I welcome the Minister for Jobs, Enterprise and Innovation to the House.
Competition and Consumer Protection Bill 2014: Committee Stage
Sections 1 to 9, inclusive, agreed to.
SECTION 10
Amendments Nos. 1 and 4 are cognate and may be discussed together.
I move amendment No. 1:
In page 13, between lines 13 and 14, to insert the following:
“(r) the Commission, where a reasonable doubt exists about competitiveness of a market and/or economic sector, may open an exploratory investigation in the contestability of a market and submit a proposal for further action to the Minister or any other Minister of the Government to ensure a competitive market environment.”.
As we said on the last day, discussions on ways to make the economy competitive are extremely valuable and it is in that spirit that I welcome the Minister. On the last day we also referred to some of what is contained in my amendment.
We tend to have some sectors of the economy which compete internationally and act as a model for the economy, of which the Minister has been champion by adding between 60,000 and 70,000 jobs annually. The international trading sector has helped to tide us over a period when, to solve some of our debt problems, we had to deflate domestic demands. The sector is very competitive while others are not. The Minister mentioned some of them when he referred to liaising with other agencies. They may not be competitive due to regulatory capture or due to being sheltered from the international winds of competition.
We support section 10(4) which states:
The Minister may request the Commission to carry out a study or analysis of—
(a) any issue relating to consumer protection and welfare,
(b) any practice or method of competition affecting the supply and distribution of goods or the provision of services, or
(c) any other matter relating to competition.
My amendment adds to the provision by referring to the work of the competitiveness council, or any evidence that comes to the Minister's mind, or if people from outside the country say a service in Ireland is expensive in comparison with what they thought it would be from their experience in whatever country they come from, such as Canada or Germany. One of the current issues of concern to me is that, even after years of domestic devaluation and promoting export-led growth, we still appear to have higher construction costs than Germany. If the Minister and commission feel these matters are important, let us investigate and strengthen the hands of Ministers and the Oireachtas in order to have a competitive economy. The purpose of my amendment is to assist the Minister in strengthening the Bill and, in the process, benefit us all by making the economy competitive.
My amendment also calls for the commission to have the power to intervene where it feels services and goods of any kind are too expensive for overall national competitiveness. The Irish economy depends a great deal on export-led growth and faces, as a small open economy, a lot of competing imports in the traded sectors. We do not want to burden either the exporters or those facing competing imports with excess costs for services of any kind within this economy. The amendment was put forward in the hope of assisting the Minister and the Bill, the goals of which I share.
I welcome the Minister here again. He is very fond of us. I support Senator Barrett's amendment. He has made his case very well. Clearly Ireland is much more expensive than other countries in certain areas and, therefore, it seems sensible that attention is drawn to the areas. Like him, I am opposed to more Government interference but I do not regard his amendment as such. All we ask is that the competitiveness council examines the situation. There are areas where we are uncompetitive and the Senator has touched on a couple of them. There must be some reason for our uncompetitiveness. The reason may be valid and logical but at least an investigation should take place. Therefore, I support amendments Nos. 1 and 4.
I thank Senator Barrett for his amendment and Senator Quinn for his comments. The issue is not whether it is a good idea to look at sheltered sectors of the economy and open them up to scrutiny, because I think that is agreed by everyone.
The real issue is whether the Bill already provides for this and I would argue very strongly that it does in section 10(3) which Senator Barrett is seeking to amend. Subsection (3)(n) provides that the commission, "shall, as it considers appropriate, conduct or commission research, studies and analysis on matters relating to the functions of the Commission and may publish, in the form and manner that the Commission thinks fit, such findings as it considers appropriate (which may consist of, or include, a study or analysis of any development outside the State)." It has the power to study any sector that it considers is a sheltered sector of the economy.
Subsection (3)(a) provides that the commission:
may, and shall at the request of the Minister, advise and, as appropriate, make recommendations to the Government, the Minister, any other Minister of the Government, any Minister of State, any public body or any prescribed body within the meaning of section 19 in relation to any matter concerning, or which the Commission considers would be likely to impact on -
(i) consumer protection and welfare, or
(ii) competition,
or both.
Between those two sections it has all the powers it needs to carry out an exploratory study to identify findings and to make whatever recommendations it believes are appropriate to Ministers. Independently of that, it has its powers of investigation and prosecution and enforcement where it has any evidence of collusion or abuse of dominance or any of those other areas. I think it has all the powers in the Bill that the Senators believe are necessary. To be fair, over the years, it has made a number of recommendations. Some would say that those recommendations were not acted upon with sufficient determination in the past. With the arrival of the troika to our shores, the various recommendations of the Competition Authority became a much greater focus of attention and many of those changes in areas of the sheltered sector have been made. Last year it conducted a study into the ports sector to ascertain whether it needs to improve competition and so on. It does have those powers and we are careful to make sure those powers are protected in the new competition and consumer protection commission. While I can understand the motive for Senator Barrett's amendment, I do not propose to accept it because I think it is fully accommodated in the paragraphs I mentioned.
We have two people rowing in the same direction. I support the Minister. If he is satisfied that he has the necessary powers, because we share the same goals, I will not push the amendment. I thank him for his considered reply. If he is of the opinion that he does not need those powers and will not be obstructed in his goal of making the Irish economy more competitive, I accept his assurances and his judgment in the matter.
Amendment, by leave, withdrawn.
I move amendment No. 2:
"(10) In this section, a public body will be subject to the same consumer protection requirements as those outlined by the Consumer Protection Act
2007.".
Members will have noted in many cases when they go on to public websites that there is a custom to refer to the users of those services as its "customers". If a service is not delivered to a person, as a customer, with the same protections as in the wider economy, can one have the same protections that are afforded by the Consumer Protection Act? In other words, I do not want providers of public services referring to people as "customers", as a cliché. It involves certain rights and protections and one should be served by public bodies with the same protections as one gets as a customer in the wider economy, which is the purpose of the Bill, which I support. The point I am making is that public services should have the same consumer focus. They should not just call people customers but treat them as people, as Senator Quinn grew such a reputation for treating people as customers with choice and rights. It is against a "take it or leave it attitude" that one might encounter by some providers of public services. I support the Minister in increasing the rights of consumers but do they extend to all areas where the providers call themselves the customers?
I support Senator Barrett's amendment. I have had the experience of being involved in various public bodies. I was chairman of one hospital, I was chairman of An Post and I am involved in the Seanad. Referring to our customers in An Post, I was reasonably successful in being able to begin the process of calling the public "the customers" and it began to work quite well. I had less success in the hospitals at getting the nurses and doctors to call the patients "customers". One does not win them all.
When I became a Member of the Seanad 21 years ago, I did not know where to start. However, I started to look for the customer in each piece of legislation and I tabled amendments to Bills that had not been thought of heretofore. In one particular case, when the unfair dismissals legislation was going through, I tabled an amendment to the effect that it should include "age" as one of the grounds on which one should not be dismissed. The reason was that I had been involved in a hotel where one of the directors asked the manager to put a bright young attractive woman behind the reception desk. The manager said there was a very good woman in the position. The director again said he would like a bright young attractive woman in the position. The manager then asked what he would do with the older lady in the position, to which the director replied, "Just get rid of her". I regarded that as very wrong. Therefore, I sought to include "age" as one of the grounds on which one could not be dismissed and it was accepted.
I was very impressed when I received two letters the following week from trade unionists who said they had the Bill circulated to them and all their members and they had not thought of that issue. It was an employer, a boss, who came up with it, rather than one of their own members. I fully support the whole concept of customers and I know the Minister does. I hope this amendment will strengthen the requirement to refer to the public as "customers".
The Consumer Protection Act 2007 gives effect in Ireland to the EU directive on unfair commercial practices. Article 3(1) of that directive provides that "this directive shall apply to unfair business-to-consumer commercial practices." The Consumer Protection Act 2007 is, therefore, more concerned with what happens before, during and after a transaction rather than the status of the trader who engages with the consumer. The Act defines "trader" as "a person who is acting for purposes related to the person's trade, business or profession." This is a wide definition and, therefore, any natural or legal person engaged in business to consumer transactions such as selling or offering to sell goods or services to consumers will have to adhere to fair commercial transacting. The legal status of the body, or how it is financed, does not affect the applicability or otherwise of the Consumer Protection Act 2007. Public bodies, therefore, qualify as "traders" when they engage in commercial activities with consumers and are already liable to the enforcement provisions of the Consumer Protection Act 2007 should they engage in unfair commercial practices. The suggested amendment would therefore add little to the Bill as it would appear that the objective behind the proposed amendment is already being met.
In light of the above I am not in a position to accept the amendment.
I thank the Minister for his reply. If he is satisfied that the appropriate protections are in place and that there is customer focus in the Bill, I will not push the amendment. I hope people read the Minister's response which we accept and endorse.
It is an attempt to improve the quality of public services by giving people rights. I thank the Minister for his response and I will not press the amendment given the spirit in which the Minister has spoken, which is very reassuring.
Amendment, by leave, withdrawn.
Section 10 agreed to.
Sections 11 to 14, inclusive, agreed to.
SECTION 15
I move amendment No. 3:
In page 18, between lines 27 and 28, to insert the following:
“(9) Vacancies of the Commission membership will be filled within 3 months.”.
The Government's record on the filling of vacant positions on NCSSBs has not been great up to now. The Minister might remember in the run-up to Christmas last year a minor crisis unfolded as SIPO was unable to carry out its investigations as the Government had failed to fill two of the six positions on that board. It appears that the lesson the Government learned from that debacle was to work around the issue rather than address the problem itself. Essentially the Bill enables the board of the CCPC to carry out its business with half of its members not present indefinitely. I do not regard that as a satisfactory way to deal with it. We are calling for the positions to be filled within a time limit and we believe three months is a fair time limit.
I think this is a very sensible amendment. Senator Cullinane has outlined the Government's record in filling vacancies. This week is a case in point, with the Cabinet reshuffle that everyone is awaiting. The Government is introducing emergency legislation tomorrow relating to the Clerk of the Dáil because of an impasse between the Taoiseach and the Ceann Comhairle in that regard. Leaving all that aside, it is a sensible amendment. There is no harm in setting a time limit in filling vacancies. I support the amendment.
The Bill makes provision for appointments being made to the new competition and consumer protection commission following an open recruitment competition to be run by the Public Appointments Service. This replicates the system that currently exists for the Competition Authority.
The mechanics of advertising, interviewing and then taking into account the need for successful applicants to give some months’ notice to their current employers - possibly up to three months - means that the entire recruitment and selection process could take a number of months to conclude, during which period the commission would not be allowed to function without the requisite membership if a number of vacancies had arisen.
Thus, the Bill replicates, at section 12(5), the provisions of the Competition (Amendment) Act 2010 which allows the Minister for Jobs, Enterprise and Innovation to appoint whole-time members for a short period to provide cover up to the point when whole-time members are appointed following the holding of a PAS competition. In that context, as laid out in section 12(10) and section 12(11) of the Bill, such members may only be appointed for an initial maximum period of six months, with a further period, or periods, allowed provided the total period for that temporary member does not exceed 12 months. This provision was utilised in 2010 and appointments were made for less than the 12-month period. In addition, replacements were put in place within a very short time to ensure that the authority had its member complement.
Section 12(3)(b) also replicates the provisions of the Competition Act 2002 regarding the appointment of temporary whole-time members to address a situation where a member is temporarily unable to discharge his or her duties. Such provisions are intended to cover illness of a member or unavailability to attend a meeting of the commission if that member is out of the country and cannot take part in that meeting with a knock-on impact on the statutory quorum for that meeting. Thus, they are of very short duration and very specific to a given unforeseen situation. They have, in the case of the Competition Authority’s experience to date, consisted of members of staff being appointed for limited periods to ensure authority meetings could take place with the required quorum, often at short notice.
