Seanad Éireann debate -
Wednesday, 18 Jul 1962

Vol. 55 No. 9

Restrictive Trade Practices (Confirmation of Orders) Bill, 1962—Second and Subsequent Stages.

Question proposed: "That the Bill be now read a Second Time."

Minister for Industry and Commerce (Mr. J. Lynch)

The object of this Bill is to confirm Orders which I made in December, 1961, and April, 1962, under the Restrictive Trade Practices Act, 1953, to give effect to the recommendations of the Fair Trade Commission on the supply and distribution of motor spirit and motor vehicle lubricating oil.

In 1958, the Fair Trade Commission received a request from the Irish Motor Traders' Association for the holding of an inquiry into the conditions operating in the supply and distribution of petrol and lubricating oil, and, having received observations and comments from interested parties, the Commission decided that it would be appropriate to hold a public inquiry. Senators have already received copies of the Commission's report, but I propose to give here a summary of its contents.

Petrol is distributed in this country by six wholesale companies three of which supply over 80 per cent. of the market. These three are subsidiaries of large outside organisations engaged in all phases of the petroleum industry. Consumption of motor spirit has been increasing steadily for many years; it rose from 60 million gallons in 1950 to 80 million gallons in 1959. In that period the number of retail sites more than doubled, rising from 1,630 to 3,470. Over the same period there was an increase of 73 per cent. in the number of motor vehicles and 45 per cent. in the sale of motor spirit by retailers. It is significant that the average annual "throughput" of spirit per site fell from 30,000 gallons in 1950 to 20,000 in 1958.

Up to 1950, the bulk of retail sales of motor spirit was through "mixed" sites, that is, sites which sold the brands of more than one petrol company. Towards the end of that year, the formal exclusive dealing arrangement, commonly referred to as the "solus" system, was introduced, and was eventually adopted by all the petrol companies. By 1959, 98 per cent. of retail outlets were operating on the "solus" system. Briefly, the principal feature of this system is that the retailer, in return for a monetary payment (known as the solus rebate), and other considerations, agrees to purchase from a particular company his full requirements of petrol for a specified period. The rebate, of ? of a 1d. to ½d. per gallon of the retailer's total gallonage for the period covered by the agreement, is usually paid in advance. The other considerations include loan facilities on favourable terms, aids to sales promotion, and free uniforms and training for staffs. The earlier "solus" agreements were usually for one year, but more recently their duration has been extended to five, ten and sometimes twenty years.

The six petrol companies distribute their own brands of motor vehicle lubricating oil. In addition, there are four companies which specialise in lubricating oil. The retail outlets are the same as for motor spirit, and the sales represent about 1 per cent. of total sales of petroleum products. The "solus" agreements of the petrol companies also contained provisions imposing varying restrictions on sales by the retailer of motor oil supplied by competitors, and in later years special agreements, operated in conjunction with special rebates, were made, the object of which was to encourage the "solus" dealer to purchase all or most of his requirements of lubricating oil from the company which supplied him with petrol.

The majority of retail sites are owned by independent dealers. Up to 1954, the petrol companies did not own or operate any such sites, but since then some of them began to acquire their own sites—mostly service or filling stations—and by 1959, 113 such sites, which are normally leased to tenants, had been acquired.

At the inquiry the Irish Motor Traders' Association, the only trade association which expressed an interest in matters affecting the retailing of motor spirit, stated that they had opposed the introduction of the "solus" system in 1951, but claimed that the manner in which the wholesale price of petrol had been manipulated had left traders with no option but to accept the system. While not pressing for its abolition, they considered that a "solus" dealer should be free, on the expiration of his contract, to select the system of trading which he prefers; also, that the agreement should contain a "break" clause which would allow a dealer to terminate it on equitable terms.

The association also asserted that, following the introduction of the "solus" system, the strenuous competition between the petrol companies for control of retail outlets had led to an uneconomic multiplicity of sites, with the result that although the overall sales had increased substantially there had been a significant drop in the average sales per outlet. They objected also to the situation where independent retailers would be in competition with the company-operated sites, and called for the establishment of an independent licensing authority to regulate the growth of new retail outlets on the basis of public need.

At the time of the inquiry, the major petrol companies pursued a vigorous policy of inducing "mixed site" dealers to change to the "solus" arrangements, but the small number of "mixed" dealers who had not accepted the new system continued to be supplied on a "mixed" basis. New entrants, however, would be supplied only on a "solus" basis, and although a "solus" dealer was free, at the termination of his agreement, to change to another supplier, it could only be on a "solus" basis, and supplies would be withheld if he wished to revert to "mixed" trading. The minor companies, while they also followed the "solus" policy, would generally supply, on a "mixed" basis, both new entrants and persons who had formerly operated on a "solus" basis.

