Seanad Éireann debate -
Wednesday, 6 Feb 2002

Vol. 169 No. 1

Competition Bill, 2001: Second Stage (Resumed).

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

Mr. Coogan

From what Senator Cosgrave just read out, one would think I am a person of widespread knowledge, but I will disabuse the Members of that view in a few minutes. Today's Bill is not my area of competence so any errors I make are purely my own. With whatever competence I have, I thank the officials from the Minister's Department for giving me some insight into the Bill, which is, to a great degree, technical in nature – I will not go into that. There are a lot of issues in the Bill worthy of being restated. We in Fine Gael, as far as I know, completely support the principle behind the Bill. One may find that the attitude in the Dáil has changed but my overall view is that this Bill is well worth recommending.

The legislation has a consolidation function because it takes into account a number of existing enactments. As the Minister rightly pointed out, the balance between economics and the law is always a very difficult one to achieve. I have no doubt that this legislation will probably be modified again in a few years' time. The legislation brings together a lot of issues that have teased people over recent years. Like the Minister, I recognise the work carried out by the Competition and Mergers Review Group under the chairmanship of Michael Collins. I commend him as well as my colleague, Deputy Richard Bruton, who was Minister at that time. There is no doubt that much of the legislation before us today is derived from the recommendations of that group, which did extraordinary work in the difficult task of finding the balance between the legal and economic aspects.

There are two proposed EU changes that are particularly relevant to the Bill. The first would abolish the EU notification system and make all of Article 81 directly applicable. In the second, the Commission proposes the competent authorities in the member states, in Ireland's case the courts and the Competition Authority, should be empowered to apply Articles 81 and 82, using national procedures and remedies. If this is true across Europe, why are we making laws that only apply to Ireland and not throughout the EU? This legislation and particularly the penalties, procedures and remedies should be the same across Europe. Does the Tánaiste intend to try to get EU regulations the same across the board?

There are reports in the newspapers today about the varying cost of motor cars in different parts of Europe. While not relevant to this Bill, it indicates there are different regulations governing differing levels of taxation on motor vehicles in EU countries. If we are really in Europe, we should ensure that regulations and laws are the same.

Senator Paul Coghlan has written to the Tánaiste on several occasions about the groceries order. He is delighted that she is retaining that and I note she has said she will review it constantly.

This is the third in a series of Bills to come before the House in the past ten years aimed at encouraging competition and enterprise. In the context of this Bill, we have the opportunity to look at the performance of the Competition Authority since 1991 and the benefits it has brought to the economy. Competition is the lifeblood of commerce. Giving consumers choice and value is at the centre of the market economy that has sustained our economic growth in recent years. The existence of a watchdog dedicated to protecting the interests of consumers can be an asset.

The Competition Bill comes before the House following an extensive review by the competitions and mergers review group, established by my colleague, Deputy Richard Bruton. The important and very valuable work carried out by this body is reflected in the extent and detail of the provisions contained in this Bill.

If we are to establish a Competition Authority and to provide for competition laws, we must fund and resource that authority to carry out its functions. There is no point in our debating yet another piece of competition law and giving even more responsibility to the Competition Authority if the Department of Enterprise, Trade and Employment starve that authority of resources and personnel. I must believe that the Tánaiste intends to ensure there will be adequate funding and staff.

Companies engaged in anti-competitive practices or cartels will always have significant resources at their disposal to prevent their schemes being detected. It is equally important that the State should not skimp on the resources to be made available to the State authority charged with eliminating such illegal practices. Unless the Tánaiste is prepared to commit to resourcing the authority, then there is little to be achieved by introducing yet more legislation in this area.

It is also important for us to review the performance of the Competition Authority over the past ten years and to draw whatever lessons might be useful for the next ten years. On a value for money basis, has the Competition Authority delivered for Irish consumers and is it deserving of these additional extensive powers? It is hard to think of any single episode where the Competition Authority took an action that benefited the mass of consumers. There are many examples of cases where the authority, at the instigation of large companies, took action to prevent smaller companies or organisations from engaging in alleged anti-competitive practices. There are also several instances where the authority has come down hard on trade associations. It is always easy to squeeze the small guys and usually the actions that gave rise to the Competition Authority intervention resulted from some collective effort on the part of a trade or sector to stand up to a big company.

However, in most instances, one gets the impression that the Competition Authority has failed to deliver any killer blows to cartels or major anti-competitive practices since its establishment. Has the authority examined why car insurance is so high, why cars are more expensive in Ireland, why credit card charges are higher? Has it dealt with the lack of competition between banks? It is important that we should assess the effectiveness of the authority on an ongoing basis to ensure that it represents value for money and is fulfilling the role envisaged for it.

While recognising the need for the independence of the authority, it is important that the authority should have some responsibility and accountability to the public who are served by it. Will the Tánaiste provide for some consumer input to the authority to ensure that consumer needs are constantly at the forefront of the authority's work programme? There is considerable merit in such a suggestion.

I have also heard it commented that some of the business community believe the authority adopts a "pointy headed" approach to addressing matters that come before it. As I understand it, the membership of the authority is primarily composed of economists, including some academic economists. Some business people have commented that this results in a narrow focus being taken on commercial issues. This is known as the ivory tower syndrome.

Another issue in this Bill that requires attention is the periods that apply for the consideration by the authority of mergers notified to them under the Act. It is extremely onerous for a company to have to wait for up to four months for a transaction to be cleared or vetoed, particularly an Irish plc. The cost and vulnerability of underwriting such a bid over a four month period must be prohibitive and I strongly urge the Tánaiste to reduce the period to not more than two months. Imagine someone who was buying a house having to remain on a bridging loan for 120 days before getting the surveyor's approval. There is no reason why the authority should take any longer than six weeks to assess if a particular transaction is acceptable from a competition law perspective. If the whole focus of competition law is on increasing efficiencies and reducing costs, then this is one very clear area where some improvement could be made with the authority's own procedures.

In terms of the retention of some political involvement in approving mergers of media companies, I urge the Tánaiste to ensure this section is drafted as widely as possible to cover modern developments in technology. The conventional media of newspaper, radio and television are now being supplemented by the Internet, DSL and the possibility of the phone system being used to carry significant volumes of data. It is imperative that the powers given to the Tánaiste are wide enough to encompass all types of media merger and not just the conventional ones. For example, in Ireland there is at least one company that has interests in cable, newspaper, Internet and phone services – all potentially competing platforms.

I welcome this Bill, but it could be improved by a number of key recommendations that reflect the need for competition law to be placed in context. Competition law and competition authorities exist to benefit consumers and commerce. They must always have a practical focus and not become embroiled in theoretical considerations. I would welcome greater interaction between the Oireachtas and the authority and suggest that the authority should come before the House on an annual basis to give an account of itself. This would lead to a useful exchange of ideas and result in greater accountability.

I am glad to see that the Tánaiste has retained the groceries order.

Mr. Quinn

Shame.

Mr. Coogan

There are different views on it, but in the overall interest of the consumer and the public the Tánaiste has made a wise decision. She intends to review the position on a constant basis, which is a practical approach.

I wish to deal with a number of points raised by the Tánaiste. I note the changes to the 1996 Act regarding the distinction between the two types of offences, the first type being the more serious, the so-called hard-core offences, which include price fixing, market control and market sharing, and the second type which includes offences that are not as clearly anti-competitive such as ancillary agreements and applying different considerations to similar transactions.

I welcome the new elements that have been introduced with regard to the serious offences, that there will be a presumption that the effect or the object of the activity is the prevention, distortion or restriction of competition. I am aware this will aid in the prosecution of those involved in such offences. I also welcome the second element in respect of the defence that is currently available to the defendant allowing him or her to plead that he or she could not have known the effect of the activity as being anti-competitive.

Another major change to the 1996 Act is contained in section 3, which provides that for offences such as market sharing, bid rigging and price fixing, penalties are increased from three years' to five years' imprisonment and also include fines. These fines are personal and corporate, but remain at the same level. Is the Tánaiste satisfied that they should remain at those levels? I agree with the Competition Authority and the Tánaiste's Department on increasing the period of imprisonment for such an offence from three to five years. I concur that such an offence constitutes serious fraud and it should be treated the same as other serious offences such as bank robbery. In relation to the remaining offences, which clearly are not as anti-competitive, it seems logical that the Tánaiste has removed them from the penalty of a jail sentence and left the fines in place, but again I wonder why she did not increase the fines from the 1996 level.