In summary, if a longer-term vacancy arises, the provisions under sections 12(5), 12(10) and 12 (11) will operate. If there is a shorter-term vacancy, then section 12(3)(b) comes into operation.
It is not clear if the proposed amendment applies to both types of vacancy or just one type only. If it relates to the longer-term vacancy, the provisions of sections 12(5), 12(10) and 12(11) will operate and replacements have to be found quickly. If there is a shorter-term vacancy, then section 12(3)(b) operates and, as these are only temporary appointments appointed at short notice, there does not appear to be any requirement to set a time period.
Therefore, I do not believe that the proposed amendment is necessary and I am not in a position to accept it. The competition board is not a board like the board of Enterprise Ireland where effectively the Minister appoints the board. These are statutory positions that people hold and they are filled by way of a public competition. Once a vacancy arises there would be no reason for not advertising that vacancy. Seeking to constrain the selection process in the way the Senator is suggesting does not serve any interest.
The history has shown that the authority has had to make use of the provisions of the Bill to ensure that important statutory duties can be conducted in a timely way when they need to be. In the nature of some of the issues that the competition and consumer protection commission will be dealing with, it needs to be in a position to respond quickly and make decisions, as appropriate, on important matters. While I understand the general principle of filling vacancies quickly, I think the amendment is unnecessary.
I appreciate the Minister's response and I fully accept the difference between this board and some other State boards. We obviously have difficulties with short-term vacancies and there will be from time to time on all boards members who are not able to fulfil their duties because of illness, etc. That was not what we were getting at. We had a fear over board positions generally not being filled. Given the Government's track record on this, we believe that the solution is to have a timeframe within which positions should be filled rather than trying to circumvent that by allowing boards to continue to do their work without the full complement of positions being filled. While there is logic to what the Minister has said, regardless of the difference between this board and other boards, generally it would be of value to have a time limit on the filling of vacancies. I will not call for a vote, but I will press the amendment.
Section 15 agreed to.
Amendment put and declared lost.
Sections 16 and 17 agreed to.
SECTION 18
Amendment No. 4 not moved.
Question proposed: "That section 18 stand part of the Bill."
I am aware that the previous Competition Authority sent observations to the Taxi Regulator indicating that it believed that certain practices were anti-consumer. It also sent observations to the National Transport Authority on liberalisation of the bus market. As far as I can see the advices from the Competition Authority were ignored. I raised some of those at the Joint Committee on Transport and Communications with the proponents of preventing competition and asked them how they would respond to the Competition Authority and the attitude was "What do you expect?"
The consumer will be extremely weak if producer bodies dominate regulatory bodies for individual sectors. It is important in the Minister’s discussions with the new body, the competition and consumer protection commission, that he makes it clear it does not opt out of the tackle after the first response from producer groups. Producer groups are extremely powerful, organised and achieve regulatory capture while consumers are disparate, badly organised and can be easily crushed. By combining competition and consumer protection, I hope the new body will take up the cudgel against producer dominance. For instance, when the Irish Water legislation was going through the House, the Minister for the Environment, Community and Local Government refused amendments to allow any role for the National Consumer Agency or that the Competition Authority should look at an industry which was being monopolised. The consumer lobby, strengthened by this legislation, must be willing to lock horns and not just send in a submission which will be ignored.
I am sure the Minister will share the aspiration that the body will stay in longer to battle consumers’ interests. The House is at one on the need for stronger protections for consumers in sectors where producers call the tune while regulators dance the merry dance.
Section 18 involves investigations by the commission and it provides that a person found guilty of an offence under this section is liable to a fine or imprisonment. These are fairly draconian powers where the commission is actually investigating a serious breach of competition law. The Senator is raising a more general view. Essentially, the Competition Authority and the National Consumer Agency have the right to comment on legislation coming before the Government which they do frequently. They have been given that privileged position which is not available to any other body, as legislation generally only circulates to other Departments. These bodies have the role of protecting consumers from anti-competition activity.
They are not always acted upon. When one is forming public policy, competition or the consumer is not the sole issue. We have had debates on proper planning, for example. The Competition Authority would have a clear view about proper planning for supermarkets and the freedom of establishment, whereas some public policymakers would take a different view on the need to protect our town centres and look at other wider issues. While competition issues are rightly flagged, a Minister will be looking at the position in the round. I am not saying that on every occasion the authority’s advice was ignored that it was incorrect. There is a broader range.
Regulatory capture has been a problem. That is why last year the Government sought to underline to regulators their duty to consumers and ensure their sectors are competitive against international benchmarks.
The commission will work actively on co-operative agreements with bodies such as Irish Water to ensure the way they develop policy is even-handed. The two bodies are already involved with the work of the Commission for Energy Regulation which is overseeing Irish Water, as well as the entity itself. They did intervene in the practices of some of the refuse collection companies which were using oppressive terms in their contracts and ensured they modified them.
I understand the Senator’s concerns. He has been a champion of the free market in these areas but I know he might take a slightly different view in the education sector. There are always wider public policy issues that have to be examined when these factors are being accounted for.
Question put and agreed to.
SECTION 19
I move amendment No. 5:
In page 23, between lines 20 and 21, to insert the following:
“(11) (a) Any body outlined in subsection (10) and/or any arrangement shall be considered to exhibit a reasonable bias that can be considered by a reasonable person to constitute a pattern of action or inaction that contravenes the public interest and favours a regulatory body or regulatee.
(b) Where evidence is provided for “regulatory capture” this can be understood to fulfil the requirements of paragraph (a) of this subsection.”.
The Minister has taken one of my lines about regulatory capture. One must ask why there are so many lobbyists in Washington, London and Brussels. As was discussed earlier, producer groups treat government as something to be manipulated while they achieve capture over agencies. Producer groups are well-organised with professional advisers while consumers are disparate and badly organised. No one consumer spends more than a fraction of income on any one commodity, whereas for big producers all of their income comes from one commodity. Put the two together and one gets unequal competition.
In the past in Europe, we had one airline per country which got together and had their parent governments rubber-stamp their fares. When the market was opened up, fares fell by 55% on the very first day. This was a form of regulation by the then transport Department and the Civil Aviation Authority in the UK which were both out of touch with reality. A regulatory body can get documents from the producers which it accepts without saying anything. Consumers have no alternative but to grin and bear it. Alfred E. Kahn pointed this out in the United States when he abolished the Civil Aeronautics Board. If it had been left in place, the airlines would still continue to lobby to get special consideration.
There are concerns about the effects of large corporations in achieving regulatory capture. If there is evidence of this, then the new agency should intervene on behalf of the consumer. It is a worldwide concern. For instance, while the world appears to becoming more unequal, certain large corporations can get governments to do whatever they like through the powers of lobbying and regulatory capture. They get richer while the rest of society does not.
Some of the Thomas Piketty literature comes in there. I do not know if this has been addressed in Irish law before, although the Minister referred to it in his response to an earlier question. Consumers are unequal when they deal with very large corporations, and very large corporations achieve control over government agencies which, as the Minister said, even when put back on the rails to represent consumers, revert to being dominated by producers.
We previously referred to the 55% increase in the public service obligation payment, PSOP, required to be added to every electricity bill. Part of the rationale given is that due to reduced international energy prices Ireland is uncompetitive by international standards, therefore the cost of protectionism rises and the PSOP must increase. Although there are arguments that this achieves security of supply, if international prices are decreasing it is good for Ireland and we can participate in the export-led growth which the Minister supports.
ComReg's opposition to the importation of gas from the US through the Shannon Estuary on the basis that it would leave the pipeline to the UK as a stranded asset could be used as an excuse not to do anything. One could have argued that one should not have built railways because it would have left the canals as a stranded asset, or roads because it would have left the railways as a stranded asset, or that one should not build a new airport because it would leave the old airport as a stranded asset.
Sooner or later, the new CCPC, the Attorney General and the Minister for Justice and Equality will have to address this factor because it seriously distorts resource allocation in the modern economy. There is much literature on it, to which the Minister alluded. There may be a bias that can lead a reasonable person to favour producers having an undue influence on regulatory bodies. In my experience, such producers do not answer very effectively when they are brought before Oireachtas committees. If this is the case, somebody must say that it looks as if certain interest groups - the construction industry, farmers, the professions - have acquired an undue influence. After what happened in 2008 we would have to include bankers and the people who are supposed to be regulating them in the list. If these bodies do not serve the wider public interest, the broadly based body the Minister proposes must research, publicise and counteract regulatory capture. The evidence is that the problem is large and damages the wider public interest. If there is any way we can accommodate that here or elsewhere, I would be grateful for the Minister's thoughts on developing a competitive Irish economy. It is an elephant in the room which we can no longer ignore. I am sure the Minister and his OECD colleagues will have also discussed it.
No doubt the Senator is correct that there have been instances of regulatory capture or where people might take the view that a regulator has been unduly influenced by producers. The new CCPC must be alert to this. The two bodies have had no compunction about challenging practices that might be evolving in sectors which they do not believe in the interests of consumers. The Senator's amendment is to section 19, which provides for co-operation between the commission and certain of these regulations. Under this section, there would be the capacity for exchanges of information, conducting joint analyses to reach a shared understanding of certain issues and to understand the performance of their functions. I can only see it as beneficial that the CCPC would have co-operation agreements with some of the bodies such as the Financial Regulator or ComReg. Those co-operation agreements will result in better understanding, more sharing of information and analysis, and more influence for the consumer view within the regulator, and this would be beneficial.
It is unclear what the Senator's provision would do. Already, the Competition Authority has ample powers both of investigation into specific sectors and of making recommendations to Ministers in respect of instances where it believes regulatory capture is occurring. Where a regulator scrutinises a sector as a whole, there will be a series of policy objectives in the sector which may not be restricted to concerns about competition and consumers. The Senator can well conceive of considerations, such as safety issues, which might be involved in the bodies. Those regulators report to their respective Ministers and have responsibilities under their Acts according to the provisions of those Acts. The Competition Authority has ample powers to challenge what it believes are bad practices in a marketplace and the development of these co-operative agreements will serve only to improve its capacity to influence.
Although the Senator's amendment is undoubtedly well intentioned, in that it would alert the commission to the possibility of regulatory capture, from a legislative point of view it does not serve any new purpose. The CCPC's predecessors have shown ample understanding of the dangers. The Senator cited instances when they have leaned against the view of another regulator, for example the taxi regulator. The legislation will give the CCPC greater powers in many instances and I hope the influence of the two predecessor bodies will grow with the merger. I see this as leveraging more benefit for consumers. The amendment does not add to the section and I will not accept it.
Again, I thank the Minister. The Minister mentioned water. We tried to get a consumer dimension into the Irish Water legislation. The Minister of State, Deputy O'Dowd, was badly advised not to accept the amendments proposed in the Seanad by Senators Cullinane and Ó Clochartaigh, me and others. Recently, Ben Dunne said that if he had a shop and 40% of the stock disappeared, he would not blame the customers. If 40% of the water is wasted, why is that visited upon the customers? The equivalent body in the UK, a specialised body from water regulation, found that if left to themselves, engineers invested approximately 40% more than is indicated because it becomes a form of welfare for engineers. We have a metering target of 100% while the UK's metering rate is approximately 40%, which means they can charge for water without spending €600 million, or whatever we are spending on meters. Left to the engineers, they will continue to do it.
