The next item on the agenda is a discussion with the director general of RGDATA, Ms Tara Buckley. I welcome Ms Buckley and her colleagues, Mr. William Barrett and Mr. Joe Doyle. I draw their attention to the fact that while members of the committee have absolute privilege, the same privilege does not apply to witnesses appearing before the committee. Members are reminded of the long-standing parliamentary practice that they should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable. I propose that we hear a short presentation by Ms Buckley, followed by a question and answer session. Is that agreed? Agreed.
Competition Issues: Discussion with RGDATA.
Ms Tara Buckley
I thank the joint committee for inviting RGDATA to make a presentation in the context of its review of regulatory structures in Ireland. I am joined by two members of RGDATA, Mr. William Barrett from County Mayo and Mr. Joe Doyle from Dublin. The members of RGDATA believe it is important that an Oireachtas committee is undertaking a review of existing regulatory structures. New regulatory structures are often put in place as a panacea for various problems without being reviewed at a later stage to ascertain whether they effectively achieve what they were designed to achieve. In general, regulators have an important role in facilitating competition, offering high levels of service and providing consumer protection. A good regulator should help to balance the scales between service providers which are often large organisations and service users which are typically smaller businesses or individual customers.
The committee has focused on sectoral regulators. While such regulators are important in terms of ensuring the better provision of services, RGDATA prefers to focus on two regulatory authorities with a wider cross-sectoral remit - the Competition Authority and the National Consumer Agency. The Competition Authority is the regulatory agency charged with the promotion and protection of competition in the national economy. The National Consumer Agency has an important regulatory function in the area of consumer protection. Concerns have been expressed to the committee about the fact that the Financial Regulator limits its regulatory function to domestic consumers and does not get involved in areas in which those who consume services are business people.
RGDATA contends that as regards the enforcement role of the Competition Authority and the National Consumer Agency they similarly limit their focus to dealing with consumer complaints and are either statutorily barred from intervening in complaints lodged by businesses or seemingly rate such complaints a low priority. That raises serious issues for business people and has significant wider implications for consumer protection and competitiveness in the national economy.
It would be useful to give the committee some background to RGDATA. It is the representative organisation for independent family-owned retail grocery outlets in Ireland. Members operate 4,000 independent shops, supermarkets, convenience stores and forecourt stores in every town, village and suburb throughout the State. Some members trade under their family name and others have a relationship with a specific wholesaler and trade under a symbol group name. They have one feature in common - they are all independent entrepreneurs in their own communities, running a business, providing local employment and a route to market for suppliers in their area. As such, RGDATA members fall clearly into the small and medium enterprises, SME, category in the State. In the context of the more challenging economic times we face - small and medium-sized enterprises are an important part of the national economy. It is important that they are given an opportunity to compete with the biggest players, do not have to suffer unnecessary bureaucracy, expense or delays in their businesses and are facilitated in offering services to the local community in the most cost effective and competitive way possible.
RGDATA members also make a significant contribution to the national economy. We estimate that our members and the companies that supply them collectively spend in the region of €6 billion on Irish produced food and supplies each year, which makes them the largest customer of Irish produced food in the world. In addition, we estimate that in the past ten years our members have spent upwards of €600 million in developing, expanding and renewing their premises throughout the State. It is a welcome hallmark of Irish retailing that in most towns and villages one will see an excellent, locally owned shop, with a full range of product for sale and often with innovative offerings. The retail deserts that have appeared in other parts of Europe have not been replicated here, because of an enlightened, informed and proactive approach to retail planning and because local entrepreneurs are taking the risks and investing in local shops.
In addition, retailing, and in particular independent retailing is labour intensive. There are very few retail outlets, even on a smaller level that employ fewer than ten people, given the need for high levels of customer service, and all of the requirements to be met to run a successful retail business. RGDATA members employ more than 40,000 full-time and part-time employees.
The main reason I am outlining the contribution RGDATA members make is to recognise that there is a value in their activity and that they are a pivotal part of the economic, social and community function in many towns and villages and have a much greater input locally than larger global enterprises. The collective scale of the operations of the retailers can also mask the fact that for the vast majority of RGDATA members, they are operators of small and medium-sized businesses. They do not have access to massive resources, nor are they of the same scale as many of the suppliers and global competitors with which they deal. In that context, they are not equal with those larger commercial operators.
