is a few miles south of Donegal town. When I came into this House for the first time 20 years ago, there were four corner shops in that village, but there is just one today. This has been happening all over rural Ireland without the groceries order being revoked. Unless there is some balance brought about, this new Bill will accelerate what has been happening in the last ten to 15 years. I am greatly anxious about how rural Ireland will look in ten or 15 years' time.
The post offices in rural Ireland are being closed by the dozen every year. In my parish of Gweedore, two post offices were closed in the past six months in Crolly and Ranafast. The shop in Ranafast has also gone. Things are changing in rural Ireland and I believe that this Bill will accelerate that change to the detriment of the people living there. The people of Laghey have built a housing scheme for the elderly, but they now have just one shop when they used to have four. There is no guarantee that that shop will stay open and where will the elderly people go then? They would have to hire a car as some of them do not have any transport. Rural Ireland could do with a better public transport system. These elderly people would then have to go to the nearest town to the nearest Tesco or Aldi. This Bill could deliver a serious blow to social and commercial life in rural Ireland. The service provided by the little corner shop is not provided by the multiples. The shopkeeper always knew what the customer wanted before he or she even came in. It is a pity to see that disappear.
There is nothing in this Bill to prevent predatory pricing or below cost selling. Perhaps the main reason in getting rid of the groceries order was that predatory pricing could occur. We know what that means. Prices can be reduced on a few items which are advertised on the weekend papers. Everyone flocks to the multiple for these bargains, but they then buy the rest of the groceries at prices that are over and above that which is saved on the below cost items. Can the Minister guarantee that this will not happen day after day? If that happens, it will put the remaining retail outlets in rural Ireland out of business. This also has implications for producers. Many of these multiples get their products from outside the country. What are the implications for our producers and native industries? We need to get some guarantees that these producers will have the opportunity to supply these multiples. I am not against multiples. We have a Tesco in Letterkenny that is open 24 hours a day. People come from my parish 30 miles away to shop there in the middle of the day or night and get what they want. The old shops used to stay open until 9 p.m., but they can no longer do that because the multiples provide a 24-hour service.
This Bill presents serious dangers to life in rural Ireland and to our way of life that has existed for so long. I drove through England last year and I went for miles without seeing a village shop until I came to one of these multiples. That is happening in Scotland and on the Continent as well. It will be a great pity if it happens in Ireland as well. We have a unique social scene in rural Ireland. People come here from the Continent and travel to the newsagents, the butcher and other shops. If that network of shops disappears, an important and valuable element of our life will disappear. I hope the Minister will be able to give us guarantees that this will not happen and that what has already has happened in the past ten years will not be accelerated as a result of what we are doing in this Bill.
The responsibility for this is being handed over to the Competition Authority. We have seen how that authority has acted and it has left much to be desired. I do not see any sign that it will be more effective in future. Perhaps the Minister can guarantee that it will. Otherwise, there may be serious repercussions for constituencies like mine, that of the Minister and that of Deputy Breen.
I welcome the opportunity to speak on this important legislation for the retail business. I can remember a time not so long ago when every town and village had its own retail grocery shop. Some villages had two or three grocery shops. Unfortunately, that is no longer the case and we have seen the growth of the multiples and the large supermarket chains. In the past five years, there has been an invasion of shops like Aldi and Lidl from continental Europe. The number of these supermarkets will increase in the next five years, according to recent reports. These supermarkets cater for the needs of the public and, as legislators, we should bear in mind that we want to protect consumers as well. The best way to protect them is to ensure we have a strong and healthy indigenous retail grocery business. It is not in the interests of consumers, local communities or even suppliers to these supermarkets to allow dominant supermarket chains to take over the retail grocery sector.
We have a thriving grocery retail sector that provides competition, choice and value for customers. If we are not careful, that may not be the case for the future. As legislators we need to ensure that there is fair play for local shops and food manufacturers, Irish suppliers and farmers. Agriculture is going through a particularly difficult time. We must bear in mind that the strength and size of some of these retail grocery chains could wipe out a complete sector of Irish farming and agriculture if we are not careful.
In my constituency we have seen the demise of the sugar factory in Carlow. While that factory was closing down I observed imported sugar on the shelves of many supermarkets. It is unfortunate to see the demise of an industry that has stood the tests of time for almost 80 years. Now we must face not only that loss but the possibility that the country's entire sugar industry will be closed down in 2007, if not this year.
I am proud to support the vibrant local communities with locally owned shopping facilities that provide a route to the market for small manufacturers and suppliers and for Irish-grown and produced meat, dairy produce, fruit and vegetables. However, if we are not careful we will ensure that there will not be a market for these small producers. It is not in anybody's interest to see the continuous rise and expansion of multinationals at the expense of local small indigenous producers.
I have grave concerns that part of the legislation as worded will not deliver greater competition and protection for Irish producers and processors. Instead, it will give some of the largest retailers in the world the freedom to engage in predatory pricing and that is my main concern. I am not satisfied the legislation has closed all the loopholes. From what I have heard and read I am not confident, as yet, that companies will be barred from engaging in predatory pricing. Strong arm tactics can be introduced by companies which will eventually lead to the closure of small rural shops in particular. We have listened to many submissions on the Joint Committee on Enterprise and Small Business and have had many debates over the past year on this issue. The vast majority of the committee's members, if not all, are genuinely concerned about the impact of predatory pricing on small retailers. The Bill, if possible, should expressly ban predatory pricing.
I welcome the Minister's statement that he will look at this issue and return to it on Committee Stage. I assume Committee Stage will be debated by the Select Committee on Enterprise and Small Business where there will be a forum to engage in a more practical and effective manner with the Minister on this aspect of the Bill. I know the Minister is prepared to listen and take on board the concerns of many people, not just in the grocery sector, but in other areas of Irish industry and commercial life.
In a Fianna Fáil meeting recently we were circulated with an article from The Grocer magazine, which makes startling reading. It talks about the dominance of Tesco in the UK and the effect this monopoly has had on retailers there. Tesco currently has 25% of the Irish market. It is a market share that is growing as Tesco opens larger stores. It proposes to open another 30 in the next few years and that market share will certainly increase. There comes a stage when we must be concerned about the dominance of one player in the market. Unless we legislate to expressly ban predatory pricing, Irish consumers will have less choice, less competition and the market will mainly comprise multinational retail groups.
However, I commend Irish retailers, Dunnes Stores in particular, an Irish-owned company that can compete with anything the multinational retailers have thrown up. Likewise, SuperValu, part of the Cork-based Musgrave group, runs a very professional show to ensure that its shops around the country are as good as anything that may be seen on the international stage. Unless we expressly ban predatory pricing, then in the long-run Irish consumers will suffer, although it will not happen immediately. Smaller players require much more than the existing references in competition law. It is important to remember the number of small and medium-sized outlets that have closed in Ireland in recent years. Unless we introduce legislation to protect such traders against predatory pricing from the large multinationals, many more of them will close.
In the UK, it is interesting to note that more than 2,000 family-owned grocery shops closed last year, due to low-cost selling and multiples opening smaller stores. This information was contained in a report to an all-party committee at Westminister. Between 1997 and 2002 more than 50 independent food shops closed in the UK each week because of pressures from large multiples. There is an opportunity to ensure this does not happen here and it is important that is enshrined in the legislation. I welcome the legislation and the opportunity to debate with the Minister on Committee Stage any proposals he might have on copperfastening the ban on predatory pricing. As a small country with 4 million people and a relatively small retail market in the context of our European partners, we have a duty and responsibility to protect those small retailers and thus, the customers. If a small shop closes it will not re-open, let us not forget. If we reach a stage where the Tescos of this world put small concerns out of business we will not see any reversal of that trend in the future because they will not re-open. I commend the Minister for bringing forward the legislation and hope we can fine tune it on Committee Stage.
I am grateful for the opportunity to speak on this Bill. I have listened to many of the speakers this morning and last Thursday, when the Minister first introduced the Bill, followed by Deputies Hogan, Howlin and others. Most of the speakers, even on the Government side, raised concerns about the Bill and the effects it will have on smaller shops. The revocation of the groceries order by the Minister, Deputy Martin, is one of the principal purposes of this Bill, with the ending of certain restrictive practices. These aspects of the Bill are welcome although the qualified ending of so-called hello money is mystifying and does not appear to be achievable. Perhaps the Minister will enlighten us as to how hello money could not but have been an object or the effect of prevention, restriction or the distortion of competition in trade in grocery goods in any part of the State. Even if hello money could be deemed benign, I doubt that the Department would send personnel to inspect such instances and make appropriate rulings. Members are well aware of the dismal failure of the Department of Enterprise, Trade and Employment to police abuses in the labour market adequately, to the extent that a book on the misery and abuse of foreign nationals here is now a best seller in Latvia.
Everybody knew the groceries order had to be changed. It has been in place for the past 18 years. However, what the Minister has done will have an effect in every county. There will be job losses. I drive through the small towns and villages in my constituency each week and one can see the effect the multinationals are having on the industry. There are few shops in the villages now. Recently, I tried to compile a database of all the shops in County Clare. I eventually compiled a list from telephone directories and old lists. I sent a letter to the shops and was astonished by how many letters were returned because most of the shops had gone out of business. It is a worrying trend.
So-called hello money aside, the underlying issues which prompted this Bill remain. These include the issues of consumer prices and rip-off Ireland. Can we be sure that prices will come down, as promised by the consumer strategy group, and will the golden era that was promised when the order was revoked come to pass? Many doubt it. There is cynicism among consumers about the ability of the Government to implement quality measures which do not impact directly on people's pockets, whether it be motorways and tolling, improving health services or taking steps to promote house price inflation which benefits Government coffers as the single biggest form of stealth tax. Meanwhile, insurance, child care and energy costs soar. It would be a welcome change if this Bill were to be a white knight for the hard-pressed consumer but I do not believe that will be the case.