With regard to the electronic storage of documents on computers, whereby a person could be said to have written a letter or drawn up a contract on somebody's computer, it is difficult to prove that the individual who typed it on computer is the person who mainly uses that computer. The Tánaiste might indicate how it can be claimed that the person who is the main user of a computer can be liable in the case of a document typed on it, when other people can access the computer. Many people have the competency to find passwords and type and issue documents. The CMRG identified this early on as being one of the most difficult measures to implement. I would be grateful if the Tánaiste would give whatever assurances she can that a person would not be charged with a crime that he or she did not commit.

I am concerned that if a person decided to blow the whistle on another person, the whistleblower would be relieved of any responsibility for an act, criminal or otherwise, that he or she committed. Some criteria must be used whereby it is provided that whistleblowers will not be let off in terms of any crime they have committed. A whistleblower who played a major part in committing a crime might be given a reduction in the penalty imposed but he or she should not be given the freedom to walk away from the crime while whistleblowing on someone else.

I commend the Tánaiste and her Department on taking on board the CMRG's recommendation removing the public interest criteria on mergers in general. That was a grey area. The public interest criteria on the media mergers remain in place. This is to protect and maintain the cultural diversity of our society and to allow the Tánaiste have the final say in any media merger application, be it concerning newspapers, magazines, television or radio broadcasting or the other areas to which I asked the Tánaiste to respond. I support the criteria that the authority will use in coming to a decision on such a merger, those being the plurality of ownership, plurality of titles and the strength and competitiveness of the indigenous media industry coupled with the issues I mentioned, the maintenance of cultural diversity and the diversity of views of our society in general.

There are many provisions in the Bill which will be teased out on Committee Stage and I would be interested to hear the Tánaiste's response to the questions I raised. We, on this side of the House, fully support the general thrust of the intention behind the Bill.

Ms Cox

I am delighted to welcome the Tánaiste to the House. When dealing with this legislation it is important to examine the reasons we need competition. The Tánaiste said that competition is the lifeblood of trade, which is true. If we did not have competition, none of the businesses that are so successful in our thriving economy would be in operation. We would have monopolies and cartels and the cost of living would be too expensive for many members of the public. We would have profit for profit's sake.

Our competitiveness is one of the key attractions for the people we encourage to invest here. Given her brief in enterprise and employment, the Tánaiste is very much aware that competition is not only about rules and regulations but about ensuring we put money into the right type of sup ports and structures for trade and industry, such as education, enhancing skills and building the value of our resources.

In addition to putting in place a strong legislative framework to deal with competition, in order to maintain our competitiveness and attractiveness to outside investors it is important we do not forget that we must have something that other countries want and that is not mobile. It is not good enough to attract a factory to locate here because of a cheap labour supply in the west. We must give investors a reason to stay here by enhancing our research and development, enhancing the skills of the people working in companies and increasing the number of people available to work in these organisations. By doing that, we will build our resources, which are part of the overall framework for maintaining competitiveness. The scope is there for us as Members of the Seanad to maintain that concept as we deal with the Bill. It is in that context that I will raise the issues on which I wish to comment.

What is the purpose of the Bill? The Tánaiste outlined that. The Bill sets a new framework. It retains the best of the existing arrangements and introduces new features. These new features have come about for various reasons. Our economy has changed over the past ten to 15 years. On our High Streets we notice the competition that has come from the UK. When one walks down a High Street, one sees shops that one used to see only in London and Edinburgh and one wonders what it is about Ireland that attracts those shops to open here. On our High Streets, one sees Boots, Next, Laura Ashley and all the other UK High Street stores. Even in small towns and villages, one sees the golden arches and the big M advertising McDonald's fast-food outlets. From the consumer point of view, that gives us an indication of how things have changed. Given those changes and the threat they pose to Irish businesses, it is vital to ensure we do not lose out to the larger monopoly cartel-type organisations which have greater resources than many of our businesses. It is important to achieve a balance and not to rely on cartels to bring in competition to ensure that our indigenous business people are not fleecing us and depriving us of the benefit we would gain from organisations that would introduce competition in the market.

The Tánaiste and Senator Coogan commented most favourably on the work of the review group. I read various chapters of the report which is quite lengthy. It appears to be one of the most wide-ranging reports on competition and policy in Ireland. It took a long time to complete and I was delighted when the Tánaiste published it in May 2000. We have had time since then to reflect on the issues and the recommendations. We now have legislation which, although I accept there are matters which need to be teased out on Committee Stage, addresses those recommendations and does what the review group suggested. I wel come the hard work done by all members of the group in that regard.

I wish to refer, with the indulgence of the Chair, to the overall issue of competition. Various initiatives have been put in place to create the type of environment that will keep people and jobs here while maintaining a competitive environment. The skillsnet initiative is one example. It is vital that we keep this initiative moving forward, particularly when we find it is worthwhile and has made a contribution to the overall quality and competitiveness of companies, especially those in peripheral areas. It is important not to let something like that go.

I welcome early indications from the Department that perhaps this model will continue. I add my voice to those the Tánaiste has probably already heard asking for it to continue. It has been particularly successful for women in business and in areas such as Mayo where the north Mayo skillsnet was introduced and has successfully utilised the resources available to it. This contributes to maintaining and enhancing the competitiveness of businesses which are set up in areas outside the Dublin metropolis and other large centres of employment. It is something we must continue to focus on and keep in mind when dealing with competitiveness.

Competitiveness has always been a challenge for small and medium sized businesses. Indeed, it is a challenge for every organisation. How does one maintain a balance where costs are not cut so low as to take from the value of the product or service while ensuring that one gives good value for money? The one thing to bear in mind when discussing competition is value for money. If somebody is producing a product or service in a way that gives value for money, that is the result of competition.

It is important to ensure that everybody is on a level playing pitch. That is what this Bill is about, setting out the rules and regulations of competition. It defines the offences and sets out the penalties. I will speak briefly later about the changes the Tánaiste is making to the penalties. The Bill sets out the ground rules for civil and criminal cases and trials and maintains the right of civil action. These elements are welcome.

I compliment the Tánaiste on moving responsibility for assessing mergers to the Competition Authority. I was not particularly interested in the Competition Authority when it was set up some years ago but I have seen over the last number of years, since my involvement at national level, how its role has evolved. It has worked well in some instances and it is good to recognise that in this legislation. We are saying, in effect, that the authority has been working well and has the expertise and required knowledge to be given further responsibility. The reason for doing this is that the expertise is there and it will make the examination of competition issues more impartial and free it from lobbying and party affiliations. That is welcome.

However, I wish to sound a note of warning, although it might not be necessary. One of the great values of having public representatives or committees look at different types of business and listen to people on the ground is that they can get a feel for how certain mergers and rules and regulations will affect them. Political representatives sometimes makes changes that may not appear to be logical, but sometimes what is logical is not always what is best. It would be sad to lose entirely the role of the public representative. Senator Coogan mentioned this also. It is important to have some type of link between the Competition Authority and the Oireachtas or public representatives to ensure that ordinary people, who cannot afford the expensive lobbying groups and are not represented by strong associations, have their voices heard at all levels when decisions are being made that will have an impact on them. If competition criteria alone are used in making decisions, it can sometimes leave out important matters that should be taken into consideration.

Senator Coogan mentioned resources. It is vital to resource an organisation adequately. The Tánaiste said the Competition Authority will have a staff complement of 44, double the level of five years ago. I welcome that and I hope it is enough. One can assume a certain number of staff is enough but it is important, and I have no doubt that the Competition Authority has done this, to ask how many people are required to do a job, how are they doing the job and if technology is being used to its best capability to ensure the job is done correctly, efficiently and effectively. We should not have people in jobs just for the sake of having them there and I have no doubt that is not the case in the authority. We must ensure the resources are in place and the Tánaiste is doing that. It appears the manpower is in place with a staff complement of 44 so, despite the concerns raised by Senator Coogan, the Competition Authority appears to be ready to take on its new tasks and will be able to deliver according to the expectations we have set out for it.

Senator Coogan was correct to bring up another matter. I am a little disappointed that over the years there have been areas where it seems, and perception is sometimes accepted as the reality, that apparent monopolies have not been addressed. The banking monopoly or cartel in this country is one such example. It was not until the entry of the Bank of Scotland into the mortgage market that there was any real competition in that market. Why was it not due to the Competition Authority that there was a reduction of 2% or 3% in mortgage interest rates? That type of competition is most welcome. Perhaps it was not within the remit of the Competition Authority.

However, there are other problems. Our telecommunications charges are too high. Look at the mobile phone market and the companies involved in it, Esat, Eircell and Meteor. We thought the introduction of the third mobile phone licence would lead to charges gradually reducing. I have not looked at the figures in the last couple of months but I understand we are still paying the highest charges in Europe even though this country is one of greatest users of this technology in the world. It does not make sense that we are still paying more. Where is the competition?

