I have asked permission to raise on the Adjournment the question of the failure of the Minister for Industry and Commerce to make an Order on the lines of the recommendations of the Fair Trade Commission in relation to proprietary and patent medicines, infant foods and medical and toilet preparations. I understand that the Minister will not be available to-night, and that his Parliamentary Secretary is not available either. I regret that fact, not so much personally, because I am getting used to raising matters here in the absence of Ministers, but from the point of view of the Seanad, I think that it is rather a pity that Ministers should not either make themselves available or send competent representatives to hear the case being made and to answer it, when a matter affecting their Department is being raised in this way.
I was shocked this morning when I read in my paper that the Minister had decided not to take any action on the recommendations contained in the Fair Trade Commission's Report. I was shocked particularly at the way in which this was announced to the public. The Dáil was about to rise. The report was not yet in circulation. Even the Minister's statement — a copy of which I have here now — was not in the hands of Deputies. The Minister made a most cursory reference to his intention in this regard in his speech on the Estimate for his Department. I notice that no Deputy subsequently took him up on the point. I felt that the matter would go by default if I were not to raise it now in the Seanad.
I thought that, if the Minister had made a decision of this kind, in fairness to the Oireachtas, he should have announced it earlier and given sufficient time for Deputies to realise just what it was he was failing to do before the Dáil rose for its summer recess. In fact, the Report of the Fair Trade Commission was furnished to the Department of Industry and Commerce on December 29th, 1956. I feel, therefore, that the Minister has had time to announce his intentions quite a long time before this.
I should like to quote from the Minister's statement — not his statement to the Dáil, because he did not make it there, but the statement he has since placed on the Tables of both Houses. He mentions that the commission in this report recommended, inter alia— he does not mention what they all are—that:—
"A trade association should be prohibited from directing or coercing its members not to purchase from a supplier, or from directing or coercing its members to accord less favourable treatment to the goods of a supplier than that accorded to the goods of another supplier; but that a retail association should be permitted to circulate to its members lists of products which are confined to retail chemists or of suppliers who have agreed to confine their products in this way, and that the association should be free to ask (but not to direct) its members to support such suppliers. Also, an individual manufacturer should be free to confine the sale of his products to chemists if he so wishes; in relation to price maintenance, that individual manufacturer should be permitted to enforce minimum prices for proprietary medical preparations but that collective action for the enforcement of such prices should be prohibited. In the case of toilet preparations and infant foods, the enforcement of resale price maintenance, whether by individual suppliers or collectively by associations, etc., should be prohibited."
Those are clear terms, and that is the sort of thing the commission recommended.The Minister's comment on that in this written statement is:—
"Having studied the commission's report the Minister is of opinion that an Order on the lines suggested by the commission would not entail any marked alteration in the manner in which the trade is at present conducted."
I propose to show that that statement is completely at variance with the facts as presented by the report and with the recommendations of the commission. The Minister's statement continues:—
"Accordingly, the Minister does not propose to make any Order."
Then he goes on even more surprisingly:—
"He wishes to emphasise, however, that this decision on his part is not to be taken as signifying approval of any practice the prohibition of which is recommended by the commission."
In other words, he will not prohibit the practices but the fact that he fails to prohibit the practices to the extent recommended by the commission must not be taken as approval of them. He goes on to say that he does not want to limit in any way:—
"... the commission's statutory power to keep the position in the trade under review and to make fair trading rules or hold another public inquiry."
That seems quite fantastic to me because they have just held a public inquiry which has lasted nearly three years.
Furthermore, and this is the point which ought to concern us, he makes it clear on page 3 of the statement that in fact his failure to make an Order is a failure to comply with the provisions of the Act itself. He makes it clear that, under Section 7, where the commission in a report to the Minister recommends the making of an Order and the Minister decides not to make an Order, he shall lay before each House of the Oireachtas a statement giving the reasons for his decision.
Section 9, sub-section (5) of the Act says:—
"The Minister shall comply with sub-section (4) within three months after receipt of the report."
The Minister blandly says in his statement:—
"Sub-section (5) of Section 9 provides that this statement must be laid before each House of the Oireachtas within three months after he has received the report from the commission. In order to comply with this sub-section, the present statement should have been laid before the Oireachtas before the 29th of March last, but the circumstances of the general election and the ensuing change of Government delayed consideration of the report and made it impossible to comply in time with the requirements of the sub-section."
It made it impossible, in fact, to do the only thing the Minister is empowered to do under the Act: either to make an Order as recommended, or, if not, to make a statement within three months as to why he is not doing it. I suggest that the Minister's failure to take action is ultra vires and is a failure to comply with the Act itself.