The other issues that prompted debate on the groceries order are the growing power of the multiples, the growing concentration of retail outlets and the demise of the corner shop. This week in County Clare a consortium of three business people offered the GAA county board in Ennis a deal to provide a 42,000 seater stadium with an all-purpose weather pitch on a greenfield site outside the town in exchange for Cusack Park in Ennis where they propose to build a shopping centre. Huge money is available to the multinationals to secure sites in town centres. Tesco, for example, is looking at sites in Kilrush, the third largest town in County Clare. Multinationals such as Tesco, Dunnes Stores, Aldi and Lidl are already in Shannon and Ennis. Greenfield sites in town centres are extremely valuable and business people are trying to acquire them because they know the multinationals have plenty of money to spend on prime locations for their outlets.
One need only look at the Sunday newspapers to see the amount spent on advertising by the multinationals. There are pages of colour advertisements displaying the bargains on offer in their supermarkets. It obviously costs a huge sum of money to take out colour advertisements in Sunday newspapers. The same is occurring with the provincial newspapers, in which the multinationals take full page colour advertisements every week. This shows the power and impact they have on the consumer and how they can direct people to their supermarkets.
Not only is there a danger of creating a problem in local areas but we are fast approaching a situation where a car will be necessary for every shopping trip as people are forced to go to out-of-town shopping centres. I recently visited a new mall that was opened about a month ago in Limerick. The size of the mall and the number of retail outlets were such that one could shop there all day. These malls are a huge attraction to the consumer and that is the reason they can afford so much advertising. The multinationals attract the smaller franchise groups into their centres.
The same can be said for town centres. The old shops are disappearing from the streets of town centres and are being replaced with English chain stores such as Boots. That is not a good thing for the consumer. I read a report produced in Britain recently and it showed that there is greater concern there than here about the demise of the corner shop. According to a survey conducted there recently, cars were used for 62% of shopping trips last year compared with 49% in 1991. It is necessary to drive out of town to visit shopping centres and people tend to spend more money at these centres than they would at smaller outlets. The situation in Ireland is probably similar or worse but I am not aware that any such survey has been conducted here.
The other issue is the increase in the number of garage forecourt shops in recent years. They were once hailed as the great hope of the independent sector and they have consolidated themselves in this country. However, this week a worrying trend emerged. The Norwegian company Statoil has said it intends to sell its outlets in Ireland. One can draw a number of conclusions from that decision but the main one is that the company does not envisage a future for these garages.
Statoil is a state-owned company in Norway and has not been operating in this country for long. It is looking for between €200 million and €300 million for its outlets. The company obviously foresees a danger coming from the other multinationals. Tesco has gone into the business of selling petrol at cheaper rates and companies such as Statoil are anticipating fierce competition. That is a big danger for the forecourt outlets. It is also rumoured that another major concern, Texaco, is thinking of putting its outlets up for sale. These oil companies are making major decisions and they are obviously aware of what is happening in the market.
Giving a free rein to these multiples in the name of choice and competition will have the opposite effect. The Bill could be entitled the anti-competition amendment Bill. As the Fine Gael spokesperson on small business, in conjunction with Deputy Hogan, I am well aware of the choice available to people to buy locally sourced products. If the multinationals are allowed to wipe out our local shops, much of our food will be sourced from elsewhere. Look, for example, at the mushroom industry and the crisis facing mushroom farmers where there are cartels and prices are controlled. Mushrooms are a delicate product with a short shelf life. If a company rejects Irish mushrooms, it can buy cheaper mushrooms from Poland, Holland or elsewhere. It is only when bad weather in Poland or Holland affects production that the Irish consumer benefits. Consumers are at the disposal of such people and cartels when it comes to Irish products.
We could also take pork products as an example. This week many farmers came to the Dáil to protest against the nitrates directive, which is a separate issue. Such protests have to do with how we sell our produce, specifically pork products. We see a packet of rashers sold by a well known company here as an Irish product. We get the impression from the Irish name that we are buying Irish rashers, but we are not. These are pork products from South America that are packaged and produced here.
These issues will have a significant effect on the grocery business here. This week we heard that Dublin has earned the honour of being the 16th most expensive city in the world. Some believe that because our economy is successful, Dublin is as successful. It is an expensive city and a rip-off culture prevails in the manner in which consumers are treated there.
I could speak further about what is happening in the grocery business, in particular the technology some of the multinationals will introduce that will create more job losses. In supermarkets people will be able to bring their basket of groceries to the checkout where it will be scanned automatically. This will cut down on employees.
Rural shops are vulnerable. They have low profit margins and face fierce competition. We have a duty to protect these shops in the interest of our rural areas and to sustain employment in these areas. The same should be done for rural post offices which are in decline. As services close down, we will soon get to the stage where local shops will also close down. Many houses are being built in small villages and towns, but unfortunately consumers are attracted to the multinationals in out of town areas where they can do their weekly shopping. As a result, small shops are ignored.
I predict opposition to this Bill on account of its failure to protect consumers in a number of key areas. I hope that on Committee Stage the Minister and the Chairman of the Select Committee on Enterprise and Small Business will listen to the Opposition. I hope some protection will be provided for small shops. These have been great and have been there to help people. Now we are in a different world and consumers want choice. As we do not have a large population, we are being subsumed into the British, German and US markets.
I thank the Acting Chairman for the opportunity to speak on this Bill and hope the Minister will listen to the amendments that will be tabled by party spokespersons on Committee Stage.
This Bill is very much a mixed bag and, like the curate's egg, good in parts. Nobody really knows what will happen. I have read a significant number of submissions were made on whether the groceries order should be abolished and know the major number of submissions to the Minister came from small shopkeepers. The consumers' champion, Eddie Hobbs, appeared to lead the charge on behalf of consumers, with consumer associations and groups, to abolish the groceries order. These two distinct groups have distinct opinions as to how matters will pan out.
Practice is changing in Ireland and we live in a culture of constant change. We can no longer consider Ireland an island nation because of the convenience of air travel and our membership of the European Union which has opened up our borders to a degree that could not have been anticipated. We live in a global market and a changing situation. Major changes have taken place. For many years I have spoken of the demise of rural areas and the vicious circle whereby when we lose services and infrastructure, we lose people. Who wants to live in an area where there are no shops where people can buy a loaf of bread or whatever? Who wants to live in an area where there is no doctor who can provide urgent medical care when needed? Who wants to live in an area without a school, post office or gardaí to protect them? I could go on. People have the right to basic services.
Free market competition is something we cannot deny. We are part of the European Union which is predisposed more towards the market, economics and wealth making than towards social concerns. This is the problem I have with what is happening in this area. We must ask where we are headed as a society. This debate on the groceries order has brought home to many people that there are forces involved we must reckon with. What can we do about the situation when so much is happening beyond our control?
People have spoken about how shops will close down if the groceries order is abolished and have said that if this legislation goes through it will be detrimental to rural areas. The issue is not that clear. Having read the Competition Authority report into the groceries order, I understand how the Government may have succumbed to the pressure from Eddie Hobbs, his followers and the public to abolish it. I do not think the Government really understands what will happen. The Minister for Enterprise, Trade and Employment, Deputy Martin, is pushing this agenda. While I laud him for introducing the revolutionary legislation establishing the smoking ban, and while he may be remembered as the Minister for Health and Children who saved and will save the most lives, he did not do much else for the health service. It was left in a greater mess than that in which he found it, especially in terms of the need for people to stay in their own areas. Half the graduates in my area have to go to Dublin to get their first job although they ought to be able to find work locally. This prompts us to question Government policy.
Government policy, while acknowledging that there should be a free market, should involve rural-proofing. It should acknowledge a certain minimum standard applying all the way down the line from service providers to people buying a loaf of bread in a shop. The Government can have a major effect in this regard. Is this legislation right or wrong for the people of rural Ireland?
The Government, in its policies, has very much favoured big businesses, large retailers and those who make a buck from whatever is going on. A good example was referred to last night in respect of supports for older people. While 5% of old people end up in residential care, it appears the private sector is really the sector making money in this area. While there are some very dedicated and altruistic people looking after older people, including nursing home staff, the vast majority of whom are doing a very good job, profit is the bottom line. By cutting corners they can make even more money. There should be much greater emphasis on communities. Community members can carry out services better than private sector operators because their bottom line is the support of older people in the community rather than making money. The Government needs to become more involved in supporting communities in this regard and should give community carers the same opportunities and incentives as those afforded to people in the private sector. The legislation in this area is very clear and does not favour communities carrying out these functions.
On the groceries order, many cornerstores have closed in rural areas. It seems they are being replaced by petrol stations with forecourts which also serve as convenience stores. While shops may be closing in rural areas, they will be replaced with these convenience stores. However, they may not be owned by the retailer but by multinationals. We have seen across the board that multinationals appear to be calling the shots and setting the agenda. This is very unfortunate. Regardless of how the sector develops — I do not believe anybody knows how it will pan out — the Government has a responsibility to monitor the sector closely so detrimental effects on rural areas can be noted and dealt with. I hope the Government will do so.
I do not believe people in rural areas will eventually have nowhere to buy a loaf of bread or carton of milk, as has been suggested, because there is a niche for convenience stores. To believe otherwise is not comparing like with like. People are going to the supermarkets in larger urban centres to do their shopping but when they want to buy perishables they go to their local store, be it a retail outlet owned by Tesco or one of the oil companies. This seems to be the trend.