Senator Coogan referred to the credit card market. It is up to the credit card user; if they do not pay their bill and use the credit, they must pay the charges. However, there are charges of between 17% and 21% on outstanding balances on credit cards whereas in other countries the percentages are much lower. A question must be asked about competition in this area. There are three main banking institutions in the country and that is reflected in the type of service and virtual disdain with which they treat their customers. Last September and October they suddenly changed policy and said people could no longer cash cheques in their banks and that all cheques had to be lodged. Now one cannot have standing orders from non-current accounts and further charges have been introduced. All the banks do this together so there is no competition between them. Furthermore, they are getting away with it. That is the end of my rant on the banks.

I welcome the point the Tánaiste made about the increased co-operation of bodies under the authority. It will be good to see better co-operation between the broadcasting commission, the commission for electricity regulation, the commission for aviation regulation and the telecommunications regulator. As the Tánaiste has said, it will underpin and enhance co-operation that is already there between them.

I spoke about competition in the telecoms area, which is the responsibility of the Office of the Director of Telecommunications Regulation and I would like to know why we do not have fast, low-cost access to technology. We do not have a flat rate Internet access package. Why not? What is happening? The ODTR has the responsibility for introducing it, but because there is no agreement on the price that will be charged by Eircom to the other subscribers, nothing has happened.

We have peripheral areas such as Donegal, Connemara, north Mayo and north Kerry where there will continue to be no access to broadband technology. These areas are dependent on high speed Internet access for which they are being charged a fortune by their Internet service provider. They are paying more than people in Dublin or other centres with access to broadband because they do not have access to the bandwidth of cable required to download information quickly. In Dublin one can download a package in three seconds but if one is in north Connemara it takes three or five minutes and one pays for the difference in connection time. This is not acceptable. We must address these areas in terms of competition. We are told we will see enhanced levels of co-operation between relevant bodies, which is welcome, but things like flat rate Internet access should become available and accessible to areas on the periphery that need this competitive edge.

Instead of looking at this issue from a regulatory point of view, let the Competition Authority look at it from a proactive point of view. In other words, let it see what it can do to make our country more competitive, what needs to be put in place to give us the type of environment we need and how it can support businesses that are on the periphery. Ireland has done well because it is on the periphery of Europe and now we have our own periphery within the country that is losing out because of the divide between east and west. Once the line is crossed into the west, one sees that people are losing out.

This Bill is clear in terms of identifying what we can and cannot do. It is clearly laid out and, as the Tánaiste said, it is technical so I do not intend to go into it in detail. It is interesting and relevant to analyse the types of penalties contained in the Bill and the carrot and stick approach that the Tánaiste spoke about. I welcome the distinction between different levels of penalties. The Tánaiste is correct to make the change so that, depending on the seriousness of the category, there are different imprisonment penalties from two years to a new maximum penalty of five years which makes the offence an arrestable one. That is important because people need to understand that fines are not a sufficient deterrent to an organisation which has plenty of money. For example, the speeding fine of £50 is no longer a deterrent. People get caught speeding, pay the £50 and forget about it. It does not slow people down so the fines are not working. Something that will work are the penalty points applied to speeding. Equally, under this legislation, the fines should be a deterrent but the indictable offence and different categories of imprisonment penalty will be enough to frighten would-be offenders. Many companies believe that their managing director could not possibly be sent to jail but this is clearly laid out in the Bill as punishment for the appropriate offences.

It is important that, while we have competition and the proper framework to manage it, we should reflect that sometimes too much competition is not good. Competition can drive down standards and we must not allow that to happen. Without going into specifics, we are seeing that happening in Dublin in certain industries where deregulation has taken place and we have seen a corresponding decrease in the level of service given to customers, an increase in overcharging and an increase in crimes – probably misdemeanours – being reported. We must bear that in mind when we examine how important competition is.

The Tánaiste asked a number of key questions the answers to which are clear. She asked if we wanted to toughen up on competition offences. The answer is yes and we have addressed this. She asked if we wanted to take merger control out of the political arena. The answer is yes and we have done that with this Bill. She asked if we wanted to retain our right to intervene on media concentrations that might pose a threat to the operation of the democratic system itself. The answer is yes. She asked if we wanted to build and develop a strong independent agency to enforce our competition law, all in the interest of ensuring that Ireland maintains its competitive advantage as an island on the periphery of Europe which we hope will become the centre of trade and competition for Europe and that we would continue to build on the strong economic success we have had and move forward in a progressive and successful way into the future.

Mr. Quinn

I wish to share time with Senator Norris. I welcome the Tánaiste and this Bill to the House. I will avoid speaking on Committee Stage and concentrate my remarks on Second Stage.

I have railed many times against the way Bills are normally drafted as amendments to previous legislation. This process, when it happens, becomes cumulative so that the legislation on a particular subject is not just one Act but a succession of measures that stretch back over generations. This makes the law difficult to access and puts further distance between Government and people. That is the reason I like this Bill. Too seldom have we seen the approach adopted in this Bill. It repeals all the existing legislation and starts again with a clean slate. When this Bill reaches the Statute Book – and I hope it soon will – it will contain, in one place, all the laws and competition measures. That is as it should be but it happens so rarely that I need to draw attention to it.

I will focus my remarks on the provisions relating to the Competition Authority and the need to make it more independent than is provided for in this Bill. According to the explanatory memorandum, section 6 (2) has the following purpose:

It introduces a new presumption which will apply in the prosecution of the more serious offences. This obliges the court to presume, unless the defendant can prove otherwise, that the object or effect of the agreement, decision or concerted practice at issue is to prevent or distort competition.

I do not want in any way to minimise the gravity of the offences we are dealing with. A crime against competition is one which makes the entire community its victim. It is only right that we take such offences seriously.

I support the increased penalties the Bill attaches to the more serious offences but this legislation sends a shiver down my spine because it strikes at our whole way of approaching justice. It sweeps away, with a casual brush of the draftsperson's pen, the presumption of innocence until proven guilty which underpins our entire legal system. With every other offence in the book the burden of proof is on the prosecutor who must make the case for the defendant's guilt beyond all reasonable doubt. What is so special about the offences we are dealing with here that we have to sweep away that basic principle? It could be argued that it would be difficult to get prosecutions otherwise, but that surely applies in every case. The authorities would favour extending this provision to all offences because it would make their lives so much easier. Picture what would happen if the same law applied to suspected bombers, terrorists and rapists.

I am trying to make sure that my point is understood. If the same presumption applied in the case of such suspects it would make it much easier to secure convictions, but we have decided to single out this area and make it different. We do not apply this principle generally because our legal tradition has always held that putting the burden of proof on the prosecution is a necessary part of the system of checks and balances regarding the power of the State over its citizens.

I wonder if the negation of this fundamental principle is proposed with regard to the offences in question because they are esoteric crimes which will not be committed by the general run of people. Does this, more seriously, represent a clash within Europe of two different systems of law? Are we conceding this principle to bring us into line with continental practice where, as we know, the presumption of innocence is a much smaller fundamental principle? If that is so, we should be open about it.

I also want to dwell on section 22, which sets out special treatment for mergers in media businesses. It allows the Competition Authority to make a ruling on purely competitive grounds after which the matter is pushed upstairs to the Minister who will make his or her decision on the broader grounds of public interest. The public interest is to do with the understandable desirability of keeping control of Irish media primarily in Irish hands and to have a spread of ownership across the media generally. My problem is not with the aspirations of the Bill, which are laudable. It is that its provisions are unenforceable. We are deluding ourselves if we think this legislation will ensure that Irish media stay in mainly Irish hands and that ownership is diverse. That is a non-starter in the age of globalisation. The European Union would presumably stop us applying this law to potential investors from other member states.

Why attempt to draw a distinction between one medium and another? We can do nothing to control the satellite signals that come to us from the skies above, so why try to control who owns a local newspaper or radio station? That might make sense if one could control everything, but as some media are by their very nature out of control, such as satellites, trying to control the others is like attempting to bail out last week's flood waters with a colander.

The centrepiece of this Bill is the Competition Authority. Our experience over the past decade has been very instructive and we should learn from it in deciding how to constitute the authority for the future. I read the OECD review of regulatory reform in Ireland, which was published last year, and this comment was made:

The authority is perhaps too reliant on the Ministry for its resources and staffing will require continuing attention in Ireland's tight labour market. The authority has tried to move into an advocacy role, but making advocacy effective will require more resources and clearer independence.

In two restrained sentences the OECD sums up the key difficulties we have had in making our competition legislation work effectively.