The wholesale price of petrol is uniform, with, of course, the special rebate already mentioned as allowed to "solus" dealers. Price changes were usually initiated by one or other of the two largest companies, who notified all other companies in advance, and ascertained before announcing increases that the others would make a corresponding increase. Price competition at retail level was discouraged, and the recommended retail prices were generally observed. It was apparent from the evidence presented at the inquiry that, because variations in the price and quality of the product were insignificant, the competition between the petrol companies as wholesalers was limited to advertising and methods of distribution.

In the supply of motor spirit to commercial users no exclusive dealing arrangements were practised, but prices quoted in reply to tenders from large commercial users were related to a common schedule, resulting in identical quotations from all the tendering companies.

There were no uniform wholesale prices for lubricating oil at the time of the inquiry, and none of the distributing companies took steps to enforce recommended prices. Retailers' profit margins varied between the various companies and grades. Prior to the introduction of the "solus" system for motor spirit, the trading terms of all companies distributing lubricating oil provided only for quantity discounts, with deferred rebates on an equal scale for all traders. As I have already mentioned, the petrol companies have introduced, sometimes in conjunction with their "solus" petrol agreements, supplementary agreements providing for exclusive dealing arrangements in lubricating oil. The four specialist companies continued to trade on the old basis, and three of them complained at the inquiry that the lubricating oil arrangements of the petrol companies were unfair to them and contrary to the public interest. Figures submitted to the Commission showed that those four specialist companies failed to maintain their proportion of a rising market in lubricating oil between 1951 and 1959, while the share enjoyed by the petrol companies rose from 63 per cent. to 72 per cent. in the same period.

In their submissions at the inquiry, the main advantage claimed by the petrol companies for the "solus" system was that it had achieved considerable savings in distribution costs which, in an inflationary period, enabled prices to the motorist to be kept at a lower level than would have been possible otherwise. The major companies claimed that the retailer, too, found the system advantageous to him. He benefited from the free training facilities provided for his staff; the advice and assistance afforded expanded his sales and increased the efficiency of his business, and all his requirements in equipment were available to him on hire-purchase terms which were much more favourable than those charged by finance houses.

In their report, the Fair Trade Commission accepted that the "solus" system has been a satisfactory method of distribution from the standpoint of the wholesaler, and that it lends itself to greater economies in distribution than the system of "mixed" trading. They pointed out, however, that it stimulated entry into the retail trade to an extent not justified by the rate at which the overall consumption of motor spirit was increasing. The commission expressed the opinion that the economic benefit of the system can be retained if its effect on entry can be damped down, and they recommended that incentives to new entrants in the form of advance payment of rebates or the giving of loans at less than commercial interest rates should be completely discontinued for the present. Further, as regards company-owned stations, they recommended that any petrol company proposing to build or acquire new outlets should be required to notify the commission in advance and furnish any information required by the commission.

The commission made a number of other recommendations designed to prevent unfairness in the operation of the "solus" system. They recommended that the small number of dealers who are at present receiving supplies on a "mixed" basis should unless they change to "solus" trading at any stage, continue to be supplied on a "mixed" basis by their existing wholesalers. At the earlier stages of the "solus" system, it was not made clear to dealers that they could not revert to "mixed" trading on the expiration of their agreements, and the commission, therefore, recommended that any "solus" dealer who had been supplied on a "mixed" basis at any time in the period 1950 to 1956, and who wishes to return to that form of trading, should be enabled to do so on the next expiration of his "solus" agreement.

The commission considered that "solus" agreements of prolonged duration are unnecessary and undesirable in that they tend to produce a rigid division of the market between the companies, and, accordingly, they proposed that any future agreement providing for exclusive dealing in motor spirit should not exceed a period of five years and that any loan, mortgage or hire-purchase arrangements or agreements should not be linked in any way with provisions for exclusive dealings for longer than five years.

While there is no suggestion that entry to the wholesale trade in motor spirit has been limited or controlled by collective arrangements, the commission considered that a new wholesaler would find it more costly and difficult to obtain outlets under the "solus" system, and, accordingly, they recommended a prohibition on any concerted action by wholesalers to restrict entry or to eliminate unfairly a competing wholesaler.

In the opinion of the commission the system of prior consultation between the petrol companies on price changes is a form of price regulation and restraint on free competition in pricing, and should be prohibited. So far as the supply of motor spirit to large-scale commercial users is concerned, the commission took the view that tendering based on an arrangement or understanding between the petrol companies concerned frustrates the function which the system of tendering was devised to perform and should be prohibited.

Apart from the rebate paid to "solus" dealers, the Commission considered that there should not be any price discrimination between retailers. The Commission recommended also that the price differential between "solus" and "non-solus" retailers should be reasonable, and be justifiable having regard to the functions which the "solus" retailer is required to perform. The Commission proposed that the petrol companies should lodge their terms and conditions with them, so that this and other relevant matters can be kept under review.

