I think that Senators will, by and large, be aware of the public debates which arise from time to time as to the merits and value of trading stamp schemes, and that it is not, therefore, necessary at this stage for me to go into detail on the economics or actual operation of such schemes. Suffice it to say that the legislative approach of other countries in the matter has varied from outright prohibition in certain cases to a more flexible regulatory approach in others.
The Bill now before the House opts for regulation as distinct from prohibition. Its nature and scope springs from a close study by the Department, over some years, into trading stamp business as it developed in Ireland. One major finding, in favour of regulation instead of suppression, was that it is the features of certain schemes, and not so much the schemes themselves, that are disquieting.
The type of stamp trading which is covered by the Bill is the general kind of scheme organised by a specialist stamp firm which serves a number of different retail outlets. Excluded are "private" voucher or stamp schemes—that is to say, schemes which are organised by a single retailer or his supplier and under which stamps are redeemable from that retailer or supplier alone.
I should say here that the major trading stamp company in Ireland has recently moved away from the usual system of central redemption of trading stamps for goods in their own depots, to a situation where stamps can now be redeemed directly for goods or services in the various retail outlets operating the franchise. Examples of the services which can be obtained in return for the stamps of one company, at least, are hairdressing and dry cleaning. This structural change in the operation of the major company involved has prompted changes in various sections of the Bill, notably sections 6, 7, 8 and 9, and these were effected by amendments in the Dáil.
I have also received the views of the Confederation of Irish Industry, of consumer interests and, of course, the stamp companies, on the Bill. In its present form, therefore, I feel that the Bill takes into account the interests of both retailers and consumers. It is concerned with the needs of retailers, because of their susceptibility on one hand to pressure to sell stamps, and, on the other, their legitimate need to adopt competitive devices, but the predominant concern is that the interests of consumers as stamp holders should be best served. To this end, the Bill adopts the approach that all pertinent and relevant facts about trading stamps themselves—and about the companies which promote trading stamps schemes—should be made fully available and accessible to the buying public. The facts I have in mind would include, in respect of the stamps themselves, information as to their real value in terms of purchasing merchandise and, in respect of the companies, information as to their financial standing, for there is no evidence to suggest that the buying public generally lacks shrewdness of judgment or common sense in determining good value for money.
Section 1 contains definitions for the purposes of the Bill. Excluded from the definition of a "trading stamp" is a stamp, coupon, voucher, token or similar device which is redeemable from the seller of goods or his supplier or from the person who provides the service. Such schemes come closest to being the acceptable type of competitive tool for retailers that trading stamps are sometimes claimed to be. Moreover, because of their limited spread in terms of use such schemes do not pose the same problems for consumers in the area of price comparisons as do the more widespread schemes. Independent stamp operators on the other hand—meaning the specialist stamp firms which serve a number of different retail outlets—will be covered by the provisions of the Bill. Such operators are few in Ireland but it is, ironically, this very fact that often leaves them in a position, by the use of the franchising system, to influence the structure of competition in the retail trade.
Section 2 of the Bill provides that only a company within the meaning of the Companies Act, 1963, having a place of business within the State, will be permitted to carry on business as the promoter of a trading stamps scheme. More importantly, however, the section waives the right of a private company which is the promoter of a trading stamp scheme not to annex prescribed accounting data to its annual return. This provision aims to make sure that the public can get essential facts about the stamp company's financial state and the likelihood of its remaining solvent.
One of the allegedly essential features of the business of the trading stamp company is the operation of the exclusive franchise. This is the system whereby the stamp company allocates stamps to one retailer, or to a limited number of them, in the same line of business in a particular area. The justification offered for the system is that it prevents direct competition among stamp-giving traders in the same business. I am sure that all Members of the House have heard complaints, from time to time, from traders who claimed to have been refused the right to participate in a trading stamps scheme for reasons which, in their eyes, were less than sound economic or business ones.