In fact, an individual retailer or shop owner is in many cases in the same position as an individual consumer when dealing with some of the larger companies and organisations that they engage with in the context of business. RGDATA contends that independent retailers and other small business owners facing difficulties in their capacity as either consumers or competitors are in a position of equivalence to ordinary consumers. However, the consequences of any anti-competitive action that has a bearing on their business creates wider impacts. For example, if an independent retailer, or any other small business owner suffers discrimination, or is at the butt of any anti-competitive behaviour, that can have a direct and meaningful impact on the viability of the business, their investment strategy, their employment strategy and the service, value and offering they provide to the hundreds of consumers they serve. The wider consequences of anti-competitive action on SMEs are significant. Similarly, if a retailer, or any other small business owner suffers when dealing with a larger company as a consumer, the consequences of that can be wider and impact on employees, customers and other suppliers.
In that context, one would expect that the agencies established by the Oireachtas to deal with competition and consumer issues would be prepared to actively address complaints relating to competition and consumer issues made to them by individual small or medium-sized business owners. Regrettably, the experience in dealing with both agencies suggests that in the case of the National Consumer Agency, it is not empowered to deal with complaints from businesses as consumers, while the Competition Authority takes a lethargic approach to resolving competition complaints lodged by businesses.
I will give the committee a couple of instances. One major issue affecting independent retailers is the whole issue of boxing out. It is a practice whereby the distributors of newspapers, magazines and periodicals supply retailers with copies of magazines they have not ordered and then bill them, deducting the amounts of the unordered copies from the retailers' bank accounts directly. The retailer must then process material that has not been ordered, return the unordered magazines and newspapers and engage in a battle with the distribution company to recover the funds that have already been deducted from the bank account. It is a form of unsolicited selling.
This issue is the single largest cause of frustration, annoyance and anger among independent retailers. It adds considerably to retailers' costs, reducing competitiveness and not delivering any benefit for consumers. There is also the environmental cost of sending vast amounts of unwanted and unordered publications up and down the country in vans. It would be like someone ordering a copy of a preferred newspaper to be delivered to one's home by one's local newsagent and signing a direct debit mandate to cover the cost. The newsagent then not only sends the newspaper ordered but also supplies copies of magazines, newspapers and periodicals that were not ordered. The price of these are then deducted from the person's bank account while the newsagent refused to answer the phone, reply to e-mails or faxes, leaving it up to the customer to sort out the resulting mess.
Retailers have been trying to get a resolution to this matter for many years. Initially, the matter was taken up with the two newspaper distribution companies but that was a fruitless exercise. RGDATA brought it to the attention of the Office of the Director of Consumer Affairs, which has since been subsumed into the National Consumer Agency. At that time there was no legal restriction on the office on investigating consumer complaints. The office, however, was not interested in pursuing the matter as it claimed that the complaint had been made by people who were engaged in business.
A complaint was lodged with the Competition Authority on 20 June 2006. The authority has been investigating this complaint for two years but there is no indication its investigation has been advanced, progressed or concluded. In the meantime, the news distribution agencies continue to engage in this expensive, costly and non-productive process, much to the frustration, annoyance and expense of retailers. RGDATA cannot understand why the Competition Authority has taken so long to carry out a simple investigation in this matter and has yet to produce any concrete outcome.
My colleague William Barrett will outline his direct experience of this practice.
Mr. William Barrett
My shop is located in the village of Laherdaun in north Mayo which is between Castlebar and Ballina. It is a family-run business and I am the third generation in 80 years of trading. It employs 11 both full-time and part-time staff. Selling newspapers and magazines is vital to our business as we have had to change to a convenience retail business. This is because we no longer have trolley shopping due to our close proximity to two major towns with major retailers. Magazines and newspapers are essential to bring customers into our store. This is a real competition issue as there are only two newspaper distributors and both offer broadly the same service levels and pricing models.
Boxing out is where the distributor dictates to us the terms of our purchases. If I want a supply of the distributor's newspapers, I must accept whatever supply and quantity it decides. The consequences of boxing out are serious and penal for retailers. It leads to high costs, inefficiency and extra waste with no added benefit for customers. It also deters investment elsewhere in the business.
The frustrations caused by following up distributors is taking up a third of our working day and increasing our workload by 50%. We have requested an end to this practice but to no avail. When we seek credits that we are rightfully owed, it is impossible to get any communication from the distributor. This issue and dealing with the news distributors causes me the greatest frustration in the running of my business. Surely, the Competition Authority is charged by the Oireachtas with dealing with competition issues. Why will it not do so? Are we not all consumers in one way or another?