In 1954, the Fair Trade Commission made Fair Trading Rules relating to entry into the retail trade in motor spirit which prohibited suppliers from refusing supplies to any person who fulfilled the normal conditions required by the supplier as to payment, minimum purchases, etc. These rules will not be necessary if effect is given to the Commission's recommendations and in that event the Commission propose to rescind them.

As regards lubricating oil, the commission were of the opinion that, if the companies which specialise in this commodity are to survive, they must have access to "solus" sites which now represent the vast majority of retail outlets. They considered, therefore, that the supply of lubricating oil to retailers should be the subject of a separate arrangement not related to any arrangement for the supply of petrol. The Commission expressed the view that special incentive rebates and other arrangements tend to limit the public in its choice of lubricating oil and are contrary to the public interest. The terms of sale should not provide for exclusive purchase, display or advertising. All terms and conditions should be applied to all traders without discrimination and should be furnished to the commission.

The commission further recommended that a trader should not be refused supplies of motor spirit or lubricating oil solely because he is or is not a member of a trade association.

The commission finally recommended that a trader should not be or margins for lubricating oil and collective enforcement of resale prices for motor spirit or lubricating oil should be prohibited.

The Restrictive Trade Practices Act, 1953 provides that an Order of this kind shall not have effect unless it is confirmed by an Act of the Oireachtas. The Bill now before the Seanad is the Confirmation Bill which is necessary to give the force of law to the two Orders concerned in this case. I should like to mention at this stage that the second Order merely made a simple drafting amendment in the first Order and was designed to define in a manner more in keeping with the Commission's recommendations, the types of trading agreements or arrangements which will continue to be permitted under Article 12 (2) of the first Order.

It will be noted that neither this Bill nor the Orders to which it relates set out the penalties for contravention of the provisions to which statutory effect is now to be given. The reason for this is that the parent statute, the Restrictive Trade Practices Act, 1953, deals comprehensively with the question of offences against any Order made thereunder. Section 14 of that Act provides for the imposition of very substantial penalties by way of fine or imprisonment for such offences.

In the case of Confirmation Bills, the arrangement is that the Orders which it is proposed to confirm would not be capable of being amended by the Oireachtas but would be accepted or rejected as they stand. The matters dealt with in the Orders have been the subject of a detailed public enquiry by the Fair Trade Commission, and the arguments in favour of adopting the provisions embodied in the Orders are set out in the commission's Report. The Orders have on the whole been well received. In matters of this kind it is not easy to find a satisfactory solution acceptable to all interested parties, particularly one to which legislative effect can be given. Our paramount interest must of course be the motoring public. The Commission considered these matters in all their aspects and I think their recommendations were very sound and reasonable, aimed as they were at the elimination of the unsatisfactory elements of the present distributive system with a minimum of interference with the trade.

I have, therefore, no hesitation in commending this Bill to the Seanad. I should like to emphasise that the sincere co-operation of all the parties concerned will be required in the operation of the Orders if the greatest benefits for the trade and the motoring public are to be derived from its provisions, and I do hope that such cooperation will be readily forthcoming.

Mr. McGuire

I rise to say that we support this Bill. We could discuss for many hours the system of the sale of petrol and lubricating oils which we have just heard the Minister speaking about and which this enquiry has been studying, but in view of the fact that this Bill, we are told, must be accepted in toto or rejected it would be more or less a waste of the time of this House if we spent too much time discussing these details, and if we do find fault, through specialised knowledge perhaps, with certain items in the Order it is hardly likely that we will throw out the Bill itself.

The thing that interests me about the Bill is the fact that the tribunal was brought into operation on the application of the Motor Traders' Association. For that reason particularly I support the Bill. Because I remember when the Restrictive Trade Practices Act came into force first there was a lot of opposition in industrial and commercial circles to the whole idea of the Act. It was felt at that time that there would be too much interference with the commercial operations of the business community, but I think it is true to say that things have changed considerably since then; first, I suppose, because of the operation of the Act itself and second because business people have adopted a more enlightened form of thinking in the meantime.

Formerly business people thought there should always be something to hide and even if they had nothing to hide they felt they should be secretive about how they were running their business. As time moved on, however, that attitude disappeared because very little is secret in business nowadays and there is nothing to hide.

I have no hesitation in saying that the thing most of these people were rather timid about was revealing how they arrived at the prices of the commodities they sold and what profits they made, but as we in this country are now no longer going to operate in an enclosed market and have to think in a world and a European sense, I have no hesitation in saying that prices and profits in this country compare very favourably in that they are so low with prices and profits in any country in the world. That is now recognised by business people generally and therefore they are not afraid to come to tribunals and public enquiries and make their case.

