In fairness, the Opposition spokesman has arrived late. I would not like to give the impression we are trying to steamroll the Bill through. He may have some points to make and I ask for the proceedings to be slowed down for a moment.
Competition (Amendment) Bill, 1994: Committee and Final Stages.
I was not aware the Opposition spokesperson had not arrived but we have agreed section 14.
I beg your pardon and I am very grateful to the Leader of the House. I was caught unawares. I was in the Library doing some research on the Bill. Unfortunately, many of the comments I had prepared are now redundant so I will make some general comments on the Bill, if I may.
I believe we are engaged here in an exercise which borders on the farcical. The deficiencies in this legislation were highlighted on several occasions on Committee Stage in the Select Committee. More recently, serious deficiencies were highlighted by Mr. Lyons, the Competition Authority's chairman, who indicated that we are, effectively, being asked to pass a piece of legislation which is unworkable.
The Bill is extremely well intentioned. I worked with the then Minister on the 1991 Bill as a member of the original Select Committee. I know this Minister is dedicated to the idea of fair and open competition and accepts the view that competition is an absolute requirement. I have no doubts about the Minister's bona fides or those of his Department in this regard. However, when the Competition Authority's chairman slams the Bill as being unworkable, there is something fundamentally wrong. Those general comments by Paddy Lyons ran through many of the comments on Committee Stage in the Select Committee. This is the only forum where these important matters can be publicly addressed. I apologise again for my late arrival.
There are many difficulties in the area of competition law of which, as the Minister knows, I have had first hand experience. I tried to use the 1991 Act, for example, in the disgraceful affair in Clonmannon. I found the Act was virtually unworkable and the Minister's Department also found serious difficulties with it. It is premature of us to push this Bill through without addressing the comments made by Mr. Lyons, Deputy O'Malley and Deputy O'Rourke. The fundamental problems which they tried to address are not being addressed. We can address these issues again in detail on Report Stage. However, could the Minister address the general comments which have been put on the public record by a public servant?
According to a report in the Irish Independent on 6 June 1996 by Kevin Murphy, the chairman suggested the proposals we are discussing today are “unworkable”. He put on the public record his “gravest reservations” about the amendments. He said he believed, as do I, that the Minister, Deputy Richard Bruton, and the Minister of State, Deputy Rabbitte, are committed to strengthening competition law. However, he also stated “I have the gravest reservations about the efficacy and workability of the proposed amendments to the Act”. These sentiments exactly echo what was said in the Select Committee debates of 11 and 18 January 1996.
He went on to state that he is strongly in favour of effectively enforcing competition policy. He made the point that "since criminal proceedings are involved, any case would have to be proved before a jury beyond reasonable doubt". He made a series of observations which I do not need to read into the record because I know the Minister is fully aware of the Competition Authority's chairman's fears for this Bill. Those fears should be addressed.
It is unfortunate that because of the technical nature of the Bill it will not receive the level of attention in this House that it deserves. The reality is that we are being asked to put a Bill in place in the extremely difficult area of competition policy, which, despite the fact it has been subject to some amendments and that the Minister has taken on board certain of the arguments in relation to fines — on which I commend him — has a fundamental problem. Why are we effectively pushing through in a few minutes legislation which is so fundamentally flawed that, for the first time in my memory, a senior public official has publicly indicated his fears on a Bill?
Mr. Lyons operates as a quasi-judicial authority in relation to this whole area. The problems he highlighted run through several sections of the Bill. We have to highlight the dangers and put them on the record. I would like to hear the Minister's views on that. I do not want to challenge the Bill to unnecessary votes but Members of the Opposition have a responsibility to challenge the Bill if we believe it is flawed.
I remind the Senator we are on section 15.
I just wanted to make those general observations.
I may be completely out of order because I want to make a general observation on the Bill rather than discuss a specific section. Is this the appropriate time to do that or should I leave it until a little later?
I am not supposed to allow Second Stage speeches on Committee Stage.
We are on section 15.
I appreciate that. Senator Quinn telephoned me from London to ask me to apologise for his unavoidable absence today. The comments I wish to make partly incorporate his views, with which I think the Minister is familiar. Where can I come in if I do not mention it now?
On Report Stage.
I will allow the Senator to make a brief contribution, but it is highly irregular.
I appreciate that and I am grateful for your ruling.
I ask the Senator to make his comments brief.
