The purpose of this Bill is to confirm an order which was made by the Minister for Industry and Commerce under the Restrictive Practices Act, 1972. The order was made on the recommendation of the Restrictive Practices Commission which was contained in their report of a special review carried out into the supply and distribution of petrol. The report and order were presented to both Houses of the Oireachtas on the 18th June, 1975.
It might help if I explained the background to the making of the order. Some years ago the Society of the Irish Motor Industry asked the Minister for Industry and Commerce to examine the possibility of curbing the growth in the number of petrol retail outlets. The Minister requested the Restrictive Practices Commission to hold a public inquiry into the matter and the inquiry was held in 1970.
The report of the inquiry showed that the number of retail outlets owned by the oil companies had been increasing unduly and the proportion of total sales of petrol through these outlets had risen substantially. The commission felt that unless this trend was checked the oil companies would gain substantial control over retail distribution. Such control would probably reduce competition, facilitate restrictive practices such as market sharing and price fixing, and extend the economic power of the multinational oil companies.
The Restrictive Practices Commission recommended, among other things, that the oil companies should not open any new company-owned retail outlets for three years. This recommendation was accepted by the Minister and on the 15th June, 1972, he made the Restrictive Trade Practices (Motor Spirit) Order, 1972. Article 3 of that order prohibits oil companies from opening new company-owned petrol stations for three years ending on the 18th July, 1975. However, there were three exceptions to the prohibition, the first being a transitional one which applied to certain retail stations under construction when the 1972 order was made. The other two allowed a company-owned retail outlet to be opened within a mile of one which had closed down (a) because of compulsory purchase by a local authority or (b) because of loss of trade due to road diversion. The Minister undertook at the time to ask the Restrictive Practices Commission to review the operation of the prohibition before it expired on the completion of its three-year period of application.
The review, which took the form of a series of private hearings, was carried out last March. The hearings were attended by representatives of seven oil companies, the Society of the Irish Motor Industry and the Irish Petrol Retailers' Association. The report of this review now shows that the order had been reasonably effective. Although the number of independent outlets continued to decrease in 1974, the number of company-owned outlets which had previously been increasing also decreased. In addition while sales by independents continued to increase sales through company-owned outlets, which had increased fairly substantially in previous years, fell in 1974. The commission are satisfied, therefore, that the prohibition is succeeding in its object of curtailing the growth in the number of company-owned stations and in the oil companies' share of retail sales. The commission recognise that even if the prohibition were removed the present state of uncertainity in the oil industry would make it unlikely that the oil companies would try to increase the number of company-owned outlets. They feel, however, that this position would not hold good in the event of a return to normal conditions in the oil industry and they consider, therefore, that the prohibition should be extended for a further period.
The oil companies indicated that they would not welcome any continuation of the prohibition but in the present state of the industry they would not be opposed to an extension for a further two years. The petrol retailers, however, wanted an extension for as long as possible. Taking all the circumstances into account the commission recommended that the extension should be for a period of three years.
The report also states that a number of oil companies asked that the "one-mile limit" for the replacement of company-owned stations which were closed in the circumstances defined in the original order should be increased or removed altogether. The purpose of the exceptions was to facilitate a company to retain its business in a particular area which it could lose because of traffic diversion resulting from the construction of a new road near its existing outlet or because of the compulsory acquisition of its existing outlet by a local authority. If there was no limit the exceptions might be abused but bearing in mind the difficulty of acquiring sites within a mile radius and of obtaining planning permission the commission recommended that the limit be increased from one to three miles. It might be argued that the "one mile limit" in the original order was sufficient to meet the requirements of the oil companies.
Nevertheless, for the reasons stated by the commission and in fairness to the oil companies, the Minister feels that an extension of the limit to three miles is reasonable.
The Minister in making the order gives effect to the commission's recommendations relating both to the extension of the period of prohibition and the "one-mile limit".
The commission pointed out in their report that matters which bore indirectly on the operation of the 1972 order were raised during the hearings. These included the effect of increasing costs, petrol outlets in new suburbs or satellite towns, the effect of various types of agreements and the significance of promotional schemes and hours of trading. The terms of reference of the review precluded the commission from investigating these matters in detail but they consider that they warrant more extensive investigation. They recommended that they should review these matters before the new extended period of prohibition expires. The Minister agrees that the matters should be examined and he intends to ask the commission to carry out the necessary review as soon as practicable.
It has been suggested that the prohibition on the opening of new company-owned outlets could preclude new retail chains from opening up for business in Ireland in competition with the major oil companies who are already dominant in the market. I accept that the prohibition could prevent a new competitor from entering the market, but I would point out that the Minister has the power to revoke or amend the order and would be prepared to do this at any time that it appeared desirable in the interests of promoting competition.
The Restrictive Practices Act, 1972, provides that orders of this kind shall not have effect unless they are confirmed by Act of the Oireachtas. The Bill now before the Seanad is the confirming Bill which is necessary to give the force of law to the order concerned. With a Bill of this kind the order which it is proposed to confirm may not be amended by the Oireachtas but must be accepted or rejected as it stands. The matters with which the order deals have been the subject of detailed special review by the Restrictive Practices Commission and their report, which was presented to this House, sets out the arguments in favour of adopting the provisions embodied in the Order.
The Bill has already been supported in the Dáil and I can recommend it to the Seanad without reservation.