There is no evidence that ComReg has yet acquired any expertise to take on the sector. The excuse was that people such as Senator Barrett would complain if the Government created a special regulator for water - and there is probably some truth in that - and therefore it was thrown in with energy.
The Competition Authority was unable to get any response from the National Transport Authority about opening 10% of bus routes. What routes were chosen and was there any indication of the economics of these routes so people would know whether to apply? It was just a matter of taking it or leaving it. It was much the same when the newly-promoted deputy leader of the Labour Party put a 91% barrier before new entrants to the taxi business by requiring them to have a wheelchair-accessible vehicle but did not put the burden on incumbents. The Competition Authority at that stage may have got a polite request to butt out, and producer bodies will keep that up.
We have lost 300,000 customers from the health insurance sector and there has been a massive increase in costs. The Minister may say some of this is to recoup the cost of hospital beds but although the State lost cases in the Supreme Court and the European court, it still implements policies to benefit its own health insurance company and not open competition. For example, it has never produced evidence that other companies refused to recruit old people or put them at any financial disadvantage.
I share the Minister's aspiration to get better representation for the consumers of energy, insurance such as health insurance and transport, including air travel. This is just not working very well, if this is meant to be a review of customer rights protection in this country. Consumers are at the back of the queue and the culture of our public services will always favour the incumbent State company and its way of doing things. It is not just an Irish syndrome but we are a pretty pronounced case, as one can see in the examples I provided. According to Dr. Vincent Power there has never been a court case by the commission to implement competition policy. A stronger line is needed in this respect.
As of yesterday, it seems the Irish taxpayer will be called upon to bail out 75,000 customers of a Maltese insurance company called Setanta. That arises because of a 2011 Act - when we all came here - which bailed out Quinn Insurance for over €700 million. Even if people insure with companies outside the country, the Irish consumer seems to bear the burden. Another aspect of a degree of capture in an industry is moral hazard, with inefficient companies repeatedly bailed out at the expense of consumers who had the wit to choose an efficient producer or those which had the wit not to engage in the inefficient practices that led to the other bankruptcies. If we go down the road that we will now bail out inefficient foreign producers of financial services, the estimate is the bill will rise from the infamous €64 billion for bailing out Irish banks to €117 billion. That is the amount that Rabobank, the Belgian banks and the UK banks lost in this country.
The bankers get together and the producers get together but the consumers get big bills. I want to see a new agency getting in far more tackles than we have seen until now and not opting out so easily when these issues arise. A large number of elements dealt with in the section are examples of how the consumer has not been well served. In Parliament we find it very difficult to get any redress, so we hope there is an ally in both the Minister and the new competition and consumer protection agency. Regulatory capture is a factor with which we have not really displayed much energy. Our performance would be more akin to the Brazil soccer team than that of Germany in tackling some of these problems. I hope the new body will put more energy into the issue, as the results have not been going our way heretofore.
The Senator's amendment does not help the issue. We are discussing cases where the commission enters into arrangements with regulatory bodies to, inter alia, ensure as far as practicable, consistency between the decisions made or other steps taken by the Commission and the prescribed bodies in so far as any part of those decisions consist or relate to consumer protection and welfare and determination of any issue of competition between the undertaking. This is a provision to ensure the various regulatory bodies take competition and consumer protection issues more seriously and embrace them in an arrangement between the competition and consumer commission and the regulatory body in question. This is a positive section, providing a positive avenue for the commission to influence public policy.
I do not quite follow what Senator Barrett is trying to achieve in his amendment. It indicates that "Any body outlined in subsection (10) and/or any arrangement shall be considered
to exhibit a reasonable bias that can be considered by a reasonable person to constitute a pattern of action or inaction that contravenes the public interest and favours a regulatory body or regulatee." I fail to see what that adds to what we are trying to achieve. We are trying to give the competition commission a way of entering into a formal arrangement with a body to ensure that the competition view of the world is in some way embraced in the decision making processes, among other elements. That is good.
The Senator seems to fear that the competition authority would enter into some sort of arrangement that would in itself not be amicable to the interests of consumers and the market. The mandate is to try to influence these bodies in order to protect consumers and competition. For the life of me I do not see what the amendment would add. The Senator is rightly flagging that regulatory capture can be an affliction of regulatory bodies but perhaps we are offering a partial, although not a whole, solution. The capacity to enter into arrangements with such bodies that embraces some sort of competition principle is good. The amendment does not add to this.
The competition commission will have other weapons in its armoury other than these arrangements and it will have, for example, power to comment on legislation or other initiatives. Currently, it is involved with some of the matters raised by the Senator, including bus routes and health insurance. Its involvement may not be in the public arena but it is very involved in some of the issues which have emerged.
I do not dismiss the concern about regulatory capture but this section and the provision in particular is a good attempt at trying to give the commission another weapon in its armoury. It is not a primary weapon but a secondary tool that can be used from time to time. As it stands, the section is good and I commend it to the House. I do not accept the amendment.
I thank the Minister and I will not press the amendment. We know where the problem is and the Minister has eloquently described the problem of regulatory capture. The producers have been dominant. The reason we could not give Cork Airport autonomy recently was because airport management love building terminals and one was built for €168 million and we do not know what to do with it. Shannon Airport, on the other hand, was given autonomy. Negotiations on airport charges, for example, must start on the basis that the people in charge love building terminals but consumers may be less enamoured and particularly when they must pay for them. Charges increased by 40% in order to pay for Terminal 2 in Dublin and only now has tourism returned to the level where we want it. There was a problem with higher air fares and the original decision ignored the views of consumers.
There is quite a tradition of that in the other fields, some of which the Minister referred to.
The starting point in these agreements must be an uphill one for the consumer and the competition interests. The bodies are used to being dictated to by producers but we should spin them around, for which the Minister has my support, and insist they give an even break to the consumer. That has not been the tradition because they usually support incumbents. In that kind of economics the new entrants are the worthwhile people and the incumbents are the people who usually try to obstruct competition.
I thank the Minister for his fine observations and share his sentiments. Perhaps he would make some of the points stronger, thus recognising the tradition where the producer dominates and consumers do not. It is an uphill struggle and I wish him, his Department and the new agency every success in that goal. It is not an attractive starting point in many places. We are willing, in the case of health insurance, to defy the European court and the Irish Supreme Court because we have a particular view of the market and are going to make the consumption of that product compulsory. In the insurance case there is regulatory failure, which was considered by the finance committee yesterday. We need a mechanism that allows the consumer agency to say it would like the insurance sector to be better regulated here, particularly as half a dozen insurance companies have gone broke, and for it to be financed by a fund paid for by consumers. I share the Minister's goal and, therefore, will not push my amendment but remind him that we are not at a propitious starting point.
The Minister mentioned the interests of different Ministers. A lot of Ministers favour their own sectors against the wider competitive implications for the economy. My amendment sought to strengthen his hand when dealing with that issue but I thank him enthusiastically, as always.
Amendment, by leave, withdrawn.
Section 19 agreed to.
Sections 20 to 31, inclusive, agreed to.
SECTION 32
Question proposed: "That section 32 stand part of the Bill."
When I first came here 21 years ago I found that every piece of legislation lacked a provision to make sure each body reported within a short period. When I sought reports from a number of bodies, of which RTE was one, I found that they would not have been published until a year later, whatever about reported. That is why I stipulated reports had to be published before 30 June of the following year. After a short period the different Departments decided that no matter what happened they would include the proviso that a report must take place by 30 June, which was also included in this legislation. Today I ask the Minister to consider having an annual report published earlier than 30 June. I was delighted to hear what he said about another item that I argued strongly for in the past.
Section 32(4) states, "The Commission shall arrange for an annual report that has been laid before each House of the Oireachtas in accordance with subsection (1) to be published on the internet as soon as practicable after copies of the report are so laid." Section 32(4)states, "The Commission shall not later than 30 June." I suggest the date is amended to 31 March as it is now possible to compile a report a lot earlier, particularly an annual report, rather than automatically wait until June. I urge him to consider shortening the time allowed. I have not tabled an amendment but suggest the shorter timeframe is considered for all bodies. A body like the Competition Authority could compile its report before the end of January.
There is nothing to prevent authorities from preparing and publishing their reports. The date in the legislation is just the outer limit. The Senator has claimed credit for adding the date of 30 June. As it has been included in all these Bills it can act like a little brass plate has been erected in his honour.
The legislation provides six months as an outer limit and does not, in any way, prevent bodies from reporting earlier. Of course the Competition Authority can issue reports of a policy nature on a continuous basis and its annual report is just a report of its activities, accounts and so on. A wealth of reports have gone into the Oireachtas Library in the past few days which in no doubt reflects the effectiveness of the publication date.
I will not accept the Senator's suggestion for an earlier date because I have not had a chance to consult the authorities involved to see if it constitutes a difficulty for them. In principle, we encourage early publication on occasion in the case of some of my own bodies. For example, our annual reports include final statements of employment and Enterprise Ireland and IDA companies look at their exports. They represent separate surveys. There are surveys that must be conducted by those bodies, after the end of the financial year, on their client companies. I refer to a separate operation after the end of the year and it is not just reporting of their own accounts. Time can be involved in assembling the sort of data one wants in a comprehensive annual report. I am not unsympathetic to the Senator's suggestion but six months is reasonable as an outer limit. I will revert to the Senator and give him a steer as to whether it is feasible, in the case of these bodies, to report on an earlier basis.
I would love to think it might be possible to move almost every report earlier than the last deadline. The Minister said he was sure bodies would submit their reports earlier than 30 June but I am not so sure. It is a fact that almost a year can elapse before publication. My suggestion is worthy and would push all bodies to publish. There is a competition among limited liability companies where awards are given for the best reports and the earliest ones. I refer to limited liability companies that have cash transactions worth many millions yet they are able to supply a report within a month. I would like to see a move in that direction.
Sections 33 to 47, inclusive, agreed to.
Question put and agreed to.
NEW SECTION
I move amendment No. 6:
In page 45, between lines 7 and 8, to insert the following:
“Amendment of section 4 of Act of 2002
48. Section 4 of the Act of 2002 is amended by inserting the following subsections after subsection (9):
“(10) Actors, voice-over actors, freelance journalists, freelance photo journalists and session musicians are not subject to the provisions contained within this section.
(11) Representatives of retailers may engage in commercial discussions with large suppliers for the purposes of advice only.”.”.
My amendment has two sections and I shall deal with the first one now. Unfortunately the Bill has not dealt with an anomaly that has existed for a long number of years in competition legislation. As the Minister will know, this fact was acknowledged by the social partnership agreement called Towards 2016. In light of previous discussions, I declare that I have been lobbied on this issue by the Irish Congress of Trade Unions and SIPTU. They raised concerns with me about the Minister not taking the opportunity to deal with a long running issue.
I want to put the issue in context and remind everyone of what we are talking about. SIPTU had a collective agreement with the Institute of Advertising Practitioners in Ireland which set a minimum rate of pay, overtime and rest breaks for voiceover actors. In 2004, the Competition Authority ruled that the agreement was in breach of section 4 of the 2002 Competition Act as each writer was, in effect, a business undertaking or, in layman's terms, a business.
They decided it was unlawful for these undertakings to agree to fixed prices, as they put it, for the sale of their services. The Competition Authority then went on to threaten to fine both Equity and SIPTU €4 million if either sought to use the collective agreement in place. The unions argued at the time that a gun was put to their head, signed up to the Competition Authority's agreement. The Irish Congress of Trade Unions pressed the Competition Authority to review its decision, which it did, and unfortunately it upheld its decision in 2006. After this SIPTU and the National Union of Journalists looked to social partnership to pursue legislative change. It has to be said that they had greater success with the former Government than with this Government.