I will. As the Minister knows, our concern was about the issue of directors having to prove their innocence, as distinct from the more traditional legal requirement that one is presumed innocent until one is found guilty. Senator Quinn made a powerful case in that regard on Second Stage and I share his arguments. He asked me to advance a further argument on his behalf — I do not know if it has been discussed with the Minister — which he believes has the potential to be quite injurious to the efforts to induce foreign investment here. I know the Minister is more alert than anybody else is to the challenge there.
Senator Quinn asked me to make the specific point that he believes our competitors — particularly the Scots, although he mentioned others — will not hesitate to point out to any incoming investor that their directors may be liable to prosecution under this legislation. That could, in his view, act as a severe deterrent in certain cases. I am very unhappy with the general principle which seems to be incorporated here. I am not sure if it exists in any other European law. I do not know how reasonable Senator Quinn's fears are, but I would be grateful if the Minister responded to them.
With regard to the point raised by Senator Roche, the argument about unworkability was thoroughly addressed on Committee Stage and Report Stage in the Dáil. It is significant that the chairman of the Competition Authority gave his interview between Committee Stage and Report Stage before he could have known of the subsequent legal advice we received about some of the concerns expressed by one or two lawyers and before we introduced a number of amendments on Committee Stage.
With regard to the concern that the criminal sections are not sufficiently specific and that there are not enough specific offences spelt out in law which would be a criminal offence, our legislation is more specific than the US legislation where no specific crime is set out at all. What we have done in Irish competition law since 1990 is to move away from the old restrictive practices orders that created specific offences defined in orders which were criminal. We now have general areas of offence which are set out in the Competition Act. These include fixing prices, controlling production and markets, sharing markets or sources of supply, applying similar conditions to recruitment transactions with other trading parties, thereby placing them at a competitive disadvantage and making the conclusions of contract subject to acceptance by other parties of supplementary obligations which by their nature or according to commercial usage have no connection with the subject of such contracts.
These are the specific types of abuse of competition law that are being made criminal. Equally, the abuse of dominant position, which is defined in section 5 of the original Act, contains specific offences such as directly or indirectly imposing unfair purchase or selling prices.
We have gone a long distance in creating specific offences, but we have not curtailed the range. We have said that these, and only these, are the offences that can be pursued. There is an element of undefined offences that may still be found. We have narrowed down the range, but American law does not narrow them down at all; it is general and has established the offences by way of precedent.
We have taken the best approach. We have clearly indicated what would constitute offences — for example, price fixing and cartels. To accommodate the concern that there may be some unconstitutionality in that there are some areas where specific offences are not defined, we have provided a good defence, set out in section 2(2)(c), to the effect that a defendant did not know, nor in all the circumstances of the case could the defendant be reasonably expected to have known.
We also sought careful constitutional advice. The balance of creating offences with some specific areas mentioned, plus the doctrine of good defence, is robust and tied into European court law precedent, which is the parent of this legislation. It was also by far the best vehicle when we surveyed the options. The restrictive practices orders proved unworkable because of the difficulty in setting out specific offences that would meet all the possible cases.
The other area of considerable doubt which led people to suggest that this was unworkable was a suggestion, which was not a considered opinion but made nevertheless by significant lawyers, that if a competition offence was elevated to the possibility of being a crime the standard of proof required in a civil case was also elevated from the normal civil test of the balance of probabilities to one of beyond reasonable doubt. Lawyers suggested that this would make civil enforcement more difficult to pursue.
We have again sought legal advice on this. There is no authority to suggest that if a criminal offence, is created for something that could also be a civil offence the burden of proof is elevated for the civil offence. For example, if there is a motor accident there is a criminal offence of dangerous driving and a civil action that can be taken in respect of liability. There is no suggestion that in pursuing a civil case for liability one must prove beyond reasonable doubt. There is no link where the same act can give rise to both criminal and civil offences. This is clear in the legislation and is endorsed by legal opinion.
The third broad area of doubt that arose on Committee Stage, echoed in the article quoted, is that this is an area where it would be extraordinarily difficult to establish criminal prosecutions. There can be no doubt that establishing beyond reasonable doubt in cases of competition law will be difficult; everybody recognises this. In order to make it as workable as possible, and on foot of the Committee Stage debate to which Senator Roche referred, we introduced a number of amendments to tighten up the legislation. These included the admissibility of expert evidence, which the Opposition parties were keen to see, to create a direct link between the activity of an individual employee and the liability of the firm, to create again a link between a criminal act, established as criminal by an undertaking, and those who control the undertaking, namely, the directors or managers. The amendments, which also include the presumption of consent, were vigorously pursued on Committee Stage by the Opposition. We carefully considered them and came back with amendments on Report Stage.
