For centuries past, actions in restraint of trade have been contrary to the principles of common law, and from time to time this position has been reinforced by specialised legislation of very limited application. Comprehensive modern legislation to promote free and fair competition can be said to have begun in this country with the enactment of the Restrictive Trade Practices Act, 1953, which set up the Fair Trade Commission with power to inquire into the conditions which obtain in regard to the supply and distribution of any kind of goods. This Act was amended in 1959 to extend somewhat its scope to permit of more specific inquiries than were possible under the Principal Act, and to provide for special reviews of orders made by the Minister for Industry and Commerce and confirmed by the Oireachtas. The legislation has been very effective in achieving the purposes for which it was designed but after 19 years of operation I feel that it can be improved and extended to make it more effective in present-day conditions.
The Bill before the House, which consolidates the Acts of 1953 and 1959 to which I have referred, contains two major new provisions. Services, including professional services, are brought within its scope, and secondly, the investigatory work hitherto performed by the Fair Trade Commission will be carried out by a new officer described as the Examiner of Restrictive Practices. The feeling has been growing among those who are concerned with the efficiency of our economic operations that the promotion of competition should extend beyond the distribution of goods and that it was important that the provision of services should reflect the benefits of competition in the prices charged to consumers who may be industrial or commercial enterprises or the man in the street.
A specific recommendation to this effect was, in particular, made by the National Industrial Economic Council in 1967. The transfer of investigatory functions to the examiner will leave the commission free to concentrate on the task of conducting public inquiries and furnishing their reports to the Minister for Industry and Commerce. This will result in inquiries being completed more speedily than at present, a factor that will become increasingly important now that the scope of the legislation is being widened. The division of functions between the commission and the examiner is also designed to remove any feeling that the commission, because it has both investigatory and adjudicatory functions under the present legislation, may not approach inquiries in a completely detached and impartial manner.
The Restrictive Trade Practices Acts, 1953 and 1959, provided for the setting up of the Fair Trade Commission, which is continued in being by section 2 of the Bill, under a new name—the Restrictive Practices Commission. The First Schedule applies to the commission and embodies the provisions of the First Schedule to the 1953 Act, except that it omits those conferring powers of investigation which are conferred on the Examiner of Restrictive Practices instead. The Second Schedule relates to the terms and conditions of the office of examiner. The Third Schedule is an adaptation of the Second Schedule to the 1953 Act to take account of the increased area of operations brought about by the inclusion of services and section 3 provides that the commission and the examiner shall have regard to the restrictive and unfair practices listed therein. During the Committee Stage in the Dáil some Deputies appeared to be under a misapprehension about the significance of the Third Schedule. As I indicated at the time, and would again like to emphasise, the schedule does not contain a list of restrictive and unfair practices prohibited by law. The schedule, in fact, has no legal force of itself but merely provides useful guidelines for the examiner and the commission in the performance of their duties.
The commission, at present, operate towards the elimination of restrictive practices in two ways. They may publish fair trading rules which, in their opinion, represent fair trading conditions in the supply and distribution of any kind of goods. Section 4 of the Bill continues this power suitably adapted to apply to the provision of services as well as the distribution of goods. Fair trading rules have no legal force and it is not intended to give them any in the Bill. They do, however, establish codes of conduct which, if adopted by the interests concerned, could obviate the need for a public inquiry and I think it is desirable that the commission should continue to have the power to make these rules. The commission may also, at present, hold a public inquiry into the supply and distribution of any kind of goods, in the course of which they may investigate services only to the extent they are rendered in the course of carrying on any trade or business under investigation. Sections 5 and 6 of the Bill continue this power of public inquiry but an important change is that the commission may not hold an inquiry on their own initiative, but must do so on the recommendation of the examiner. The scope of the legislation is also widened to include all services other than banking, electricity supply, transport, and services provided by local authorities. It was argued in the Dáil that the bodies thus excluded were principally State or semi-State bodies, and that they should be subject to supervision and control as well as private bodies. I agree fully with this sentiment, but would like to point out that their exclusion from this Bill does not mean their exemption from control. The excluded services are controlled by legislation designed to meet their special characteristics and are the specific responsibility of other Ministers; and if practices in the provision of any of these services were considered to be contrary to the common good it would be a matter for the Minister concerned to take appropriate action.
Section 7 provides for the making of reports by the commission, and section 8 provides that on the basis of these reports the Minister may make orders which will not have legal effect until confirmed by Acts of the Oireachtas. Similar provisions are in the existing legislation, but I feel that the wording in the Bill will make for greater clarification of the intention behind the legislation by explicitly including unfair practices and unfair methods of competition amongst the matters on which the commission are required to report and concerning which the Minister may make provisions in orders. The existing legislation put the emphasis on the prevention or restriction of competition as matters on which the commission should report and these remain in the Bill as essential factors. I feel that in these days of intense competition from powerful financial interests when small independent traders are struggling for survival there should be no doubt that the legislation gives power to outlaw any practice or method of competition which is unfair or against the common good as well as those which are restrictive. I am sure that Senators will agree with me that the amendment of these central provisions of the legislation in this respect is essential in modern conditions.
