I must enter these reservations at this stage. I believe the credibility and the standing of this House is at issue here. Having made these points I will not be in further conflict with the Chair's feelings in the matter and I will move on to other points.
There are a number of important bodies in the commercial and business life of the country who have made representations and submissions to all of us in relation to the impact of this measure. Many of them have complained that there has been a lack of consultation between the Minister and his Department and between the organisations, bodies and trade associations that will be affected by the terms of this measure. They have argued that they have felt that an input from them has not been allowed and they are concerned that some of the fears they have expressed have not been dealt with in a manner that would satisfy their concerns. I will allude to some of these reservations and fears that have been expressed as I go along in the confident expectation that the Minister when replying will put at ease not only my fears but the fears of the organisations I will mention.
The Bill has quite a number of positive aspects. One thing that gives me satisfaction is the fact that it will apply to public and semi-State undertakings in so far as they provide a service as well as to the private sector and that the monopoly or dominant position, and perhaps the abuse of a dominant position where it arises by a State body in the supply of services, is covered in this measure. I am concerned that the legislation should involve both the public and the private sectors. I noted from the Official Report of the Dáil that the Minister felt that certain services provided by local authorities would come under the scope of the Bill but, as the debate developed, that did not appear to be the case. Perhaps the Minister will clarify where services by local authorities are included and excluded and the reasons.
I accept there is need to outlaw certain unacceptable practices which have emerged on the commercial and business scene in recent years. It is not necessary for me to pinpoint these as they are well known. I accept in full the Minister's contention that in a market-orientated economy competition is necessary. Very few business people will complain provided the pitch is level and there is a fair opportunity for everybody. I accept the Minister's point that the domestic sectors which have been exposed to competition have proved to be the most dynamic and have contributed most to economic growth.
Abuse of the dominant position comes under this measure. It has caused major difficulties and will continue to do so unless it is contained and controlled in the economy. The consumer's interest is best served by being supplied with a good product and a good service at a reasonable price. The Minister should retain the right to investigate abuses. I am not sure if that right is, to some extent, diluted by this measure but that is a matter that can best be teased out on Committee Stage.
I understand that the Fair Trade Commission will become the new Competition Authority. I noted with interest that in a recent public statement the Chairman of the Fair Trade Commission gave as his view that the primary functions of the new Competition Authority would be first, the licensing of exemptions and, secondly, the issue of certificates of negative clearance. There is a good deal of uncertainty in the business community as to the effect this measure will have on business. There is a widespread belief in business and among traders that the only safe way to operate will be either to have a licence of exemption or a certificate of negative clearance. If there is validity in that point of view — and time alone will show — this new body will be deluged with applications either for a licence or a certificate. The Minister should assure the House that the Competition Authority will have the necessary financial and other resources to discharge their functions in the event of that development. If that proves to be the case, we are setting up a substantial bureaucratic machine and bureaucratic machinery has not always worked to the advantage of the business environment.
The Minister referred to the restrictive practices order in relation to low cost selling in the grocery trade. That is being reviewed by the Fair Trade Commission. He will decide whether to retain, amend or repeal it when the Fair Trade Commission's report is available to him. There is widespread concern in the grocery trade that repeal of that order would lead to disastrous consequences for small stores and shopkeepers. RGDATA have complained that their concerns and reservations in relation to this measure have not been given due weight and that they have not had sufficient opportunity to make their case. I refer to their communication which I am sure most of us received dated 7 May, 1991. There is no doubt that they are deeply and genuinely concerned about the future prospects of their members, small shopkeepers and family grocers in particular. They are deeply apprehensive about the Minister's stated intention to remove in time the ban on below cost selling. They outline their fears as to why the Bill will not work, their fears for the future of their members, for employment in the trade and the eventual effect on prices.
The industry employs 43,000 people. It is a tough, competitive trade and long hours are worked to provide a service to the public. They make the point that in recent years the retail environment has been made more competitive by the 1987 groceries order which introduced the ban on below cost selling. They point to four positive results of that: 4,000 extra jobs have been created in the sector since 1988; greater investment, approximately £60 million, in the modernisation of shops over the past two to three years; a reduction in the dominance of the multiple chains which reduced the hostage-like dependence of suppliers.