Senator Lee is essentially coming from the other direction. He is concerned that those amendments that were introduced to make criminal cases more workable go beyond what is reasonable or constitutional. I have dealt with the issue of constitutionality. By establishing the good defence of not knowing or could not reasonably have been expected to know, we are satisfied we have provided a sound constitutional base for this.
The other issue refers to section 3(4). If an undertaking has been found guilty of a criminal offence, those who control that body, who authorised or consented to that action, will also be guilty of a criminal offence. Undertakings are not abstract bodies; they are controlled by somebody who makes and directs the decision. Where it has been established beyond reasonable doubt that a crime was committed, a person who consented to or authorised it is also guilty of a crime. Nobody would argue with that. If somebody is pursuing commercial policies aimed at destroying a competitor in a way that is anti competitive, the person who directs, authorises or consents to those decisions is guilty of an offence.
Senator Lee is concerned that we are providing that there will be a presumption that people who are effectively in a position of decision making within a company, where it has been established that a crime has been committed, consented to it until the contrary has been proven. It is in a limited area where the case has been proven beyond reasonable doubt. The individual concerned will have two good defences. He can establish that he did not consent to it, or that he did not know or could not reasonably have been expected to know that it would have the effect it had.
A balance between the strong demands for a workable section and the rights of the defendant has been achieved. A balancing act is required, but the presumption that a person consented is established only after proof beyond reasonable doubt that the crime was committed has been established to the satisfaction of the court. This is how the measure evolved, but it would exaggerate its impact to suggest there is a presumption of guilt from the outset.
Senator Lee referred to Senator Quinn's concern that foreign investors would be concerned about these type of provisions. However, in many European countries, such as Austria and France, criminal sanctions exist in respect of individuals and directors in this area. The UK has restrictive practices orders, which is the old vehicle for creating criminal offences, and there is a liability on directors. In most European countries, fines are applicable to directors and in the United States of America a criminal offence is pursuable against individuals who engage in anti-competitive practices under the strong anti-trust laws there.
There are similar provisions, either in the host country of the investor or the investor's own country, in most places with which Ireland is involved and which are also engaged in competition for foreign direct investment. Ireland is behind in terms of the introduction of proper enforceable procedures in competition law and this is why the legislation is being teased out carefully by the Houses of the Oireachtas. However, this reflects that Ireland has been slower to bring in effective competition law which is prevalent in most countries. Most foreign direct investors are familiar with the strong provisions of competition law which apply in their countries and most other places in which they would consider investing.
The point I wish to raise has already been mentioned, but it affects the position of the House as part of the Legislature. I refer to the public comments on 5 June of the chairman of the Competition Authority. The Minister responded to a degree when he said the public comments of the chairman were made between the passing of Second Stage and Committee Stage of the Bill. However, I do not know whether the Minister is referring to this or the other House, but the Seanad is dealing with a Bill which was passed by the Lower House on 29 May.
The public comments of the chairman of the Competition Authority appeared on 6 June. The Seanad debated Second Stage on 5 June and the public comments were made the following day. The chairman effectively said the legislation it is proposed to put on the Statute Book is unworkable. If he said that, he is implying he is not prepared to work the legislation. It is extremely serious for a public servant in that position to make a public statement which implies a certain defiance of us as legislators.
I wish to ask the Minister two questions regarding the Competition Authority chairman's public statement, which is highly irregular anyway. Was it because the Minister was aware of the attitude of the chairman of the Authority that he took onto himself the power in section 3 (6) (a) to bring a prosecution should the Authority, which is charged with that job by us as legislators, fail to do so? Was it because of a certain knowledge on the Minister's part of the attitude of the Competition Authority in that regard that he felt it necessary to take that power? Did the chairman of the Competition Authority convey his views privately to the Minister or his Department before he went public?
There has been a noticeable tendency on the part of certain institutions of the State to disregard the democratic process. This new development in the psychology of many people in authoritative positions in this country is in part responsible for the difficulties in which we find ourselves regarding many aspects of the administration of the State's affairs. I take the gravest exception to the public statement of the chairman of the Competition Authority. It implies that we as legislators can put whatever legislation we like on the Statute Book but he will not work it.
I wish to raise a point of order. I declare an interest in this matter because I know Mr. Paddy Lyons well. I have known him for many years as a friend and a constituent.
What is the Senator's point of order?