Ms Tara Buckley
Considering the clear evidence provided to the Competition Authority on a consistent basis since the complaint was first lodged, I am left with the distinct impression that because the complaint does not deal with consumers in the strict sense, the authority has given it a low priority.
This is not necessarily a recent phenomenon. In 2002 there was another complaint which RGDATA lodged against a unilateral decision taken by Vodafone to alter the commission rates paid to retailers. This decision had a significant impact on retailers and retail margins. On the face of it, it indicated there may have been an issue concerning abuse of dominance by Vodafone, given its significant market penetration.
RGDATA made a formal complaint to the Competition Authority but was advised by the authority that the complaints lodged by retailers were "not well founded". What the authority said indicates clearly its attitude on such matters, and I quote it as follows:
The role of the authority and the Competition Act 2002 is to ensure that competition works well for consumers. The question at issue is whether Vodafone's conduct constituted abuse of dominance within the sector, to the detriment of consumers and in contravention to the Act.
I was not aware that the Competition Act, 2002 had expressly limited the role of the Competition Authority to look at competition issues solely affecting consumers. On another complaint the same approach seems to have been adopted by the Competition Authority. The situation has been replicated recently in relation to complaints that RGDATA made on behalf of members in relation to pricing practices by a particular media group. These complaints alleged that the media group was discriminating between categories of retailers on the terms of supply of newspapers.
The impact of this discrimination at a local level could cost an individual retailer up to €5,000 a year. This is not an insignificant sum and could, for example, pay a retailer's rates for a year, allow him or her to give customers more special offers, go towards funding an additional staff member or pay for the heating or electricity. We tried to raise the matter directly with the media organisation, but to no avail. I then brought the complaint to the Competition Authority on 20 March 2007. To this day, we have not received a report from the Competition Authority to the effect that the matter has been resolved and retailers are continuing to suffer as a consequence of this discriminatory treatment.
RGDATA is increasingly coming to the conclusion that we may have an à la carte Competition Authority in the State. Where smaller businesses are dealing with larger entities as consumers, any difficulties with a competition law dimension they experience through these commercial relationships receive a low priority from the Competition Authority. The authority seems to regard its primary focus, at least where it comes to enforcement, to be directed at dealing with issues that impact directly on non-business consumers, regardless of the wider consequences for the customers of businesses. It is important I emphasise that the consequences of an anti-competitive action for a business consumer, particularly one from the small and medium enterprises, SME, sector, can be as damaging, if not more damaging, than those for the general body of consumers. If restrictive practices prevent an individual small business owner from offering better services, cheaper prices, or better serving his or her customers, a company is in a position of equivalence to many small consumers.
An individual operator is unlikely to have the resources, funding or know-how to take on a large multinational supplier with which he or she is dealing. It is important for such businesses that they have access to independent, resourced and dedicated enforcement agencies, which are prepared to take their complaints seriously and act with all due haste in a transparent and timely manner to investigate matters brought to their attention.
Instead, there is a strong perception among many in the retail grocery sector, and I suspect in other SME sectors throughout the State, that bodies such as the Competition Authority, do not see it as within their remit to get involved in enforcement where matters are brought to their attention by people or companies who have faced competition or consumer problems as commercial undertakings.
The extent to which this is prevalent needs to be challenged. That is why we are in front of this committee today, because we believe there are number of ways the problems identified may be addressed. Where there is a statutory restriction, for instance, on the regulatory agencies from investigating a consumer or competition issue that impacts on business, then this should be removed. For example, for the purpose of enforcement the Consumer Protection Act 2007 defines a consumer as meaning: "a natural person [whether in the State or not] who is acting for purposes unrelated to the person's trade, business or profession". This is a blatantly discriminatory definition and excludes a whole body of consumers from the remit and statutory protection of the National Consumer Agency. As for the Competition Authority I am not aware that it is statutorily inhibited from investigating complaints raised by companies or individuals. The Competition Authority may argue that it must prioritise resources and businesses have the ability to tackle anti-competitive actions directly through the courts or otherwise. Again, this view needs to be challenged. It is not good enough for any statutory agency to wash its hands of complaints and leave the matter to private enforcement, given the considerable cost involved in doing so. It is ironic that there is only one Competition Authority and in circumstances where it has a monopoly on enforcement, it should ensure that it provides a responsive, transparent and efficient service to those that it is statutorily mandated to serve.