Let me read from the social partnership agreement 2016 which states:
The Government is committed to introducing amending legislation in 2009 to exclude voice-over actors, freelance journalists and session musicians, being categories of workers formerly or currently covered by collective agreements, when engaging in collective bargaining, from the provisions of Section 4 of the Competition Act, 2002, .....
It then goes on to discuss the logic of that.
Unfortunately they have had less success with this Government than they had with the previous Government. My understanding is that negotiations between ICTU and the Labour Party and Fine Gael broke down in 2012. I suppose yet again this is the Labour Party in government failing to progress the rights and protections of vulnerable workers. In 2012, the Irish Congress of Trade Unions wrote to the Minister seeking an exemption from the Competition Act. It is my understanding that in 2013, the Minister's private secretary told the unions the troika was blocking the Government from exempting the workers from the competition legislation. I think that is laughable for a number of reasons. First all the political parties and the Independent groupings had opportunities to meet the troika when they were here. The troika had been very clear that its job in this State was to ensure that the Government reached its deficit reduction targets. How the Government went about its business and achieved those targets was, it would argue, entirely a matter for Government and not for it. In other words it was not micro-managing all of the policies and certainly not worker's rights or competition legislation, industrial relations and to suggest that it was in the business of doing that is laughable.
Even if we were to take that at face value and imagine for a second that the troika members were of that view, which I do not believe they were, they are no longer here so there is nothing stopping the Government from doing the right thing. The Competition Authority judgment is wrong - and that is plain and simple - and has unduly impacted on the income of freelance journalists, photographers, voice-over actors whose rates of pay have dropped significantly. The Competition Authority in this instance has taken a very heavy handed and rigid interpretation of section 4 of the 2002 Act. This Bill is an opportunity to address that but unfortunately the Minister has not taken the opportunity to do so but he can by accepting the amendment which we in Sinn Féin have tabled.
The second part of our amendment states, "(11) Representatives of retailers may engage in commercial discussions with large suppliers for the purposes of advice only.”. We have had representations from small business organisations in respect of this part of the amendment, which seeks to provide effective representation and expert technical advice to small retailers who believe that they should be free to request their representative organisations to assist them in negotiations in keeping with the determinations of the Competition Authority or the IMO. They would argue that this is neither radical nor anti-competitive. For example, in Australia it is specifically provided for that retailers can engage with two lottery companies and can engage with all newspaper publishers. The alternative to allowing small businesses to have a centralised and a well financed advocacy group discussing terms on their behalf would be to permit suppliers such as tobacco companies, newspaper distributors, telephone top-up companies and so on to dictate terms and conditions on a take it or leave it basis. Retailers of products exclusively supplied by one company would be forced to accept its terms. Again we see the logic in the amendment being accepted and we do not see that it would be in conflict in any way with competition rights.
I have outlined the logic of this amendment and I look forward to the Minister's response.
I thank Senator Cullinane for tabling this amendment. It is an important debate and I think it is worth spending a little bit of time on it.
There was a proposal to look afresh at the ruling of the Competition Authority but I understand that commitment was subject to consistency with EU competition rules. It is not consistent with EU competition rules to have such an arrangement. The case we are talking about is not about employees who entered into an agreement, but self employed people who were involved in this agreement.
Under both EU and Irish competition legislation, self-employed persons, including professionals who are not employees, are regarded as "undertakings". There is ample evidence of EU case law at the European Court of Justice on this issue.
Section 4 of the Competition Act 2002 prohibits and makes void all agreements between undertakings, decisions by bodies representing undertakings and concerted practices which have, as their object or effect, the prevention, restriction or distortion of competition in trade in any goods or services in the State or in any part of the State. This reflects the provisions of Article 101 of the Treaty on the Functioning of the EU, which contains a similar prohibition in relation to agreements, decisions and concerted practices, which may affect trade between member states.
The current situation is that self-employed undertakings, acting collectively or through their representative bodies, can neither decide on the fees for services provided nor agree a price between themselves for their services, as this is regarded as price fixing contrary to the Competition Act 2002. Competition law does not prevent consultation with groups of self-employed undertakings as long as the power to ultimately set the price does not lie with that collective group. The reason for this is good. If one allows groups of self-employed people to fix their fees or to be involved in practices like this, it does ultimately act against the interests of consumers. Employees are in a different position and they are protected in negotiations.
As Senator Cullinane will know, he is putting forward a view for actors and voice-over actors but there are 250,000 self-employed groups and as he knows there are many groups who would like to have the ability to collude to set their fees. We have seen lots of battles. We discussed with Senator Barrett how we have tended to take a view of competition law, that we should have an exemption for this that or another group. If one has those exemptions, one prevents the interests of consumers being protected by competition law. That is the backdrop to this.
I think we are being consistent with EU rules. The troika members were very clear and it was not an added extra, of which they were indifferent, that further exemptions from competition law was not something that the Irish economy wanted or needed. They were very strong in their view and were supported by the Commission, that Ireland should not be seeking to erode the area of operation of competition law. We responded to that and undertook that we would not erode the operation of competition law. I think we must stand up and accept that competition law is an important part of a system of protection of consumers and making sure that markets operate in a fair way. We cannot pick one group of self-employed and say would it not be nice to give them some sort of an agreement and then say to others that they will not get a similar agreement.
This is a consistent rule that has been at the heart of EU competition law and is one that we have to uphold.
In the second part of the Senator's amendment, he is proposing that discussions may take place "for the purposes of advice only". Collusion and price-fixing are the only things we are prohibiting undertakings from doing. If we were to accept the Senator's proposal that the only permissible form of engagement between representatives of retailers and large suppliers should be commercial discussions for the purposes of advice, we would undermine freedom to contract and add nothing to competition law requirements. They are not prevented from entering into discussions and negotiations. The only thing that is prevented is price-fixing. The Senator's amendment would be more restrictive than the existing law. I do not think the second part of the amendment would achieve the purpose the Senator is hoping to achieve. I am not in a position to accept the dual amendment.
I intend to press this amendment to a vote. I do not accept the premise of the Minister's argument regarding the first part of the amendment, even if I can see some logic in what he is saying about the second part of it. As the Minister said, this difficulty was recognised in the social partnership agreement. It was recognised at the time that this was a problem and that this group of workers could collectively bargain and should be allowed to do so.
They are not workers; they are self-employed people.
They are still workers. They would see themselves as workers.
Of course all self-employed people are workers.
I will finish on this point. I do not want to hold the House up because we have many amendments to get through. When we had a similar discussion recently in the context of another Bill, I made the point that in the EU, competition seems to trump everything. It is seen as the Holy Grail and everything else - protection of workers' rights and investment in public services - seems to come a poor second. There is an increasing encroachment on what we would see as citizens' rights. The move towards the liberalisation of public services is another example of the trend coming from Europe. We seem to be dancing to their tune. In my view, their analysis of competition is very rigid. I have already criticised the Competition Authority in this regard. I do not expect the Minister to come back to me on these points. He has already given the House a comprehensive overview of this amendment, which I intend to press to a vote.
I will be brief. Competition law, which does stem from the EU, protects us from collusion, cartels and abuse of dominance. These are important protections for consumers and I do not think they should be-----
They do not protect us at all.
There will always be people saying that particular groups should be exempt from these laws. I am happy that these laws protect consumers in a fair way. If the House has to divide on this amendment, so be it.
Amendment put:
The Committee divided: Tá, 7; Níl, 27.
Tá
- Byrne, Thomas.
- Cullinane, David.
- Daly, Mark.
- Leyden, Terry.
- O'Brien, Darragh.
- Power, Averil.
- Wilson, Diarmuid.
Níl
- Bacik, Ivana.
- Barrett, Sean D.
- Brennan, Terry.
- Burke, Colm.
- Conway, Martin.
- Crown, John.
- Cummins, Maurice.
- Gilroy, John.
- Hayden, Aideen.
- Heffernan, James.
- Henry, Imelda.
- Higgins, Lorraine.
- Keane, Cáit.
- Moloney, Marie.
- Moran, Mary.
- Mulcahy, Tony.
- Mullen, Rónán.
- Mullins, Michael.
- Naughton, Hildegarde.
- Noone, Catherine.
- O'Donnell, Marie-Louise.
- O'Keeffe, Susan.
- O'Neill, Pat.
- Quinn, Feargal.
- Sheahan, Tom.
- van Turnhout, Jillian.
- Whelan, John.
Tellers: Tá, Senators David Cullinane and Diarmuid Wilson; Níl, Senators Aideen Hayden and Michael Mullins.
Amendment declared lost.
Section 48 agreed to.
SECTION 49
Government amendment No. 7:
In page 45, line 15, to delete "section 34" and substitute "section 37".
This is a technical amendment to correct a cross-referencing error. The text should refer to section 37, which is on the powers of authorised officers in respect of investigations under the 2002 Act, rather than to section 34, which is on definitions in the chapter on authorised officers.
Amendment agreed to.
Section 49, as amended, agreed to.
Sections 50 to 73, inclusive, agreed to.
SECTION 74
I move amendment No. 8:
In page 55, line 11, to delete "prevalent" and substitute "present".
I ask the Minister to respond.
The background to the amendment is the definition of the term "diversity of content". Senator Cullinane's amendment proposes that in considering diversity of content it will be necessary to take account of all views present rather than prevalent. The definition of the term "diversity of content" is taken directly from the Sreenan report, which defines the term as meaning the extent to which the broad diversity of views, including the diversity of views on news and current affairs and diversity of cultural interests prevalent in Irish society, is reflected through the activities of media businesses in the State, including their editorial ethos, content and sources. Replacing the word "prevalent" with the word "present" would change the meaning of the definition because the word "present" is more absolute than the word "prevalent" and it would make the proper measure of diversity extremely complex.
We had a debate on this issue in the Dáil. I understand Senator Cullinane's objective is to have an all-encompassing definition that would ensure every viewpoint would be taken into account. However, when one is trying to interpret diversity of content in terms of determining whether a media merger should proceed, the definition proposed is too absolutist in its terms. For this reason, we relied on the expert report on which this section is based.
The Minister is correct. We were seeking the maximum interpretation of "diversity of content". Having listened to what the Minister has said I withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed: "That section 74 stand part of the Bill."
This section deals with the media. The media in Ireland is highly competitive and, therefore, I question whether we need it in a competition and consumer protection Bill. Listed in the Institute of Public Administration Yearbook and Diary 2014, pages 275 to 291, are 17 national papers, 60 regional papers, nine free sheets, 33 radio stations, four TV stations, 240 periodicals, ranging from Accountancy Ireland to Zoo Matters, amounting to 363 media outlets. By the concentration ratios that the Minister and I used to study in the Herfindahl index, this is a perfectly competitive industry. It is easy to enter and if one does not like the existing products there are another 362 that one can buy. I know the degree of concentration is a matter of great fascination in certain media public houses but, in fact, it is not a concentrated industry, it is a very competitive industry. Unlike some of those the Minister and I discussed earlier where we were trying to inject competition, this one is already competitive and I do not see the need to bother the new commission in getting involved in this field.