I should like to pass now to the question of why the Minister did not take any action. This Fair Trade Commission was originally set up by the present Minister, and I presume he intended it to do something. He did not intend it simply to make recommendations and that nothing would arise out of them. I do not think it was his intention to do nothing on them finally, as has happened in many cases of similar bodies; for instance, the Milk Tribunal or the Council of Education, where specific recommendations were made and no action taken. I do not wish to believe that was the intention of the Minister when setting up the commission.
We have already seen, indeed, results arising from reports of the same commission in regard to the grocery trade, the wireless trade, the building trade and the motor trade; and we have observed in the last year or two a distinct fall in retail prices following upon Orders made by the Minister for Industry and Commerce arising out of similar recommendations.
This particular commission on pharmaceuticals, infant foods, and so on, held 20 public sittings from November, 1954, to January, 1955. Then, High Court proceedings were taken to prevent it from inquiring into how chemists' prescriptions were made up and priced. Proceedings were taken by the Pharmaceutical Society of Ireland in November, 1954, and they continued until the 1st April, 1955. An appeal was made to the Supreme Court and it was not until January, 1956, that the Supreme Court upheld the commission's right to engage in this type of inquiry. The inquiry consequently resumed in February, 1956. There were three more public sittings, and in all 113 witnesses were examined on oath, before the report of this investigation was furnished to the Minister, and before the recommendations were made.
I would ask the Seanad to think of the cost of all this, the cost of these legal proceedings, public sittings and so on, and of the final report. Yet the Minister says he will take no action but that the commission, and I quote from Volume 163, column 460, of the Dáil Debates, "is free to reinvestigate the trade". It seems to me that, in the circumstances, the Minister is acting in a scandalously irresponsible manner. He is saying to price fixers and inflaters: "You are quite free to continue your old practices again. I will not do anything on these recommendations to stop you."
What kind of facts were elicited by this commission in their examination? They found, for instance, that in the Twenty-Six Counties there are 1,343 chemists' shops. They found that price fixing arrangements exist very widely. In page 13 of the report they quote the objects of the Irish Drug Association, which are "to regulate from time to time and maintain the minimum retail prices to be charged for patent medicines, proprietary articles, drugs, sundries and the compounding of prescriptions, and for such other articles as are sold by members", and so on.
What does that mean in practice for the ordinary consumer? It means that all patent medicines, which require no technical skill in sale because they are all made up and packaged — things like milk of magnesia, California syrup of figs, balibut oil, cod liver oil, various brands of toothpaste, Virol, Nivea cream — all that kind of product is being placed under price-fixing control by private organisations. What is more serious is that that kind of "price control" is being applied widely in relation to baby foods. There is in relation to all these products a suggestion that everybody dealing with the sale of them has a solemn duty to take in the retail end a gross profit of at least 50 per cent. That applies to such foods as "Farex", "Sister Laura's Food", "Cow and Gate Cream" and all the various infant foods.
The aim of these people, as clearly demonstrated by this report, is to restrict supplies to certain channels and eliminate effective price competition. That seems directly against the public interest, and I am shocked and scandalised that the Minister has not felt it necessary to act on the commission's recommendations and make an Order in the precise terms set forth by them in their recommendation.
I will cite a practical example. A certain baby food is retailing now at 1/6 in the retail shops. It is normally bought from the manufacturer by the wholesaler at 13/6 a dozen less 12½ per cent. discount. That is to say, it costs the wholesaler less than 1/- per packet. The housewife is paying more than 50 per cent. more than that cost price from the manufacturer. If there were retail price competition, instead of retail price maintenance, it could be far cheaper to the ordinary Irish parent.
This report makes it clear that there is organised price fixing which prevents such articles from being supplied cheaper. On page 15 it is pointed out that the various associations have "approved lists". The report says:—
"The association also maintains a list of approved wholesalers who have agreed to confine goods to retail chemists, members of the medical profession, hospitals and public institutions. ... Approval would not be given to a wholesaler with retail connections if it appeared that he might use the two margins to increase his retail business by cutting prices."
That is, cutting them below the 50 per cent. gross profit which they insist shall be taken by all.
Further on, on page 16, this is made quite clear, by a quotation from a circular sent out, in which individual wholesalers are told: "Until you comply with the price regulations you will not be admitted to membership."
It is made clear on page 17 that even private nursing homes had supplies stopped because of differences of opinion as to who should give out these patent medicines, and so on. "A doctor stated he sought supplies from a wholesaler in order to have adequate supplies immediately available in a hospital and also to reduce the cost of medicines to patients," but they were stopped.
A contention was made before the commission by some manufacturers, that in the case of certain baby foods it was necessary that they should be fresh, and that they would not be kept fresh in some of the grocers' shops, if they were allowed to sell them. On page 22 it is stated that it was contended by some manufacturers as follows:—
"Young mothers bring their babies to the chemist to have them weighed and to get advice. If the food were to be distributed outside the chemist trade, the co-operation of chemists in its sale would be lost. Nobody would then have a sufficient interest in it, with consequences such as were recently experienced by the firm when supplies which had leaked to a non-chemist outlet were returned in very bad condition four years after manufacture."