I hope this committee, when looking at regulatory structures both in relation to sectoral and cross-sectoral regulators will examine the extent of regulatory protection afforded to businesses in the performance of their commercial functions. In particular, I think that SME businesses should be able to avail of the facilities and functions provided by statutory agencies in the area of competition and regulation. I note that a similar call was made to the committee in regard to the financial regulation model and the need to give some protection for complaints by businesses against banks arising under financial regulation. We echo these comments and believe this matter needs to be addressed in the round in regard to regulation generally.
I thank the Chairman and the esteemed members for giving RGDATA the opportunity to make this presentation. We are happy to take any questions they may have.
I thank Ms Buckley, who has given us considerable food for thought on the operations in her sector. I am sure it is a matter of huge frustration to RGDATA members to try to contend with this on a daily basis. I will take questions from members.
As members reminded me earlier, RGDATA is my nominating body for the Industrial and Commercial Panel. I stress I am not a member of that organisation, nor am I a retailer. I welcome the RGDATA representatives and have much sympathy for the case they have outlined.
Does Ms Buckley think it is understandable that the agencies to which she refers should prioritise the welfare of consumers above better resourced businesses, even if, as she outlines, many of the businesses are small and serve their communities well throughout the country? She instances two examples of the Competition Authority dealing with specific problems. Is that sufficient to indicate there is a major problem? It is obvious there is a problem but its size is the question. The Consumer Protection Act was enacted only last year. Is Ms Buckley suggesting the Oireachtas got it wrong by excluding business complaints from the scope of the legislation?
I feel for the RGDATA members with regard to boxing out. Only this morning, in examining my Visa account, I saw duplication. As the clerk will know, I recently had occasion to visit London on committee business and I booked a ticket in advance for the Holyhead to London train. When I received my Visa statement this morning, I found that not alone had Virgin Trains charged me twice, in the second instance it charged me a great deal more than the first. I telephoned several times and was given the runaround. Virgin Trains wants me to write a letter, as does Visa. I completely sympathise with the case made by RGDATA.
It is not as innocent as its name suggests.
I do not know about the virgins I was dealing with on the telephone, with their foreign accents and all the rest, wherever they were from in Britain--
We would not hold that against them.
No, but I found it very difficult to understand them. The end result was that the consumer got a frightful runaround.
I thank Ms Buckley for her presentation. I sympathise with RGDATA on the issue of boxing out. It is scandalous that a company can use its dominant position like that and bully people into a position where they have money taken out of their accounts. We understand the difficulty of telephoning. As public representatives, most of us have had problems at times with NTL and other large, dominant bodies in trying to get through to the billing section to try to get our constituents' accounts regularised.
The Consumer Protection Agency has a definition of the person. Would RGDATA consider it appropriate for a Bill to be initiated in the Oireachtas on the basis that business in Ireland should be operated in a fair, equitable and ethical way and that sanctions would be put in place for businesses that do not operate on those terms? Would RGDATA support the implementation of that type of instrument so that the protection of the Oireachtas can be afforded to businesses that find themselves in the position outlined by the delegates?
I welcome the representatives of RGDATA. I take this opportunity to acknowledge the role of independent retailers throughout the State in providing an important service for local communities, as outlined by Mr. Barrett. This is particularly important for communities located at a distance from large shopping centres. Independent retailers ensure people do not have to travel long distances to obtain basic conveniences. They are a greatly under-valued resource.
I was interested in what the delegates said about the frustrations encountered by them in the day-to-day operation of their businesses, particularly in regard to boxing out. I propose that the committee write to the National Consumer Agency and the Competition Authority and, if the delegates are amenable, forward them a copy of today's presentations. We should ask why the National Consumer Agency does not regard small businesses as consumers and why the Competition Authority has taken no action on the complaint made. If this proposal is in order, I suggest that we proceed as a matter of urgency. Consumers generally will suffer as a result of this type of wastage of labour hours and the resulting drain on the profits of independent retailers trying to provide a service for communities. I cannot understand why the Competition Authority has not become involved in this urgent issue.
That proposal is in order. I have already spoken to the clerk about it. I now call on Ms Buckley to respond to members' questions.