It is not right for Senator Howard to impugn the integrity of this public official. As legislators we continuously argue——
He is entitled to his view.
The Senator did not name anybody.
He named the chairman of the Authority.
It is not a point of order.
He said the chairman of the Authority made a public statement. The man is identified.
That is not a point of order.
I am ruling that it is not a point of order.
Is it in order for the Senator to name him? With respect to the Clerk of the House——
He did not name him.
Senator Howard did not name him.
He indicated he was speaking about the chairman of the Competition Authority. Mr. Paddy Lyons is the chairman of the Authority and I disagree fundamentally with the advice the Cathaoirleach is receiving from the Clerk. There is only one chairman of the Competition Authority.
I have already ruled that it is not a point of order. To my knowledge, the Senator is the only person who named the individual.
The man is named all over the newspapers. Everybody in the country knows who is the chairman.
The Senator is the only one who named him. I have ruled it is not a point of order.
I can be helpful to the Senators and I hope it will deal with the matter to the satisfaction of all sides. While the report to which Senator Howard referred was in the newspapers on 6 June, which was after the Second Stage debate in the Seanad, the interview took place many days previously and before Report Stage in the other House. It was between Committee Stage and Report Stage. There was a lengthy delay between the Stages during which we dealt with many concerns raised by lawyers and Deputy O'Malley, Deputy O'Rourke and others during Committee Stage. The arguments were carefully teased out to ensure the Bill is workable. The statement was made without the chairman having access to or knowledge of the response I gave in the other House to certain concerns which were raised.
On foot of discussions with the chairman of the Authority, I can categorically state that he is fully supportive of the enactment of the Bill. He is prepared to work it and he is keen to have strong enforcement powers. There is clear commonality of views in that regard. The ministerial powers of action, in addition to those of the Authority, contained in the legislation predate the Bill.
There have always been ministerial powers of action as well as aggrieved parties, but it has been wholly satisfactory and widely recognised that the only power of investigation and of enforcement should rest with the Minister or with the small player who is the aggrieved party. The purpose of this legislation is to establish enforcement powers for the Authority. Heretofore, the Authority had been a reactive body reacting to certificates or licences applied for by individuals engaged in practices which either needed to be certified as not in breach of the law or needed to be licensed; because, although they were in breach of the law, they were permissible because of wider public interest. We have moved beyond that reactive form of Competition Authority to one that is proactive, can take its own right of investigation and take its own enforcement powers either by civil or by criminal route.
I am happy that the Authority chairman is happy with those enforcement powers and enthusiastic to see them developed. He expressed views as to the workability which were in the public ether at the time. Lawyers had expressed them and he said at times in his comments that if such were the case this was the problematic.
The Senator asked if he conveyed his views to me before the article. He conveyed views to the Department, not to me personally, about certain sections, but in his article he went beyond any concerns expressed before. You have to recognise that we have an independent Competition Authority which is not under ministerial control. While I regret that points of view were expressed without access to legal advice and the work I did in the interim dealing with these issues, I still recognise the right of a person to express their views.
Fundamentally, I have confidence that the chairman of the Authority supports and is enthusiastic about the enforcement powers and will operate them. By the careful way I have dealt with arguments raised by lawyers and sought legal advice on them, I am convinced I have dealt with those concerns that alleged there were unworkable elements in this Bill — and also in the way I introduced amendments on foot of the debate on Committee Stage — and that I have a good vehicle for going forward. It is a new and complex area of law and there will always be considerable debate, but this is a robust piece of legislation that will stand us in good stead and deals with the issue of enforcement.
The Senators will know that there are many other issues in competition law such as the mergers element, which was the subject of considerable debate when this Bill was originally introduced, which made provision for the exemption from scrutiny of mergers that fell below certain thresholds. That was a cause of considerable concern to many Deputies and Senators including, as I recall, Senator Roche. It has been removed and we have asked an independent competition and mergers review group to review that element and other areas of competition law so that we can have evolving competition law that will be effective. I believe that this has effectively dealt with the enforcement issue and I am happy that the Competition Authority and its chairman are fully supportive of the legislation and will enforce it fully.
Is section 15 agreed? I have allowed Senators who arrived late to contribute, but the Senator will appreciate the situation. We are on section 15.
I am concerned that the integrity of this House is at stake. The situation may be rectified about half way by what the Minister has said in so far as he is confident that the chairman will work the Bill. As far as I am aware, and I am open to correction on this, there has been no retraction of that public statement and therefore that other half of the doubt remains with me.