Two consumers' organisations answered that point, and they are quoted on pages 24 and 25 of the report: One association said:—
"A customer would not continue to deal with a grocer who allowed stocks of baby food to deteriorate. Instructions supplied with infant foods are very clear and where there was need for advice it could be sought from the doctor or clinic rather than from the chemist."
The other association stated:—
"Mothers do not depend on the chemists' advice in regard to baby food, but in nearly all cases consult the doctor or clinic. Furthermore, baby foods must be non-poisonous and cannot be harmful. The association cannot understand why a manufacturer would be afraid that his goods would fall into disfavour if not confined to certain channels."
The commission gives its opinion on the prevalence of price-fixing, on page 27 of the report, paragraph 46:—
"The evidence indicated that proprietary goods (which include toilet preparations in addition to medicines and infant foods) account for all but a small percentage of the turnover of goods within the scope of the inquiry. The resale prices of practically all proprietary medicines, infant foods and toilet preparations are fixed or suggested by the individual manufacturers."
In paragraph 47 they say:—
"The evidence established that the wholesalers adhere to the manufacturers' instructions regarding the prices to be charged to retailers."
Furthermore, they make it clear on page 31 that what is being sought is a 50 per cent. profit margin, and then they even quote, in paragraph 58, a circular from the Irish Drugs Association which was issued to one of its members and referred to a particular product.
"As the margin of profit is not to the satisfaction of the committee, members are reminded to keep—— in the background where it will not be seen."
They do not give the name of the product.
"Any line that does not show an adequate and fair profit margin should not be stocked in any prominent part of a pharmacy where it may be observed by a customer but should rather be stowed away from the eyes of potential customers."
That is the kind of attitude which is keeping up prices on all these items for the ordinary parent and housewife. All these facts, in my contention, reveal a situation in which an inflated profit margin is artificially maintained on a whole range of commodities essential to the average Irish home — and particularly so where there are young children. Yet the Minister, in column 460 of the Dáil Report just quoted, says:—
"The investigation carried out by the commission did not disclose a situation which required the making of an Order."
That is what the Minister says, but the commission emphatically thinks they do disclose a situation which undoubtedly requires the making of an Order.
The prices of all these articles — proprietary medicines, infant foods, toilet requisites and so on — are kept substantially higher than they need be to the ordinary Irish public by this price maintenance mechanism and the manoeuvres of the various vested interests.
Who has to pay these extra prices but the Irish parent? I myself have three young children — one who is only three and a half years of age — and I have very clear and near memories of the cost to the consumer — to the person buying them—of baby powders, proprietary medicines, baby foods and so on. Irish parents, in my submission, are being mulcted by the middlemen who have organised for their own interest and against the interest of the ordinary Irish public. The Irish public — and Irish parents, in particular — are paying exorbitant prices; and their love of children, their sense of duty to their children, and their sense of self-sacrifice for children are being unscrupulously exploited for private profit.Yet the Minister stands aside and says he does not think the situation warrants any action on his part, despite the strongest recommendations from the Fair Trade Commission.
I quote page 45:—
"The commission consider that collective action, whether through an association or otherwise, by manufacturers or traders, for the enforcement of resale price maintenance would constitute an unreasonable restriction on the supply of goods and could lead to injustice to particular traders, and they recommend that it should be prohibited."
Yet the Minister decides to do nothing.Again, on page 47 the commission says:—
"In the opinion of the commission, a collective arrangement or understanding between wholesalers relating to the prices to be charged by them is contrary to the public interest in that it involves an unnecsary and unreasonable limitation of free and fair competition and, accordingly should be prohibited."
Yet the Minister decides to do nothing.
Finally, from among the many other recommendations, I quote what the commission says on page 48:—
"The commission consider further that the coding of prescriptions to show the price charged by one chemist as a guide to other chemists is unnecessary in view of the detailed information on prices available to chemists and is undesirable in that, by promoting uniformity of prices, it may induce a chemist to charge a higher price than he might otherwise charge. Accordingly, the commission recommend that this practice should be prohibited."
Here again the Minister decides that no action is necessary from him.
On this and on several other recommendations, the Minister decides to take no action whatever. He decides that, on the day before the Dáil rises, two or three days before this report will be circulated to members of the Dáil and Seanad. He makes a cursory reference to it in his speech on his Estimate and he gives no opportunity in the Dáil for debating this decision with Deputies in full possession of the facts until after the Summer Recess.
I want to know from him and that is my purpose in raising the whole matter to-day — why he has decided to take no action on these recommendations and I very much regret that the Minister has not been able to be here to-night to answer that question.
