Seanad Éireann debate -
Wednesday, 27 Jun 1979

Vol. 92 No. 7

Restrictive Practices (Confirmation of Order) Bill, 1979: Second and Subsequent Stages.

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

Minister for Industry, Commerce and Energy (Mr. O'Malley)

The object of this Bill is to confirm the Restrictive Practices (Motor Spirit) Order, 1979 which I made on 12 June under the Restrictive Practices Act, 1972. This order extends for another year a statutory ban on the operation of new motor spirit stations by oil companies. The order was due to expire shortly.

The supply and distribution of motor spirit and lubricating oils has been the subject of legislation since 1961. The first order was made following an inquiry held in 1960 by the Fair Trade Commission. That inquiry was concerned principally with examining the merits of the "solus" system, the system under which a retailer agrees to handle one brand of motor spirit exclusively. It found that while the system had certain merits, it needed to be regulated because of its tendency to encourage an excessive number of petrol outlets. The system was regulated by the 1961 order, and shortly afterwards the Fair Trade Commission and the petrol companies reached agreement on certain guiding principles designed to limit the increase in outlets.

In the following years the guiding principles did not appear to be operating effectively as the number of company-owned outlets grew substantially, from 133 in 1960 to 394 in 1969. There was also concern that the regulation of the solus system was leading the oil companies to increase the number of directly-operated outlets. Accordingly, in 1970 the Minister requested the commission to hold an inquiry into this growth in outlets.

The Commission reported that the growth in the number of company-run stations was not in the public interest as it could lead to abuses if the oil companies attained a dominant position in the retail market. In 1972 an order was made prohibiting oil companies from operating retail outlets which were not previously operated by them. The order was made initially for a period of three years; in 1975 it was reviewed and, on the recommendation of the commission, extended for a further three-year period.

Following the review in 1975, the commission suggested that, when they next reviewed the prohibition, they should also review the orders as a whole. The commission had also stated in their report of the review that they received representations on matters relevant to the orders but as they were outside their terms of reference they could not consider them. Accordingly I decided, when requesting the recent inquiry, that they should not alone look into the operation of the orders as a whole, but also any matters germane thereto. I also decided that they should look into a matter which had been a source of grievance to some people in the trade for a number of years—the conditions under which persons who are not employees of the oil companies operate their stations under licence. The order was renewed in 1978 to allow the commission to hold an inquiry into these matters.

The commission held the public hearings in connection with this inquiry in the early months of this year. They have indicated to me, however, that they will not be in a position to report to me for some time yet. In these circumstances the currency of the prohibition on the operation of new company outlets was extended for a further year.

The Restrictive Practices Act provides that orders of this kind shall not have effect unless they are confirmed by an Act of the Oireachtas. The Bill now before the Seanad is the confirming Bill required to give the force of law to the order. The order may not be amended, but must be accepted or rejected as it stands.

I have no hesitation in recommending it to the Seanad.

Mr. Staunton

Speaking for my party, we have no objection to this order being confirmed and we support its extension.

Mrs. Robinson

We, too, support the proposal to extend for a further year the prohibition on the operation of new petrol filling stations by oil companies. However I should like to raise a number of important issues. The Minister referred to one of them, that is the question of the terms and conditions of those who operate retail filling stations on behalf of oil companies. I know this was the subject of the recent inquiry. It does seem as though the oil companies, or a number of them, operating in Ireland are doing so in such a way as to prevent the operators of the retail stations having the necessary security of tenure in their jobs—they are not given proper leases with the right of renewal—and it also endangers the employment of the people employed by them.

This is a major problem and I would welcome some comments by the Minister about his attitude towards the subject matter of the recent inquiry by the commission. I certainly have heard of a number of situations in which married men with families, whose lease is not renewed by the oil company, find themselves without any right to remain there. They find themselves before the courts, being ejected; their employees find themselves out of a job. It is all part of what appears to be a very highhanded and heavy-handed operation by the oil companies. I gather that the practice of oil companies in other countries is to operate a leasing system which gives a right of renewal, which gives security of tenure and future rights and employment security to those who operate a retail petrol filling station.