It relates to the integrity of this House in the making of legislation and I suggest that is of concern to the Cathaoirleach, Senator Roche, Senator Lee and myself and the rest of us to be concerned that the workability of legislation we put on the Statute Book should not be questioned by those whom we empower to work it.
There is the matter of the failure to retract that statement and there is no more fundamental an issue than that of the ethics of somebody in the chairman's position making a statement between Second Stage and Committee Stage of a piece of legislation in this House.
Is section 15 agreed?
I wish to address the Minister's comments.
On section 15.
First, I wish to compliment the Minister because he dealt with the difficult issue of the questions raised about civil versus criminal proceedings and the process of enforcing competition policy in a most exemplary fashion. I admire the way he did this because he did it without reference to notes. I take solace from that because I was worried about aspects of this Bill. It seems to me that the Minister has clearly read into the intricate nuance and detail and I would expect no more from him.
We are back to section 15, Senator.
I am also grateful to the Minister that he clarified the issue of the time lapse between published comments and the Final Stage. I make the point to the Cathaoirleach that it was difficult for me today to prepare myself for this because all copies of Report Stage of discussions are not fully available. That is why I was delayed getting here.
I compliment the Minister that he accepts there is a responsibility on a publicly placed official such as the Competition Authority chairman to engage in robust public debate and the Minister's reaction to that is exemplary. I also compliment the chairman of the Authority, because if he felt something was fundamentally wrong, he was doing us a service rather than a disservice in putting his views, as the Minister has said, into the public ether and it helps us to develop.
We are certainly not on section 15 now. Is section 15 agreed?
Could I make a brief point on section 15?
On section 15.
I have the Report Stage amendments in front of me. There were 14 proposed by the Minister and the date is 29 May 1996 in the Dáil on Report Stage. Some of them are quite substantial. They do indicate that the various points made were taken on board.
In listening to the debate here and hearing Senator Lee's concerns on the one hand and Senator Roche's and Senator Howard's on the other, it is a matter of finding a balance. On the one hand there is a concern that industrialists may not wish to come here because we have too heavy a Competition Act and on the other hand we have the concerns——
That is not relevant to section 15 either.
It is as relevant as anything anybody else has said here today.
I take the Senator's point
It is very relevant.
We should take on board that there were serious Report Stage amendments brought in by the Minister.
I wish to point out that I allowed Senator Roche to make one general statement because he was late for the earlier sections.
While I admire the way the Minister dealt with the issues I raised, I still have some lingering doubts, so, on a point of principle, I am recording disagreement from this side on that.
I wish to thank Senators for their contribution to this debate both on Second Stage and on Committee Stage. I acknowledge that this is new legislation. We have never had proper enforcement powers in competition law. It is right that both Deputies and Senators should question elements of this, although I believe we have struck a reasonable balance. I thank Senators for their support for the Bill and for their active interest during the debate.
Notwithstanding what I have already said, I compliment the Minister, with whom I worked previously on the 1990 Bill. He has an extraordinary personal grasp of this. Although I still have some small doubts, the fact that the Minister is so personally and passionately committed to this will solve many of my doubts.
I echo what Senator Roche said. I remain uneasy about some of the principles in this legislation. However, my admiration for the Minister's obvious command of the issue and for the clarity and courtesy with which he has dealt with queries reassures me that it is as good a piece of legislation as can be struck in terms of balance.
The comments made both on Second Stage and today demonstrate there was substantial worry about ensuring that the legislation would be workable. I was a bit dumbfounded the day the comments were made by the particular individual that Senator Howard mentioned; however, the Minister clarified those points quite well and a balance has been struck. Monopolies legislation is important in ensuring that what happens in the business world is done in a proper way. I compliment the Minister for taking the time to ensure that happened properly.
It is a fine balancing act to get this right. The most important aspect of this legislation is the fact that it allows the Competition Authority to initiate investigations, whereas in the past it was often left to small firms that could not afford it to try to put right injustices. I hope the Bill will improve the situation, particularly for small firms.
I thank Senators for their generous comments. This legislation will be an improvement and we will see the fruits of it in time to come. Certain commentators have estimated the effectiveness of good competition law will be worth 1 per cent of GNP. That represents £300 million or £400 million, which is not an insignificant sum even for those looking at the importance of competition law, in an academic sense, from the outside.
I also want to thank my officials for the work that has gone into the Bill, often under difficult pressures. Their work has been admirable and is appreciated.