The history of the Competition Authority surely teaches us that legislation alone is not enough to make things happen. The earlier Competition Acts gave the authority quite wide powers, but there is a simple reason it did not use them to the full extent envisaged. The Department of Finance systematically starved the organisation of the resources it needed to do its job properly. Again and again it was refused permission to employ the number of staff it needed at the levels of remuneration required to ensure that the right people were available to it. I have heard the Tánaiste and Minister for Enterprise, Trade and Employment and Senator Cox speak of promise, but I would like to hear how that is to be guaranteed in the future, long after the Tánaiste has left office. Whether it was intended, the Department of Finance's stranglehold has had the effect of hobbling the authority and preventing the full realisation of the provisions of competition legislation. It is no wonder that many said the real intention was to maintain an enforcement authority as a showpiece while preventing it from showing its teeth by starving it of resources.

The OECD report is right to cite greater independence as the way forward, but as I look through the provisions of this Bill I see no sign of any intention to strengthen the authority in that way. If we can change the Bill, that is how we must do it. The independence we are talking about does not refer to the independence of the competing parties in a merger. What is much more important is making the Competition Authority independent of the Government of the day. I have full confidence in the Tánaiste, but I have no guarantee that she will be there in ten, 20 or 30 years' time. I am sure she would not fancy that.

Tánaiste and Minister for Enterprise, Trade and Employment (Ms Harney)

I can confirm that I will not be there in 30 years' time.

Mr. Quinn

Unless it is independent in that way, the authority cannot be fully effective in policing the legislation in the interests of the public. Competition issues are and should be matters of law. That is the kind of regime we are trying to put in place with this legislation as is the EU with its overarching framework of competition law. Competition issues should not be political issues and to ensure that they do not become so we must ring-fence the implementation of the law from the political process. We have allowed competition issues to get caught up in politics here and that is why I have a problem with what Senator Cox said. I have a great fear in that regard.

I note three examples. The creation of a free market in the taxi industry should have been a legal matter, not a political one. The creation of a free market for pharmaceutical services should have been a legal matter, not a political one. I congratulate the Tánaiste for what is taking place in those areas now. The creation of a free market in the selling of alcohol should be a legal matter, though perhaps not altogether as there have to be political implications in that regard. At least steps have recently been taken in that area, but it is not a coincidence that the three markets I mentioned have concerned the Competition Authority since its inception.

It is not a coincidence that the authority has been systematically deprived of the resources to stand up to the Government on those particular issues, as well as on others. It is perhaps no coincidence that the authority has lacked the resources to act as an advocate. I ask the Tánaiste to take us through the advocacy role which follows on the removal of restrictive Government legislation that conflicts with the letter and spirit of competition law. On Committee Stage we must amend the Bill to strengthen the independence of the Competition Authority and I look forward to the support of my colleagues in the House in doing that. Let us make no mistake, the effectiveness of this legislation will depend entirely on the degree of that independence.

I want to avoid debating as if this was Committee Stage, but I would like answers from the Tánaiste to a number of questions. I have not seen other legislation where the Minister may appoint any number of members to the Competition Authority. They are described as part-time members in the Bill, but they have the same number. The Bill provides that there are four members of the authority plus a chairman. However, the Minister of the day may appoint any number of extra persons. That is surely an opportunity for a Minister to overcome the decisions of the authority. As chairman of An Post I had the experience of producing a report every year which my colleagues and I were not allowed to publish. We had to hand it to the Minister who sometimes delayed publication and I see here that the authority does not have the right to publish its report either. It has to give it to the Minister who has to publish within four months, which is an improvement, although I do not understand why that provision has been made at all.

Why not trust the authority with the groceries order? I will not use that order on this occasion, but I must respond to Senator Coogan who said that practically everyone is in favour of it. He forgets that the Competition Authority has strong views on it. I urge the Tánaiste to hand over responsibility for it to the Competition Authority rather than retain it for the Minister for Enterprise, Trade and Employment.

It is our job to give the authority the teeth it needs to fulfil its functions. I welcome the Bill and its provisions and I urge that we give it a great deal of attention to help the Tánaiste through it on Committee Stage.

Mr. Norris

I thank my colleague, Senator Quinn, for sharing his time with me. We are a happy example of positive competition and co-operation. However, we come from slightly different constituencies and it might be otherwise if we were in precisely the same one. I, too, welcome the Minister. This is almost a family occasion. There is the Minister, whom I remember well from her days in Trinity for her work politically and I notice a distinguished financial journalist in the Press Gallery whom I have known for many years. I also see the chairman of the Competition Authority who is an old colleague from Trinity and one of the Minister's advisers.

Mr. Dardis

How many more constituents does the Senator see?

Mr. Norris

I am glad to see Trinity is at last coming into its own and running the country, that is why we are doing so very well. The Senator should be glad because there are quite a lot of them in his own little party.

Acting Chairman (Mr. McDonagh)

The Senator has about five minutes left.

Mr. Norris

No.

Ms Cox

Yes.

Ms Harney

The Chairman is obviously not a Trinity graduate.

Mr. Norris

The Bill which strengthens and consolidates the 1991 and 1996 Acts is very welcome and this is probably not the last we have heard of it. We should watch this space. I am sure that following the election the incoming Government, which I hope is of a similar composition and continues for the same length of time as this one, will introduce further legislation. I hope I will be re-elected and expect that if I am, I will have to deal with further legislation on this matter because I do not think everything has been fully addressed in this Bill.

Competition is very important. It is not just a question of restriction. Any intelligent commentator will recognise that one of the engines we have which can drive the economy forward is the positive encouragement of competition, particularly in this country when so many economic levers such as exchange rates and interest rates have been removed from us and centralised in Brus sels. I do not see this Bill as a negative restrictive measure, rather as a very positive move in terms of the economy. It is good for business.

Coincidentally, the United Kingdom is also introducing legislation in this area. I wonder whether the Tánaiste and her Department have scrutinised that legislation because it seems to me there are parallels from which we can learn. I hope the Bill can be strengthened in this way.

Senator Quinn referred to amendments. This is almost a virgin Bill. It is coming before the Seanad first and I very much hope that the Minister will accept amendments, as I, too, intend to table some.

I briefly examined some of the Bill's main provisions. The fact that all mergers are now to be referred directly to the authority is a good development. At present, they are only referred if there is a ministerial refusal and this has happened only ten times, only once in the past two and a half years. I look forward to the Competition Authority being strengthened in this area.

Criminal sanctions are being strengthened which is also to be welcomed. I applaud the move from two to five years. I do not believe people will be sent to prison nor do I want them to be. I have never wanted blue collar people to be sent to prison because it is a waste of taxpayers' money. It is even more of a waste when they are white collar workers, but it does trigger certain investigative provisions in the criminal law and gives greater teeth and strength to the Competition Authority which can only be welcomed. That is the significance of the five-year protocol.

There is a presumption with regard to documents such as e-mails. This is something on which I would welcome further comment from the Minister. The presumption favours the authority. I am all in favour of the authority, but I have been reading Dick Francis recently and am, therefore, full of conspiracy theories.

Mr. Dardis

Is he a Trinity constituent too?

Mr. Norris

I ask the Senator not to interrupt because I have a limited amount of time. It seems to be slightly dangerous if it is always taken to be the owner of the fax machine or the e-mail system or whatever. There is always the possibility of a conspiracy to implicate a company and, in my opinion, the shifting of the onus of proof is questionable in this area but not, perhaps, in others.

I welcome the provision for the exchange of information. I vaguely recall that in the past few years there was a meeting in a nice hotel in County Kildare of some major international producers of vitamins and they managed to rig the prices, especially in America. We were not in a position to exchange that information with the US authorities. If we had been, perhaps they would have been prevented from doing this to everybody's advantage.

I welcome the assumption in regard to a negative impact on competition although I am not an economist and do not understand it. When I hear economists on "Today with Pat Kenny" or "Marian Finucane" , I end up confused. One says one thing and another says something else. I heard Brendan Keenan making this point this morning on the radio when he was asked whether he would buy Elan shares. He said, "Well, you just look at the information", and then he said, "You make up your own mind, but I am not taking any responsibility." He is a very responsible and good economist, but in the courts the Minister, under this legislation, will not have to introduce the evidence of professional economists.

I do have some difficulties with the Bill. There is provision for an appeal to the High Court. Why is there no appeal to the Supreme Court? I will certainly table an amendment on this as such a provision is desirable. There is considerable case precedent in this area to demonstrate this. For example, there is the judgment by Judge Fidelma Macken in the Orange mobile phone case. It is a complex area. Even a very fine judge can make a decision that can be challenged. The judgment in the above case was appealed to the Supreme Court and was reversed. If we pass this Bill as it stands, this cannot happen. We must have the full range of appeal, right up to the Supreme Court.