They go on to outline what they fear will happen should the ban be removed. They say that the removal of the ban would be catastrophic for their trade and for the public and that a new series of price wars with consequent job losses in the retail trade and among suppliers would result. They say there will be less investment as instability increases; illusory prices misleading consumers; the elimination of competition and an increase in dominance of the major multiples and the closure of independent retailers with the consequent loss to the community. They say not only are they concerned at the proposed abolition of the ban on below cost selling but they are also concerned at the Minister's proposal that the industry should police itself. They say that for any competition legislation to be effective there must be what they describe as an independent statutory referee and they refer to the recent milk voucher war as proof of this.
They also express the view that the Competition Bill will not function successfully for a number of reasons. They say that the food trade will be unable to police itself, that it is unrealistic to think suppliers will bring their customers to court and risk permanently delisting. They have emphasised this in many public statements in recent weeks. They also say that small retailers cannot afford High Court costs if they are being deliberately put out of business. However, the Minister moved to that by way of amendments made in the Dáil. They made the following comment:
The removal on the ban will result in job losses at both retail and supply level due to renewed aggression and subsequent bad debts. The courts are already overburdened and ponderous. The legal process will be too slow for the speed/dynamics of the trade. Below cost selling can be initiated with an outlet with 5 per cent of the market, so "abuse of a dominant position" is not relevant. What do we need?
For new competition legislation to be effective it must continue the ban on below cost selling and provide for an ombudsman/referee to police the operation of the law or
Maintain the present Restrictive Practices (Groceries) Order, 1987 and appoint a "watchdog" within the new Competition Authority. The latter is necessary as the Office of Consumer Affairs and Fair Trade will be gone.
This organisation represents an industry which employes 43,000. They have expressed major reservations and are of the opinion that they did not get an opportunity to put their point of view across. It is a matter of concern that RGDATA feel that due weight was not given to their points of view.
It is recognised that below cost selling is not a struggle between equals. It is the law of the jungle where the strongest — in this case multi-national chain stores — survive. We know many small businesses which have gone to the wall. The Minister informed us that he is considering the report of the Fair Trade Commission on the ban on below cost selling. He will make a decision shortly in relation to that. I understand that he gave a commitment that if he was amending the order he would come back to the Dáil and seek its approval for it. I am not too clear what assurance he gave in relation to repealing the order in full. What will be the position if he decides to repeal the order? Will he bring it back to both Houses?
There is another organisation with a very high standing in the business and commercial field, the Confederation of Irish Industry. They circulated a newsletter on 28 May. I feel obliged because of the importance of that body to put on the record of the House some of the reservations they expressed.
CII welcomes the proposed abolition of the "Control of Abuse" system and its replacement by the "Prohibition" System in the belief that this will increase the efficacy of the Competition system and control abuses by those enterprises in a position to act independently of competition. The CII recommends, however, a continuation of the Groceries Order alongside the new competition measures as recommended by the Fair Trade Commission in their recently published study on competition law.
The CII are particularly concerned about the effects of the additional cost which this measure will put on the commercial sector as every company, firm, trader or private individual engaged for gain will be required to examine all agreements and practices to establish whether such agreements have either as their objective or effect the prevention, restriction or distortion of competition and then if in any doubt to seek a licence or certificate from the Competition Authority. That is very much in line with a point I made at the beginning of the deliberations that there is widespread belief within the business community that it will be necessary to have either a licence or a certificate of exemption. The CII echo that point of view and emphasise the additional costs this will put on the industry. I would point out that failure to notify the Competition Authority exposes the enterprise to liability for damages, and exemplary damages and agreements may be prohibited. I will deal with the question of guidelines later in the discussion.