Ms Tara Buckley
We agree with Senator Coghlan that it is important that the relevant regulatory agencies look after consumers. However, our difficulty is that the bodies in question do not regard us as consumers. Resolution of the types of complaints we have brought to them would make life better for all consumers and not just the small businesses concerned. As the owners of small businesses, we see ourselves as akin to ordinary consumers. Even though the contribution made by independent retailers is significant, it is difficult for them to take on the might of some of the large companies with which they have dealings. It is important that we be afforded the protection of these strong State regulatory agencies.
I referred to two specific outstanding complaints but I could have brought hundreds of retailers to this meeting to outline the difficulties they experience. The boxing out complaint is a serious issue that causes frustration to small businesses on a daily basis. Given that we have waited more than two years for a reply, our confidence in the Competition Authority is at a low ebb. The prospect of approaching it with more complaints is not to the fore for us because we are still waiting for it to deal with those we have already presented.
We prefer to deal with issues as soon as they arise. It is only when we become utterly frustrated that there is a need to seek the assistance of one of these agencies. The boxing out issue goes back many years. My colleagues, Mr. Barrett and Mr. Doyle, have indicated the level of frustration they experience on a daily basis. Given the wider implications for everybody, we cannot understand why this issue has been allowed to continue for so long.
I welcome Deputy Behan's comments and thank him for his compliments to the independent sector. We agree it is highly important that people should have shops to which they can walk. It certainly is a tough business. I do not know whether many members saw a documentary on RTE last night about the demise of the commercial traveller in Ireland. One of the commercial travellers interviewed spoke of how, at the outset of his career 30 years ago, he used to visit 32 shops in Kildare. However, by the time he retired, he used to visit only five shops. Undoubtedly, the numbers of small, individually-owned shops have diminished over the years. However, a strong group of retailers, represented by RGDATA, are fighting their corner and will continue, for as long as they are allowed to do so on a level playing field, to provide local shops to which people can walk and local points at which the community can meet.
We would welcome anything this joint committee could do to address these issues and will take on board the comments made regarding writing to the various agencies. Were the joint committee to do so, we would be delighted because we believe such agencies will listen to it. I also thank Deputy Ardagh for his comments. Quite often, people do not understand the intricacies of issues such as boxing out. Having explained it here, members probably do understand the issue, as well as the reason it is such a frustration for retailers. As for the Consumer Protection Act 2007, RGDATA agrees it probably was remiss not to address the issue of small businesses as consumers and would support a change in this. As for a Bill, we would support a measure that would address this issue. In this context, we are not merely speaking for small retailers but on behalf of small businesses and their frustrations when trying to operate against some of the biggest players in the world.
While I have no questions, I welcome the representatives from RGDATA. When one travels through Ireland, including County Longford, one can see the service provided by those whom they represent is second to none. It is fantastic to see the transformation in the retail business in rural Ireland, where such people operate 24 hours a day, seven days a week with a huge variety of stock and services. I wish them well and members should do everything possible to help them because the small shop on the corner or in the small village preceded both the entrance into business of other entities and the multinationals' decision to take over the world.
As for the boxing out issue, I suggest those involved should be invited to appear before the joint committee. It seems highly unfair and I am sure it is anti-competitive to expect people to buy items they did not order. The opposite phenomenon occurred in recent years, when the newsagents' distributors were obliged to supply despite not wanting entities other than newsagents in the business. In this case they are doing the opposite by getting retailers to buy stuff they do not want, which is not on. It is unfair and, as some of my colleagues have noted, constitutes a bullying tactic. If retailers wish to buy one or two magazines, they should be allowed to do so. Those involved should be invited before the joint committee.
As for the Competition Authority, it should be invited before the joint committee. Although its representatives have a great way with words, unless we get satisfaction the Competition Authority should be abolished. What is the point in having such an authority? Two complaints were made, the process went on for two years and ultimately the complainant received a waffle of words on the reasons. One can interpret this any way one wishes. While everyone can interpret issues in different ways, the Competition Authority was established to maintain competition and fair play. However, it is not providing fair play to RGDATA and unless the Competition Authority does its job, it should close up its office tomorrow morning.
I thank Deputy Kelly for his strong words. I call on Deputy Kirk.