Then there is the question of advocacy. I referred to the UK Bill. In the United Kingdom, when the Office of Fair Trading gives a public recommendation there is a statutory requirement for the Government to give a measured response within 90 days. There should be such a provision in this jurisdiction also. This is very important as it would mean, for example, that if the Competition Authority were to decide to go into an area such as taxis, pharmacies or pubs, then the Government would have to come back with a response.

The Competition Authority should be both financially and politically independent. Political independence is extremely important. Senator Quinn referred to the question of the number of members on the authority. There should be a finite number. This Minister would not load the jury but other Ministers might well do so.

Acting Chairman

The Senator has one minute left.

Mr. Norris

I know it is an expansive minute and will use it to its full extent. I had to laugh at this provision. This is a Bill about a Competition Authority, yet there is not open competition for the jobs. There is a paradox for the Minister. There should be open competition for membership of the authority.

Mr. Dardis

And for seats on the University benches.

Mr. Norris

Senator Dardis might like to look at the democratic element in his own background and pluck the beam out of his own eye before he starts looking into the mote in mine.

Mr. Dardis

It is a flawed system.

Mr. Norris

May I have the protection of the Chair, please?

Mr. Dardis

The Senator is under a flawed discriminatory system.

Mr. Norris

Of course the annual report should be published annually by the authority, not by the Minister.

Acting Chairman

Senator Norris, I think time has—

Mr. Norris

I am sorry, I must protest. There is one final point that I insist I really must be allowed to make.

Acting Chairman

There is no injury time. I will allow the Senator 15 seconds.

Mr. Norris

Thank you. This is the most important point I want to make. The exemption for media mergers is completely and utterly wrong and must be addressed. For example, in 1994, the authority found the Independent Group abusing its dominant position. The authority had no power at that stage and when it subsequently got power, it did nothing. Politicians will be queasy about taking on the media. Let there be somebody independent out there to tackle the media.

In terms of the media, it is obvious there should be additional criteria. This is not just a commercial issue. One must allow in a democracy for a plurality of views. It is not just a question of 80% of people voting with their money to take up a ticket on an airline or a share in this or that. This is the life-blood of democracy in terms of the media, in terms of television and newspapers. This Bill will be defective unless the Minister addresses the issue of media mergers, an issue on which I will also table an amendment.

Mr. Dardis

I am delighted to share the first five minutes of my time with Senator Norris.

Mr. Norris

May I interrupt Senator Dardis to the same extent that he interrupted me?

Mr. Dardis

Just before Senator Quinn leaves, I must say to Senator Norris that Senator Quinn was in advance of him in every respect because we received his literature in the post yesterday, a very nice letter about how to access him on the web. He is looking after his constituents.

I welcome the Tánaiste and Minister for Enterprise, Trade and Employment to the House and I welcome the legislation before us. I particularly welcome the fact that the Bill has been initiated in the Upper House. This is not a first for the Tánaiste. When she was a junior Minister in the Department of the Environment, she introduced the Environmental Protection Agency Bill, a very lengthy and comprehensive piece of legislation which was very important. She is very amenable to listening to the arguments in the House and, where required, she has had a history of amending legislation where deficiencies can be demonstrated.

I am also pleased that this Bill represents continuity in terms of Ministers. The 1978 mergers Bill was introduced by the then Minister, Deputy O'Malley. Of course the Competition Act, 1991, was introduced during Deputy O'Malley's tenure. The 1996 amending Act was introduced when Deputy Richard Bruton was in the Department. I am glad to see that continuity being maintained by the Minister, and I say that from a party perspective.

The Government and previous Governments have achieved a lot in the management of the economy and the creation of an environment which has allowed the economy to develop to the point it has with regard to personal and capital taxes and general fiscal policy. The missing element is the matter of competitiveness, and that is now being rectified. If we are to maintain the successes we have achieved it is obvious we must be competitive in the world market. We must have an environment, through our political stability, tax regime and competition law, that makes it attractive for businesses to locate here. They can do so in the knowledge that they will be treated fairly and be able to compete on an equal basis. This Bill is one of the elements which will allow that to happen. The next stage will be the building of the knowledge based economy. That is a very important aspect and one which is related to the content of the Bill. It has been said to me in the past week that in the roll-out of broadband technology we have a duopoly and that there is a lack of genuine competition leading to increasing costs for people who require such technology. That is something that needs to be looked at.

The legislation is very much pro-business and I also regard it as pro-consumer. I do not think there is incompatibility between those. It is reasonable to say that consumer power in this country has not been particularly strong. Perhaps it has been strong at ground level and in general consumer terms but in terms of organised consumer power we are some way behind other countries, particularly the United States. That is a matter which the Director of Consumer Affairs has referred to and one she mentioned at a recent meeting of the Joint Committee on Finance and the Public Service. Ensuring that competition operates properly and fairly is just as important as the work of IDA Ireland or other agencies that are involved in attracting businesses to this country. It is also important from a domestic point of view. I always believed that if somebody started with a very small business and had enough energy, vision and commitment, they could build it into a large business. Unfortunately, devices were used by dominant market players in the past to ensure that small businesses could not develop, flourish or become as large as they were. It is important to encourage the people who have that energy, vision and commitment as it is at the heart of what makes us a competitive and effective economy.

I am pleased to see that some of the European competition measures are being introduced into Irish law. Even if we had not been obliged to do that we should have gone ahead and done it because it is so critically important to our competitive position in the world market. It is also important that we have a level playing field whereby companies can operate and flourish. I applaud the work that was done by the competition and mergers review group. They laid the foundations for the legislation that is before us.

The question of a dominant position is important. As far as I can recollect, a dominant position of itself was not grounds for disqualification on a merger. It related to the misuse of a dominant position, and that is obviously something that is very difficult to prove. This is the area where we have the most problems with the legislation. Most beef producers in the country would have said there was a lack of competition between meat factories. That was evidenced by the protests, organised by the IFA, that took place outside meat factories last year. That matter was investigated and it was held that there was no evidence of collusion in pricing between the factories. There are difficulties in establishing and proving the facts where lack of competition is a commonly held view, although I accept that because something is commonly held it is not necessarily the case.

It is reasonable to say that the burden of proof for some of these serious matters should lie with those who are the subjects of the investigation or the scrutiny of the merger. The onus should lie with them, as it does in other legislation, to make their case properly and prove the contrary. For example, insider trading and conspiracy are notoriously difficult to prove. That is why the provision regarding the whistleblower, which has been criticised in the debate, is reasonable. I envisage many circumstances whereby the only way a charge can be laid, apart even from proving it, is if somebody has immunity because they have come forward with information. That makes it easier to build a case and make it stick.

Other speakers have referred to the timescale. The Competition Authority is notified that it has to make an initial adjudication and then another timescale – I think it is three months – is imposed on it. That is very reasonable. With the nature of these mergers there has to be a defined timescale, otherwise investors will get edgy and the deal may fall for reasons other than that there is a dominance.

I have already mentioned the roll-out of broadband technology – Senator Cox also raised simi lar points. I know Shannon Development is among those concerned about it. I welcome the appointment of John Fingleton as chairman of the authority. He has returned from the United States to take up the position. It is good to see people with enough commitment and international experience returning to Ireland to take up these jobs. That can only be of benefit. I suspect it will not be possible for the Minister to appoint four Trinity College graduates, in addition to the chairman, to the authority. That is unfortunate. I note that the upper limit is four – I think other speakers suggested otherwise.

Mr. Costello

Will the Senator make an exception?

Ms Harney

I would make an exception for a member of the Labour Party.

Mr. Dardis

I thought Senator Costello asked for the section—

Acting Chairman

I am sure Senator Dardis will make an exception to ensure he will not forget Galway.

Mr. Dardis

Of course I would not, neither would I forget any other part of the country.

Mr. Mooney

Considering the Minister was born there, it is highly unlikely the Senator would forget.

Mr. Dardis

I thank Members for those interventions.

Mr. Mooney

Members are always glad to be of help.

Mr. Dardis

It is appropriate that a distinction should be drawn between so-called serious offences, such as price-fixing, which are subject to a maximum sentence of five years, and those of a minor nature, such as refusal to supply. Minor offences are not subject to the same penalties. That is right and it is important that distinction is made as they are of different magnitudes. The fines have been referred to in this debate.

The media can be adjudicated on and referred to the Minister. That is appropriate. There can be a dominance within the media which is not necessarily based on shareholding or financial interests. It is also unquestionable that a plurality of views in the media is part of a healthy democracy just as it is in society and it would be highly regrettable and totally wrong if there was to be unanimity in the media based on sole ownership or dominance by one owner. That would be highly prejudicial to the future of proper democratic and open debate and it would subvert democracy.