They state that the likely flood of notifications will result in a backlog of cases to the Competition Authority similar to the experience of the European Commission. There will be delays and, more importantly from the point of view of any businessman, uncertainty which may inhibit business activity, investment and so on. Under the heading "Enforcement", they state:
Under European law, if a company feels that another company is abusing a dominant position it can complain to the European Commission. The Commission may then undertake an investigation of the complaint. This is a relatively cost-effective way for an enterprise to use the law to protect itself.
The Minister has gone some way to meet this fear and I welcome that. They go on to say:
Complaints that do end up in court will be extremely costly for both parties... Requiring the Courts to implement policy will impose additional burdens on the administration of the Irish Court system, already the subject of comment and criticism.
I read a statement by a prominent lawyer some weeks ago who made the interesting observation that the Judiciary are not trained to deal with the intricacies of commercial operations. There is an absence of case law that the courts can refer to. He said he was confident that, over time, they would acquire that expertise but in the meantime it would be a somewhat hit-and-miss affair. The point the CII are making is that those who are caught in that hit-and-miss process will be in a most unfortunate situation. It is an interesting point and well worth raising.
In dealing with section 6 the Minister referred to "any person who suffers loss" but later he reverted to the word used consistently throughout the Bill, that is, an "aggrieved person". I have no problem with a term that refers to a person who has suffered loss but I have every problem with the definition of "aggrieved person". The CII — and we are on common ground on this — referred to "aggrieved person" and said the provision permitting an aggrieved person to have recourse to the courts is too broad. They would seek to reduce the scope of the definition of "aggrieved person" to cover only the parties to a prohibited agreement or a person suffering damage as a result thereof. I noted with particular interest that the Minister referred to a person who had suffered loss. If that was considered as a replacement for the term "aggrieved person" in the Bill I would be happy.
The CII complained about the lack of consultation and said they do not feel there was adequate consultation with the industry about this important legislation. They are concerned about the undue haste with which the Bill is being pushed through the legislative process because it does not allow for adequate time in which to assess adequately the implications of the Bill and they have a number of other observations to make which are of interest.
In relation to certificates they say: "the distinction between a licence and a certificate is, therefore, that if an agreement infringes section 4 (1), it requires a licence; if it does not infringe section 4 (1) it may be granted a certificate". That comes back to the point that there is widespread fear among the business community that they must have a certificate or a licence. In view of the fact that there is likely to be a considerable number of applications for either a licence or a certificate, is the Minister prepared to put a time limit on the period within which an application for either will be adjudicated on by the Competition Authority?
In relation to appeals the CII say: "an aggrieved person may appeal to the High Court against the granting of a certificate". This temporary or uncertain status of a certificate leads to uncertainty. The authority should have the final word in relation to certification and there should be an appeal to the High Court on a point of law or procedure only.
As regards the term "aggrieved person" they say it is drafted in very broad terms. Any person who is "aggrieved" may initiate damages. However, it is too broad because such a person only needs to be aggrieved, not "injured" or "suffered loss". The right of action should be restricted to persons who are a party to agreements or who are subsequently injured as a result of a prohibited practice. I look forward to the Minister's observations on that.
We should examine how the Bill will work and anticipate problems that may arise in relation to it. For example, what is meant by "concerted practices"? It will be difficult to prove conclusively that concerted practices exist. Is it sufficient for the Authority to be of the opinion that concerted practices exist? Does it require something more than a person simply to be of the opinion that concerted practices exist? Could we have some examples of concerted practices?
The term "aggrieved person" is far too general. In making a complaint or initiating an action a person should be in a position to show they have suffered damages or loss. Otherwise, it simply allows cranks to initiate actions against shops, stores, etc. without having to show that they have suffered loss or damage in any material way. It may well be an imaginary action they are complaining about.
Section 4, is really implementing Article 85 of the Treaty of Rome. I am not aware that the right of action is in accordance with the terms of that treaty. I am not aware that similar provisions exist in any other EC country. I believe the Government, for some reason, have decided to introduce the type of action that is in the Bill and perhaps the Minister will indicate the reason.