The only reservation is that it is felt at times that the tribunal was summoned into activity unnecessarily and, indeed, provocatively, with the result that certain traders had to spend a lot of time, a lot of money and a lot of worry arguing their case, as they sometimes thought unnecessarily, before this tribunal which was set up under the Restrictive Trade Practices Act. In the course of time we have now come to a more rational way of handling the tribunal and I was glad to see therefore, that the Motor Traders' Association themselves were responsible for the enquiry into the sale of petrol and lubricating oils.

The objects of the commission's activity can be several. One would be to make supplies available to traders generally without unfair discrimination between one and another, also to prevent a price conspiracy and encourage competition, generally and finally the overriding objective of benefiting the consumer both in regard to the service he gets and the price he pays for whatever the commodity may be.

In this Bill, it would seem that the main purpose has been to prevent harsh or restrictive conditions being imposed on retail petrol distributors. Out of that arose the question of the solus system as against the mixed system which operated up to some years ago. I think that is where the Motor Traders' Association has come in. As the Minister told us in his detailed introduction of this Bill, it was felt that the solus system in the beginning seemed to work all right while it was left in the hands of the ordinary existing dealers. Apparently it was felt it was getting out of hand, for many reasons: It was trying people too much and becoming too much of a monopoly. It was closing out other citizens from taking part, profitably and reasonably, in the motor trade.

The report of the commission and their recommendations indicate that they have gone as far as possible to remedy the faults in the system. However, they have not been able to go very far because, as far as I can see and as the Minister stated, there is no way of dealing with the price of petrol, that is of getting away from the price arrangements already made because they are really decided outside the country. Therefore, it would seem that there is very little, really, coming out of this for the actual consumer. I suppose the traders themselves have got what they wanted by at least drawing attention to the way petrol supplies were handled in this country.

Very often, a commission like this may not be able to give very positive returns. However, it will throw light on a position and will prevent it from deteriorating further. I think that is what has happened in this case. If this inquiry had not been made, we would find in a few years' time, the motor distribution trade in this country in the hands of very few people, and those people dictated to from outside the country.

The Motors Traders' Association themselves started this inquiry. I do not remember if the Minister said there had been any reaction from the Motor Traders' Association as to the usefulness of this whole exercise in connection with the motor trade. It may not have produced very positive or very dramatic results but it may prevent things from deteriorating in the future and perhaps, from here on, a more liberal system may be worked out as between the Motor Traders' Association and the petrol companies. Therefore, I have pleasure in supporting this Bill.

Professor Stanford

This Bill, I am sure, has the support of every motorist in the country. It is fundamentally sound in principle. There is always a danger in monopoly and of monopoly in a commodity of this kind and the Government and the Minister are taking the right steps to watch that. There are one or two questions which I would like to ask.

Recently we read about a petrol trader in England who was able to sell petrol there apparently for an extraordinarily low cost, about 6d., I think, less than the cost in Ireland at present. He has spoken of setting up petrol stations in the Republic. Am I to understand, or may I understand, that he would be quite free now to come into this country and to set up his petrol stations in direct competition with the stations here already? I hope that is so. I think we all want as much competition as possible in this trade. The danger is, of course, from monopolies.

At the moment, as the Minister said, those petrol companies control our supply of petrol completely and, in certain circumstances like that, I think we must all the time, both as members of this Parliament and as consumers, watch two things. We must watch that the monopolists do not run up the price unreasonably. We must also watch that they do not allow the quality of their petrol to deteriorate. Just this time last year I raised a question in this House about the quality of the petrol that is being supplied in the Republic. I asked the Minister who is present this evening, through the Minister for Finance, to test the quality. The reason why I asked for that was this: There are undoubtedly many people in this country who believe that the quality of our petrol is not as good as the quality supplied in Northern Ireland or in Great Britain. I have had letters. I have had statements in considerable number to that effect. I am well aware, as the Minister is well aware, that it is extremely hard to test the truth of such statements. Let me be quite specific. The complaints are of three kinds. Some people say that the mileage from the Irish petrol is 2 or 3 or perhaps even 5 miles a gallon less than that from Northern Ireland or British petrol. Others say that the general standard of performance is lower. Others say that the effect on their engines is more harmful than that of petrol supplied outside the country.

I know it is extremely difficult to test objectively the truth of such complaints but it can be done. I understand that in Great Britain there are machines which can quite objectively test the quality of petrol for performance, and the rest of it. They are expensive. I understand they cost many thousands of pounds to install, but it can be done. Some months ago, we set up a body to test industrial standards and standards of manufacture in this country. It is a most valuable institution.

I suggest that this question of petrol is of such supreme importance that the body charged with the responsibility of maintaining our industrial standards should be asked to investigate the matter objectively. I am prepared to concede this. I am no chemist; I cannot speak with authority. If it is proved that Irish petrol is as good as or better than that outside the country, nobody will be better pleased than myself. But there is public dissatisfaction. If we could, by objective tests, settle that matter, it would be good for the country. There is always this risk in monopoly of deterioration of quality and unreasonable increase in prices. I should be very glad if the Minister could reassure us on this matter.

