Dáil Éireann Debate, Thursday - 15 September 2022
22. Deputy Paul Murphy asked the Tánaiste and Minister for Enterprise, Trade and Employment his views on the role of profiteering in contributing to inflation, the actions that agencies under his remit will take in relation to this; and if he will make a statement on the matter. [45107/22]
View answerThe factors contributing to inflation at the present time have been well documented. These factors are generally accepted to include global supply chain issues relating to rebounding global demand post COVID-19; and the impact of the invasion of Ukraine on international commodity supplies especially grain/oilseeds and energy supplies. These issues are significant and are having impacts right across the economy.
Notwithstanding the issues around supplies and their costs, businesses must behave competitively. The Competition and Consumer Protection Commission (CCPC), which is independent in the exercise of its functions, has powers to:
- Enforce competition and consumer protection rules that ensure businesses set prices independently and communicate them appropriately to consumers;
- Ensure that mergers do not result in a significant lessening of competition, which carries a risk of higher pricing;
- Help to educate and inform consumers so they are able to shop around, and in doing so add to the competitive pressure on businesses when they set their prices; and
- Conduct a market study if it suspects that there is a market failure or dysfunction that results in pricing that is causing consumer harm.
Excessive pricing may be illegal if a business is in a dominant position, where it faces little competition, and its customers have little bargaining power. When a business is dominant, it is not allowed to abuse its position. Businesses and their pricing decisions are constrained by the need to compete rather than by any legal obligation.
When the CCPC receives complaints about pricing it assesses them to see if they indicate a possible breach of competition or consumer protection law. It can also take action on its own initiative when it suspects there may have been a breach.
I understand that the Deputy has previously raised the issue of profit margins made by energy providers. The regulation of energy networks in this country falls under the remit of my colleague the Minister for Environment, Climate, Communications and Transport and, in turn, the Commission for the Regulation of Utilities. However, this is a complex issue and several energy providers across Europe have requested liquidity supports from their governments. The Deputy will also be aware of moves afoot at the EU level to examine some of the underlying structures of energy markets and pricing. In a market economy like ours, businesses are free to set prices in line with market conditions, provided they are not in a dominant position in the market, and provided they do this without colluding with competitors. There are some exceptions, for example suppliers of energy, telecommunications, postal services, and financial services having an obligation to apply to, or inform, a regulator about pricing changes. This means that prices can rise, whether that be as a result of increased input costs or an imbalance in supply and demand. While in these situations companies can make profits, this is not necessarily the same as ‘profiteering’, which normally refers to emergency situations where a product is in such short supply that any seller with stock is able to set a price independently of any competitive constraint.