The Government needs to ensure rural-proofing of legislation. While there needs to be a free market, the Government has responsibility to protect citizens and ensure minimum standards are maintained. It also has responsibility to ensure citizens have reasonable access to services — otherwise the vicious circle to which I referred will continue. We have seen that when the Government fails to provide money for services and infrastructure in rural areas, people leave those areas and are forced into the urban centres. They are not prepared to live in areas without services — this is logical.
On the question of planning, the Irish Rural Dwellers Association has drawn attention to the difficulty experienced by citizens when trying to find accommodation in rural areas. Groups such as Rural Resettlement Ireland have done great good by bringing people from Tallaght, County Dublin, for example, to rural areas. The people concerned have got on quite well and have ended up supporting local schools. This is the sort of initiative the Government needs to continue to support. Otherwise I do not know what the future will bring.
Let us consider big business. I referred in the Chamber today to the need for the Government to get on the rails again as regards the mediation process pertaining to the Corrib gas project. The Minister for Communications, Marine and Natural Resources, Deputy Noel Dempsey, made a commitment to five people, who were released from jail, that there would be mediation between themselves, Shell and the Corrib gas partners. Unfortunately, he managed to reach a point where the process was so broad that the five Rossport men pulled out. The process is going nowhere and means nothing anymore. The Minister needs to return to mediation. It appears he misled the Dáil in stating what exactly was to happen because the process in train is clearly not what he promised the five men when they were released from jail. He needs to examine this.
On the groceries order, there is a way forward. The Tweedledee and Tweedledum of the big parties have not been supporting what is happening right across the board in terms of community initiatives. There is not adequate support for communities but there is always so much support for non-community enterprises. The Government should examine the fact that the system favours the profit-maker, in the planning system, for example. I have been involved in various community enterprises and found this to be true. From having spoken to people throughout the country, I have found they have major difficulties in trying to secure planning permission in rural areas. This is particularly true in respect of community initiatives, yet big businesses can get tax exemptions and planning permission for hotels, nursing homes and so forth. The Government needs to address this. The alliance of Independent Members, who are the nearest link to the people and do not have a party agenda to interfere with their wishes, are best placed to carry out the agenda.
Hear, hear.
Change is necessary. The market will bring it about by itself but the Government has great power to do so and I hope it will. Having brought forward the Bill, it should consider the position of businesses which are struggling to survive in rural areas, particularly the west. Unfortunately, in a place such as Achill or Belmullet, business costs and expenses are similar to elsewhere and similar wages, heating bills and rates must be paid. The rate for a rural hotel in Achill is €18,000 a year. Given that the season is so short, these costs must be paid with the earnings of a few months at best, which is difficult.
Such businesses do not have as much of what the trade would call footfall as O'Connell Street in Dublin, for example. Hotels are opening on O'Connell Street and in many other locations owing to Government incentives, and they are doing well because of the high footfall — the number passing their doors. The Government must consider what is happening in places such as Achill and the need to give rural hotels a means to survive. Many businesses have closed owing to the shortness of the season and the fact that costs are the same as in O'Connell Street whereas the number of customers is lower.
If the Government wants tourists to visit places like Achill, it must consider what it can do for such areas. It should examine the role of Ireland West Airport Knock in the context of balanced regional development. Some 500,000 people visit the west each year through Knock Airport whereas 25 million visit the east and south and 6 million visit Northern Ireland through the airports in those regions. Given that the population of the Border, midlands and west region is almost the same as that of Northern Ireland, one must ask why there is this discrepancy. The reason is lack of investment by the Government. All that Knock Airport received from Government was €5 million. If the airport had received the basic Aer Rianta payment of €3 per passenger during the years, Knock Airport would have received approximately €119 million, or up to €190 million at a higher rate per passenger. Instead, it got €5 million.
How can businesses, hotels and shops in the area compete when the Government has not made the required investment? Knock Airport has specific needs in the coming years for which it requires €29 million. This investment should be made because Knock Airport is a major catalyst for the development of the west. Considering that there is a €3.5 billion underspend——
They should build a few grocery stores up there.
It is a colossal underspend and a compelling reason for the Government to invest €29 million in Ireland West Airport Knock.
Funding is needed in the next three years for an extension of the passenger terminal and the installation of category 2 navigation status for the airport, which is Ireland's fourth international airport, with the third longest runway. During a recent celebration of the welcome arrival of three fire engines at the airport, two new and one second-hand, an aeroplane was unable to land for a considerable period because the lack of category 2 navigational status meant that fog prevented the landing. Knock Airport is the only international airport in Ireland that does not have this status.
The Government must not only consider the abolition of the groceries order but should also consider what it can do for businesses, which not only exist in O'Connell Street, Dublin. Fianna Fáil and Fine Gael — Tweedledum and Tweedledee — have based so much——
If Fine Gael was in power, Knock Airport would not be in place. The Deputy should give credit where it is due. That is a fact of life.
Knock Airport has no place in the debate.
The only thing the Deputy has missed is turf-cutting. Will he give us a little about it?
Businesses must be properly supported. It is not enough to abolish the groceries order. The Government must put its money where its mouth is and do something to support businesses. It can do so by supporting facilities such as Knock Airport, which is a major catalyst for the area.
That is thanks to Pádraig Flynn and Charlie Haughey.
An investment of €5 million does not constitute support. The Government has wasted far more in ways the Minister of State will not discuss. The sum of €5 million is a small one.
The Government should closely monitor the effect of the Bill, which will pass owing to the Government majority, in order that any adverse effects can be dealt with.
One would not know what the debate was about or whether it concerned Knock Airport or Fine Gael and Fianna Fáil. Nonetheless, it is good that the Bill is still alive. As I always say, where there is life, there is hope. For a country that has taken so much from the European Union during the years, it amazes me that we have never been able to stand on our own two feet or stand back and dictate the kind of Europe we want.
We all know that this country is in its infancy with regard to building. I hope there will be another 20 years of construction and long may the current property boom last, although the time will come when enough houses have been built and building comes to a halt. However, the industry on which this country has been built and of which we can always be proud is the food industry. That industry will be gone because we will have handed over the reins to every other country to import food at a cheap price but at a quality those countries cannot stand over.
A family in Ashbourne, County Meath, sold their own lettuce, potatoes and vegetables of every sort. Approximately 700 people a week visited the farm and bought the produce because they knew its quality and provenance, as it was grown on the family land. Last Tuesday, however, the business was closed down. There was a minor planning problem which could have been rectified, but the reason for the closure was because the three main supermarket chains constantly complained to Meath County Council about this man and his wife and children growing their own food and selling it. Unfortunately, that business is gone and the food has been ploughed back into the ground because there is nowhere to sell it.
Nobody can stand over the standard of the products consumers buy from shop shelves. For years Ireland built slatted units for meat and received grants from the European Union but these units are now idle. The bit of quality beef we produce is bought by the rich of different countries while most of our supermarkets and eating places import substandard food from South America. We know that meat which is supposedly from Brazil is not from there because Brazil now supplies most of Europe with beef and is running short. Beef is imported untagged and untraceable from other countries and this is what the Irish people are asked to eat.
For the past 60 years, small shops in small towns and villages always stocked the quality food we enjoyed. Quality of life was always good, as was the health of the people. When questions about why this country has such high rates of diseases like stomach cancer are finally answered, they will reveal that the culprit is the change in our diet and the food chain, involving as it does the increased production of processed food without proper monitoring of its effects on human health. Stomach cancer is practically non-existent in China, where rice has been the main diet for many years. Ireland has reached a stage where age means nothing with regard to developing cancer. It might take another 15 to 20 years for research into this area to come to light, but it will show that the increase in cancer is due to our food chain.
Deputy Cowley likened Fianna Fáil and Fine Gael to Tweedledum and Tweedledee, but everyone in this House, with the Irish people, has been responsible for the country's success. I would like to think that we could preserve our agricultural sector and villages. I do not wish Ireland to become like the United Kingdom where people living in villages must travel 30 or 40 miles to shop or go for a drink. We seem to be heading in that direction. Perhaps we should work together on this matter. Some speakers have commented that Fianna Fáil backbenchers oppose this Bill but we should put our heads together in respect of our agricultural products, towns, villages and food.
Hear, hear.
We should be able to stand over everything we eat. We should ensure that when the building boom ends, our agriculture sector will not have disappeared. Everyone knows that it has practically disappeared. Only 10,000 farmers will be producing food in the next five or six years given the introduction of various measures prohibiting farmers from producing certain foods.
The case cited by me concerning the family in Ashbourne, where seven or eight jobs were lost, is a reflection of how the big players can push out the small operator. I can understand why busy people choose to shop in places where they can pick up everything they need in five minutes at a good price. However, everyone knows that if small farmers or businesses are put out of business, prices will rise in ten years' time and food stores will introduce greater mark-ups. Such developments are taking place in the milk industry. Cheap milk from the United Kingdom is entering the Irish market because farmers have abandoned the land in England and the country has excess quota, which is entering the Northern Ireland market at 1p or 2p per litre. The farmers in Northern Ireland can then flood the market down here. It is a pity that Ireland cannot obtain some of this quota, which might sustain some of our farmers who must produce 155,000 gallons of milk per year to make a half decent wage. It will drive the dairy farmer out of business; a scenario which will be replicated in every other sector of our food industry.
I hope the debate on this Bill will continue and that when the building boom ends or stalls, our agriculture and villages will still exist. I hope our economy never collapses. The boom will continue for another 15 or 20 years because, through no fault of our own, we have only recently been capable of building this country up to the required standard. Everyone is responsible for ensuring the survival of our agriculture and villages, particularly the Ministers for Agriculture and Food and the Environment, Heritage and Local Government, who apparently did not want to listen to the farming community the other day. Agriculture, tourism, food, small villages and pubs are the reason for this country's success.