Mr. Moloney

At the outset, I should like to congratulate the Minister generally on the satisfactory working of the Fair Trade Commission in regard to this problem. It is true to say that the investigation which the Fair Trade Commission carried out was done, generally, at the request of the Motor Traders' Association who were then very much dissatisfied with the existing system of petrol distribution and arrangements by the petrol companies. By and large, it was a rather technical problem to solve. I must say that the Fair Trade Commission have done a reasonably good job.

The Minister mentioned Orders, by way of Confirmation Bills, and, in that regard, I have a few observations to make. The price of petrol has been mentioned here and the suggestion made by innuendo that there is still some sort of gentlemen's agreement operated by these major companies in regard to the fixing of petrol prices. From my experience of the competition that seems to exist between the petrol companies in other directions for the past couple of years, I am very slow to accept that. One thing that puzzles me is how the price of petrol is fixed and what is the source at which it is fixed? We are in the dark all the time about that, even though we may be associated with the trade. It is generally accepted that the price fixing is done at a source outside the country and that the petrol companies seem to follow suit with one another in the matter. The Order which the Minister introduced this evening will not make that so easy in the future. That is probably desirable.

There are many factors which determine the price of petrol. It might be as dangerous to have too much competition as to have a monopoly. At the moment, the motor trade in the country has taken grave exception to certain developments by the petrol companies in the matter of erecting petrol company owned sites. The Minister has explained that the number of sites increased very considerably over a period and the increase was entirely out of pace during that period with the general growth in the number of vehicles that came on the road. There was a period of approximately eight years when the increase was 113 per cent. in the erection and operation of retail sites. During the same period, the number of vehicles licensed was only 73 per cent. That proves that the growth in the erection of petrol stations was entirely out of line with the requirements of the public.

If those stations were being erected at the expense of the private traders, there would not be much to worry about, because the situation would take care of itself. But it has been the policy of the companies to subsidise the erection of certain filling stations and, more recently, the petrol companies have not been satisfied with that arrangement and have now gone into the business themselves. There are many areas throughout the country where the petrol companies have gone into that type of business and where the trade and public were satisfied with the existing arrangements.

In Killarney recently, two or three companies have come into the suburbs of the town and paid fabulous sums for site accommodation. In one case, they paid at the rate of £3,000 per acre and they propose to erect stations to be operated as company-owned stations. They will probably lease them out to the people who may or may not be in the trade. In one case, a company proposes to operate the station itself, as far as we can understand. It is obvious that if there is an over-growth in that regard, the position will be affected in another way and the price of petrol will suffer as a result of this in the long run.

While the Fair Trade Commission dealt with that aspect and while we are told by the Minister in a statement he made in the Dáil that the commission recommended that petrol companies proposing to build or acquire new outlets should be required to notify the commission in advance, I do not think that goes far enough. In the first instance, I feel that, unless the Commission requests the company to notify them of their proposal, there is no direct liability on the petrol company to do so. In fact, the station could be erected or nearly erected, as has been the case in Dublin, before it would be possible to bring it to the notice of the Fair Trade Commission and before the Commission could request them——

Mr. J. Lynch

They have no power to request until such time as the Act is passed.

Mr. Moloney

In addition, there is no provision regarding what action the Fair Trade Commission can take. One is entitled to feel that, while there is provision for it, the commission will be rather reluctant to take positive action, if they can avoid doing so. It is very desirable at this stage that the Minister should give clarification to the House in regard to what action the commission could take. Are they in a position to say to the particular petrol company: "We consider that the existing arrangements in the area are quite adequate to serve the public and you should not go ahead with the erection of this station"?

The point I am trying to make is: how does this concern the public? It concerns them to this extent. The companies have to get the finances to erect and operate these stations. Most of them will be uneconomic from the point of view of operation. That money comes from the general profit pool which will accrue from the trade and, in the long run, from the public. The trade has to collect for the petrol companies and then try to get it back from the public as far as possible. The petrol companies should be content to carry on the wholesale distribution of petrol. The time has arrived when the commission should be asked to take some action in this respect, with a view to preventing the appearance of company-operated stations.

The petrol companies' policy in that respect seems to be that, if one company erects a station, the other, in order to preserve the prestige which it seems to think is required to operate its business, erects another station. The three major companies are largely competing in that direction. The motor trade, when making their submissions to the Fair Trade Commission, suggested that some licensing body should be set up to examine cases of the kind about which I am complaining, with a view to determining whether or not there was a necessity for erecting a particular station and whether that station was to be operated by a private individual or a petrol company. The Commission did not accept those submissions, but experience within the past couple of years would, I think, justify the Minister re-examining that aspect of the matter.