Perhaps the Minister might give us some idea of the leasing practices in this regard; whether or not it is a certain number of filling stations who are operating under these conditions and whether some others have better security of tenure and better right to renew the lease than certain other petrol stations. This is becoming a very real problem. Certainly it is something that is worrying the petrol retailers' association very deeply indeed. It is causing a lot of suffering to Irish operators of retail stations and to their Irish employees. It is something about which we should be very concerned. I hope the Minister will take a very strong stand against what in European Community terms might be called an abuse of a dominant position, abusing the strength of their position on the market, not entering into fair terms with the operators of the retail stations, giving them proper security of tenure. That is the first important matter that arises under this order and to which the Minister referred briefly in his opening speech.

The second matter I should like to refer to is the question of whether there is an abuse of this order. Is it possible for an oil company to have a nominee who appears to be acting on his own behalf but who is, in fact—under some hidden agreement, gentlemen's agreement or whatever you want to call it—acting on behalf of the oil company? I would like to give a specific instance of what may be a case in point. Perhaps the Minister knows about this particular problem. It arises in the planning permission which was given in 1970 for a new petrol filling station at IA Oxford Road, Ranelagh. That planning permission was given against the wishes of Dublin Corporation at the time. Dublin Corporation refused the planning permission and it was obtained on appeal to the Minister. At the time the owner was a private person. I do not think I need name him here. The site, with the planning permission for a petrol station, was sold to Shell. They subsequently resold it to another private individual who has now, almost ten years later, sought to reactivate the permission to build a filling station.

The site is a totally inappropriate one. Oxford Road, which is narrow, is choked with traffic. The residents in that area object to the opening of the petrol filling station. There is a very strong rumour in the area—I heard it from residents in the area—that it is not the individual who is concerned but that this is, in fact, a front for the oil company who know that this order, which the Minister is now extending, would prohibit them from opening a petrol station there.

This is a very serious problem indeed. It is an example of where a very bad planning decision, taken almost ten years ago, is capable of being reactivated now, in 1979, when it is a much worse decision, because traffic congestion has increased in that area. There are a number of petrol filling stations in the area. I wish I had the map here to show the Minister just how many petrol filling stations there are in that area; it is overfull. I gather the throughput in the petrol filling stations in that area is below average even for Dublin; that it is very low. It seems to be a very serious situation when a bad planning decision—which can affect the residents in a whole area—can be reactivated nine years later.

There is provision in the 1976 Planning Act for a cut-off after five years. Therefore, there would be a cut-off in 1981. But that is no good for the residents at present who face this prospect of the petrol-filling station opening.

Will the Minister inquire fully into the circumstances of this sudden reactivation, after nine years, of the planning permission for a petrol-filling station on 1A Oxford Road, because the local residents appear to believe that this may be a front for an oil company and that the individual concerned may only be operating under some private arrangement? They have made submissions to the Dublin City Council about the matter and these will be pursued by the local representatives. However, when the Minister is tabling an order of this sort, to control the outlets of oil companies, he must have regard to the possibility of evasion of the order and of secret arrangements being entered into by the oil companies and certain individuals operating retail outlets, circumventing the objectives of this order and of the Act.

I would welcome some comment from the Minister on this and I hope he will investigate that particular instance. It is intolerable that an extremely bad planning decision which would have a very damaging effect on the residents of that area should be capable of being resurrected at this stage. There have been protests not only from the immediate residents of Oxford Road, Rugby Road, Rugby Villas and that area but there have also been supportive objections from all the residents' associations in the peripheral areas. This matter is not immediately before the Minister as a planning decision but I would welcome his investigation into it because it seems to be an instance where, to say the least of it, there is very sharp practice in relation to our planning code. It is also a new petrol filling station outlet in a totally unsuitable area, where the residents believe that it is a front for an oil company seeking to circumvent the Minister's order.

Mr. McGowan

I support the extension of the order for another year. It is right that that should be done because a year is a long enough term to extend the order. We are at present in a transitional state as far as oil outlets and oil sales are concerned. It is a time when the Minister and his Department will learn much about the activities of oil companies. We have learned a lot about the many aspects of the sale of oil and petrol in the recent past.