Ireland is a jolly nation and its people do not wish to become robots and be forced to travel 30 or 40 miles to buy their groceries on Saturday night or Sunday morning. That is the direction in which Irish retail is heading. Shops are open at the weekend not only from 8 a.m. to 6 p.m. but from 6 a.m to 8 a.m., which is madness. I hope changes might be made to this Bill or that people might realise that agriculture and the food chain are major parts of this country and that small villages cannot be allowed to disappear.
I thank the Leas-Cheann Comhairle for giving me the opportunity to speak about this very important legislation. Before I address the technical details of the Bill, I will follow up on Deputy McEntee's excellent contribution. He spoke about the relationship between food and health, an issue which is larger than the Government and encompasses every Member of the Oireachtas. The points he raised about health and concerns about many modern foods are very relevant to this debate.
Agriculture, tourism, small businesses and small pubs are at the heart of Ireland, make it different throughout the world and should be part of this wider debate. We are missing out on this and I welcome the Deputy's comments in this regard. As a representative of Dublin North-Central, I know that many people share my and Deputy McEntee's concern about the deterioration of the wider society. If the small shop or local pub is lost and the large investors come on to the pitch, the integrity of society and the economy is damaged. I urge people to reflect on this point because Irish society is at a crossroads. Which direction will it take? Will we move to the extreme right and usher in a dog-eat-dog society or will we begin reflecting about society and looking out for our neighbours and shopkeepers? The sad reality is that society has become very impersonal, which is relevant to today's debate. It is important for us to touch on these issues in the debate on this Bill.
I welcome the fact that the Minister of State is present to listen to the views on this Bill, including those which are critical. I will provide an independent view of the legislation. This Bill will have serious repercussions for Irish consumers and the thousands of Irish businesses involved in the production, supply and sale of food in Ireland. It will have major implications for the provision of local facilities in all our communities. I will develop these themes later. I am concerned that the Minister got the balance wrong in this legislation. The Bill will do nothing to prevent larger retailers from squeezing smaller retailers and suppliers as part of their greedy battle for increased market share.
The Bill does not contain any practical proposals to tackle the considerable market power of the larger multiples and has no effective mechanism to prevent them from abusing their power. If this legislation is enacted in its current form, it will lead to less choice for Irish consumers, greater consolidation in the marketplace and, ultimately, less Irish-produced food. This debate relates to both health and the community. The Bill will not provide any safeguard to ensure fair play in the food market and will give the largest retailers in this market a legislative basis with which to squeeze out competitors without sanction or fear of regulatory reproach. These retailers will be able to use every means at their disposal, including predatory pricing, the demanding of hello money, the abuse of credit terms and the imposition of unfair contract terms on suppliers. If the Minister wishes to ensure that consumers benefit from cheaper prices and greater choice and competition in retail, he must introduce real and meaningful controls to prevent unfair play in the food sector and ensure meaningful competition in retail.
I hope the Government will support the strengthening of this Bill as it goes through the Dáil to ensure it genuinely facilitates and achieves effective competition in retail. Creating a legislative basis for the largest market players to grow even larger will not achieve this purpose.
We have reached a crossroads in respect of the wider debate on competition, business, small shops and the role of agriculture and the community. The best way to sum this up is to liken it to the debate on television personalities, where some people prefer Brendan O'Connor and others prefer Des Bishop. O'Connor's mannerism, for example, is built on greed, being self-centred, degrading people and a right-wing economic agenda. The mannerism of Des Bishop, or Bishopism as I term it, is built on understanding, having respect for people, especially in marginalised communities, and giving such people hope and positivity. This debate is somewhat like that debate. One can have O'Connorism or Bishopism. I urge Deputies to take on Bishopism as it gives hope and respect to the person and it benefits the community. It is important to state this in the broader debate.
This Bill contains six sections: amendment of the Competition Act 2002 by inserting a new Part 2A, amendment of section 30 of the Competition Act 2002, amendment of section 45 of the Competition Act 2002, revocation of the groceries order, repeals, and the Short Title and commencement. Section 1 of the legislation contains an amendment to the Competition Act 2002 by inserting a new Part 2A to prevent certain unfair trading practices in the groceries trade. I accept that it is important to have this. Section 15B sets out new rules regarding anti-competitive conduct in the groceries sector. Section 15B(1) is designed to prohibit resale price maintenance in the groceries sector.
These are important, and although it is very well to have a debate about competition and prices, we must not lose sight of the quality issue, in particular the quality of a product or particular food. This is related to the health debate. We should face the reality that consumers have major concerns about the quality of food in the State and there is a lack of confidence on the issue. This is a reality, be it in a debate about cancer or other illnesses. People have that concern. We must reflect on this. I stated with regard to remarks made by Deputy McEntee that this is bigger than one political party or the Government. The Oireachtas Joint Committee on Health and Children should pursue this topic as problems are emerging in the broader society.
People may discuss the period in the 1930s, 1940s and 1950s when there were outbreaks of tuberculosis in the State. This was a major crisis, solved thanks to people such as Noel Browne, who was also an Independent Member of this House and had a strong health mandate. With the current issue, an important factor to consider is that we had a crisis involving TB and we had to respond to it. We have a cancer crisis in the State in 2006, and many believe major contributory factors are the chemicals and preservatives in foods. The jury is out on the issue and I urge academics and medical people involved in research to open their eyes to it. The matter will become more apparent in a few years. It is important that the consumer has confidence in the quality of food.
Section 15B(3) is designed to prohibit parties from compelling or coercing others to pay advertising allowances. I welcome this as it deals with the matter of corruption in business. Section 15B(4) is designed to prohibit so-called hello money in new or extended retail outlets. Section 15C(1) confers the right of action on any person who is aggrieved as a result of actions prohibited under section 15B. A similar right of action is provided for the Competition Authority. It is important to consider these issues.
It is important that we do not allow ourselves to lose small local shops, whether these are in an urban, rural or island area. Small shops and businesses are very important. We must support them in this debate, and I will side with the smaller shopkeeper and service provider in the local community. It is important as this shop is more than just a place where a person can get bread or milk. It is a local community centre for many. They may drop in to the shop for a chat, or older people may drop in because they live on their own in the area. These people have the opportunity, when getting the paper, for example, to be proactive and involved with the local community.
The small shop is also personable and accountable to the local community. We all have experiences of the local shopkeeper being supportive of the voluntary community, be it in football clubs or community and residents groups. In the past week one of my local shops has been involved in a project with me on raising funds for children and adults with a disability. These are commonplace examples.
As we are discussing the rights of the small shopkeeper in the context of this Bill, we have a duty to protect the people concerned commercially and from a security perspective. In recent days, an owner of a small off-licence in my constituency attended my clinic and reported that he had been robbed three times in the past four weeks. Robberies took place twice with guns and the last robbery was carried out by a gang with knives at 12.40 p.m. last Tuesday. The unfortunate man was terrified. On the first two occasions he was made lie on the floor while guns were put to his head, all for €200 or €300. The last incident was more serious and the man was more fearful because knives were held to his person as the gang stole cigarettes and alcohol. This is an indication of the way society is heading.
It is important that we defend the interests of law-abiding citizens who provide a valuable community service and who need our support. People nonetheless attack and abuse them. I have already raised the matter with the Minister for Justice, Equality and Law Reform and I will not tolerate any of my constituents being treated in this way. We must face the reality that these types of crimes are taking place. It is a nonsense that a programme such as "Crimecall" shows petty crime incidence when my constituency is subject to robberies at gun and knife point, and it is not even mentioned. It is important that these incidents are mentioned to defend the safety and security of the small shopkeeper.
The larger players in the retail market must be closely monitored. It is the duty of the Government and the legislation. Superstores should be watched carefully as many of these businesses are very aggressive in the market. They will be involved in practices that will hammer the smaller businessman. With regard to the manner in which staff are treated, I commend the credibility and integrity of smaller shopkeepers and business people in looking after their own staff, paying them well and providing a good local service.
On the other hand, some stores do not treat their staff properly. I mention the case of Joanne Delaney in this regard. Ms Delaney had worked in the Dunnes Stores in Crumlin and was sacked by that supermarket for wearing a union badge in the workplace. She is a shop steward for Mandate, the union of those working in shops. She was recently suspended from the job and she has now been sacked. Mandate is attempting to defend her case. It represents 40,000 workers in the retail and bar trade, including staff at Dunnes Stores.
I am horrified to see such action against a person for such a trivial issue as wearing a union badge. I strongly support Mandate in this case. Brendan Archibald, the national official for Mandate, has explained there are well established mechanisms available to Dunnes Stores and operated by the union which have been repeatedly bypassed by the company during this process. The decision by Dunnes Stores to sack a member of Mandate for wearing her union badge is symptomatic of a wider campaign by the chain to undermine the union and systematically erode its right to represent its members effectively. For a considerable period, it has been clear to Mandate that the company has wilfully and methodically sought to obstruct the union's efforts to engage with the company on a variety of issues. This is just one example of the company's deplorable attitude to trade union and labour law in 2006. Issues such as this have contributed to the souring of the industrial relations environment in Dunnes Stores. The company continues to ignore the principles of natural justice and the Labour Relations Commission code of practice on disciplinary procedures as they work to isolate and destroy the union. Unless this matter is dealt with satisfactorily from the union's point of view it has the potential to escalate, given the worst atmosphere in the company's history.
We are discussing the retail sector and an employee who works in that sector. We cannot allow such a situation to develop in the retail and shops industry in 2006. It is important for the Government to listen to the debate and to the concerns raised by all Deputies.