There have been developments by the companies within the past five or six months which prove that some action on the part of the Fair Trade Commission, some speedy action, will have to be taken to control their activities in the matter of erecting stations through their own organisations. The proof that further stations are not required is already available. The Minister in his statement has indicated that the gallonage sale of the stations fell from 30,000 in 1950 to 20,000 in 1958, on average. That indicates that the number of stations erected during the period from 1952 to 1958 or 1959 multiplied very considerably, and increased by over 100 per cent., by 113 per cent. The result was that they were entirely out of pace with customer requirements. In each station, there was a very substantial fall in gallonage output, from 30,000 gallons to 20,000 gallons, which represents one-third of the turnover. Many of those stations are entirely dependent on the sales of petrol and lubricants, and are finding it pretty difficult to carry on. When the companies erect stations of their own in places already adequately provided for, the position deteriorates further and gives quite a headache to a number of traders who are engaged in retail distribution.

I have tried to make the points which are important in this discussion. I have given the Minister all the facts to the best of my ability. The question of price has been dealt with. Before I leave it, I should like to suggest to the Minister that he might consider setting up some form of licensing body to examine the merits of any applications for additional sites. The system as it exists at the moment should be changed. The Fair Trade Commission should have some say in the erection of new stations. I suggest that there should be an advisory body or, better still, a licensing authority.

That authority could be composed of three or four people: one person representing the Minister or alternatively the Fair Trade Commission; one person representing the Motor Traders' Association, a third person representing the petrol companies and nominated by the main petrol companies; and a fourth person representing the motorists or the public as the case may be. A body of that kind would be very competent to examine local requirements and to deal objectively with any application which came before them for permission to erect additional stations in a particular area.

The multiplicity of sites seems to be coming to notice very much in recent months. I have explained the situation in Killarney and I am sure there are many similar cases throughout the country. Action will have to be taken very speedily in that connection. To some extent, the Fair Trade Commission have power at least to check this unreasonable growth in the erection of filling stations. It is a limited power. The order does not seem to specify what action they can take, other than getting information when a case comes to notice, but usually when a case comes to notice, the filling station is erected or well in course of erection.

The question of the price and quality of petrol is rather important. I am glad the previous speaker dealt with the question of the quality of petrol. I feel that the noticeable differential in quality and in general performance is due to the fact that we have only two grades in this country. Generally speaking, there are only two grades here, but in the North of Ireland and in England, I understand there are three grades and in some cases four. There is a price differential, of course, between one grade and another. The superior grade, the top grade, is some pence dearer than the lower grades. Until we get a greater variety in the matter of grades, there will be complaints, by and large, with regard to quality.

Senator Stanford suggested that the question of standard should be examined. I entirely agree with him. I feel that we have some machinery available to us through the Institute for Industrial Research and Standards to examine the quality of petrol and clear up certain points in regard to the ill-effects our existing petrol supply may have, and particularly in regard to excessive wear on the motor engine. From my experience, I feel that charge does not stand up to examination. I have occasion to know that the engines of motor cars which have operated for 11 of the 12 months in England and Northern Ireland very often show as much wear as they do in the Republic. If we had a wider variety in the matter of grades, people would have a choice, and they would not be tied to the two very fixed grades which they are obliged to use at the moment.

There is also the possibility of another question arising in that connection, that the general research carried out into petrol products is not as up to date as it might be, or as it is in the American countries. It is only in recent years that we have had our own refinery, and it is probably a bit unreasonable to expect that we should have reached the stage of perfection that has been reached in other countries which have been refining for many years. I understand that in our refinery that question is being attended to, that we may take it that everything possible is being done, and that the products we will get will compare favourably in a short time with any products that have been obtained from the European refineries, and the American refineries which are supposed to be the best in the world when it comes to petroleum products.

Professor Quinlan

While we can all welcome this Bill, and I think we must compliment the Fair Trade Commission for the very good work they have done, it does seem that the era of the Fair Trade Commission is about to end, and that in the framework of the Common Market, such restrictive practices cannot last because of the free right of establishment that is contained fundamentally in the principles of the Common Market.

So far as I can see, that will allow any outside company to come in and set up a petrol station or any other station anywhere throughout the country. We have to face that situation. It is one of the more unpleasant facts associated with the Common Market, especially when we consider our rather abrupt transition from our rather regulated type of economy to one of free trade. I should have thought that the petrol stations which are not competitive will just have to face up to the fact that they cannot be helped to hold on indefinitely. This Bill is rather temporary in nature and it will, I believe, have to be drastically revised if or when we become members of the European Economic Community.