The Senator should realise this has been a feature of competition law since 2002. The only issue here arose from an expert group on media mergers which looked at the way in which we handle mergers as they affect the media, therefore, competition law always has dealt with mergers. What we have here is a provision where there is a number of loops in dealing with a media merger. First, there is the competition test when one tests on competition grounds alone, whether this is a concentrated market and would the proposed merger represent a diminution of competition that would interfere with the public interest. There is the capacity to make that decision. If the competition commission decides that the merger does not offend competition rules, there is a second test already in Irish law which involves looking at whether the wider public interest in terms of diversity of content, plurality of ownership and so on, is served. That is a separate test. Under the existing law that test is exercised by me, as Minister for Jobs, Enterprise and Innovation, following an evaluation of the public interest by the Competition Authority. What is proposed is that in future that second element, the public interest test, would be conducted by a panel appointed by the Minister for Communications, Energy and Natural Resources involving the Broadcasting Authority. The reason for that was the belief that media mergers increasingly occur across a diverse range of communications, newspapers, radio, social media and so on and the Minister for Communications, Energy and Natural Resources would have access to better information, better opportunities to evaluate the public interest element than the Minister for Jobs, Enterprise and Innovation. That is one element of it. It also provides for consultation before the Minister makes his decision and an order is made. What is being done here is not new as media mergers have always been subject to a dual test, a competition test and a public interest test. We are setting a more modern set of criteria, a more consultative arrangement including consultation with the relevant Oireachtas committee, and the decision will ultimately be made by a Minister who has oversight across a range of media outlets that reflects the changing nature of media.
I believe the basis for this amendment, which lies in a report of the media mergers groups chaired by Mr. Sreenan, is the right way to proceed. I commend it to the House. Clearly the diversity of ownership of media is an important public interest in a democracy. Separate from measuring the market concentration or other measures that would be viewed from a very narrow competition perspective, there is a broader public interest in the merger of media outlets. It is correct that this should be reviewed, it speaks for itself. The Competition Authority itself has made pronouncements about the unsatisfactory nature of competition in this marketplace. There is a record of public concern, including by the Competition Authority, in respect of the healthy state of competition in this marketplace and, therefore, I believe this provision amendment is valid.
I thank the Minister. The Minister referred to the history of this issue, which goes back a long time. There used to be a fear, almost paranoia, that imported newspapers would dominate the home newspapers. There was a certain amount of media self-obsession. There are 363 media outlets listed in the Institute of Public Administration Yearbook and Diary, that invaluable publication. I am sure the Minister and I could easily find another 40 imported publications on the shelves of the nearest newsagent. If one does not much like a particular newspaper one can buy another. Government is expensive, it is a difficult enough task and we have enough tasks on our hand. The reason I tabled the amendment, which effectively seeks to do nothing about this, is that I believe the problem is solving itself and that the Minister has many other duties to fulfil such as those we mentioned earlier. I will not push the amendment but the belief in Ireland that the media is anti-competitive is not borne out by the vast array of media, including many new media such as the new radio stations, the new newspapers - I mentioned those in Kerry yesterday. The risk that Mr. Murdoch that or somebody else who we may not like would buy it all is counteracted by the fact that it is an easy business to enter and the capital costs have been reduced. There will always be anti-establishment publications, such as Phoenix or whatever, where people can read alternative views. The concerns are ill-founded and based on a view that having governments, lawyers, review committees and competition authorities working in this area is a waste of resources because it does not have a competition problem.
I thank the Minister. I will not push the question to a vote but it is important that somebody gets the view into the parliament that if one does not like media one can simply buy a different set. As this Bill is about consumers, the consumer can solve this problem. I believe consumers have it well under control.
Question put and agreed to.
Section 75 to 82, inclusive, agreed to.
SECTION 83
I move amendment No. 9:
In page 84, between lines 2 and 3, to insert the following:
"(e) all other goods sold in grocery goods undertakings,".
I would like to hear the Minister's response first.
The proposed amendment is a very wide catch all provision and could cover everything from greeting cards to petrol to electrical equipment. Even occasional items that are offered for sale by a grocery goods undertaking would be covered.
For the purpose of this Bill, the term “grocery goods” means any food or drink that is intended to be sold for human consumption and can include items such as any substance or thing sold or represented for use as food or drink for human consumption, or any substance or thing sold or represented for use as an additive, ingredient or processing aid in the preparation or production of food or drink for human consumption. It also includes intoxicating liquors, household cleaning products, garden plants, garden plant bulbs and toiletries.
Although it is clear that many relevant “grocery goods undertakings” may sell other products along with grocery goods as part of their overall offering to consumers, it is worth recalling that the inclusion of the products proposed by this amendment would mean that a new cohort of businesses such as retailers, suppliers and wholesalers could now come within the definition of “relevant grocery goods undertakings”. None of these businesses would have engaged in the public consultation process on this issue heretofore as the discussion centred on the traditional and previous definition of “grocery goods” which did not include this catch-all element. Thus, there would be an unforeseen, in their view extra, administrative burden imposed on them without any prior consultation.
The UK code does not include such a catch-all provision in the goods covered by it. Officials in the Department of Jobs, Enterprise and Innovation are also not aware of such a catch-all inclusion in any other state's codes or measures. The addition of an unspecified range of products, for which there is no evidence of any problem, is neither appropriate nor proportionate. In view of this, I am not in a position to accept the proposed amendment.
The amendment put forward in the Dáil included garden plants, but I am not sure why that has been omitted.
I accepted that in the Dáil.
Good. Subsection (e) refers to all other goods sold in grocery goods undertakings. We must accept the reality that large retailers stock and sell a vast array of products which are not covered in the Bill. There is no protection for electrical or hardware suppliers or suppliers of flowers, newspapers, magazines, stationery, greeting cards, clothing, ties, giftware and so on. This is the purpose of our amendment. I listened to what the Minister had to say, but I believe this worthwhile amendment should be supported.
The background to this was a concern in regard to the powerful retailers in the grocery sector who were using terms and conditions in contract terms. Those contract terms were subject to abrupt change. Sometimes there was no contract at all and sometimes the obligations to fund special promotions were being placed on suppliers. We had a long consultation period between the different parties, including farmers, suppliers and grocery interests, to try to work out whether a voluntary code could be agreed, based on grocery goods as originally defined. This was not possible.
We then had to move to decide to have a regulatory system which would be overseen through the Competition Authority. This is not a new provision that will be applied in every part of the economy. This recognises a particular problem which has been the subject of two Oireachtas committee reports, one from the Joint Committee on Agriculture, Food and the Marine and the other from the Joint Committee on Jobs, Enterprise and Innovation. Therefore, the provision is a response to a particular problem. The Deputy's amendment, on the other hand, brings in everything, the kitchen sink included. I believe it is unnecessary to do as the Deputy proposes. It would open this up to an area of retailers who have not been consulted and where there has been no regulatory impact assessment in regard to them. It would, therefore, be disproportionate.
Amendment, by leave, withdrawn.
I move amendment No. 10:
In page 84, line 5, after “goods,” to insert “newspaper and magazine distribution companies”.
This amendment proposes to include newspaper and magazine distribution companies.
The same argument prevails here. This was not part of the area of concern signalled and was not part of the discussion that went into the development of the legislation. At this point, I am not willing to accept it.
Amendment, by leave, withdrawn.
I move amendment No. 11:
In page 84, lines 27 and 28, to delete “€50 million” and substitute “€10 million”.
This is a simple amendment which seeks to reduce the turnover figure to ensure the relevant grocery goods undertaking, GGU, applies to intermediate suppliers. There was some discussion in the Dáil on this. I do not wish to hold up proceedings, but I am interested to hear whether the Minister has looked at the issue since then.
This amendment seeks to reduce the turnover threshold from €50 million to €10 million. The €50 million figure is the threshold to carry the new obligations in respect of recording contracts, having compliance officers and so on.
First, it is intended to ensure these provisions are not disproportionate by including a broader swathe of processors, suppliers and retailers who are not regarded as major players in the national grocery goods sector. Second, the European Commission uses a threshold figure of €50 million in respect of turnover for making the distinction between a small and medium enterprises and what constitutes a large firm. We are obviously trying to contain this to large firms. Third, we should be anxious to ensure regulatory and red tape obligations imposed by regulatory authorities on small and medium enterprises are kept to a minimum and the reduction in the threshold levels as proposed would see a much higher incidence of administrative burden on many SMEs in the grocery goods sector. If the turnover threshold was reduced from €50 million to €10 million, the number of retailers and wholesalers that would be affected, according to CSO figures and definitions, would rise from approximately 210 to approximately 3,250 businesses. Fourth, in the UK the threshold for qualifying "designated retailers" for the purposes of the Groceries (Supply Chain Practices) Market Investigation Order 2009 is any retailer with a turnover exceeding £1 billion with respect to the retail supply of groceries in the UK. A €50 million turnover was estimated based on an extrapolation of the qualifying turnovers under the UK legislation.
Finally, on the basis of the public consultation process undertaken on this issue, the figure of €50 million emerged as a suggested figure. For all the above reasons, the proposed figure in the Bill has been set at €50 million. In seeking not to be disproportionate about the ambit of this provision to grocery goods undertakings in the Irish market, it is considered that any reduction in the qualifying threshold of €50 million would impose an unfair burden on many firms in this sector and thus I am not in a position to accept the amendment.
Furthermore, this applies equally to large retailers or large suppliers. It cuts both ways. Large suppliers will be included at the €50 million threshold. Therefore, there is no distinction being made between retailers and suppliers.
Amendment, by leave, withdrawn.
I move amendment No. 12:
In page 85, lines 10 and 11, to delete “or indirectly through franchise arrangements,”.
This amendment deals with a situation where a person is a party to a franchise agreement with another person. It has been argued that franchises should not be included in any definition in this Bill. I read the Dáil exchanges on this issue, which seem to imply that they act collectively with what the Bill describes as a related undertaking. As the Bill stands currently, there is no specific reference to the amount of grocery goods, as defined, being part of the purchasing made by the franchise from the related undertaking. We have taken on board what has been said in discussion in the Dáil, but we feel this relevant amendment should be tabled again. I am interested to hear the Minister's response.
The issue of franchises has two sides to it - the individual operator who holds a franchise licence, the franchisee, and the overall, higher level operator, the franchisor, which operates and controls the franchise. While the majority of individual franchisees are small operations with a turnover of less than €5 million per annum, the parent franchisors are much bigger concerns with turnovers of over €50 million, with powerful purchasing powers.
It has already been agreed to remove the reference to franchisees in a previous Dáil Report Stage amendment as there was never an intention to cover the individual franchisees through the definition of “relevant grocery goods undertakings”. However, on the issue of the franchisors, these are intended to be covered by the definition of “relevant grocery goods undertakings”. Some franchisors consider themselves to be wholesalers, others to be retailers.
To ensure both scenarios are covered, the phrase which the Senators are seeking to delete in the definition of retailer is vital. Without it, there is a danger that retailers could try to circumvent the regulations by operating franchise arrangements. In light of this I cannot accept the proposed amendment.
Amendment, by leave, withdrawn.
I move amendment No. 13:
In page 85, between lines 24 and 25, to insert the following:
“(a) having regard to the importance of and impact to the economic viability and sustainability of primary producers the decisions made at processing and/or retail level,”.
I know the Minister has gone some way in the Dáil towards accepting a similar amendment. I do not believe there is enough protection for primary producers, particularly in the grocery and agriculture trade. I think we are missing an opportunity. The Minister has gone some way towards this by including production and accepting a similar amendment or proposing his own amendment in the Dáil. Could the Minister please clarify that?
This amendment seeks to include a statement in section 63B(1) to the effect that the Minister should include the importance of, and impact on, the economic viability and sustainability of primary producers of decisions made at processing and-or retailing level when considering introducing regulations.