I referred earlier to the CII document and the absence of a yardstick by which the courts can determine what are described as damages or exemplary damages. How are they to be assessed? In the absence of guidelines, plaintiffs in an action will be expected to produce very detailed particulars in relation to a claim for an injunction or damages under this section. The cost of providing these detailed particulars, which involves the employment of accountants, solicitors, barristers and so on, can be extremely expensive for the companies involved particularly as these actions can be initiated by a person described as aggrived but who may in reality have suffered no loss.
Section 9 does not permit a party refused a licence or a certficate by the Competition Authority to appeal that decision. I know the Minister dealt with this at length in the Dáil but to deny that right of appeal is contrary to natural justice and procedure. I find the position unsatisfactory.
I do not intend to deal with that part of the Bill concerned with takeovers, monopolies, mergers and so on, largely because I agree with it. I want to deal at some length with the powers that have been given to the Competition Authority. We know that the Fair Trade Commission will be renamed the Competition Authority. I am concerned in some cases, and not clear in others, about the precise powers this Authority will have in discharging their duties and in dealing with the public.
The powers that can be given to authorised officers and to the Authority are wide-ranging. These powers go deeper and beyond what the law in this country has attempted up to now. On the position of members of the Authority and its authorised officers, what protection will exist for these members and officers as if in the discharge of their duties they are guilty of abuse or wrong-doing? I am asking about the availability of protection for members of the Authority and authorised officers where necessary before I go on to a contrary situation that I fear might arise.
Members of the Authority will be appointed by the Minister, and will include a chairman and not more than four and not less than two members. Among its function will be the summoning of witnesses to attend before them. A summons must be signed by at least one member of the Competition Authority and they can examine an oath witnesses before them. In this regard any member of the Authority is authorised to administer an oath and, in effect, to act as a commissioner for oaths. To the best of my knowledge commissioners for oaths are generally solicitors and are appointed by the High Court. What precise authority will the members of the Authority have in the administration of oaths, the summoning of witnesses and particularly on the examination of oath of witnesses attending before them? What is the source of that authority? Will they be appointed, as commissioners, for oaths are, by the President of the High Court? Will they be commissioners for oaths in the full sense or will they constitute some other category of law enforcers we have not had up to now?
The Authority can require a witness to produce any documents under such person's power or control. This undoubtedly may well be necessary in view of our experience in certain well-known cases in recent times. Nonetheless it is an invasion of the confidentiality between clients and their professional advisers, whether solicitors, accountants or others. What will be the position of solicitors and accountants in that situation?
I want to deal now with the provisions for non-compliance with the requirements of the Authority. If a person fails to appear before the Authority having been duly summoned, if they refuse to take the oath, if they refuse to produce any document in their power or control which has been requested by the Authority or if they refuse to answer any questions, they can be found to be in contempt of court as if the Authority were a court and empowered to commit for contempt of court. They will be guilty of an offence and liable on summary conviction to a fine not exceeding £1,000 or imprisonment not exceeding six months or, at the discretion of the court, to both fine and imprisonment. The powers to summon witnesses to be examined on oath and to require production of documents are the equivalent of powers conferred on a judge appointed by the Government and exercising his powers in the court of law. The Competition Authority in these circumstances will be functioning as a court of law. Lay people will be acting as judges without the knowledge and experience of a judge in a court of law. We may be in danger here of breaching a long-standing constitutional separation of the judicial and executive functions of State and I do not believe Seanad Éireann should lightly acquiesce to such a fundamental change in the application of the law.
A person who does not appear before the Authority or refuses to take an oath or to produce documents or answer questions will, in effect, be in contempt of court. Who does the sentencing here? Is it the Authority or is it a court of law? In either case what appeal procedures are open to the individual concerned? A penalty or term of imprisonment can only be imposed by a judge in a court of law in which case the member or duly authorised officer of the Competition Authority will have to give evidence against such persons to obtain a conviction.