In terms of the detail of the legislation, the departmental report on which the Minister and the Government based their decision to introduce the Bill contained a number of errors and mistakes. This misinformed the Minister and the Government. For example, Germany has a ban on below cost selling but the report states it does not. Second, suppliers will not be able to use existing laws to enforce credit terms but the report states they will. A ban on below cost selling is practical but the report states it is not. Selling below the cost of goods purchased does not take place in other sectors but the report states it does. The Competition Bill will not prevent predatory pricing but the report states it will. Finally, the report asks why the rate of inflation has diverged so dramatically from that of the United Kingdom in the past nine years but there are clear and simple answers if the authors of the report had only looked at them. Why, for example, is UK inflation higher than Irish inflation in the past two and a half years when the United Kingdom has no ban on below cost selling? That is the question that should have been asked.
The report also omits to mention that UK supermarkets are subject to a code of practice but Irish supermarkets, if the Bill is passed, will not be subject to such a code. The UK Competition Commission recommended that supermarkets with a market share above 8% should not be permitted to open new supermarkets within a specified distance of their existing supermarkets. The successful entry of Aldi and Lidl was made possible by the ban on below cost selling.
Removing the ban will bring about selling of alcohol at below cost which will encourage alcohol consumption. However, at times, people go over the top about the subject of alcohol. Before we deal with the problem of alcohol in society we should first accept responsibility ourselves. We should not blame the people who sell it or who are involved in the industry. The vast majority of Irish citizens enjoy alcohol in moderation and get on with their lives. They do not get into problems. Those who are involved in anti-social behaviour already have other issues. People should come into the real world and start accepting responsibility. It is a shame that this constant theme persists about people. We must, however, be vigilant about our young people, give them a healthy attitude to the enjoyment of alcohol and teach them how to drink it sensibly. If they can do it in France or Spain, where every young person has a positive attitude to alcohol and has no problem handling it when they reach their teens or early 20s, I do not see why we cannot do it. If our parents, who grew up in Ireland in the 1920s, 1930s and 1940s, could give us a healthy and balanced attitude to alcohol I do not see why we cannot do so in 2006. I say to society to stop blaming the world, accept responsibility and deal with these issues.
For the year to November 2005 Ireland had the lowest rate of food inflation in the eurozone and in the 15 member EU and the second lowest in the 25-member EU. These are recent figures, which I raise because we are dealing with competition, food, shopkeepers, small businesses and large superstores. It is part of the Competition (Amendment) Bill 2005 but also part of the broader debate on the direction we are going. In 2006, some feel less equal than others and, for all our talk about equal rights, a significant minority living in Ireland have not achieved legal, economic or cultural parity. The economic, political and cultural disadvantages suffered by these people are serious violations of justice. It cannot be disputed that the Ireland created by the Celtic tiger is a much more prosperous one. We all accept that but prosperity creates dilemmas of its own. Contemporary society displays proliferation of many interests — individual, social, environmental and medical — each demanding a fair share of society's resources. Unfortunately, there does not seem to be enough resources to meet all those needs. There is no easy ethical blueprint to which society can refer to establish that all its obligations have been justly discharged. In the context of difficult decisions about the distribution of resources awkward questions need to be put. How is the tension between the rights of individuals and the overall good of society to be resolved? What are the relevant inequalities that justify giving more resources to some and less to others?
We need to balance the rights of the individual, the good of the other and the common good but how, in Ireland in 2006, are we to attain the correct balance? To date we seem to be failing a substantial minority of our population. I do not say that lightly and it is not a question as to the rights and wrongs of competition. I favour competition but we must not lose control or balance. Nowadays the debate is not about creating a wealthy society because we have a wealthy country. Now it is about how we distribute resources, the extra that we have. The challenge for all political parties and Members of the Oireachtas is to ensure the weaker sections of society get the biggest boost from the Celtic boom and our economic prosperity. That must be the priority or there is no point in saying we believe in equality, justice and fair play.
I welcome the opportunity to have this broad and wide-ranging debate on the Competition (Amendment) Bill 2005. There are many issues I did not get to. There are major flaws in the legislation. I will stand by the working man and woman of this State. I will stand by the small shop against large vested interests and by the community. I urge the Minister to listen to this view.
I welcome the opportunity to speak on this legislation. As with much of the legislation ushered into the House in recent times, it has one eye on the issue, another on the electorate and another on the impending election date.
I am not as impressed as many on the other side of the House by the presentation of this Bill. It is here to encourage the public to believe there is a deep and serious concern on the part of the Government for competition and a reduction in prices for the consumer. Nothing could be further from the truth. It reminds me of the run-up to the last general election. The same Minister who is introducing this Bill abolished the health boards, to resolve the problems in the health services. Those of us who remember that can only ask what was the real purpose of that exercise.
Notwithstanding that the legislation needed updating, its format and the manner in which it was introduced is nothing more than a smokescreen to divert public attention from unrecorded inflation and to pretend the Government is concerned about the impact on the consumer. The consumer is now a much sought after personality and is mentioned at every opportunity, as if he or she matters. The consumer does not matter in this country and is the last person thought of at the end of the line. The consumer is the one who pays the piper through the nose every time. The unfortunate consumers, waiting at the end of the line and having shouldered the burdens of Government taxation and broken promises, have their heads on the block once again.
Let us look at the changing scene for retailing in this country. Like it or not, due to the planning policies of local authorities and for other reasons, we have arrived at a situation where most towns and villages will no longer possess any shops. The many obstructions which prevent consumers from purchasing goods where they want means that not many retailers will remain in this city in a few years' time. Consumers are being forced to the new shopping complexes on the north, west and south sides. I do not know whether that is deliberate policy or merely represents indulgences on the part of planners, who should have seen that the lack of adequate parking and convenience for consumers would cause shopping centres to move away.
A feature of today's marketplaces brought to my attention by people who shop on a regular basis is that it is not unusual for certain lines of groceries and household goods to disappear from shelves for a couple of weeks at a time. Why does that happen? The groceries order attempted to address these issues and this Bill purports to do likewise. I put it to the Minister of State that products are taken off the shelf to muscle suppliers into providing better deals. In reply to anybody who says this does not and cannot happen, I say that it can and does happen when major retailers develop excessive muscles. I do not know what research has been conducted by the Department on this matter but this legislation is supposed to address practices such as hello, goodbye and how are you money.
After discussing similar problems ten or 15 years ago, we decided the groceries order was a necessary measure. The entire retail structure has changed since then, some say for the better and others for the worse. It is becoming rare to find the owner of a filling station and say hello or to meet the same person on return visits. The previous relationship between customer and retailer has gone. That is fine in the great conurbations but I wonder whether the people of rural areas have a competitive service which is of benefit to consumers.
In the area of telecommunications, the consumer is at the end of the line. There is much talk about mobile phone services and competition, but competition works in every country in Europe except here. We have the most expensive and least effective service in Europe. That is crazy in this free marketing time when competition should be encouraged. There is something wrong with what we are doing and, while I do not know whether adequate research is being devoted to finding out the cause, application needs to be made in that area because it will soon be too late. The quality and standard of our service will degenerate to such an extent that we will become a laughing stock. If anybody believes I exaggerate, they should make the comparison for themselves.
In terms of the nationwide delivery of broadband, there were supposed to be 500,000 customers two years ago, yet we have half that number today. It is crazy that a concept we were led to believe in is not delivering. The mechanics of the marketplace need to be carefully examined and questions need to be asked about why we are not delivering to the consumer.
As we live in a time of low interest rates, every utility service in the market, whether toll road or telecommunications system, is an investment house. They are better than banks because they make money on a regular basis. Once again, the poor old consumer is at the end of the line, bearing the burden and coughing up every time more is clapped on.
In recent days, the Minister for Transport appeared on television, looking like he wanted to be elsewhere, and announced that tolls will be lifted from the M50. The impression was given that we would eliminate the blockages in the system and allow the traffic flow along the road. The consumer thinks about this for about 12 hours, only to find a slight problem. What the Minister really meant is that he wants to snare more unfortunate consumers so that they cannot get on or off the M50 without being screwed to the wall and having the money extracted from them whether they like it. We should be protecting the consumers whose contribution to the Exchequer amounts to €5.2 billion and will rise to €6 billion next year.
The little old consumer that so concerns this caring Government sits on the M50 for two or three hours, if lucky, and pays tolls and taxes. In return, he or she has to face four obstructions where there was previously one. Those obstructions are not yet fully designed and——
The Deputy should be up for the Booker prize.
——I hate to think of the machinations the think-tanks over there can devise, given time. The Leas-Cheann Comhairle can be sure that they will not be of benefit to us when we go down the M50. Consumers are supposed to rate highly on the Government's priority list, God love them. Another promise has been broken, with €5.2 billion in the Exchequer.
A bit of light entertainment is always worthwhile after the pub.
Inasmuch as entertainment is concerned, I often thought that the guys opposite should go on stage because they would attract full houses every night and the audience would fall out of their seats with laughter because every time they heard from the Government, they would say to themselves, "Well, the consumer was a victim of the Red Cow roundabout and the Luas." Consumers will be victims evermore of the port tunnel because, although tunnels were built throughout the world 150 years ago, Fianna Fáil could not even build a simple one and, when it was built, we discovered it was too small. Still they think they would not draw a crowd on the stage but I can assure them they would get full houses every night. There would be no need for comedians because they would provide all of the comedy. Incidentally, these are only minor details. I could give a long list of other areas where the unfortunate consumer has been fleeced. When the time came — we are getting nearer to an election, no doubt about it — the Government rose to the occasion. It had a good look at what could be done and decided that while the poor consumer had been hammered sufficiently in the past three or four years, there was no harm in having another go. It sent a smoke signal and there was a fudge but it hammered the consumer again.