Competition involves serious issues which relate to broadcasters as well as newspapers and one should worry about local broadcasting because it could transpire that one group or indi vidual holds the majority of shares or a significant number of shares in a large number of small local radio stations or provincial newspapers. This is a hugely important issue and that is why it is correct that this legislation should be introduced. I have a reservation, which does not relate to the Minister, about circumstances in which it is conceivable that the Minister of the day could be the instrument of the particular media group or could be acting under its orders. That is something about which I have difficulties and questions. It is argued that the Oireachtas is the safeguard. In other words, ownership issues would have to be referred back to the Oireachtas but the capacity to influence the majority of Members within the Oireachtas could be a factor and perhaps the Minister will address this issue when she replies.

The system of writing to the Department so that the Minister can decide whether the matter should be referred to the authority has been changed in that one can write directly to the authority. That is welcome and the timescale envisaged to provide clearance or proceed to a full investigation is appropriate and reasonable.

Turnover is another issue. A reasonable threshold has been set at €40 million before a company comes within the ambit of the mergers legislation. That is better than basing the threshold on assets, which I welcome.

The administrative reforms have been strengthened and I am pleased that the authority has been given considerable powers under sections 28 and 29. While it is important that the authority should be able to cast its beady eye over activities in the wider economy, it should also be able to examine practices in Departments, semi-State bodies and so on. Under section 28(1)(c) the authority has power “to advise the Government, Ministers and Ministers of State concerning the implications for competition in markets for goods and services of proposals for legislation, including any instruments to be made under any enactment”. It is good that the authority has an advisory role. It is difficult to prove anti-competitive practices are in place and any improvement to the powers of the authority is welcome.

The authority's advocacy powers are also important. For instance, it has the power to point out that a Department is not looking after the consumer properly. The pharmacy regulations have been mentioned and the authority would say the regulations that were in place were not helpful in terms of competition. The groceries order has also been mentioned.

This is a reasonable Bill which I hope will have the desired effect by ensuring a truly competitive economy is created that benefits foreigners and indigenous investors and consumers who need to be confident that when they buy whatever goods and services they require, they are doing so on reasonable terms in an environment where there is no collusion, price fixing or inner circles operating to their detriment.

Mr. Costello

I welcome the Tánaiste to the House and congratulate her on her recent nuptials. I hope my remark relating to her public duty in Manorhamilton did not cause offence. It is always a pleasure to see her in the House as she is a breath of fresh air in what is mostly a stale Government.

By and large I welcome the legislation. The Tánaiste stated that the legislation is being introduced in the common good and competition is the life of trade. However, the legislation, in addressing anti-competition measures and anti-merger cartels, endeavours to prohibit activities that restrict, prevent or distort competition and prevent a business monopolising the marketplace, thereby ensuring cartels are not established and there is a free flow of goods so that the consumer or the business community does not suffer in a distorted marketplace.

The Government has concentrated on the public sector in this regard over the past five years. The word abroad, which the Tánaiste has echoed on many occasions, is that the public sector is not competitive. Every measure has been taken over the past five years to privatise State companies and now the public sector is overwhelmed with regulation. Regulators have been appointed in the telecommunications, aviation and electricity sectors. There is regulation throughout the public sector to the extent that it is top heavy with regulation.

It is ironic that the public sector has always been perceived as a monopoly or a closed shop that has not been competitive because it dominated the markets in which it traded, yet it is expected to operate in the marketplace now as though it were operating on a level playing pitch. However, the semi-State sector is operating in a small island economy and it is extremely difficult to compete in an open global market. The Government has turned these State companies into commercial entities and expects them to float on their own, but that does not mean a level playing pitch has been created or anti-competitive measures have been removed because large businesses always have an advantage over small businesses.

A David and Goliath scenario is still applicable to business operations in the EU and throughout the world and to multinationals in our economy. It is extremely difficult for indigenous industry, whether it has emerged from the semi-State or private sectors, to compete in the open marketplace. We know to our cost that, as soon as there is a breath of cold air through the global economy, we are the first to be hit by it.

We know the majority of our manufacturing output is not indigenous but multinational and that is the reason we have distorted the market and have a preferential tax rate for multinational companies over domestic ones. They pay less tax although they are much larger. Surely that is anti-competitive. What have we done about it? We have, under the influence of the European Union, begun to harmonise gradually towards a common tax position in Ireland. Even still, the multinationals pay less tax.

They have a constant advantage. They are also multinational which means they do not come any larger. They have a dominant position outside the country which means they dominate indigenous industry to such an extent that it is very difficult for the latter to develop under their tentacles. Consequently, we are an isolated island economy which is used and abused by every dominant foreign industry. We encourage it because we benefit in many ways from it. In the long term it means we can be the quickest to collapse as an industrial complex compared to other countries which have a greater balance.

This key area must be addressed, but I do not know if there is anything in the legislation to do that. Multinationals operate as if they were a law unto their own. What is in the legislation to deal with this? It deals with the national sector, but how does it deal with the multinational sector which does not have trade unions and strikes sweetheart deals to avoid them, which benefits from preferential tax rates in this country, which hides many products made in other countries and which uses false accounting practices? Profits made in another country are often channelled through this country.

The result of all this is that the productivity of a worker in the multinational sector is ten times greater than that of one in the indigenous sector. Can this be true? Of course it is not. It is because false accounting practices are in operation in the multinational sector although it benefits from preferential tax treatment. This is an area which is rather ugly under the surface. We do not touch it because we are afraid to say "boo" to multinationals in case the economy collapses. They comprise the economy in this country, by and large. Despite the wonderful things we say about ourselves being a dynamic economy with a well educated workforce, we are not dynamic in terms of productivity. Our little country, in common with a number of other countries throughout the world, mostly Third World countries, is a pawn in a much larger global game.

I hope the legislation is effective. I hope we rid ourselves of mergers, monopolies and anti-competitive cartels. I am happy with the developments which have taken—

Ms Harney

The Senator's party was involved in an interesting political merger lately. Has that coloured his opinion of mergers? We are not getting rid of them.

Mr. Costello

There was no competition in this case and there is no need for the authority to examine it. We are an open economy and it is something we have to address as best we can. There are many contradictions in the manner in which we deal with businesses. If we examine any of them closely, we find it very difficult to resolve matters in a satisfactory fashion.

My main concern is what is happening in certain sectors in the domestic market where cartels operate despite the fact that the Competition Authority has examined these sectors and regulatory bodies are in place for them. The largest enterprise with which we deal almost daily is banks. We do not need the Committee of Public Accounts to tell us that banks abuse their dominant position and have defrauded their customers in a direct fashion. They do not compete with each other either. Bank of Ireland does not compete with AIB. They have been closing branches throughout the country in the past four years. I said on the Order of Business that, in the past two years, Bank of Ireland and AIB have between them closed almost 100 branches in this country. They did not do so in a manner which would have allowed them compete with each other.

Bank of Ireland and AIB have a branch each in most places. When branch closures occurred, one branch was not left to operate in the area. Instead, both branches were closed. For example, in my constituency, both branches were closed in Stoneybatter and the customers were transferred to Phibsborough. It was not as if one stayed on to continue business or that there was cut-throat competition. The two closed and both sets of customers were transferred. They did the same where both had branches side by side on the quays in Dublin and also in Cabra.

There is no competition, yet we hear the Central Bank keeps an eye on this sector and that the new financial regulatory body will deal with it. In practice, all we get is rhetoric and the competition does not exist. The charges are roughly the same and are outrageous. There is little competition between the two banks. I would like to know how the Bill will change that and improve the lousy service customers receive from banks with the associated high charges and the fact they cannot get to see anyone in person. Banks will accept business on the Internet or over the telephone, but God help one if one tries to conduct business in a branch. A person has to wait in a queue for a long time and there is always a shortage of staff to serve customers. Competition exists in other areas of business. Supermarkets would never get away with that because people expect service and competition.

The media are an area on which I agree with the Minister. They are a central aspect of democracy. Without a free, responsible and diverse media, it is not possible to ensure democracy. They have incredible power. They constantly churn out information to the public and that is the regular diet the public receives in terms of what is right or wrong, good or bad and what is happening or not happening. A slant is put on events or not as the case may be. This is how the media operate.

They can, when they choose, endeavour to become a complete monopoly and influence the direction of a country. We have seen them try to do this and the Minister's predecessor, Deputy O'Malley, was right in taking the action he did at the time. It is an extremely dangerous development. The combined involvement of the Minister, the Competition Authority and, ultimately, of both Houses of the Oireachtas is right. It is the only way to address the development adequately, appropriately and, I hope, effectively.

