JOINT COMMITTEE ON ENTERPRISE AND SMALL BUSINESS debate -
Tuesday, 2 Nov 2004

Business of Joint Committee.

Chairman

I welcome members and guests. On behalf of the committee, I welcome Deputy Pat Breen of Fine Gael who has been nominated to this committee in place of Deputy Murphy. Congratulations are due to Deputy Murphy on his appointment as vice Chairman of the Joint Committee on Justice, Equality, Defence and Women's Rights. Deputy Murphy made a very meaningful contribution to this committee and accompanied us on a deputation to New York to investigate the setting up of a traffic corps in the context of our insurance inquiry. I wish him well and congratulate him on his promotion to vice Chairman of the joint committee.

I also welcome Mr. Myles O'Reilly and Ms Aoife Teehan of O'Reilly Consultants who have been appointed by the committee as consultants to it on the grocery prices issue. O'Reilly Consultants has worked hard with us on the insurance inquiry and we look forward to working with it over the coming months.

The minutes of the meeting of 20 October have been circulated. Are they agreed? Agreed.

We received a letter from the chief executive officer of Enterprise Ireland thanking the committee for its recent meeting with it, for the compliments the committee paid to the agency and offering assistance whenever the committee proceeds with its plan to visit the regions, including the north west. We will try to arrange that at the next meeting.

We also received a letter from Retail Ireland, a representative body for the retail sector, which is affiliated to IBEC and which was established over the summer. It requests an opportunity to address the committee on the grocery prices issue. There is a number of requests from various interested parties. I propose we defer this until the end of our deliberations tomorrow and reassess the situation as we make progress. Is that agreed? Agreed.

We also received a letter from Dunnes Stores which was invited to attend the hearings. It is from Mr. Andrew Street, who is the chief executive officer. Members will have received a copy of this letter addressed to Ms Hogan, Clerk to the committee. It reads:

Thank you for your letter on the 14th October 2004 seeking information to assist the Committee with its examination of the Grocery market.

Dunnes Stores is an Irish owned, private company with 69 grocery outlets in the Republic employing about 8,500 people. Our share of grocery market is reported to be in the region of 22%.

Our commitment to our Irish supply base is well known and second to none. All of our fresh meat, fresh poultry and milk and a very large proportion of vegetables are sourced on the island. Even when we purchase product originating from outside of Ireland this is transacted largely with companies which have Irish based management teams and distribution operations.

At this point of time, we are not in a position to comment factually on why the price of some grocery products appears to be higher in Ireland than in other EU countries. This would require a detailed analysis of, amongst other things, wage rates, V.A.T. rates, distribution costs, land and building costs, etc. — all of which have a major bearing on operating costs retail prices.

The "below cost selling" legislation in Ireland effectively allows suppliers to set the retail prices for products it covers. It discriminates against indigenous companies by allowing large international companies operating stores here to avoid suppliers setting prices by bringing products into Ireland directly from supply bases overseas.

If this legislation were removed, it is difficult to predict accurately how market forces would affect prices, employment and viability of the grocery outlets.

We do not wish to take up your invitation to attend the meeting of the Committee on November 2nd 2004 but, if the Committee requires further views from us, perhaps you would let us have note of the questions raised so that we can consider them.

As some members may have read in today's edition of The Irish Times, I made a short statement to the newspaper in which I expressed the wish that Dunnes Stores, which has played a major part in this industry over the years and which has outlets in the North as well as in the South of Ireland, would be able to assist this committee. I accept the notice we sent it was perhaps a little short because it wants to conduct a detailed analysis. However, I propose that we invite Dunnes Stores to conduct a detailed analysis for the committee. As the Minister is unable to attend the committee hearings until 15 December, we should invite Dunnes Stores to attend for an hour and a half before that.

Deputy Hogan

Dunnes Stores acknowledged in its correspondence that it has 69 outlets in the Republic of Ireland in addition to outlets in the UK and Northern Ireland. Some 17 days' notice to appear here is sufficient. It knows its business well enough to be able to give us a summary of its business activities, its turnover and profitability and the impact it has on consumers. Some 20% of household income is devoted to groceries. Tesco, Superquinn and other stores, which have agreed to appear before the committee, received the same notice. I do not think there should be any corporate untouchables in respect of these hearings that are important to consumers and to household incomes. We want to know the level of its activity in regard to prices between here and our neighbouring jurisdictions. That is what we are studying and we want its assistance in regard to any recommendations we might make to Government to help consumers. It is totally unacceptable and frustrating for the committee that a large player, such as Dunnes Stores, would refuse to appear. It is an affront to the committee.