I have referred already to the changing face of shopping. On a related issue, we have a reasonably large market, with a relatively good turnover and it should not be the case that competition is between suppliers as opposed to retailers. Retailers are concerned with market share. Retailers will always assert that their main concern is service to the consumer, but in actual fact it is market share. The essential presumption, articulated in the context of the discussion of the groceries order, is that the majority of supplies to the various trades come from indigenous suppliers. That is the way it should be but that is changing. If one looks carefully at the origin of goods, one will find vague references to the European Union or labels stating that the goods were processed or packed in Ireland. These are various ways of misleading the unfortunate consumer, who might unwittingly assume a product originated here, generated jobs here and was part and parcel of our economy when in it might only have been packed here.
With regard to what will happen from now on, it would serve the Minister well to keep a close eye on prices in all of the retail outlets, given that the purpose of the exercise was to produce cheaper food for the consumer. The consumer expects to receive a boost in the form of cheaper food. Let us see how it works and how it has worked, for instance, since last November, with the abolition of the groceries order. How beneficial has it been to the consumer? The answer is zilch, it has made no difference at all, but it could have a serious impact on market share from this day forward. Will the Minister indicate to what degree his Department can monitor the fluctuations and trends in the trade, particularly with regard to market share? To what extent will the inspectors be able to monitor the demand for "hello" money? There is more than one way of getting around that provision, which I am quite sure the Minister of State knows about.
We know about them.
If he knows about them, then why has he not looked more carefully at them and suggested different legislation to deal with them?
I recall that some prominent people in Deputy Durkan's party got into trouble over demanding "hello" money.
I advise the Minister of State not to give me lectures about prominent people in my party. As I said a few minutes ago, if members of Fianna Fáil ever decided to go on the stage, I will be there to applaud and laugh at each turn.
The Deputy could be the court jester.
It will not be for the comedy, but for the irony.
The Deputy could definitely be the court jester.
I know that members of the Ceann Comhairle's family are involved in the entertainment business but they are likely to be put out of business by members of the Government. There are plenty of competitors within the Government who, as a group, could go on the stage tomorrow morning and entertain the public with the things they promised but failed to deliver.
It has been Government policy to get to the top.
The show would run as long as the famous play, "The Mousetrap" before the public would have a full list of the broken promises.
This legislation was heralded as a great development in terms of regulating the retail trade in a positive way for the consumer. However, I do not see any evidence to support that assertion. I have no doubt the single most important reason for the introduction of this Bill, the debate leading up to it, the heart wrenching hand-wringing, the tearing of hair and the gnashing of teeth in the Department — one could almost feel the hurt and pain of the Minister as he examined the nuances of the legislation — was the forthcoming general election and not any concern for the consumer or the retail trade.
I have already referred to changes in our cities but now wish to briefly refer to changes in the towns. There was a time when there were small shops and small supermarkets on the streets of every town and village. They are disappearing fast, either because they are unable to compete with their bigger rivals or as a result of the planning process. We will shortly arrive at a situation where all that is left on the main streets of towns and villages are offices and traffic lights. If the Government persists with its traffic lights policy, getting into those offices will be more difficult than getting into this House.
The most important thing I want to see emerging from this process is consumers benefitting in a real way and not simply in a way that meets the propaganda requirements of an election.
The centrepiece of this legislation is the revocation of the groceries order but it contains no meaningful measures to deal with predatory pricing. The removal of the groceries order is a grandiose gesture, calculated to pander to the gallery rather than put more money into the pockets of consumers. The Minister for Enterprise, Trade and Employment described the demise of the groceries order as a "liberating day for competition policy in Ireland". I will believe that when I see people heading off to the sunspots of Europe with the fruits of the lower prices that the multiples have decided to give them, but that day will be a long time coming.
The major multiples, both Irish and multinational, will continue to alternate their loss leaders from week to week, with the aplomb of circus jugglers. It is interesting to see how there are special offers in Tesco in one week and in Dunnes Stores the following week. It is an ongoing saga and people should see it for what it really is.
It is all very well to trumpet the abolition of the groceries order as a lifting of the ban on below-cost selling, if one does not happen to be the owner of a small shop. Often such shops have been in families for generations and, that is what rural Ireland and the towns of Ireland are all about, family-owned businesses passed on from generation to generation. Such small shops grow over the decades into larger shops, perhaps becoming a local supermarket. Families put money into them, building extensions and offering greater levels of service. The personal touch is evident in the services provided to customers, having changed little from across the counter service. By linking up with local chains such as Londis, Centra, Spar, SuperValu or Mace, the shops could compete with multiples and even beat them in some areas. This is welcome.
The "Tescopoly", where every little can hurt, is generally within walking distance in most towns. If Britain is any guide, it will crush many of the small, independent grocers. The massive purchasing power of the multiples in Britain, added to the lack of constraints on below cost selling, sounded the death knell for many small shops. It is a complaint in many British towns that it is not possible to get milk or bread at night because the small shops had been swept away. Once they forced the local shops to close and shoppers were left with no choice but to shop in large out of town centres, the prices increased.
The groceries order was introduced in 1987 by the then Minister, Albert Reynolds, after the H. Williams group collapsed following a lengthy price war. It was seen as a solution at that time but since then more than 2,000 small grocers have gone out of business, with most of the remainder seeking refuge in symbol chains like Spar and Mace. These 2,000 retailers were self-employed, family business people who provided a service but they were wiped out.
The major British multiples entered the Irish market, with Tesco and Marks and Spencer making major inroads within a few years. Much of the distribution to these major multiples is done directly from Britain and the invoice price is set outside the country, presenting problems here. The goods are then imported at a price below the invoice price in Ireland. This must be constantly monitored because such companies can find ways to get around our pricing structure and to make special offers.
The contribution of small retailers cannot be overstated. They are a vital part of society's fabric. The convenience and flexibility of going to a shop near the house to buy bread or milk is invaluable. These shops belong to us and we must make a conscious effort to support such enterprises. It is a major advantage that we do not have to queue at a checkout for more than ten minutes to pay for the groceries and that we can walk in and out without getting a trolley. People should value their time and, while no one should be directed into small shops, we should make a conscious decision to use them. It is not uncommon for parents to run out of milk or bread late at night and the small shop's role in meeting such needs is important. If we do not support them, they will not be there the day we need them and by then it will be too late to complain.
The small shop is a community hub, where people meet after mass, pick up the newspapers and lottery tickets and hear the local news. Deputy Durkan referred to the changed landscape in most towns. In one town in Monaghan where there used to be ten shops 15 years ago, not a single shop is left. That has been replicated in every town. Some town centres are dead, with people only going to multiples in shopping centres, leaving other businesses struggling. My neighbours in Cavan experienced the same difficulty, with the small, family-run business in the town centre suffering. Many town centres are semi-derelict but those derelict buildings were thriving businesses a few years ago.
Previously, in many small housing developments, an integral part of a new community was a small neighbourhood centre which included local shops. Some emerging communities now are bereft of shops, leaving a gaping void that is often not filled for many years. Many people are unable to set up their own businesses and boost the local economy by providing valuable employment. In these areas community is a misnomer because a community looks after its members, with a shop and post office offering self-sufficiency. New housing developments have lost that and there is no way to get to know the neighbours with no local shops or sense of community. These estates are simply collections of commuters where people do not know their neighbours. This starts the breakdown of community spirit because the chatting that once went on is now absent. People have no way of getting to know each other.
The groceries order included a ban on so-called "hello" money, upfront payments from suppliers to ensure their products were carried by supermarkets. There are ways around that and that should be addressed. The order attempted to ensure retailers would not receive any benefit from a supplier for advertising the supplier's product. Suppliers are prohibited from discriminating against any retailer in the terms and conditions under which goods are supplied and suppliers are not permitted to coerce retailers in any way by threatening to withhold supplies. The order importantly required large purchasers to pay their suppliers on time and to adhere to the published credit terms of small businesses and suppliers. Cash flow is a vital aspect in business and unless it is properly managed, a business might not be able to survive, no matter how profitably it trades.
Many book stores and supermarket chains have adopted the practice of selling three items for the price of two. This is in conflict with the below cost prohibitions of the groceries order. It is vital to ensure that another below cost price war does not break out between the major multiples and Irish suppliers. There is a danger that some of the major multiples may take a strategic decision to go below cost to appear competitive for a short period in the knowledge that they will blow away the opposition. They can take a short-term loss for long-term gain. These issues should be examined. This will put at risk the jobs of people working for supermarkets and retailers.
The purpose of this Bill should be to protect the rights of the consumer and ensure where possible that savings that can be made through national distribution are passed on to the customer. Competition is the lifeblood of trade. Permitting small shopkeepers and entrepreneurs to open and carry on business is of paramount importance, as is the availability of choice to the consumer. While it is argued that competition is good for the consumer, unfortunately the small corner shop is virtually extinct and currently accounts for only 10% of the retail sector. The market share of the multiples will grow relentlessly as they continue their below cost onslaught on the market. In the long run, if the scale of their international purchasing clout is allowed to continue unfettered, the rest of the market will not stand a chance, with consumers being nailed to the wall. If Irish consumers wish to consort with the likes of Tesco or Wal-Mart, in its guise of the British ASDA chain, it will cost them much more than the €1,000 they will supposedly save in the next 12 months.
Legislation and regulations will not make a real difference. Ultimately, the onus is on individuals to recognise the bigger picture and make a conscious decision to support small corner shops. Not long ago we sought to try to save rural post offices. If most people were to examine their consciences, they would probably find they have not bought a stamp in a local post office in many years. With post offices and corner shops disappearing before our noses, it is vital we support our local businesses.