I do not know how legislation of this nature is enforced. I am pleased to see the penalties have been increased but an increase in penalties does not ensure enforcement. I hope the Competition Authority will be an effective watchdog but I am not sure the authority is effective now or will be effective in the future, even though its role is being strengthened and widened. We will be watching to see if it works effectively.

The Bill is largely welcome. The prevention of distortion in the marketplace, which is the function of the Bill, is not an easy task. It is extremely difficult to maintain a balance between the various forces operating in the marketplace but we must make every effort to do so. In endeavouring to ensure that the domestic market is not distorted we must be careful not to compound the problem by curtailing the ability of our indigenous market to compete internationally. It is in this area that legislation such as this can fall down.

Mr. Mooney

I join my colleagues in welcoming the Tánaiste and Minister for Enterprise, Trade and Employment to the House and in congratulating her and her husband and wishing them a very happy life together.

Mr. Costello

Hear, hear.

Mr. Mooney

I will try to be concise although those who know me might say that is an impossible task. The Minister has been ideologically wedded to the concept of fairer competition and committed to changing the business culture of this country since she entered public life and especially since she assumed leadership of the Progressive Democrats. This is the Minister's Bill, but it coincides happily with the current business environment which needs the type of legislative rationalisation and consolidation which is provided by the Bill. The Bill is clear, focused and unambiguous and draws together other legislation, which was commendable in its time. It has brought to fruition the long-held political aspiration of the Minister to set up a competition authority which would be independent of her Department and able to focus on its mandate. The Bill is to be welcomed because it covers all bases. Notwithstanding the contributions of our colleagues on the Independent benches who will bring forward amendments, no Senator could disagree with the broad thrust of the Bill and with what it attempts to achieve.

The EU Commissioner with responsibility for competition has taken an initiative with regard to the price fixing cartel which has operated in the car industry. The Commissioner is to be com mended on his political courage in taking on a significant lobby and bringing it kicking and screaming into the 21st century. It is sad, therefore, that Ireland denies its consumers the right to be able to purchase cars on the same competitive level as their fellow citizens of the European Union. I fully understand the reason for the vehicle registration tax and I accept the argument that a radical reduction in VRT would place an enormous strain on the Exchequer receipts. Nevertheless, I suggest to the Minister that an attempt be made to dismantle the VRT albatross which has been around the neck of the Irish consumer since its introduction in 1993. This could be done on a phased basis over a period of years so that its impact on Exchequer income would be minimal. No Government could agree to a complete and immediate removal of VRT and I would not ask for that.

Many of my colleagues have referred to media dominance. I too welcome the provisions in the legislation which cement the initiatives taken by previous Ministers in relation to media mergers but it is not enough to pass legislation to prevent dominance of the media by a single cartel. Let me be frank and brutal. When we speak of dominance of the media, particularly of television, we are talking about Rupert Murdoch. However, in recent years there has been an increasing drive by outside media companies, particularly those based in the United Kingdom, to identify business opportunities in the Irish media at local level. The first foray into media purchase in Ireland by Scottish Holdings, which is becoming a dominant player in the Irish media, was not of a large Irish conglomerate but of my local newspaper, the Leitrim Observer, of which the Minister has an intimate knowledge as a result of recent activities in my county. My local newspaper is now owned by a Scottish company.

I say, as an aside, that the Minister will always be welcome in County Leitrim irrespective of her reason for coming. I know I speak for the overwhelming majority of the people of my county and the neighbouring county of Sligo in saying this.

Mr. Coogan

Is Senator Mooney getting his wine cheap?

Mr. Mooney

This was another example of Dublin 4 getting things wrong and being out of step. The episode may have exercised the minds of people in the media in Dublin but most people at home were very happy and proud that the Minister came to see us. It was said to me that people in Dublin 4 may not have heard of Manorhamilton before Christmas but they know exactly where it is now.

Mr. Coogan

It was the handling of the matter afterwards which needed to be finessed.

Mr. Mooney

RTÉ is in financial crisis. There is an increasing concentration of power in radio and television. Cork 96.8 was recently taken over by a consortium and Today FM has been taken over for a huge sum of money. As someone who has an interest in local radio – I declare an interest in this regard because I am a shareholder in a Dublin radio station – I know that the rationalisation and consolidation of the Irish radio and television media industry will continue. The effect on television will not be so great because TV3 is our only independent commercial TV channel, but if RTÉ continues to be starved of funding for programming we will see the diminution and even the elimination of a public service voice in the Irish electronic media. RTÉ will not be able to survive commercially because of the powerful figures who control the electronic media and who can spend hundreds of millions of pounds.

I cite as an example the enormous sum of money – between £6 million and £7 million – given to the premiership in Britain by Sky Television. At the end of this year, a similar arrangement between the English Rugby Football Union and Sky TV for exclusive rights to England's home international matches will come up for renegotiation. The international rugby union fought against this when it was first initiated three years ago. There is no doubt, when money of the order that has been dangled in front of the premiership is similarly dangled in front of the rugby authorities next summer, that, even with the best will in the world, they will succumb to it. What will then happen is what will happen next Saturday week when the vast majority of rugby followers in this country, including people like me who follow the game because we enjoy sport, will be denied the right to see the game being played at Twickenham.

That is not because of any merger, competition legislation or legislative model that has been brought to bear on the issue but for the one basic old fashioned reason of money, and lots of it. I urge the Minister in her capacity as a member of the Cabinet to try to ensure that the final pieces of the jigsaw in regard to listed sporting events, which were promised several years ago, are acted on as a matter of urgency, notwithstanding the fact that we are in a pre-election situation. There is absolutely no rocket science involved in identifying the national sporting events that need to be protected.

I am adding this dimension to the debate because it is not sufficient to suggest this model of legislation is in place, although it is excellent legislation, and that all the infrastructure is in place to ensure there is no abuse and that, if there is abuse, sanctions will be imposed. The point has been well made by my colleagues about the importance of the media. It may seem like I would say so – I am declaring a vested interest as I still receive an income from RTÉ – but I am passionately committed to the concept of public service broadcasting and an independent voice in this country when it comes to dissemination of news, current affairs and articulating and reflecting our national cultural identity. Therefore, I believe it would be madness to allow the destabilisation of RTÉ as a public service concept.

One can have this legislation which ensures there will not be a dominance of the media but if the existing semi-State body does not have sufficient money to, at least, try to compete, it will fall. I appreciate the Tánaiste and I might not necessarily see eye to eye on this issue, coming as she does from a free market philosophy, but I think I would do her a disservice if I suggested she would not see some merit in my argument about the protection of a separateness within television. The point has been well made about the print media. Therefore, I will not repeat what has been said in that regard.

I wish to refer to supermarket dominance. Since the introduction of the euro, what was anecdotal up to then has now become apparent, that is, some price fixing is taking place among supermarkets. How else can one explain the gross disparity in price for even the most basic items? I was aghast at one item in particular, potatoes, which have been the staple diet of the Irish for centuries. There must be something wrong given that we pay more for potatoes than any other euro zone country. It might be worthwhile for the Minister, who has already embarked on a series of studies and commissioned a number of reports in various areas, or the Minister of State, Deputy Tom Kitt, to embark on some type of comprehensive study on to why there are such gross price disparities between Ireland and other euro zone countries for staple produce.

Is there a link between the fact that most of our larger food outlets are controlled from Britain? Most of the ordering process comes from Britain. Any day of the week one can see massive juggernauts with UK registrations which have just arrived off the ferry outside Marks and Spencer's. Much of that produce which is on our shelves and sold within a few hours originates outside the country. Similarly, Tesco has a dominant position in the Irish supermarket scene and, again, its ordering processes are UK originated. I suggest there is a linkage which is not just about the sterling and VAT differentials, but a culture in Britain which is not beneficial to this country.

It would be remiss of me not to raise that issue in the context of the legislation. I should put on record the fact that there is still a significant independent player in the market, Senator Quinn of Superquinn. He is out there, he is Irish and proud of it and I am very happy to shop in his premises. If that sounds like narrow nationalism, I do not care because it is important to support our own. That does not in any way reflect on the thousands of Irish workers employed in the other dominant supermarkets. This is about a concept and philosophy. If price fixing is taking place, is there a link between the fact that the dominant players involved in the food chain are UK based, with UK buying practices and business practices that are inimical to ensuring consumers get a fair deal in this country?

Once again, I reiterate that the Minister is particularly proud of the fact that this legislation has finally come to fruition. I am particularly pleased it has been initiated in the Upper House of which she was a very distinguished Member at the beginning of her political career. I wish the Bill well.