Deputy Lynch

I agree with everything Deputy Hogan has said. I shop every week, mainly at the supermarket nearest to me, but would have spent a considerable amount of time shopping in Dunnes. It is incredible that one of the biggest suppliers of groceries refuses to come before an Oireachtas committee made up of elected members. From the consumer's point of view it must sound warning bells. Tesco, Superquinn and all the major players in the market were given the same notice, as Deputy Hogan has said, and agreed to come in and speak to the committee. However, the people who promote themselves as being the friendliest of all are refusing to come before the committee. Dunnes should take a serious look at its position in so far as we have just completed our investigation into the insurance industry. The insurance industry is probably far more secretive in the way it does its business and yet its representatives came before the committee. As a result major benefits were achieved for the consumer. People came in, whether brokers, tied agents or insurance company executives, and spoke to us. They perceived the benefit of this as well. I hope Dunnes will take a serious look at its position and reconsider. It should be asked to do that, officially.

Chairman

I want it to go out loud and clear that the committee's approach to this issue is the same as that taken in its investigation into the insurance industry. This committee is the watchdog on behalf of the consumers and for the Government. It is also the conduit of Government to the industry itself. The insurance industry was in a difficult situation. We convinced Government of the need to bring in four new Bills. Two of these were enacted before the summer recess and the other two are now to be enacted. One of them will come before the committee in two weeks time. There are many pluses for this industry in acknowledging the hand of friendship being extended to it by this committee. We certainly want everyone to play his or her part.

Senator Coghlan

I agree with what the Chairman has said, and with Deputy Hogan and Deputy Lynch. It is not acceptable that a concern of the size of Dunnes in this era of transparency should refuse to co-operate with an Oireachtas committee set up on the basis outlined by the Chairman, to assist both Government and the consumer. I want to inquire whether compellability is necessary. May we take that initiative? That may not be appropriate just yet, if the Chairman is proposing to give Dunnes another chance and invite it in, again. What is the position of Aldi and Lidl? Have we had responses from them? As regards Dunnes, it admits to having more than a fifth of the market share, 22%. It is disgraceful that it will not come before the committee.

Chairman

Lidl has not confirmed, as yet, whether it will come before the committee. We had a letter on 27 October from Aldi, which said:

Further to your letter of 21 October, regarding the examination of the impact of the grocery multiples on the grocery retail market and its effects on consumers, small grocery retail and small grocery suppliers, Aldi (Ireland) Ltd. wish to decline the invitation to appear before the Joint Committee.

That is a different situation, a complete blanket refusal. We will reassess the situation as regards this letter at the conclusion of business tomorrow afternoon. However, Dunnes clearly stated in its letter that at this time it wanted to conduct a detailed survey as regards its submission. I want to give the company the opportunity to do that. There is also a precedent as regards Dunnes, which appeared before a previous committee and assisted it, albeit reluctantly, I am reliably informed. All of this takes time, however.

Senator Leyden

Members should be aware of a certain nervousness at this time. There may be a degree of stage fright over today's hearings and I want to welcome both Tesco and Superquinn who are prepared to debate the issues with the committee. We should bear in mind that if Dunnes Stores wishes to influence Government policy it will have to come before the committee. It has made a strong case as regards lifting the ban on below-cost selling. However, it will not be in a position to influence any Government decision on this unless it appears before the committee. There is no point in the company writing a letter stating what it requires if its representatives are not prepared to place it before the committee in the form of an oral submission.

As far as Aldi is concerned, I am not surprised that it is not here. I do not believe it will appear before the committee and no amount of legislation will bring it here.

Deputy McHugh

I would not be as lenient as the other members since I believe Dunnes Stores is treating this committee with contempt. The response from Dunnes is rubbish. It states that its share of the grocery market "is reported" to be in the region of 22%. Is it suggesting that it does not know and that it bases all its projections, business plans etc. on reports? It says, "At this point in time we are not in a position to comment factually on why the price of some grocery products appears to be higher in Ireland...". I do not accept that Dunnes is not in a position to comment. It is big business here and is not in a position to comment. Does it think we are fools? Obviously it does, to make a submission the size of that and statements such as those in the Dunnes submission. The committee should respond, saying it is not prepared to accept this and expressing members' absolute dismay at the Dunnes response. It is an Irish-owned company and should have more respect for the Houses of the Oireachtas and for investigations carried out by committees of this House. Whatever is done in this House is for the good of the people and Dunnes Stores should be part of the attempt to make matters better for everybody.

Chairman

I have heard the views of all the members who wish to contribute. I will write a strongly worded response to the Dunnes letter and will make personal contact, if necessary, with the appropriate company representative. At the conclusion of business tomorrow I will report to the committee on how I am progressing. Is that agreed? Agreed.

We also have a letter from the Minister for Enterprise, Trade and Employment, Deputy Martin, requesting the deferral of his attendance at the committee as regards our inquiry into the multiples, until 15 December. His diary will not facilitate attendance any sooner. Is that agreed? Agreed.

There is a letter from Marks & Spencer, which is opening a new outlet in Blanchardstown today or tomorrow. It wants to defer its date of attendance for another week or two. That is acceptable.

The TASTE Council, which represents the Irish speciality food industry and whose work is co-ordinated by Bord Bia, has also requested that it should make a submission. We can take that at the end of business tomorrow. The Dublin Meat Growers' Association wishes to come before the committee and we will take that tomorrow at the end of business. Deputy Mary Wallace has made representations on that association's behalf, as well. That is the end of the correspondence.