I apologise on behalf of the Minister for Enterprise, Trade and Employment, Deputy Martin, for his absence from the debate. As he is attending talks in Dublin Castle, I will reply on his behalf. I have no doubt Committee Stage will provide an opportunity to discuss all the issues raised on Second Stage. This is as it should be given the importance of this Bill which raises key issues for a critical sector of the economy.
I propose to respond to some of the points raised by Deputies during the debate. It is difficult to discern where Deputy Hogan and his party stand on this issue.
The Minister of State should ask backbench Government Deputies where they stand on the Bill.
I have read the Deputy's contribution to the debate which bounced around like a pinball. At one point he told us he seeks a pragmatic outcome, namely, lower prices, while in virtually the same breath he informed the House he wishes to protect retailers from aggressive pricing tactics. Perhaps he knows how to reconcile both views but I am unable to do so.
Deputy Hogan informed us he has a plan to boost the resources of the Competition Authority in order that it can be a real force working on behalf of consumers. He then rejected out of hand the authority's view of competition law and dismissed its comments on the groceries order as worthless. Perhaps he wishes to double its resources so that he can disagree with twice as many of its decisions.
We will be fair to the Competition Authority.
The Deputy claimed he will support a facility which will allow discounts and rebates to be passed on to consumers rather than putting the money into the pockets of retailers. While this view is commendable, he later rejected the provision of the Bill which will have precisely that effect. The Bill removes the incentive for the trade to operate a system of discounts and rebates in the first instance. The Deputy has asked the Minister to indicate what part of the legislation will ensure that consumers will be able to access such discounts and rebates in future. He cannot have read the Department's report if he asks such a question. The part of the Bill the Deputy seeks is section 4(1) which reads: "The Restrictive Practices (Groceries) Order 1987 (S.I. No. 15 142 of 1987) is revoked". The order encouraged and facilitated off invoice discounts and specifically prohibited retailers from passing them on to consumers. Getting rid of the order is a major step towards getting rid of that problem but evidently the Deputy did not draw this conclusion.
Deputy Hogan is also wrong to state the Department's report indicated there was no evidence that the abolition of the groceries order would lead to lower prices. I will cite the report to clarify this matter. It states:
We would expect that the impact of the resulting competition in the market would be to bring about decreases in the retail prices of goods covered by the Order.
However, we don't believe that it is possible to predict in any meaningful way the precise extent of such price reductions. Ultimately, that will be a function of a variety of factors including the amount of off-invoice discounts that are available for transfer back to the invoice, the actual level of net margin obtaining in the retail trade currently, and the extent to which resulting competitive forces will drive efficiencies at all levels of the production and distribution chain.
Other extraneous factors, including input costs and consumer demand, also impact on retail prices and make it difficult to isolate the impact of any one factor such as the ban on selling below net invoice price.
Deputy Hogan criticised the Minister on the basis that there was no sign of a new chairman being appointed to the Competition Authority. I am pleased to note that less than 24 hours later, the Minister announced the appointment of Bill Prasifka to the post.
He can move quickly when he wants.
Deputy Hogan is often wrong but sometimes he is no more than a victim of bad timing.
The decision took seven months.
The Deputy dismissed the views of the dean of the faculty of human and social sciences at Trinity College as those of an academic and well-known opponent of the groceries order and implied derisively that the dean's views are somehow less than objective. It is interesting that the measure of objectivity in this matter is whether one agrees with Deputy Hogan. It is unfair to characterise a contribution to the debate as less than objective because the person who makes it happens to hold an informed view.
Deputy Hogan accused the Minister and Department of ignoring the valid concerns of anti-poverty groups, including the Society of St. Vincent de Paul, Crosscare and the Combat Poverty Agency, notwithstanding the fact that a full chapter of the Department's report is primarily devoted to the submission these organisations made to the public consultation process. The concerns of these groups are based on the fact that consumers in areas of economic deprivation have little choice other than to shop with symbol group operators and small independent grocers which, in turn, limits their access to healthy foodstuffs. The anti-poverty groups want the multiples to be attracted into such areas to provide the competition and choice needed. I agree with this proposition and fully support the anti-poverty agencies in pursuit of this objective. It does not make sense, however, to argue against abolishing the groceries order on the grounds it might encourage the multiples to compete more aggressively with the symbol group operators. This is a case of being damned if one does and damned if one does not. One group argues we must keep the order to ensure competition from the multiples, while other groups argue we must keep it to protect against such competition. Between these arguments we have Deputy Hogan who somehow manages to support both of them.
We have a Minister who wanders around aimlessly.
I wish to respond to Deputy Howlin's contribution. The Deputy quoted inflation statistics at some length and delivered them as if he believed they were new to Deputies. Most of the figures he cited are already contained in my Department's report on the groceries order.
The report ignores and twists them.
Deputy Howlin told me nothing I did not know already. I suspect he deliberately missed the point.
The Minister of State should not read scripts.
The issue is not whether food inflation increases in one year and decreases the following year. It is easy to close the door to the outside world and assume that if food inflation is -1% in a given year, we must be doing okay. We need to compare our rate of inflation against other indicators, for example, if our rate is -1%, the average European Union rate is -2% and the United Kingdom rate is -3%, we must question whether we are getting a good deal.
Is that speculation or fact?
Deputy Howlin also dismissed as irrelevant the argument regarding the comparative rates of inflation in the clothing sector here and in the United Kingdom.
There is nothing left of the clothing industry because it has moved to China.
Again, I suspect he deliberately missed the point. We are told groceries cost more here than in the United Kingdom because we have higher input costs such as rents, wages, insurance and so forth. If such costs are higher here, this will be the case regardless of what product one is selling and, as such, any divergence in the rate of inflation between here and the UK should be viewed across all retail sectors.
That is a silly proposition. If the base cost of the product one is selling is much lower because one is importing it from Morocco or China, the price will naturally fall.
The fact that they are not falling points to a serious flaw in the Deputy's argument. A factor other than input costs is driving the disparity in food prices between Ireland and the United Kingdom.
Deputy Howlin cited evidence given to the Joint Committee on Enterprise, Trade and Employment by representatives of Aldi and Lidl, in which they indicated they could not have opened in Ireland had it not been for the groceries order. Apparently they stated they would have been devoured and killed off by Tesco and Dunnes Stores. How does the Deputy explain the presence of both discounters in the UK market where all the evidence suggests they are enjoying a period of strong growth?
Almost all retailers try to attract customers by claiming to offer prices which are lower than those charged by the competition. That is the nature of business. In general the consumer is free to judge which retailer offers the best value. Aggressive pricing is not uncommon in highly competitive markets. Many low fares airlines have an aggressive pricing policy. We all know people who have travelled to the UK for 1 cent.
Not with Government taxes.
Fair play to Jim Mitchell.
Although Ryanair's objective is to win market share from the competition, it has not been accused of being predatory. Not all aggressive prices are predatory. Why should we assume that a supermarket that charges low prices or engages in aggressive pricing is trying to put the opposition out of business? Aggressive pricing is fair and is designed to attract customers and win market share. It benefits consumers and encourages businesses to be efficient and deliver value for money. Predatory pricing is different. It is the unfair and deliberate use of market power to put people out of business. In regulating competition in any sector of the economy, it is critical that we distinguish between the two. We must be able to determine when the line between aggressive and predatory pricing has been crossed.
The key distinguishing feature of predatory pricing is that it is unfair and deliberate misuse of market power. Competition law provides a mechanism to measure this unfair and deliberate misuse of market power. It is a persistent and prolonged sale of a product below cost by a firm that is dominant in its market. If we reject this measurement, we reject the distinction between aggressive and predatory. If we reject the measurement, we will prohibit valid low pricing strategies that benefit consumers and the economy as a whole. That is why the concept of predatory pricing by a non-dominant firm is a contradiction in terms. When it comes to deciding whether a firm is dominant, competition law does not specify the geographical boundaries of the relevant market beyond saying it can be in the State or any part of the State. We will have the opportunity to address the issue in greater detail on Committee Stage. For now the strength of the law on dominance is its flexibility and ability to be adapted to each set of circumstances.
It is never implemented.
Market share is only one criterion to be used in deciding if a firm holds sufficient power to be considered dominant. A firm with a large market share might not be considered dominant if because of other factors it is not in a position to exercise power over the market. Similarly if all the other criteria pointed to market power, a firm with a small market share might be considered dominant. If we change the law to say that a firm with a 30% market share is automatically dominant and one with less than that is not, we will eliminate the flexibility and destroy the law beyond redemption. Worse, we would run the risk of destroying all vestige of competition in the economy.
Deputy Howlin criticised a former chairman of the Competition Authority for his preoccupation with price and said that price is not the be all and end all.
Hear, hear.
Issues such as access and transport are just as important.
They are.
Would Deputy Howlin prefer to have one grocery store in town that charges high prices or just one grocery store that charges low prices? No doubt the Deputy would prefer the store with the low prices, as would we all.
That is a nonsense question.
That is a stupid question.
Price is important, and let us not try to fool ourselves otherwise.
If one has no personal transport or is elderly, one may not have access. It is an important issue to anybody with a social view.
Better than that would be two stores in one town, one at either end of the street competing aggressively with each other and offering consumers real choice and value.
I take issue with most of the statements by Deputies Eamon Ryan and Morgan. Deputy Eamon Ryan said the groceries order was not a major reason for the lack of competition in the market. No matter how often the Deputy repeats that statement, it will not make it true. The groceries order was the principal contributing factor in driving price competition out of the grocery trade after 1997. By creating a convoluted mechanism of discounts and rebates, it allowed suppliers to fix minimum prices below which most grocery prices could not be sold. Deputy Eamon Ryan flies in the face of the economic evidence on that score.