Sections 13 to 17 provide for the appointment and functions of the examiner of restrictive practices. It is envisaged that he will investigate the supply and distribution of goods and the provision of services and furnish the commission with reports of his inquiries, and he may recommend the commission to hold a public inquiry under section 5, in which case the commission is obliged to make copies of his report available to interested parties. The examiner may also give evidence at an inquiry and may call and examine witnesses. As I emphasised in the Dáil I am very conscious of the need to make a careful selection for the post of examiner, and I shall take particular care to make a suitable choice. With the entry of the commission into new fields of activity, I shall, in any case where the subject matter of an inquiry seems to call for specialised qualifications, be prepared to add to its membership one or more suitably qualified members for the purposes of the particular inquiry.
Restrictions of competition and abuses of power by powerful firms in any country may be expected to affect business in other countries to an increasing extent as trade barriers are lowered, and I feel that the commission and the examiner should be empowered by law to take action. Section 14 empowers the examiner to investigate any restriction of competition or any unfair practice or unfair method of competition or any abuse of a dominant position by firms outside the State. Senators will appreciate that the exercise of his powers in the conduct of such an investigation must be confined to the area under the jurisdiction of the State, but it may be anticipated that a considerable amount of information will be obtainable from outside the State without the aid of any special powers. The Restrictive Practices Commission is obliged by section 11 to examine every report by the examiner of such an investigation and to give observations on it to the Minister, and may make recommendations as to what action should be taken. In addition, the commission is obliged by section 12 to study developments in other countries with particular reference to the operation of international firms. I think that it is necessary to confer statutory functions on the commission and the examiner in regard to these matters because of the existence today of international co-operation in the elimination of harmful restrictive practices. I believe that such co-operation will increase as we establish closer relationships with other countries in the interests of the economic well-being of our people, and the possession of statutory functions will endow the commission and the examiner with a status which they would not otherwise have in their dealings with people abroad.
The commission is also required by section 12 to study and analyse the effect on the public interest of methods of competition, types of restrictive practices, monopolies, mergers, takeovers, multi-national companies and market structures, and the operation of relevant legislation. I would like to point out that these functions of the commission do not involve the use of any powers of investigation, but their reports would be based on the knowledge and experience which they will gather in the course of their other activities, supplemented by the study of published material and their contacts with corresponding bodies in other countries and with international organisations.
I think at this stage it would be appropriate for me to comment on the implications of our membership of the European Economic Community in the context of restrictive practices legislation and, indeed, this aspect was raised when the Bill was before the Dáil. The position is that membership of the Community will not affect the powers provided in this Bill, and on our entry to the EEC the investigation and control of practices which distort or unfairly restrict competition in this country will remain within our jurisdiction. However, practices in this country which affect competition in other member States will fall within the jurisdiction of the European Commission and there will be an obligation on the examiner and the Restrictive Practices Commission to render any assistance required by the European Commission in the investigation of such practices. There will be a similar obligation on the other member states in regard to practices in their countries which affect competition here. Following approval by the Oireachtas of this country's accession to the European Communities it will be necessary to bring in legislation to enable us to honour the obligations of membership.
It is hardly necessary for me to remind Senators that promotion of free and fair competition, which may be said to have been pioneered in the United States during the latter half of the 19th century, has spread throughout the world and is now regarded as an essential economic objective in individual countries and in the European Economic Community of which we will shortly become a member. We cannot afford to lag behind other countries in adapting and extending our legislation so that the instruments which we are using for this purpose are suitable. I feel that the Bill which is now before you is worthy of support for the two reasons which I have already mentioned, namely, that it provides for more efficient investigation and control of restrictive and unfair practices and that it will extend the legislation over a wider field of economic activity.
The preparation of this Bill was already advanced when I was gratified to see that the Organisation for Economic Co-operation and Development had recommended to member countries that they examine their restrictive practices legislation in order to make it more effective and to extend it over as wide an area of economic activity as possible. This recommendation was one of a number made by OECD for the purpose of slowing down the rate of inflation and I mention it so that Senators will appreciate more fully that this Bill is indeed timely. I would also like to put before you my view that effective legislation of the kind which we are now considering will be all the more important for our country when we enter the European Economic Community. The door will be wide open to competition from nine other countries and we must be able to ensure, not only that obstacles to the increasing efficiency of undertakings in this country are removed, but also that the competition from abroad is fair.
I feel that I can recommend this Bill to Seanad Éireann without reservation.