Mr. O'Reilly

This measure is the result of the report of an inquiry by the Fair Trade Commission into trading in motor spirit and motor lubricants. I did not think the debate on it would be as protracted as it has been. Some Senators have given their views. I was interested in the view expressed by my colleague on this side of the House and I was inclined to ask myself what is fair trading. It appears to me that the function of the Fair Trade Commission fundamentally is to protect the public rather than to protect a particular trade and to that degree I could hardly subscribe to some of the comments made by my colleague.

The best protection the public can have in the long run is competition so long as it is fair competition and once there is any attempt at interference by any group, either retailers, wholesalers or at any level of the distribution of any commodity, there is not fair competition and it becomes a matter for somebody like the Fair Trade Commission.

Senator Stanford raised the question of quality. Not being a chemist, I cannot express any opinion except that of a layman with nothing to support it, but I believe there is little or no difference between petrols and that is why so much money is spent on advertising. When there is no difference in commodities sold by firms there is cut-throat competition and colossal sums are spent on advertising. This, I believe, is true in this country and in England and also, I am certain, on the Continent. It may be a good thing but in my opinion it would be good if less money were spent on advertising and more ploughed back into production of the commodity either to make it better or to enable it to be sold at a cheaper rate to the public.

On the multiplicity of sites, while it may not be socially a good thing to have too many people engaged in that business, it is a fact that very few people in this country rely solely on the sale of petrol and motor lubricants. Most of them have sidelines, whether they are engaged in the motor trade as such, farm machinery or even selling groceries. Sometimes you see a petrol pump outside a premises where they sell anti-freeze inside, a public house, but I am not aware of any being seen outside a post office. Unless it becomes socially undesirable to have too many sites I do not see how you can go so far as to regulate the number by licensing them. Sites where petrol is sold in a public place are licensed by the local authority in any case and I do not see how it could be arranged that some people would get licences and others would not.

It is socially desirable to control the number of public houses but whether it would be socially desirable to control the number of people selling petrol is another matter. I think it would create a restrictive trade practice, the very thing it was intended to prevent by the Fair Trade Commission, if you allowed some people to sell petrol and did not allow others. I am inclined to come down on the side of free competition. If people are prepared to erect a pump to sell petrol the man who is a good salesman will sell more than the man who is not. It may be argued that it would be undesirable to have overselling where a number of people are already engaged in the trade.

While I agree that it is not a good thing that petrol companies should themselves operate sites, I must admit that they give employment. The managing director of a petrol company is not going to sell petrol himself but will employ people to do it, but though that is so I do not think it is a good tendency to have petrol companies taking over and running sites. One thing against it is that it tends to create a monopoly so that it is much easier to avoid competition and the people will suffer. I could suggest other objections but that is the most important. It would be much better if distribution and sale were conducted through the medium of people in the motor trade or any other people who felt there was a shilling to be made on the sale of petrol.

The Fair Trade Commission went to a lot of trouble, spent a lot of public time and, I am sure, spent a lot of public money on this investigation. I might ask the Minister—he may not answer as he may not have the details —the cost of that enquiry. It might be that some cynic could suggest that the cost of the enquiry was greater than any advantages that might accrue from it. I remember an argument on this matter when it was pretty hot and the enquiry was on and it was said that the money spent on the enquiry would far outweigh any advantages that might accrue from it. I did not think so but I heard a cynical person in the motor trade suggest it. Quite a lot of good has been achieved and the enquiry has gone some way to prevent a monopolistic tendency in the distribution and sale of what is really a very vital commodity.

Mr. J. Lynch

As in the Dáil, the measure has received general approval in this House, subject of course to what were questions rather than criticisms. Senator McGuire pointed out that under the parent Act, Orders such as this are either accepted or rejected. I do not think he intended to criticise that, but it was a wise provision in that the Fair Trade Commission, having heard the evidence before it in detail, were the best fitted to make the recommendation and it is difficult for this House to amend, in detail at any rate, the contents of the recommendations they made when they are ultimately confirmed by Order. I think it is a good system. Apart altogether from that, the recommendations are published well in advance of legislation being introduced and representations may be made by and received from interested parties.

I do not think any representation of note was made in respect of the recommendations of the Fair Trade Commission as embodied in this Order. The main difficulty with the creation of too many outlets was, in my opinion, that while the solus system itself tended to greater economy of distribution, as the Fair Trade Commission found and I think the Motor Traders' Association did not contest this, there was, on the other hand, the multiplicity of stations or outlets as they are called, causing a reduction in the throughput on the average of outlets and therefore must of necessity have given rise to greater overheads and must in general have affected the price of petrol. I felt, and still feel, that the multiplicity of these outlets must have adversely affected whatever economies were created by the solus system. It is, therefore, desirable that some restraint should be put on the multiplicity of outlets.