I join the Vice Chairman and other members in welcoming RGDATA's representatives. I wish to tease out the problems associated with the boxing out difficulty. It was news to me that such practices occur in this business. The old theory that one learns something new every day comes into play. I refer to the payment methods of individual retailers. Does the confined number of distributors insist on a certain payment method? This holds the key to the issue. When individual retailers place orders with newspaper distributors, is this done by telephone or word of mouth? Do the distributors simply decide that as Seamus Kirk of Knockbridge, Dundalk or wherever received a particular number of copies of the Irish Independent, or The Irish Times last week, that will be the number he needs this week? Do the retailers have a system whereby they place an order a week, month or two months in advance? It seems that this would be important.
Will Ms Buckley elaborate on the confinement of newspaper and periodical distribution because it is important to help the committee to look at this in more detail?
I understand where the delegation is coming from and the committee will try to help it as much as it can. It is our duty as legislators to ensure there is a level playing pitch for all businesses, particularly small and medium-sized businesses because that is where the future lies. This sector provides a considerable amount of part-time work and gives many people their first jobs from a young age, which is important. Many of our young people start off in the local shop and it is important that it is looked after for that reason alone.
When planning our work for the year ahead at a recent meeting, we discussed homing in on all regulation relating to small business. In her first paragraph, Ms Buckley touched on reviewing the overall thing to see who is doing a good job on their behalf and who is not. A review should also try to see whether we can save costs in the area of red tape affecting small business. There is an awful lot of red tape involved in a range of issues, not all of which relate to today.
There are a few things about which I am not sure. If RGDATA has more than 4,000 members, that is a very strong lobby group. Are there many outside of RGDATA? How is it that RGDATA cannot take on these distributors from its own dominant position and tell them that it represents their customers and that it wants changes? Who else are the distributors' customers? Does RGDATA not represent their main bunch of people? I accept that we need a change in the law but I find it strange that such a group of people cannot bring about changes.
We have had many discussions about the Competition Authority here and have reviewed and questioned it. Clearly, the authority does not have enough strength in respect of RGDATA's complaint or that of anybody else. The authority is very slow and there are different reasons for that. It claims that it has enough staff and resources but it does not have sufficiently fast access to the legal route. A competition authority needs specific access to the legal route so that it can get quick decisions. There is no point in getting a decision four or five years after the problem during which the uncompetitive act continues. We have a duty to change the law to get quicker decisions regardless of what the complaint is and to deal with complaints by small businesses. This something we will all work on.
Ms Buckley mentioned other complaints. What other kind of complaints does she know about? I know that the main issue today is boxing out but is there another list of complaints of uncompetitive behaviour that needs to be looked at? If this is the case, could Ms Buckley let us know what they are?
Ms Buckley discussed problems with electronic payments. We work in other committees to try to encourage more business by electronic payments so we must work on that. In some shops, the minimum spend is €10 before one can use a laser or credit card. This does not happen across the continent so it is a pity it still happens in Ireland. Does RGDATA have a rule on that or can we see the end of that? There is much more security if one can use non-cash payments and we must work towards that. It is a separate issue but given that RGDATA is here today, there is a chance to talk about it as well.
The small local shop is the glue that holds many communities together. It is located within walking or cycling distance of where many people live. We have seen what happens when one has a free-for-all in the retail environment, as Ms Buckley so rightly described. One is left with superstores on the edge of town. It is crucial that we have a strong retail policy that allows smaller local shops to survive and thrive at the heart of our communities.
I wonder about the contractual agreements RGDATA has with the distributors. Is there a formal contract that deals in detail with the arrangements that are possible for supplying it with goods? Could RGDATA's members look at the possibility of taking legal action on foot of that contract or is this not possible? I welcome our guests, and will certainly consider the options outlined on how to move forward.
Will our guests explain the distributors' motives? Are they given bonuses if they sell newspapers and magazines? Who gains? Retailers seem to do a great deal of work on the distributors' behalf. While the latter are allowed to use the former's money for X amount of time, it is eventually returned. Knowing who gains and the motive might help the committee in tackling the issue.
Ms Tara Buckley
I will ask Mr. Doyle to reply, as several members have asked detailed questions on the contract and how it operates. Mr. Doyle will explain a retailer's relationship with distributors and what the former must do.
Mr. Joe Doyle
For the most part, the contract is for supply. From the suppliers' point of view, the most important of its financial implications is the pay. One acts as an agent with the distributor and the latter sends a list each week from which, in theory, one can choose. However, the distributors inevitably choose and send what they believe should be sent. Consequently, a battle is ongoing. Given that we are all computerised and know what sells in our stores, we try to order based on this information. The system works for one or two weeks, after which one is flooded.