Section 3 of the Bill tackles this problem. It provides that the unreasonable withholding by a company, which is the promoter of a trading stamps scheme, of a supply of trading stamps will be an unfair practice within the meaning of the Restrictive Practices Act, 1972. The section does not pass judgment on what is deemed to be unreasonable. The determination of this can clearly depend so much on the circumstances of individual cases and in the operation of the investigative machinery that is available under the Restrictive Practices Act, the differing circumstances of different cases can be fully taken into account.
Sections 4 and 5 deal with the notion of the "cash option". This option has two main objectives. First, it provides for the indication of the worth of the stamps in cash, thus aiding rational comparison with the value of goods offered in exchange for stamps. Secondly, it offers the stamp holder the right to choose between redemption for cash or for goods.
The main objective of the cash option, namely, to permit stamp holders to calculate the worth of stamps in merchandise, would be frustrated, of course, if adequate provision were not made for the availability of catalogues where goods are offered in exchange for stamps. Section 6 makes such provision and obviates the possibility of confusion among stampholders by making sure of a reasonable time-lag between the replacement of old catalogues by new ones.
Two of the offences created in section 7 deserve elaboration. An alteration in exchange values clearly affects, in turn, the real value of the stamps held by shoppers. Where more stamps than before are required to obtain goods in exchange, this is, in effect, akin to a price increase. Hence, an offence is being created where exchange values in catalogues are altered without the Minister's prior approval. Likewise, the expectations of stampholders can be seriously jeopardised if specific goods publicised in a catalogue, and for which shoppers had been collecting stamps for the purposes of an exchange, are found later to be unavailable from the stamp company. Accordingly, an offence is being created, too, to prevent this type of situation.
The Sale of Goods Act, 1893 provides for implied conditions and warranties in contracts for the sale of goods. Such conditions and warranties are, of course, being improved by the Sale of Goods and Supply of Services Bill which, I hope, will be enacted shortly. In the context of the present Bill, however, there is no good reason why goods exchanged for stamps should not carry the same implied undertakings as to quality and fitness. Both Acts will accordingly apply in their entirety to trading stamps transactions as if cash sales were involved. Section 8 of the Bill makes the requisite provisions in this respect.
Generally, stamps are offered to shoppers at retail outlets. It is at this point of doing their business, therefore, that shoppers should have access to certain basic items of information relating to stamps offered with the goods purchased. Section 9, which was also in the Dáil the subject of amendment, makes obligatory the display of specified items of information which are considered to be those most fundamental to the shopper.
Section 10 deals with a kind of misrepresentation which is peculiar to stamp trading business. This poses as a type of promotional inducement in the form of a statement which describes the worth of stamps in terms of the money the prospective collector must spend in order to receive them. Misleading though they are, these statements, nonetheless, can serve their purpose by enticing consumers into shopping in the outlets concerned. The use of such deceptive claims should clearly be stopped and section 10 has been drafted for this purpose.
Finally, there is section 11 of the Bill which declares contracts of a specified type to be void. This section is emphatically a protective provision for traders, as distinct from consumers. Complaints have been made to the Department, predominantly by petrol retailers, that their suppliers have sometimes compelled them to offer trading stamps by reason of their operating from leased or licensed premises. Terms of leases, which have a promotional emphasis from the viewpoint of the lessor, have been invoked for this purpose. That such can happen is a most unsatisfactory and inequitable state of affairs. It is contrary to any principle of fair play that any trader should be forced into doing a business that he does not want to do particularly when, as some complaints have alleged, the trader must fund the cost of the unwanted business from the profit gained on his normal business. Section 11 is designed to put an end to this practice. Given its objective, I am sure it will have the full backing of the House. Its purpose is none other than to ensure that lessees and licensees of premises cannot be forced to handle trading stamps on foot of a condition of a lease or licence. The section will not curtail competition or limit the competitive use of stamps by those traders who themselves choose to handle stamps by agreement with a stamp company. Nor will it affect the contractual obligations as between a retailer and his customers where the retailer decides, of his own free will, to offer stamps and the fact that he offers them acts as an inducement to shoppers to take their custom to him.
As I mentioned previously, I feel that the Bill strikes the right balance between the regulation of stamp companies, the legitimate interests of retailers and the absolute right of consumers to get a fair deal. I commend the Bill to the House.