The Deputy also claimed the groceries order protected a form of retailing that he characterised as the corner shop. We cannot allow the outcome of a debate as serious as this to hinge on such misinformation and spurious claims. In 15 years after the groceries order was amended in 1987, more than 20% of the independent grocery stores in this country closed.
The Minister of State wants to close the rest of them.
Some 2,500 stores went out of business and the economic evidence points to the fact that the groceries order was the major contributing factor to that demise. Can the Deputy point to even a handful of new, small and truly independent stores that opened in the same period? The order did not protect small retailers in the manner he claimed. Neither did it protect suppliers who were faced with secretive, arbitrary and discriminatory demands from retailers. Those demands were not just facilitated by the order but were positively encouraged by the convoluted way in which the provisions and supplementary terms had been drafted.
The Minister of State could bring in transparency.
The Minister of State should ask Musgrave its opinion.
Off-invoice discounts and rebates in the grocery trade did not just happen because some suppliers and retailers thought it might be a good idea. It happened because while the order allowed suppliers to have their principal terms and conditions of trade about which they had to be open and transparent, which is fine as far as it goes, it also allowed them to operate a system of supplementary terms, keep them a closely guarded secret and negotiate them in an arbitrary way. If that were not bad enough, the order also did not require suppliers to put those supplementary terms on the invoice which meant the retailer was not allowed to pass them on to the consumer.
The Minister of State should change that. It is what we recommended.
It is time we got real about this debate. The groceries order was insidious, anti-competitive and discriminatory legislation——
That successive Governments supported for 18 years.
——that protected certain elements in the trade from having to face up to competition. It did not protect the small, independent grocers, who were squeezed out of business by the practices encouraged and legitimised by the order. Deputy Morgan described the groceries order as a ban on below-cost selling. Even the most ardent supporters of the order admit that it was not a ban on below cost selling. Deputy Morgan should have read the Department's report on this issue before debating the order.
The Deputy also referred to planning laws and while it is not in our area of responsibility, I want to dispel the notion that the groceries order prevented the opening of large hypermarkets. It had nothing to do with this issue and suggestions to the contrary cloud the debate. While our planning laws must be framed in a sensible, reasonable way that allows proper, sustainable retail development that encourages fair competition, I do not want to see planning laws used to protect existing business from the introduction of the type of competition that would facilitate easier access to cheaper, healthier food, particularly for the less well-off.
I return to what some Deputies have referred to as the core issue in this debate, the prohibition of predatory pricing. We have been told that existing laws are not strong enough. This is not entitled the Competition (Amendment) Bill for nothing. When enacted it will be part of competition law. Such law is only concerned with low prices on two conditions, namely, when prices are so low as to have no economic justification and when the firm in question has sufficient market power to be able to use such uneconomic prices to put other firms out of business. When prices meet those conditions, they are considered to be predatory and such conduct is already prohibited by the Competition Act 2002. Opposition Deputies have advocated a law that prohibits predatory pricing by non-dominant firms. They want a law that prohibits all low prices regardless of whether such prices are part of an attempt to put somebody out of business. Such a prohibition has no place in competition law and this Bill. When we tried to operate such a law in the past, it did not work. It was called the groceries order.
Deputies have spoken on rip-off Ireland and the high cost of groceries here compared with the rest of Europe and have bemoaned the lack of competition in the market, but when the chance comes to do something about it and take the bold step——
Very bold.
——that would stimulate competition and contribute to lower prices, they shy away from it.
By how much would it reduce costs? Will the Minister give us a figure, an estimate or a guesstimate?
The groceries order did not work in the way it has been claimed. Replacing it with the same law under a different guise will not work. We must encourage low prices, not demonise them. We must not try to scare consumers into thinking low prices are bad for them.
I was taken aback by the number of references in the debate to the report by the consumer strategy group. It was suggested more than once that the decision to revoke the groceries order has been based on a recommendation by that group. Deputy Lynch referred to it and Deputy McHugh repeated the assertion at least three times in the course of his contribution. Both were wrong. The Government's decision on the order was made on the basis of a detailed review and analysis by the Department which was published last November. The Deputies would have spent their time more productively by reading the report and concentrating less on the report of the consumer strategy group.
The decision was made and that was the justification.
Deputy McHugh devoted most of his contribution to explaining why, in his view, the strategy group's analysis of the high cost of groceries in Ireland was flawed. It is his analysis that it is flawed. Not only was the CSG report not the basis for the decision on the order, but the CSG never argued that the order should be removed because our grocery prices were higher than in other European countries. The CSG report stated that the order should be removed because it had resulted in grocery prices that were higher than they otherwise might be, which is a very different concept. This assertion was borne out by the detailed analysis carried out by my Department as part of a subsequent public consultation process. If Deputies opposite me and even some of my own colleagues had spent more time reading my Department's report they would understand better the harm the groceries order was doing——
Has the Minister of State gone out in sympathy with them?
Will the Minister of State name those colleagues?
——and they might understand better the concept of loss leading, predatory pricing and dominance, all of which are extensively examined in the report. Deputy Ó Caoláin might not have been so quick to assert that the groceries order banned predatory pricing and below cost selling. The Deputy was wrong on both counts as the order did neither.
He might also have avoided stating that the order banned price fixing, by which I presume he was referring to resale price maintenance. The order not only legitimised the practice, but made it inevitable by prohibiting the sale of grocery goods at a price less than the price on the invoice.
It is a wonder that Fianna Fáil maintained the order for 19 years.
Deputy Lynch stated that the Competition Act does not ban predatory pricing, but that it bans unfair pricing by companies in a dominant position. If Deputy Lynch had read the report, she would know that unfair pricing by a company in a dominant position is predatory pricing. Deputy Lynch also stated that the Minister said that every household in England now lives within four kilometres of a petrol station with a convenience store attached. Had she read the report, she would know that the Minister stated that almost 90% of rural households in England live within four kilometres of such a facility.
No he did not, he referred to a petrol station only.
The definition of rural in this case is the 15% of the population of England who live in the most remote parts of the country. That is a far cry from claiming that 70% of towns and villages in the UK had no shop of any kind. It seems a long time ago that statistics were widely used to scare customers into believing that getting rid of the groceries order would result in a similar situation in the country. The statistic was dropped like a hot potato when my Department's report proved it to be a complete fallacy.
I thank the Deputies who made valuable contributions. I will pass them on to the Minister, Deputy Martin, and I am sure there will be a wide-ranging, informative discussion on Committee Stage.
Question put.
The Dáil divided: Tá, 60; Níl, 46.
Tá
- Ahern, Dermot.
- Ahern, Noel.
- Andrews, Barry.
- Ardagh, Seán.
- Brady, Johnny.
- Brady, Martin.
- Browne, John.
- Callanan, Joe.
- Carey, Pat.
- Carty, John.
- Cassidy, Donie.
- Cregan, John.
- Cullen, Martin.
- de Valera, Síle.
- Dempsey, Noel.
- Dennehy, John.
- Devins, Jimmy.
- Ellis, John.
- Fahey, Frank.
- Finneran, Michael.
- Fleming, Seán.
- Gallagher, Pat The Cope.
- Glennon, Jim.
- Grealish, Noel.
- Hanafin, Mary.
- Haughey, Seán.
- Hoctor, Máire.
- Jacob, Joe.
- Kelleher, Billy.
- Kelly, Peter.
- Kirk, Seamus.
- Kitt, Tom.
- Lenihan, Brian.
- Lenihan, Conor.
- McDowell, Michael.
- McEllistrim, Thomas.
- McGuinness, John.
- Moloney, John.
- Moynihan, Donal.
- Moynihan, Michael.
- Mulcahy, Michael.
- Nolan, M. J.
- Ó Fearghaíl, Seán.
- O’Connor, Charlie.
- O’Dea, Willie.
- O’Donnell, Liz.
- O’Donovan, Denis.
- O’Keeffe, Batt.
- O’Keeffe, Ned.
- O’Malley, Tim.
- Power, Peter.
- Roche, Dick.
- Sexton, Mae.
- Smith, Brendan.
- Smith, Michael.
- Treacy, Noel.
- Wallace, Dan.
- Walsh, Joe.
- Wilkinson, Ollie.
- Wright, G. V.
Níl
- Boyle, Dan.
- Breen, Pat.
- Broughan, Thomas P.
- Bruton, Richard.
- Connolly, Paudge.
- Costello, Joe.
- Cowley, Jerry.
- Crowe, Seán.
- Deasy, John.
- Durkan, Bernard J.
- English, Damien.
- Enright, Olwyn.
- Fox, Mildred.
- Gilmore, Eamon.
- Hayes, Tom.
- Higgins, Joe.
- Higgins, Michael D.
- Hogan, Phil.
- Howlin, Brendan.
- Kenny, Enda.
- McCormack, Pádraic.
- McEntee, Shane.
- McGinley, Dinny.
- McGrath, Finian.
- McGrath, Paul.
- McHugh, Paddy.
- Mitchell, Olivia.
- Moynihan-Cronin, Breeda.
- Murphy, Catherine.
- Neville, Dan.
- Ó Snodaigh, Aengus.
- O’Dowd, Fergus.
- O’Keeffe, Jim.
- O’Shea, Brian.
- O’Sullivan, Jan.
- Pattison, Seamus.
- Perry, John.
- Quinn, Ruairí.
- Rabbitte, Pat.
- Ryan, Seán.
- Sargent, Trevor.
- Shortall, Róisín.
- Stagg, Emmet.
- Timmins, Billy.
- Twomey, Liam.
- Upton, Mary.
Tellers: Tá, Deputies Kitt and Kelleher; Níl, Deputies Neville and Stagg.
Question declared carried.