Individuals have held numerous meetings with the two agents involved to no avail. By approaching our representatives in RGDATA and other agencies, we have brought the matter this far. We have also held several meetings with the Members. We have come close to being laughed at.
Concerning distributors' reasons, they represent publishers and it is their job to get magazines into the system. If there are new publications, distributors send them to sellers. This is how the operation works.
What about the question on RGDATA, which represents many shops, being unable to get the distributors to change what they are doing? Is it a matter of too many shops not being members of the group?
Mr. Joe Doyle
There are two strong bodies. Given that most of the material is imported, they control the structure completely. It is difficult to effect change.
However, distributors need the retailers to sell the publications. For this reason, I do not understand why the former do not listen to the latter. Without retailers, distributors cannot sell.
Ms Tara Buckley
Deputy English has asked whether retailers can do something collectively to try to make the distributors sit up and take notice. If RGDATA considered telling our members not to stock newspapers or magazines, the Competition Authority would be quick off the mark to close us down.
It might force the issue.
Ms Tara Buckley
It would tell us that we were breaking the law.
Will Ms Buckley address the point about the payment method?
Ms Tara Buckley
Many of our members signed their contracts with the two distributors many years ago. When one sets up a shop, one needs newspapers and magazines to be viable, so our members would have signed anything. The fine print stated that retailers would accept in the boxes any magazines the distributors chose to send. One must also arrange a direct debit with the distributors. If one is lucky after arguing the point with them and the unwanted magazines are returned in perfect condition, they will repay the money taken out of one's account.
Is the operative word "must"? Is there an alternative method of payment? This seems to be the key issue.
Mr. William Barrett
They do not allow an alternative.
Mr. Joe Doyle
Direct debit is the only way. Given that one must wait a month for a repayment, one's money is in their accounts.
Payment is made on delivery and the retailer must wait one month for reimbursement.
Mr. William Barrett
Deputy Kirk asked a question about the ordering system, but there is none. We all know what we can sell. One might get that order this week but next week one will get double the order. I dealt with one of the distributors last week when I got in a Belfast newspaper which does not sell in north Mayo. I got a high quantity on Tuesday, to be cancelled at 10 a.m. on Tuesday. It did not come in on Wednesday but came in again on Thursday. I cancelled it again on Thursday only to be told by the caller from the distribution agency whose name and call reference number I logged, that this does not work and that I can cancel as often as I like but it will be boxed out to me again.
Deputy English referred to a minimum spend. I have not had to put it in place but I know retailers who had to do it. I have an ATM in my store. Some people do not because of the cost of installing them. Some banks want 500 transactions per week or they will charge the retailer up to €400 per week for the privilege of having the machine. I know of retailers where people buy a packet of chewing gum at 50 cent and ask for €100 cash back.
Therefore, it is cash back that is the issue.
Mr. William Barrett
The retailers were running out of cash. In every business cash is vital.
It is hard work to get the credits from these companies. I do not get a delivery every day with one of the newsagent distributors. I must do a round trip of 11 miles to another town four days a week to pick up my newspapers. The distributor told me I could send them back on Monday, as under the old system, even though the distributor picks up from the retailers where the newspapers are sent every day. My credits were then refused and returned in the post because they do not accept freepost anymore, even though it was their freepost envelope. I put my credits into an envelope and paid €19 to post it back. I received a four page statement stating that all my credits had been refused because they were sent back late. I am still fighting.
Please indicate what kind of an imposition that is on the business.
Mr. William Barrett
On those credits alone, I am down approximately €2,000.
Over what period?
Mr. William Barrett
I am fighting since March. I have records of telephone calls since March and know one agent's voicemail system off by heart. In a roundabout way I got his mobile number and sent him a text message asking him to ring me at his earliest convenience. I have sent e-mails and have been told it is the wrong e-mail address. I cannot get through and I am only trying to get through from Mayo to Dublin. It is not rocket science.
It appears Mr. Barrett has signed up to a contract that has been abused. He signed a contract to take the magazines and the company is abusing the contract by sending magazines that cannot be sold or that he does not want to sell. Even if we invite these people to a meeting and interrogate them, they will say that a contract has been signed. We must devise a way to get over the problem. As someone who has been in business all my life, it is frustrating when people abuse a situation, as is happening at the moment. It will not be easy to get over that. Once one signs a contract, there must be a reason to break or review the contract.