On the first element of this proposal, this would introduce the concepts of viability and sustainability which, almost by definition, imply a guarantee of certain economic returns. The second element adds a causation effect to decisions at processing and-or retail level. This is a clear attempt to shift the balance in favour of the primary producers at the expense of the processing or retail sectors.
This amendment is not an appropriate one for a Bill that aims at regulating certain practices. It does not and cannot guarantee prices or, consequently, sustainability or viability. It should also not be prejudicial in its considerations of where cause and effects lie when trying at the same time to introduce fairness, openness and transparency into the process.
The Government is strongly of the view that it is important to ensure there is balance in the relationship between the various players in the grocery goods sector and that Ireland continues to have robust agrifood and retail sectors, particularly given the importance of these sectors to the national economy. Regulation of certain practices in the grocery goods sector is intended to achieve such a balance taking into account the interests of all stakeholders in the grocery goods sector, including the interests of the consumer and the need to ensure there is no impediment to the passing-on of lower prices to consumers. This balance is important.
In the context of the proposed amendment, it is worth noting that section 63B(1)(f), which was a Government amendment introduced on Report Stage in the Dáil, recognises "the economic importance to the State of the production, supply, distribution, wholesale and retail sectors in respect of grocery goods". In addition, section 63B(1)(g) gives recognition to the importance of “the development and maintenance of strong, innovative, efficient and competitive production and supply bases in the grocery goods sector”. As this Bill cannot guarantee prices, economic viability or sustainability for any part of the grocery goods sector, I cannot accept the amendment.
I will consider tabling this amendment again on Report Stage. The Bill does not deal in any way, shape or form with below cost selling. If the Minister would strengthen the Bill under section 83 by creating an ombudsman for this area to oversee these regulations and give this authority some teeth, I would be more inclined to accept fully what he says. He has, however, gone part of the way to meet my concern.
Amendment, by leave, withdrawn.
Amendments Nos. 14 and 15 are logical alternatives and may be discussed together by agreement. Is that agreed? Agreed.
I move amendment No. 14:
In page 86, between lines 10 and 11, to insert the following:
“(2) A retailer defined as a relevant grocery goods undertaking must disclose the annual profits of its Irish outlets.”.
This has been a contentious issue for some time. Large retailers such as Tesco do not make public the annual profits they generate in Irish outlets. This Bill gives us an opportunity to compel or force them to do so. There is merit in that because we are talking here about competition and making comparisons between retailers and the money being made. This amendment will strengthen the Bill, given what it is trying to do.
I have not read the Dáil exchanges so I am not sure how the Minister responded to this amendment. I fail to understand why this amendment could not be accepted because it would surely be a good thing to force all companies, including Tesco and others, to publish their annual profits. I do not see how that would be in any way contentious. I can only see it adding value.
The Minister mentioned in a previous response that one of the goals of this legislation is to introduce fairness, openness and transparency into this sector. I fail to see how the Minister can say that on the one hand but on the other say that consumers should have no idea of the mark-up here by international multiples such as Tesco in comparison with the British market. That has been a bone of contention for several years and remains so, not just in the grocery sector.
The Government response so far has been that it does not intend to insert this into the legislation as it cannot have financial disclosure for one sector and not another. Financial disclosure could negatively affect foreign direct investment into Ireland. I am a bit perplexed by that because most companies which trade or pay taxes here and which are Irish businesses in the retail sector, such as Dunnes Stores, reveal their profits, yet Tesco and others do not have to do so. When fluctuations in exchange rates are taken into account, we want to ensure consumers get a fair price and are not being ripped off compared with their peers in Britain. People can see that very clearly when they order items from British shops that come in through their distribution centres with the UK price, which bears no resemblance to the exchange rate at the time. This can be done. The amendments may not be perfect but the Government should consider this area in particular. I, too, will push that amendment on behalf of my party.
These amendments, that call for relevant grocery goods undertakings to disclose the profits of their Irish outlets, refer to a stand-alone provision not related to the regulations that may be made to regulate certain practices in the grocery goods sector. The purpose of this Bill is to regulate the relationship between various parts of the supply chain to ensure there are no abuses and the contract terms are fair and are entered into and negotiated freely. The terms are set out to be fair. The Senators are trying to introduce something new specifically about disclosure of profits.
As has been stated on previous occasions, companies operating in Ireland are free to establish and organise themselves in the most suitable form to promote and run their businesses, provided that they comply fully with relevant national and EU legislation, including relevant legislation on the content of their financial statements. The requirements regarding the preparation and publication of the financial statements of limited companies and groups are determined by the first, fourth and seventh EU company law directives and by the EU Regulation 1606-2002 and international financial reporting standards adopted by the EU under its provisions. These requirements are largely reflected in the Companies Act 1963, the Companies (Amendment) Act 1986 and the European Communities (Companies: Group Accounts) Regulations 1992, as amended. Equivalent requirements apply across the EU. The fourth and seventh directives have been replaced by a new Accounting Directive 2013-34-EU which is required to be transposed by July 2015. The requirements concerning the accounts of unlimited companies are governed by domestic legislation.
The extent to which profits are or are not disclosed is of general application and is not determined on the basis of the sector in which a company or group operates. The requirements under company law are essentially the same for companies or groups that operate supermarkets as they are for companies or groups active in any other sector of the economy. I consider that a disclosure regime targeting a specific sector could be viewed as disproportionate and discriminatory and could have negative consequences in terms of business costs and in attracting foreign direct investment. Thus, I am not in a position to accept the amendment on this issue.
Contrary to what Senator Darragh O'Brien said, Dunnes Stores is a private concern and does not reveal its profits. I do not propose to interfere in the accounting arrangements of different companies in this sector. I seek fairness in the relationships between small suppliers and large suppliers in the grocery chain, regardless of who they may be. The Senator also asked whether a comparison could be made with prices in other jurisdictions but this is easily done. Indeed, the National Consumer Agency provides comparisons of prices of similar goods in different jurisdictions for the benefit of consumers.
I do not seek to interfere with any company's accountancy arrangements. The Minister's response, that this could be a threat to foreign investment and big multiples, was similar to his response on this in the Dáil and Senator Darragh O'Brien touched on this area. I do not buy this as it favours secrecy over openness and transparency, which is what the Minister argued this Bill stood for. This is a matter of competition and consumer protection so surely it is in the consumer's interests to know how much profit a company like Tesco makes in Ireland compared to the UK. This will allow consumers to see retailers' profit margins. To suggest this might adversely affect foreign direct investment buys into the general notion that no questions can be asked of multinational companies. The same debate goes on around whether multinationals pay full corporation tax and a similar controversy applied to Apple. It seems we cannot ask any questions when it comes to foreign direct investment and we cannot get information. Irish people shop with such multinationals and they make their profits through our spending so I do not understand the logic of the Minister's response. I will press my amendment to a vote.
I agree entirely with the Minister. To single out a particular group of companies to publish figures does nothing for consumer protection. The grocery business is as competitive a business as any and this is evident in the number of companies that have come and gone over the years.
Senator Quinn did well out of it.
In my years in the business I have seen companies fail and succeed and this will continue to be the case as long as there is competition. This amendment will do nothing but disclose information relating to each individual company. I do not think Senator Darragh O'Brien is correct as we do not know the sales figures for Dunnes Stores nor its profit margin in the Republic of Ireland. In any case, I do not think this amendment would help.
Did the Minister's Department, in preparation for this legislation and in consultation with the industry, receive direct representations from foreign multiples to ensure there would be no disclosure on this matter?
I am not aware of any such representations but this debate has a very long history, dating back to previous Ministers and the appointment of John Travers. The lobbying on this issue was carried out by the Irish Farmers Association.
A level playing field is provided by the accountancy regulations, which apply everywhere in the European Union. There is not a different set of accountancy regulations for grocery goods, record players, wholesalers in lawnmowers and so on. It is not the case that certain accounting rules apply to some companies. Consumers are protected by consumer law and this requires price transparency, that is, prices must be displayed and advertised clearly so a person can make informed choices. Consumer law has never sought shops to disclose profit margins so I do not think this amendment is relevant to this legislation. It is not in the State's interests to selectively, and under pressure from certain groups, require specific companies to display accounts while not requiring the same of others. This would suggest the Government is inconsistent in its policies and foreign direct investment requires Governments to be consistent and even-handed in how they apply rules relating to a company's obligations. We will not single out specific groups for special accountancy disclosure requirements and this is the correct path to take. I think if the Senators were in my seat they would argue the same.
Amendment put:
The Committee divided: Tá, 11; Níl, 24.
Tá
- Barrett, Sean D.
- Byrne, Thomas.
- Crown, John.
- Cullinane, David.
- Daly, Mark.
- Heffernan, James.
- Leyden, Terry.
- Mullen, Rónán.
- O'Brien, Darragh.
- Power, Averil.
- Wilson, Diarmuid.
Níl
- Bacik, Ivana.
- Brennan, Terry.
- Burke, Colm.
- Coghlan, Paul.
- Conway, Martin.
- Cummins, Maurice.
- Gilroy, John.
- Hayden, Aideen.
- Henry, Imelda.
- Higgins, Lorraine.
- Keane, Cáit.
- Landy, Denis.
- Moloney, Marie.
- Moran, Mary.
- Mulcahy, Tony.
- Mullins, Michael.
- Naughton, Hildegarde.
- Noone, Catherine.
- O'Donnell, Marie-Louise.
- O'Keeffe, Susan.
- O'Neill, Pat.
- Quinn, Feargal.
- Sheahan, Tom.
- van Turnhout, Jillian.
Tellers: Tá, Senators David Cullinane and Diarmuid Wilson; Níl, Senators Paul Coghlan and Aideen Hayden.
Amendment declared lost.
Amendment No. 15 not moved.
I move amendment No. 16:
In page 86, between lines 10 and 11, to insert the following:
“(2) The Commission may order such redress, including financial redress, for the aggrieved person subject to the breach of regulations as considered appropriate by the Commission having considered all circumstances.”.
If it is acceptable, I would like to hear the Minister's response to the amendment before I comment.
The Bill already provides for a wide suite of means of sanction for offences related to the grocery goods regulations. Included in the Bill are specific sections relating to civil action by aggrieved parties for damages. For example, section 83, which inserts the new section 63E(3), (4) and (5) into the Act of 2007, provides that an aggrieved party can take action to seek relief through the Circuit Court, for damages, including exemplary damages.
Senators who are leaving the Chamber should do so quietly.
Section 86, which the Government introduced on Report Stage in Dáil Éireann, provides that where a court has made a final finding in a particular case in respect of breaches of the grocery goods part of the Bill, that finding is res judicata for the purpose of subsequent proceedings regardless of whether parties to those subsequent proceedings are the same as the parties to the first mentioned proceedings.
The provision that a finding in earlier proceedings shall be res judicata in subsequent proceedings lessens somewhat the burden on a private litigant who, relying on this legal doctrine, will not be required to prove the contravention of the relevant sections afresh in a follow-on action in respect of the same contravention. Rather, he or she will be able to rely on that earlier finding for the purpose of an action for damages. That earlier finding can be based on a successful prosecution by the new competition and consumer protection commission.
Expecting the new competition and consumer protection commission to pursue the issue of redress on behalf of aggrieved persons would have major resource implications for the new body and would constitute a duplication of the provisions of the Bill at section 83, inserting new section 63E(3), section 63E(4) and section 63E(5), and section 86.
As the Bill already makes sufficient provisions relating to the right of action by aggrieved parties and as I do not wish to see the new competition and consumer protection commission use its resources to duplicate the provisions of the Bill at sections 83 and 86, I am not in a position to accept the proposed amendment.