I would draw the Minister's attention to some privately-owned garages and filling stations that were set up and approved by oil companies, under very tight agreements, but which were not supplied by the oil companies during the recent oil crisis. These garages should merit special attention from the Minister because they complied with the agreements entered into but they have been denied regular supplies, even on a quota basis. The agreements are so tight that they cannot be broken in law. The extension of this period will give the Minister time to consider this. Unlike Senator Robinson, I do not support the very tight restrictions on planning permission for new filling stations. That would restrict us in removing the monopolies from all the major companies. I am a member of a local authority and I am very conscious of the fact that where there is a planning application for a new filling station the planning authority are entitled to be very careful and to give every consideration to objections from residents and others. I would not like to see a blanket disapproval of new filling stations advocated. We have an ever-increasing oil consumption and we cannot be tied to the long-established outlets or filling stations. We are paying very dearly for oil. We should encourage competition and I certainly support the setting up of new privately-owned filling stations. I do not want to see filling stations established and supported by companies who will use the situation of the day to supply or withhold supplies.

I am pleased to support the extension of this period for another year. The Minister will have an opportunity of looking afresh at the sale and distribution of oil in this country. It is very important to the future of the economy and to the future of those who use petrol and those who have to sell petrol.

Minister for Industry, Commerce and Energy (Mr. O'Malley)

I thank the Senators for what they have said. In relation to the points raised by Senator Robinson the position is that the Restrictive Practices Commission, in the early months of this year held an inquiry into not alone the practice dealt with in this Bill but into various associated practices in relation to the retail oil business, including some of the grievances, practices and difficulties to which she referred. I anticipate their report in the autumn, when they will deal with the kind of matters that Senator Robinson mentioned. pending the receipt of their report I do not want to anticipate their findings or the conditions generally under which stations, particularly company-owned stations, are operated. I will bear in mind what the Senator said when I come to consider the commission's findings.

Senator Robinson mentioned the question of the security of tenure of people operating company-owned stations. This has been a long-standing grievance and it has been looked into by the commission. Senator Robinson referred to the leasing arrangements. Unhappily the real problem is that generally speaking they are not leases but are usually caretakers' agreements and other licences and similar devices which are of little or no legal value. The longest period of tenure granted is two years and nine months, for the purpose of keeping the station or the premises out of the operation of the Landlord and Tenant Acts.

Senator Robinson also raised a point about the possible abuse of this order and previous orders by oil companies on the matter of putting in nominees to circumvent the order. I have no evidence of that. If the Senator or anybody else has any evidence I will have it investigated by the examiner. It would be a serious breach of the order and the Act under which it is made if such were happening. The Senator also mentioned one instance at Oxford Road, Ranelagh, where the local community believe that there is an effort by an oil company to circumvent the order. If they have any evidence of that, I would be glad to get it and I will immediately have the matter investigated.

The number of privately owned and company owned stations has fallen marginally in recent years but the proportion of petrol sold through company-owned stations seems to be increasing and is out of proportion to the percentage which they bear to the number of stations as a whole. This is a matter that one would be concerned about.

Some Senators may be aware that a practice, in relation to company-owned stations, about which a grievance has been expressed in recent years, was of oil companies requiring their licensees, caretakers, managers or whatever one might call them, to give trading stamps to customers as a condition of their being able to operate the station. I am sure this House will be glad to see the provision in the Trading Stamps Bill which will prevent that practice in the future. It caused loss to the operators of such stations and was of benefit only to multinational oil companies and to a foreign-owned trading stamp company.

In case there is any misunderstanding about it the purpose of this order and Bill, is not to restrict the number of stations but only to restrict the number of company-owned stations. Subject to the planning laws and whatever other byelaws apply, private individuals are perfectly free, under this Bill, to establish new stations. That covers most of the points raised by Senator Robinson and Senator McGowan. If there is any other point that I have not covered, I will be glad to do so.

Question put and agreed to.

Agreed to take remaining Stages today.

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