It appears the Competition Authority may only prove that a person was summoned as a witness and defaulted in attending but will not have to state why such person was summoned in the first instance. I would like clarification on that point. Am I correct in assuming that they do not have to give a reason for a summons? Is it sufficient for the Competition Authority to prove that the witness refused to take the oath required by the Authority without giving the grounds for requesting such an oath? It appears that these offences become absolute offences in such a case, namely, that what was requested by the Competition Authority was not complied with and that there is no duty or obligation on the Authority to give its grounds for summoning in the first instance. There appears to be no provision whereby a witness summoned to attend before the Competition Authority may attend with his legal adviser or may conduct such hearing through his legal adviser. Again, I would like to know the precise position on that aspect.
The Authority has almost the same powers of inquiry as a court of law dealing with a criminal offence. There appears to be no provision for a witness to appeal against a summons to appear before the Competition Authority. I would like the Minister to confirm if that is the case. It is unjust not to make provision for a person to appeal against a summons to attend before the Competition Authority and provision should be made for it. Our judicial system provides for such a situation and why then should an exception be made here?
It appears from the way the legislation has been drafted that the Competition Authority can do no wrong. It would appear to have absolute power of inquisition. If the Authority at some stage goes off the rails, how does the Minister bring it back on? How does he restrain it? Perhaps amendments should be considered to provide against such a situation developing. I would not expect it to go off the rails, bearing in mind the people who will constitute the first Authority but it is a possibility that should be borne in mind and provided for. Accordingly, I hope that amendments can be introduced that would allow a person summoned to attend to speak through his legal adviser with proper legal representation and with a right of appeal against any decision made by the Competition Authority.
With regard to authorised officers, both the Minister and the Authority can appoint such officers to carry out functions under the Bill. An authorised officer may apply to the justice of the District Court to obtain a warrant authorising him for the purpose of obtaining information in the exercise of any of the functions of the Competition Authority or the Minister under the Bill as follows: enter and inspect premises at or vehicles in or by means of which any activity in connection with the business of supplying or distributing goods or providing a service, or in connection with the organisation or assistance of persons engaged in any such business, is carried on. This is the equivalent of a warrant usually granted to a member of the Garda Siochána investigating an alleged criminal offence. The warrant provides that the authorised officer can gain access to any premises where the business is being carried on or to offices in connection with the organisation or assistance of persons engaged in such business. The Minister in his speech used the rather fancy term of "dawn raids" and that is the provision being made.
Reference is made in section 21 (1) (a) to powers in connection with the organisation or assistance.... That appears to imply that banks, solicitors and accountants, etc. can merit major investigation with invasion and intrusion caused to one's business advisers and to parties assisting such business.
Section 21 (1) (b) has the following reference:
requires the person who carries on such activity and any person employed in connection therewith to produce to the authorised officer any books, documents or records relating to such activity which are in that person's power or control, and to give to the authorised officer such information as he may reasonably require in regard to any entries in such books, documents and records.
These powers constitute the powers of a court of law where witnesses are obliged to bring documents to the court and to be examined in relation to them. In effect, officers appointed by the Minister or by the Authority will be acting like a judge in a court of law, compelling witnesses to provide this information.
There are further powers for authorised officers under the same section. They can inspect, copy and take extracts from any book, document or record. They may require a person who carries out an activity in connection with the business of supplying and distributing goods or providing a service, or indeed any persons employed in connection therein, "to give to the authorised officer any information he may require in regard to the persons carrying on such activities (including, in particular, in the case of an unincorporated body of persons, information in regard to the membership thereof and its committee of management or other controlling authority) or employed in connection therewith." The details of what is required here need clarification. The Minister should explain the meaning of the words "in connection with the organisation or assistance of persons engaged in such business" as contained in section 21 (1) (a).
I want to raise with the Minister the position of a person who becomes caught up in this situation and who is genuinely unable to assist the authorised officers. If there is no information to impart but if the authorised officers refuse to accept this and maintain that the person concerned is being unco-operative, what recourse does an innocent person have under such circumstances? What power of appeal does he have and how may he vindicate himself?