Senator Moloney rather questioned the effectiveness of the recommendation of the Fair Trade Commission in this respect. In the first place, it was decided by the Fair Trade Commission that they ought not to establish a licensing authority as it would tend to create vested interests in sites and perhaps give rise to another type of abuse that we are trying to avoid in another form of trade. As well as that, this being a free enterprise economy, it is desired by all of us and by the Government to interfere as little as possible in that enterprise and to do so only when the public interest is involved or is adversely affected.

It is true that the public interest may adversely be affected by the creation of too many sites as is obviously evidenced in Killarney at present where the petrol companies themselves are acquiring sites and operating them through tenants or their own employees direct. There is possibly good reason from the petrol companies' point of view to go to Killarney. It is one of our greatest show pieces. The appearance of attractive petrol stations bearing the name of a particular brand in such a place must obviously be attractive to petrol companies. However, the Order made in consequence of the recommendation of the Fair Trade Commission requires that petrol companies who propose to acquire or build new outlets must notify in advance the Fair Trade Commission of their intentions in that regard.

As of now, the Fair Trade Commission again say to these people: "If you go ahead with your plans we shall order you to take down the premises." The immediate purpose of the recommendation is that they can keep the growth of petrol retail outlets under review. An abuse has arisen to a certain extent. However, if they find an abuse arising to the extent that they ought to act then they will have power to make certain recommendations on the basis of which an Order can be made which ultimately may be given the force of law by the Dáil and the Seanad. I think that is far enough to go at the present time. I believe that the recommendation will have the desired effect in so far as the multiplicity of petrol stations are concerned.

Senator Stanford asked if this Order will have any effect. He instanced the possibility of a person coming from England to establish a distribution chain in this country. It will facilitate such a person coming in. It will facilitate greater competition. It is true to say, further, that the Fair Trade Commission found that there was no suggestion of restriction of entry into the wholesale trade. However, the manner in which the petrol companies were buying solus sites, to take only their own brand of petrol, would be a restriction in so far as it would not be possible for a new wholesale entrant to sell his petrol to retailers who were bound up by solus agreements.

These solus agreements will be capable of being rescinded after their current period of operation and a person can renew them only for a limited period. A person who was bound under a solus agreement and who was formerly a mixed trader can, on the termination of his contract, revert to mixed trading and the petrol companies will have to supply him. Therefore, a new wholesale entrant will be able to get an outlet there with a mixed trader and with existing mixed traders even though they are limited at the present time. As well as that, he will be able to make his plans available to the Fair Trade Commission in relation to building his own retail outlets.

There is really only one restriction, if one may call it that. When the Oil Refinery was built the Government of the day gave them an undertaking that any petroleum spirit that would be imported into this country would bear a duty of 1d. per gallon over and above the petrol products produced at the Whitegate Refinery. So, subject to that, and subject to the existing restrictions which it is proposed to eliminate, there is no limitation on the right of a new wholesaler to come into business no matter from where he comes.

As regards the quality of petrol, people complain about the quality of goods from time to time. I have no opportunity of comparing the quality of petrol in this country with that of petrol sold in Britain. It must be remembered that we get our raw material, the crude oil, from the same sources as they get it in Britain. We have one of the most modern refineries in the world. It is operated, largely, I am happy to say, by Irishmen, Irish technicians. I hope we can produce petrol, given the same tools, the same raw materials, as good as anybody in the world.

I do not know if there are serious objections to the quality of our petrol. I do not know whether, as Senator Stanford suggests, it gives a lesser mileage per gallon or has a more adverse effect on the engines of motor cars but, if there is substance in the complaints, I am sure we have the means to carry out tests. I am not suggesting that the Institute for Industrial Research and Standards have the necessary equipment to do so at the present time but I have no doubt that if there were a volume of opinion on this matter and if the case were made to the Institute for Industrial Research and Standards appropriate tests could be made. Over and above that, of course, there is the facility available to anybody who has a serious complaint in that regard to have it tested perhaps by private sources. However, I feel that if a proper case were made to the Institute the appropriate tests could be carried out.

I think these are the main points that have been made. I just want to say one thing with regard to the fixing of prices. As I said, and as the Commission found, the scope of competition in this country is very limited. The costs of crude oil are not fixed and are not fixable in this country. The costs of processing are perhaps subject to the control of the Irish companies but, nevertheless, they have their overheads and other costs to take care of. The competition has been restricted mainly to competition for outlets. In the long run there is very little scope for competition in pricing.

There is one good thing however in the Order and that is that bulk commercial users will now have the advantage of reasonable tendering and not tendering according to a schedule agreed beforehand by the petrol companies. So that, in that single respect at any rate, there ought to be greater competition and I hope a greater advantage to bulk users, mostly for industry and the heating of big institutions. I do not think there are any other points but, if there are, perhaps I might be able to answer them if they are put.

Question put and agreed to.

Agreed to take remaining Stages today.

Bill put through Committee, reported without recommendation, received for final consideration and passed.