I support the local small shopkeepers because they give young people their first job in the area. They deliver a first class service and without them we would be much poorer. I support Mr. Barrett's complaint against these companies that can make substantial profits over the year by using Mr. Barrett's credit for 12 months. This is a difficult situation but we must tackle it. As Deputy Kelly said, if we have an organisation that is supposed to look after fair trade and it is not working, we should invite it in here to ensure it is doing its job. If it is not relevant to what we think it should do, we should get rid of it.
Abuse of a dominant position is occurring. One can call it what one likes but there are only two newspapers and magazines distribution companies for the entire country. Having heard RGDATA we may have to recommend abolishing the signing up for direct debiting. It is direct debiting which is causing the problem and leading to all of the costs. Mr. Barrett outlined how he was €2,000 out of pocket not to mention all of the telephone calls and the time wasted.
The issues of better regulation, elimination of waste and cutting down on red tape concern us as a committee. This system of abuse which was outlined suggests direct debiting should not be tolerated or allowed and people should not have to sign up to direct debit. This is what we may have to pursue.
With regard to health and safety issues, are the volume and weight of the bales of newspapers being dropped off an issue? I have heard this from older shopkeepers.
Mr. William Barrett
I have brought pictorial evidence of this. I had to invest in a fork-lift because the girls could not pull the bin out on Thursday mornings. If I received the orders I wanted and that I knew I could sell, I would not fill the large bin in three months. I am only one person but we have everybody else in the country also. This is the waste being produced.
It is a green issue as well as a health and safety issue.
We must not get distracted from the substantive issue.
It is all the one. It is an abuse of power.
To get to the nub of this problem, am I to interpret the definition of a consumer as per the Competition Act 2002 is too narrow and this is the difficulty? It does not encompass the small retailer as was outlined in the presentation.
Ms Tara Buckley
Our understanding of the Competition Act is that the Competition Authority is in charge of competition and fair play across the economy. We believe the Competition Authority should take a complaint from a small business as seriously as a complaint from anybody else. Unfortunately--
The Competition Authority has to exercise the power it has through primary and secondary legislation.
Ms Tara Buckley
Our frustration is that the Competition Authority does not seem to take complaints from small businesses as seriously as we think it should. A reason it gave us with regard to one complaint is that it examines the impact on consumers. This issue impacts on consumers in a real way but the people making the complaint are small business owners.
Is Ms Buckley happy that the Competition Authority regards retailers as consumers in this context?
Ms Tara Buckley
I am unhappy that the Competition Authority seems to be lethargic about taking on board the complaints made by small businesses. Originally, we made this complaint to the Office of the Director of Consumer Affairs which made the point that it did not have to deal with complaints made by small businesses. It deals with complaints made by consumers. We thought our consumer protection legislation might be remiss in not addressing issues faced by small businesses.
The Vice Chairman asked why not take a legal case. Taking on the might of someone is a difficult decision for a small business to take and competition law is notoriously difficult to take through the courts. It is also expensive. It would be a major imposition on one of our members or us as a small trade association. We represent a significant number but they are all small retailers. Our frustration is that we have a regulatory body that is supposed to examine this. If this regulatory body did its job we would not need to go to the courts.
The question committee members are asking is whether we need to change the wording of the Competition Act because the Competition Authority does not consider small businesses as consumers. What Ms Buckley is suggesting is that small businesses, as consumers, selling to a consumer are affected by the regulatory body.
Ms Tara Buckley
That is a weakness in the remit of the National Consumer Agency. Its definition of a consumer is very narrow. We would like that issue to be addressed in legislation. In terms of the Competition Authority, we do not see any legislative reason it cannot take our complaints seriously and do something about them.
Why it cannot deal with them, in other words.
It should be able to do so, more so than the National Consumer Agency.
It should be brought in and questioned on why it is not--
Before we get into deciding what to do, I thank the delegation for the presentation. We can tease out exactly what to do subsequently.
On behalf of the committee I thank Ms Buckley, Mr. Barrett and Mr. Doyle for their attendance today. Let there be no doubt but that this committee will do its utmost to pursue the issues and difficulties raised.
Ms Tara Buckley
On behalf of my delegation, I thank the committee. We appreciate members taking our points so seriously.
The joint committee went into private session at 3 p.m. and adjourned at 3.05 p.m. until 2 p.m. on Tuesday, 2 September 2008.