I also ask the Minister to clarify what is meant by the words "and any person employed in connection therewith to produce to the authorised officer any books, documents or records relating to such activity which are in that person's power and control" as referred to in section 21 (1) (b). References to persons employed in connection therewith could mean persons who provide services to the party carrying out the activity, namely solicitors, accountants and trade organisations. Will the Minister amend this to mean persons directly employed by the person who carries out such activity and excluding those who provide independent services?
Any person who impedes the organised officer and does not comply with his requirement shall be guilty of an offence incurring a £1,000 fine or 12 months' imprisonment or both. It appears that an absolute offence can be committed in that the authorised officer is given absolute power in such proceedings and may declare, without evidence, that he was obstructed or impeded. He may contend that when questions were asked replies were not given or that when documents or books were requested they were not produced. Similarly, he may claim that when an explanation of entries in books or documents was requested it was not provided. In each case, on the word of the authorised officer the court is empowered to convict and impose a fine or imprisonment. The terms and provisions appear to have been drafted on the basis that a criminal offence is being investigated. Will the Minister respond to these points?
I have raised a number of issues that were of concern to me and to others also. It has been necessary to bring these matters to the attention of the House and the Minister to seek clarification that may well assuage genuine and perhaps well-founded fears. The fact that I have raised questions on some aspects of the Bill does not mean I disagree with the parts of the Bill about which I have been silent. I accept the need for a Competition Authority with the powers necessary to do its duty but I believe that in a few instances we are giving this Authority powers that are unprecedented in our judicial system. This departure from practice may be dangerous.
I was anxious to establish the protection available to authorised officers and to members of the Authority who may act illegally or who abuse their position to the detriment of innocent members of the business community. It is a two-way situation there. Powers of extraordinary depth and range are being provided under this Bill to officers which may affect many people not involved in the matters being investigated. If an officer believes, quite wrongly, that some person is obstructing him, since conviction appears to depend on the officers' opinion what protection is afforded the innocent party? No protection appears in the Bill's provisions as far as I am aware and I stand open to correction on this. That is a serious matter.
I regard this as a lengthy and complicated Bill, introducing complicated and far-reaching changes. It will have major effects on trade and business, given the sweeping powers included in its provisions. Judicial powers are being given to what will be a non-judicial body, namely, the new Competition Authority and its authorised officers under sections 4 and 8.
I regard it as unbalanced that in the granting or refusing of licences or certificates a third party may appeal or object to the granting of a licence or certificate but in the case of a refusal the party directly affected has no right of appeal. I am concerned also about possible abuse of the dominant position, and the investigation and actions open to the Minister. Something occurred to me when I was reading about the abuse of a dominant position. The GAA are having a bonanza with replays and so on and if I or a member of the public were to write to Croke Park wanting two tickets for the hurling or football final and if they wrote back saying I was not entitled to them, that they had their own system of allocating tickets then I think the GAA would be caught fairly and squarely under this legislation. It would be an interesting development.
In connection with the abuse of a dominant position I will mention a personal experience some time ago when importing a second-hand car. I arrived to pay the duty on it and the Revenue Commissioners got on to the motor manufacturers or importers to ask the list price of a new car of that model and since this price is deliberately inflated I was caught for a rate of duty beyond what I pay in the normal course. However, if I were to go to the people who supplied the Revenue Commissioners with that list and said: "I want to buy that car, here is the cash," I would get it for thousands of pounds less than the list price. That is a clear case of abuse of a dominant position and I would be delighted if such people were apprehended under this legislation.
The investigation and actions open to the Minister under sections 5 and 14 regarding abuse of the dominant position require detailed debate and examination preferably at Committee Stage, and the same is true of many other parts of the Bill. It would appear that the House will not have the opportunity to amend this Bill and I regret that. The Minister has indicated that he wishes to have the Bill before the recess and the Dáil will not be in session after Friday to take any amendments that may be made here next week. Despite the need for the Competition Bill and despite the many valuable aspects of the Bill which I fully acknowledge, in view of the disability that this House has been placed it may well be its duty to refuse the Bill a Second Reading but before coming to that conclusion I await the Minister's response.