I thank the Minister for his response and will withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment No. 17 not moved.
Amendments Nos. 18 and 20 are related and may be discussed together. Is that agreed? Agreed.
I move amendment No. 18:
In page 86, line 30, after “undertakings” to insert “to be made within 30 days”.
I assume the Minister has been lobbied many times with regard to prompt payments for suppliers. The issue for them is they must wait for a long time to get paid by retailers, be they larger multiples or smaller or medium-sized retailers. It is reasonable to deal with this issue in this way, in that there should be a requirement in this regard. Perhaps the amendment is not perfect and perhaps a time period such as 30 days may in itself be imperfect, because there may be reasons a payment is not made within that period. However, the Minister is aware this is an issue for suppliers. It is a matter that has been flagged to all political parties for many years and has become a particular problem in recent years because of the downturn, during which many suppliers have gone out of business because they simply were not getting paid quickly enough. Cash flow is an important area of any business and if a company is not getting in money but is sending out the goods, it then becomes a problem.
I will be interested to hear the Minister's response in this regard. If he considers the amendment to be a somewhat crude instrument to deal with this issue, he might then offer up his solution on how to so do. This is not relevant to the grocery sector solely but is relevant to business in general. While the amendment is being tabled in the context of the Bill under discussion, I appreciate, as I am sure does the Minister, that this is a much bigger issue for businesses generally and I am interested to hear what the Minister has to say.
Briefly, I understand the Minister indicated in the Dáil that he would deal with payment periods and so on by way of regulation. Consequently, before Members proceed, I will be interested to hear the Minister's response in this regard, as well as the timeframe in which the Minister intends to publish the aforementioned regulations, obviously subject to the passage of this legislation.
I thank the Senators. Senator Darragh O'Brien to a degree has answered the question. The Government proposes to deal with this issue by way of regulation and not by way of a primary provision in the Acts. To answer Senator O'Brien, the Government is developing the regulations in parallel as, obviously, the Department cannot finalise regulations until the final version of the Bill is seen. However, I have committed that there will be consultations, including with the Oireachtas committee, in order that there will be an opportunity to discuss this matter.
Essentially, the argument here is that on the issue of payment, the Bill clearly sets out at section 63B(2)(q) that the regulations may "specify the manner and timeframe in which payments for grocery goods supplied to relevant grocery goods undertakings are to be made". It is believed that the issue of the timeframe for payment should be considered in the context of any regulations, rather than in primary legislation, to allow for more flexibility if required in any statutory instrument. Payments also are covered by the prompt payment legislation and this must be factored into any regulations. Setting out a period of 30 days or indeed any set period of days in primary legislation may be too rigid compared with the making of regulations and thus, whilst the text of any regulations is not yet finalised or agreed, I believe these amendments are neither required nor appropriate to this Bill.
Amendment, by leave, withdrawn.
Amendments Nos. 19 and 22 are related and may be discussed together. Is that agreed? Agreed.
I move amendment No. 19:
In page 88, between lines 1 and 2, to insert the following:
“(iii) to secure or retain shelf-space, to improve positioning, or to increase an allocation of shelf-space of the grocery goods or of the grocery goods undertaking, in the premises of the relevant grocery goods undertaking,
(iv) in respect of requiring a supplier to obtain any goods or services from a third party from whom the relevant grocery goods undertaking receives payment for this arrangement,
(v) directly related to the value or volume of the goods traded,”.
This is an interesting proposal, the first part of which is to secure or retain shelf space, to improve positioning or to increase an allocation of shelf-space of the grocery goods of the grocery goods undertaking, in the premises of the relevant grocery goods undertaking. This pertains to what is described in the industry as "hello money". This is an additional amendment to add to the robustness of the provision to ensure an end to this practice. Again, as the amendment is fairly self-explanatory, I will listen to what the Minister has to say on this, as well as on the other two provisions of the amendment. I may come back in after the Minister has made his contribution.
The two issues of introducing a prohibition in respect of compelling of payment in respect of shelf space to the list of prohibited activities that may be included in the regulations, as well as a prohibition on requiring a grocery goods undertaking to obtain any goods or services from a third party from whom the relevant grocery goods undertaking receives payment for this arrangement, were raised in earlier debates on this matter and two amendments were already introduced on Report Stage in the Dáil. These are at section 63B(2)(j)(iii) and section 63B(2)(m), respectively, and thus the amendments are not required. On the third element of the proposed amendment from Senators Cullinane, Reilly and Ó Clochartaigh and on amendment No. 22 from Senator Darragh O’Brien, it is considered that the issue of the regulating for payments is covered by a series of subsections in the Bill such as, for example, section 63B(2)(d) and section 63B(2)(q), and the situation outlined by the Senators appears to be already covered by those provisions. Thus, I am not in a position to accept these amendments.
Amendment put and declared lost.
Amendment No. 20 not moved.
Amendments Nos. 21 and 23 are related and may be discussed together. Is that agreed? Agreed.
I move amendment No. 21:
In page 88, between lines 30 and 31, to insert the following:
“(r) specify Retention of Title for goods until such time as full payment is received,”.
I will be brief. This amendment is clear and proposes to insert between lines 30 and 31 the phrase, "specify Retention of Title for goods until such time as full payment is received", which I consider to be a reasonable request. I am disappointed thus far, unless the Minister can enlighten me further, that he does not intend to address this matter in this legislation. Most people would agree that such a provision would in particular strengthen further the position of producers of goods in the sector, were they to retain the title to the goods until they were paid for in full. This is a reasonable request and I will wait until I hear the Minister's response before deciding how to proceed.
Retention of title is something some companies seek and to which some companies agree and I do not believe legislation for this is required, as it is normal negotiation. If a retailer is buying from a supplier who wishes to retain the title while it is still there and if the retailer does not wish to so do, the deal then does not go ahead. It is normal business practice to do this but legislation is not required for it.
Like Senator O'Brien, I want to hear what the Minister has to say. All this is about dealing with below-cost selling. It is the substance of our amendment and, I assume, amendment No. 23. Maybe the Minister does not feel it is necessary, and Senator Quinn has given his view on it. Any measures we can take that would prohibit below-cost selling should be welcomed because it is anti-competitive and is not good for the consumer generally.
There are two main issues in these amendments. Irish and EU law recognise simple retention of title clauses of the kind set out in the amendment and the courts have upheld such clauses. However, to take up Senator Quinn's point, it is one thing for the law to uphold certain forms of retention of title clause freely agreed by contracting parties, but another for it to insert a mandatory title retention clause into commercial contracts. To the best of my knowledge, no other jurisdiction has introduced a legislative provision of this kind.
While the aim on the Bill's provisions on grocery goods is to achieve a proper balance in the commercial relations between suppliers and retailers, it should not be done by introducing a potential imbalance into the relationship between suppliers, retailers and other parties. The proposed amendment would affect the interests of third parties, including the Revenue Commissioners, employees and unpaid service providers - who have no equivalent option of taking back services that they have provided - by reducing the pool of assets available for distribution to other creditors of an insolvent buyer and effectively permitting an unpaid seller to jump the queue of creditors. The potential for retention of title clauses to lead to inequity between creditors has led to a number of jurisdictions, including the US, Australia and New Zealand, to treat such clauses as a form of security interest against third parties that must be registered by the seller.
Although the Law Reform Commission proposed a similar system of registration and other conditions relating to the retention of title clauses, the recommendations were not implemented. In its comprehensive report of 2011 on the legislation governing the sale of goods, the sales law review group also concluded that because of their impact on third parties who had had no say in the contract, any reform of the retention of title clauses had to be considered in the context of a broader reform of the law relating to personal property security interests. Although I have some sympathy with the aim behind the amendment, I cannot accept it.
I will now refer to the part which calls for powers for the Minister for Jobs, Enterprise and Innovation to issue directions to retailers not to sell grocery goods at a price that is less than the net invoice price of the goods. As the Senators are well aware, the Restrictive Practices (Groceries) Order 1987 prohibited below invoice price selling of certain goods rather than banning below cost selling of those goods. In effect, the order allowed wholesalers and suppliers to determine minimum retail prices being charged to consumers, thereby seriously constraining competition in the grocery trade. Since the repeal of that order in 2006, no statutory basis exists for the Minister for Jobs, Enterprise and Innovation to make a minimum pricing order in any sector. The use of aggressive pricing strategies in any business is a legitimate marketing tool and is the normal outcome of the competitive process.
Low-cost and below-cost selling by a retailer is not of itself an offence unless it involves abuse of a dominant position. A determination on whether a retailer is abusing a dominant position in the marketplace would necessitate a comprehensive investigation by the Competition Authority. The Competition Authority is the independent statutory body responsible for enforcing competition law in the State and complaints of any alleged anti-competitive practice should be referred to it. As stated clearly in earlier debates, it is not believed that there are grounds for the re-introduction of such a restrictive measure. It would effectively reintroduce retail price maintenance, which flies in the face of the free market and would be a retrograde step. Thus, I am not in a position to accept the proposed amendment.
Price fixing by writing an invoice price would be resale price maintenance, which used to be one of the offences of competition law. For the State to introduce it and police it as an obligation would be very strange. The amendment is not right. We are trying to ensure the contract terms are fair in how they are assembled and we have taken powers to examine different elements of the contract terms that could be cast in an unfair way or not provided, and allow very arbitrary changes by the more powerful player in the relationship. This would be an anti-competitive measure and I do not support it.
I will consider the Minister's response before Report Stage on Tuesday, and therefore I withdraw amendment No. 21 and reserve the right to resubmit it on Report Stage.
Amendment, by leave, withdrawn.
Amendments Nos. 22 to 25, inclusive, not moved.
Question proposed: "That section 83 stand part of the Bill."
Section 83 has ten pages and approximately 4,000 words meddling in the grocery business under the illusion that it is an uncompetitive business, which it is not. The existence of new entrants is one of the basic criteria for competition to work. Two new entrants, Aldi and Lidl, have entered the Irish grocery market and have approximately one fifth of it. There are at least eight completely different competing places where one can shop around. During the week, I received a complaint from a member of the agriculture lobby that the price of beef was too low and we needed a regulator. Too many producers in Ireland try to abuse consumer law, such as that which is before us, to engage in restrictive practices, rent seeking and trying to rig the market. The grocery market in Ireland is as near to competition as one will get in the real world.
I wonder why the energy devoted to writing the nearly 4,000 words of the section were not instead put into something such as industrial policy or science and technology as we develop. The Minister is pretending the grocery market is not competitive when it obviously is. There is ease of entry and many producers and consumers. It is old style industrial policy, lobbying and wasting the time of the departmental staff and others engaged in it when they should be out competing and talking to the consumer. That is how a market economy operates. The old industrial policy was clientelism and protectionism whereby people went to the Department seeking tariffs and quotas. We need a contestable market. The thinking in the section is at a substantial cost in terms of administration, the Minister's time and lawyers to accomplish nothing.
Even if the Minister does not like all the people to whom I referred, Bord Bia has a most interesting publication on 133 farmers' markets throughout the country. Farmers do not like any of the people, including Aldi, which advertised that it buys its ice cream in Mallow and its beef in County Laois. If the Senators who were here do not like any of the grocery retailers, Bord Bia lists farmers' markets, which provide alternative ways for farmers to sell products and for consumers to buy. There are six farmers' markets in Waterford, nine in Clare, 17 in Cork, 26 in Dublin, 14 in Kerry, five in Meath and 12 in Galway. I refer just to the counties of the Senators who were here during the debate. I agree with Senator Quinn that there is no lack of competition in the Irish grocery trade and it is a pity we waste so much valuable Government and bureaucratic intelligence when we should do something better with our time. This is why I oppose the sections on the grocery trade.