Tánaiste and Minister for Enterprise, Trade and Employment (Ms Harney)

I thank all the Members who participated in the debate and for their good wishes. It is always difficult to respond to individual points when Members have left. I will not respond in detail to all the suggestions made because, as I said at the outset, I have an open mind on some of the issues raised. On another occasion when I took the Environmental Protection Agency Bill through the House, I recall accepting 183 amendments. I do not want to encourage this as other events are occurring later this year. However, I genuinely have an open mind. I like good and healthy Committee Stage debates because the primary role of Members of this House, as in the other House, is to be legislators. I always think legislation is stronger if it has been properly scrutinised. I will not go into the individual points raised but I want to comment on a number of inaccuracies.

In reply to Senator Costello, it is not the case that multinational or multi-locational companies have a preferential tax regime. The 10% tax which applies until 2010 is ring-fenced around certain activities, including manufacturing and internationally traded services, regardless of whether companies are indigenous or foreign companies in this jurisdiction. There are a large number of multi-locational companies which were originally indigenous such as CRH, AIB, Bank of Ireland, Elan and Iona. There are many multi-locational and multinational companies and, therefore, it is wrong to presume the reference to multinationals refers to foreign companies solely. It is inaccurate to say they have a different tax regime from that which applies to the indigenous sector because that is not the case.

In any event, all companies will pay 12.5% tax on corporation profits from 1 January 2003. That proposal was initially made in 1997 by the rainbow Government in which Senator Costello's party was a partner. We have accepted the need for a low corporate tax rate because we realise it encourages activity and makes more things happen in Ireland. It has made Ireland more competitive and has generated substantially more revenue for the Exchequer than might otherwise have been the case. Companies in Ireland, paying on average one-third of the tax rate on profits that applies generally in Europe, contribute about 15% of the tax take. In other countries, they contribute about 5% or 6% of the tax take. The lower rate generates almost three times the rev enue that is generated elsewhere – it used to be two and a half times the revenue.

Senator Mooney made reference to the proposal by Commissioner Monti. There is some confusion over this. Commissioner Monti was dealing with what is called the "block exemption". This was an arrangement that existed between manufacturers and distributors which discriminated against retailers and purchasers of cars. That is a separate matter from the raising of taxation. Vehicle registration tax applies in eight countries in Europe. In some cases, it is at a much higher level than in Ireland.

I am a strong advocate of lower taxes, not just lower personal taxes and corporate taxes. I like to keep taxes low because it encourages activity and it rewards risk-taking. Ultimately, it raises more revenue. VRT currently brings in €800 million annually. If we were to abolish it, we would have to increase petrol costs by about 36% to raise a similar amount of revenue or put 2% on the standard rate of tax. There are issues concerning how we raise the tax revenue we need to provide the services we all want to see in this jurisdiction. That is separate from the decision that was made, which will benefit consumers in Ireland as it will everywhere else. I welcome the decision very much.

With regard to pay-for-view television in respect of major sporting events, Senator Mooney should note that the English RFU has the ownership rights to the rugby match on Saturday week in Twickenham and it has sold them to Sky. The Minister for Arts, Heritage, Gaeltacht and the Islands, who has responsibility in this area, can, under the 1999 Broadcasting Act, make an order designating certain major events of national importance to be made available on free television. Obviously, they are events that take place in this jurisdiction. I understand that the Minister for Tourism, Sport and Recreation is in discussion with the national sporting organisations and there are two views emerging. Some organisations, for financial reasons, may have difficulties with that. The matter is being discussed between the Ministers involved and does not come within my remit.

I welcome the support for this Bill. Nobody will oppose it on Second Stage, which I welcome very much. Across the House there is support for increasing the powers of the Competition Authority and simplifying competition law. The fact that previous legislation will be consolidated in one Act is a very good thing. Legislators and practitioners of the law find it difficult to get their heads around the law in Ireland because we have not yet reached the stage where we have been able to consolidate legislation, as we do with the Finance Bill every year. The Finance Acts are consolidated Acts, but this is exceptional because the law is not yet in a form that is easily understood. It is a great pity that is the case. It is the intention of the current Attorney General and others, over a period of time, to have all our laws codified or consolidated. That is the way it should be.

Unfortunately Senator Mooney has left, but he should note I am not a free marketeer. If I were, I would not be bringing in this legislation. If the market were so perfect, we would not need competition legislation. I strongly support private enterprise, individual enterprise and community enterprise – there is no question about that. People often misunderstand the issue when one favours both lower taxes and State disengagement from private and social lives or lives in terms of business and taxation. Neither am I an ideologue. My politics do not come from any textbook ideology. They come from practical experience. That is why I have a practical perspective with regard to this Bill. I have also had the benefit of working in the Department of Enterprise, Trade and Employment for the past four and a half years. That experience gives me a certain perspective on the best way forward.

It is untrue to say, as Senator Quinn said, that the Minister can appoint as many members of the authority as he or she wishes. It is limited to a minimum of two and a maximum of four. One can appoint part-time members and I would not rule out the possibility of using a provision like that because, from time to time, certain expertise may be required. It is important that legislation of this kind is flexible and not too rigid to allow for the different circumstances that might arise.

The authority will be much more independent. I would be interested to hear how Senator Quinn thinks the authority could raise the resources that may or may not be necessary if they are not raised from central taxation. There are possibilities but I think they are genuinely quite limited.

I remember that when the Environmental Protection Agency and the National Roads Authority were being established, there was a general welcoming of the fact that these bodies would be independent. Subsequently, after their establishment and their having being in operation for a number of years, there was much criticism from Members of the Oireachtas because they felt the bodies were too independent and that Members never had an opportunity to ask questions. We need to get the balance right in terms of public policy.

This is a very small country with only 3.7 million people – fairly thinly dispersed in many places. We want to make sure that consumers, whether in west Cork or Dublin city centre, have access to a range of services. That is important in terms of public policy.

I am surprised by Senator Costello's remarks about my visit to Manorhamilton recently. I got an opportunity to read them when they were faxed to me in Nairobi. There was a large wad of paper and among the comments included were those of Senator Costello. Given that he comes from a small village in Sligo, I thought that he in particular would understand the significance of opening an off-licence in a place like Manorhamilton. However, it seems that is not the case. Per haps it was the mode of transport and not the event that caused him disquiet.

Reference was made to the groceries order. I emphasise that I said I do not have plans at present in this regard. We need to look at any restrictions that are in the way of competition and which act against the consumer interest. We all have a duty to do that.

I look forward to the amendments that will be tabled on Committee Stage. I have no doubt we will have a very good debate because there is a huge level of interest. Some people have a theoretical interest. Sometimes the theory sounds great, but when one starts to put it into practice, a different view is often taken.

At the end of the process, we must end up with a Bill that is practical and flexible, which ensures that consumer interest comes first and that we have the capacity to enforce competition law. Bearing in mind the importance of the 1996 Act, Members will recognise that having something written in law is one thing, but having the capacity to enforce the laws that are passed is often very different. We must ensure we have a workable regime in place so that serious offences are penalised appropriately and that the Competition Authority has the capacity to do that.

Senator Norris has rejoined us – I thank him for his very kind wishes. There is no preference for Trinity graduates on the authority. It happens to be a coincidence that the current chairman—

Mr. Norris

Why is the Minister suggesting that?

Ms Harney

—is a Trinity graduate. I mention it in case there is any misunderstanding. I know Senator Norris is a keen advocate of competition. As I travel the country, I frequently meet graduates from the institutes of technology and universities who are not part of the NUI and they wonder why they cannot vote for the six Members of the Seanad.

Mr. Norris

They are very welcome.

Ms Harney

It is very hard to tell them why they cannot, but I look forward to the day when all graduates, if we are to have graduate representation, will have equal rights—

Mr. Norris

The Minister should not use the word "if".

Ms Harney

Do not put in the "if"?

Mr. Norris

The Tánaiste said: "if we are to have". We must have it. It is essential for the intellectual well being of the country.

Ms Harney

Competition is sometimes good in theory, but when it affects people directly, many who support the theory are not as good in practice. I have learned that in recent days from friends of mine in the pharmacy business and in the past year from constituents of mine who are holders of taxi plates. It happens in the political arena also. I am not very happy that my constituency will go from having five seats to three seats at the next election. It makes things more difficult.

I thank the Senators for facilitating the early Second Stage reading of this Bill. I look forward to Committee Stage within the next few weeks. That is the understanding we have reached with the different representatives in the House. I look forward to a very challenging and interesting debate. I give the commitment that all the amendments put forward, which I know will be tabled in good faith, will be given very serious consideration by me and my officials.

Question put and agreed to.

Committee Stage ordered for Wednesday, 13 February 2002.

Sitting suspended at 5.50 p.m. and resumed at 6 p.m.