In this Bill we promote competition and the consumer. This is an area in which competition works, and the evidence is before our eyes. So what if some producers do not like it? Yesterday, I mentioned that in the UK the cost of food has decreased from 30% of the family budget to 9%. The grocery trade is working and there is no need to reinvent a "Joe Stalin" style economy to regulate the grocery business. I look forward to the day when we grow up, accept that it is a competitive business and stop trying to introduce all these petty regulations.
It is not often I find myself in complete disagreement with Senator Barrett. I am pretty stunned by what he has said. If some producers do not like it, that is tough. I firmly stand by the belief that we have an indigenous industry that successive governments have continued to promote, including promoting Ireland as a food island. The Food Harvest 2020 document produced by the former Minister, Deputy Smith, and followed on by the Minister, Deputy Coveney, indicates the importance of the agrifood sector and dairy sector. That can only happen if people can trust the quality and the nature of the product, based on where it is sourced, how it is produced and the expertise that is there.
While it is correct to say that the household budget for food in the UK has dropped from 30% to 9%, that is not necessarily good. In Britain, farmers in particular as well as producers, growers and market gardeners have gone out of business. Family-run businesses have been screwed to the wall by certain multiples that have squeezed every last drop out of them. Tesco and other companies buy the farms, produce vegetables themselves and drive down costs, just as Aldi, Lidl and others do from time to time. I am not talking about putting a tariff on the consumer; I am asking whether we value the industry itself. Do we want to look back in 30 years at a fantastic industry, but one that is entirely owned by foreign companies? Would that be acceptable?
I invite Senator Barrett to meet the growers and small business owners in my area in north County Dublin and put his case to them. I think he would find a very different response in that regard. Competition is very important, as is fairness. I accept that some businesses fail and if they fail, they do. I do not favour artificially supporting a sector.
I will be resubmitting on Report Stage my amendment No. 25 on appointing an independent ombudsman. The Cathaoirleach of the Seanad ruled that out of order on the basis that it could have brought a cost on the Exchequer. I will be resubmitting it and asking the Minister to look at how it works in Britain which has an ombudsman over this sector. That ombudsman costs £800,000 which is fully funded by the retail sector. That office is manned by one ombudsman and three staff.
I welcome the Minister's interaction in our discussion on the Bill today which has been very useful. We want to work with him on this. The Bill had been promised for many years. Many small family-run businesses have been waiting for this Bill to offer them some protection and fair play. To have legislation such as this without an ombudsman removes any type of real power that could be there. I believe the Cathaoirleach's ruling was incorrect.
On Report Stage I will be proposing an amendment that the Minister should appoint an independent ombudsman to oversee and implement the regulations provided for in section 60(3)(b) funded fully by the retail sector. It is done in Britain and it can be done here. I am not looking to overburden the authority with additional work, but we can build on this legislation. I will be opposing the section on the basis that the Minister has not taken the opportunity of this legislation to have an ombudsman. That is a mistake and needs to be rectified. I will be returning to the issue on Report Stage.
I thank the Minister for the time he has given throughout the process. I know this is a complex Bill and we will not agree on everything, but it represents a start. I am not sure whether the Minister will be back here on Tuesday to take Report Stage, but whatever happens over the weekend, I wish him-----
The Senator should stick to the section.
I am sure I will wake up some day and the reshuffle will be done, hopefully sooner rather than later. The Minister has performed very well in his portfolio - I say that on behalf of the Fianna Fáil grouping in the Seanad. Regardless of who is coming back here on Tuesday, be that the Minister, Deputy Bruton, or the Tánaiste, if Labour gets its way, I will resubmit that amendment on the ombudsman on Report Stage.
I will not repeat what has been said. I heard the Minister talk about resale price maintenance. There have been so many efforts to control the grocery business over the years, but the ideal control is competition, and Senator Barrett is absolutely right. In my years, a huge number of companies did not succeed and went out of business. However, they went out of business to companies that started. They were small businesses that started. While there are some very large international companies here now, the second biggest company is the Musgrave Group. That is owned by private individuals with a supplier coming to them. This is a competitive marketplace.
When I look back on the controls that manufacturers and suppliers would like, I can remember one group of farmers coming to me and complaining that our meat was too cheap and they were going to place a picket on our stores. I told them they were very welcome to do so because I could not imagine a better advertisement we could get. They did not place a picket. Competition has been very healthy in Ireland and I hope it will continue on that basis in the years ahead. The fewer controls and difficulties we have on that basis, the healthier it will be for competition and therefore for the consumer.
Most countries have looked at the grocery sector and found that it has problems that are particular to it because of the presence of very substantial retailers relative to pretty small players on the supply side in some cases. We have ensured it will also apply to relatively small retailers which might have supply chain problems with very large distributors.
Senator Barrett is right in saying this is not an industry in which there are large barriers to entry, but that is not the only test of competition and it never has been. There is also the issue of abuse of dominance and whether it is easy to pursue cases of dominance. Previous competition law recognised that by banning so-called hello money because it was not consistent with a proper approach.
While there are broad principles of competition law, which are set out in European treaties and reflected in our law, there are cases when, based on the operation of a particular market, it is necessary to introduce other protections. If the Senator looked through the sections - I do not know if he bothered to read the ten pages he found so irksome - he would find they cover issues such as what happens when the forecast of supply of goods is wrong and how the cost of that is shared out. Who pays for the cost of a discount promotion in a grocery store? How is that fairly worked out? We are seeking to ensure there are written contracts and these matters are handled fairly. Most large grocers, particularly ones that operate in other jurisdictions - Aldi and Lidl in particular have come in from other jurisdictions - are used to operating these sorts of rules in respect of reasonable contracts for their suppliers. This is not something really cumbersome and irksome for many of them. The same would be true of Tesco.
They provide, as they have done in the UK and other markets, a fair approach to handling things that are pretty unique to groceries, such as shrinkage, wastage, losses and so on. I am not trying to pretend I have anything like the knowledge Senator Quinn has of the sector, but while it is competitive in many ways and people do shop around, we need to ensure the rules are fairly applied because there are large players in this sector. Other countries have taken this approach.
I turn to Senator Darragh O'Brien's point.
The original approach developed by Mr. John Travers was to have a code of practice and an ombudsman. As the Senator knows, a code of practice is essentially voluntary and an ombudsman makes recommendations which one then hopes people will act upon. We have taken the view that the voluntary approach did not work so we are introducing regulations with legal force and with criminal sanctions. We are using the Competition Authority not as an ombudsman, but as an enforcer. It is a not a body which will weigh arguments and make a recommendation that does not have the force of law behind it. This will be a set of regulations that will have the force of law which we will expect to see reflected. Where the regulations are not abided to, there will be the opportunity to enforce them. There will also be other measures available, such as the possibility that the Competition Authority would issue a compliance notice so that if an action was inadvertent or a first-time misdemeanour, there might be no action beyond the compliance notice. If a party refused to act on a compliance notice, an enforceable instrument would be used.
The debate about the ombudsman has passed. It was an alternative approach involving codes, an ombudsman and a voluntary arrangement. It was assumed that everybody would be a good scout and play by the rules but it did not prove possible to achieve that kind of approach. This approach would use the Competition Authority, as it regulates every other sector and it has intimate knowledge of fair practice in the market. It has enforcement powers and legal, economic and other machinery to do this right. It would make no sense for us to set up a new quango to do what we can now with the joining of two agencies. The Senator's amendment would not add to the Bill. I have spent most of my life on the Senator's side of the House and I know a charge cannot be introduced on the Exchequer either.
I will try and see how I get on.
Perhaps the ruling has changed and I do not want to prejudice proceedings.
It may be allowed in the reformed Seanad.
I see. We went through a phase and the IFA, for example, has spoken about an ombudsman. In the Competition Authority we have a really seasoned player with many years of battle scars in trying to deal with fair trading and competition. It is the best placed body to deal with this, and especially now that it will have the experience of the consumer agency. As I noted on Second Stage, this balances the legalistic and economic views of the world with the more pragmatic consumer perspective. Bringing those together is a good approach and will improve the operation of both agencies.
I thank the Minister. I agree with Senator O'Brien's very generous tributes to the Minister, which are deserved. We echo those sentiments. It is interesting that both of us are opposing section 83 for completely opposite reasons; Senator O'Brien wants more in it and I want elements removed.
That is democracy.
It demonstrates the difficulty for the Minister, who must engage the wisdom of Solomon to satisfy us.
Maybe I am on the right track. I thank the Senators for the kind remarks. I have enjoyed debating this interesting Bill, which has garnered many views. We are adopting a balanced approach and it will not be a red-tape disaster which many fear. We have tried to confine it and be balanced, and I hope that aspiration will emerge from it.
Amendment put:
The Committee divided: Tá, 20; Níl, 10.
Tá
- Bacik, Ivana.
- Brennan, Terry.
- Burke, Colm.
- Conway, Martin.
- Cummins, Maurice.
- Gilroy, John.
- Hayden, Aideen.
- Henry, Imelda.
- Higgins, Lorraine.
- Landy, Denis.
- Moloney, Marie.
- Moran, Mary.
- Mulcahy, Tony.
- Mullins, Michael.
- Naughton, Hildegarde.
- Noone, Catherine.
- O'Keeffe, Susan.
- O'Neill, Pat.
- Sheahan, Tom.
- van Turnhout, Jillian.
Níl
- Barrett, Sean D.
- Byrne, Thomas.
- Crown, John.
- Daly, Mark.
- Heffernan, James.
- Leyden, Terry.
- O'Brien, Darragh.
- Power, Averil.
- Quinn, Feargal.
- Wilson, Diarmuid.
Tellers: Tá, Senators Aideen Hayden and Michael Mullins; Níl, Senators Thomas Byrne and Diarmuid Wilson.
Amendment declared carried.
Sections 84 to 86, inclusive, agreed to.
SECTION 87
Question proposed: "That section 87 stand part of the Bill."
The section deals with financial services. I am sure the House endorses the Minister's efforts in respect of financial services and discussions with the Central Bank where things have been going appallingly. Banks are down for €64 billion, insurance companies have closed, including another one this week, all the building societies have disappeared, many credit unions are in trouble and accounts are unreliable. Much stricter regulation is needed in this area. I endorse the Minister's approach of providing that the new competition and consumer protection commission will have a say with the Central Bank. We have to pull up our socks in the area of financial services because the collapse of the sector has cast a pall over all Members of both Houses since 2008.
The input the Minister can make under that section will be most important. We wish him well in that because we continue to make mistakes six years into the crisis and, as I said on the Order of Business earlier, the fact we are now asked to bail out a company registered in Malta through the insurance fund illustrates the magnitude of that task. More power to the elbow of the competition and consumer protection commission in that because it has not been an outstanding area of economic policy heretofore. I do not wish to oppose section 87 but it is a very important part of the Bill and I commend the Minister on including it.
This section arises from the previous role the National Consumer Agency played in financial affairs, and it provides that the new commission will continue to play that role. It is a continuation of a role rather than exploring any new ground.
Question put and agreed to.
Sections 88 to 91, inclusive, agreed to.
Title agreed to.
Bill reported with amendment.
When is it proposed to take the Report Stage?
Next Tuesday.
Report Stage ordered for Tuesday, 15 July 2014.
When is it proposed to sit again?
At 12.30 p.m. on Tuesday, 15 July 2014.