Dáil Éireann díospóireacht -
Thursday, 22 Oct 1959

Vol. 177 No. 2

Restrictive Trade Practices (Amendment) Bill, 1959—Second Stage.

Minister for Industry and Commerce (Mr. J. Lynch)

I move that the Bill be now read a Second Time.

The primary purpose of the Bill is to improve in certain respects the machinery provided by the Restrictive Trade Practices Act, 1953, for the investigation of restrictive trade practices and for the taking of remedial action in respect of those practices which are found to be unfair or to operate against the public interest.

It may be of assistance to the House in considering the Bill if I recall briefly the main provisions of the Act of 1953. That Act provided for the establishment of the Fair Trade Commission, and the Commission was duly set up with effect from 12th June, 1953. The Commission have the power to investigate restrictive trade practices in regard to the supply and distribution of goods and the rendering, in the course of carrying on any trade or business, of any services affecting such supply or distribution. In the discharge of their functions, the Commission are empowered to summon witnesses and examine them on oath and they may require a witness to produce any documents in his power or control. Witnesses before the Commission are entitled to the same immunities and privileges as if they were witnesses before the High Court.

The investigation of restrictive practices may be approached by the Commission in two different ways. First, the Commission may prepare and publish rules—known as fair trading rules—representing, in the opinion of the Commission, fair trading conditions with regard to the supply and distribution of any kind of goods and the rendering of any services affecting such supply or distribution. Such rules have not the force of law, but they represent a code of conduct for the particular trades concerned. The trade interests involved have the opportunity of voluntarily adhering to the rules and abandoning unfair restrictive practices. The Commission are obliged to keep under review the operation of fair trading rules and to report to the Minister for Industry and Commerce if the rules are not being observed. The second method which the Commission may adopt for the investigation of restrictive practices is to hold a public enquiry into the conditions which obtain in regard to the supply and distribution of the goods concerned. The Commission may hold such an enquiry on their own initiative, and they must do so if the Minister so requests. The Commission are required to submit to the Minister a report of every enquiry.

A report submitted to the Minister by the Commission in relation to the non-observance of fair trading rules, or following the holding of a public enquiry, must describe the conditions which obtain in regard to the supply and distribution of the goods concerned. The report must indicate whether these conditions prevent or restrict competition or restrain trade or involve resale price maintenance. If, in the opinion of the Commission, any such interference with trade or competition is unfair or operates against the public interest the report must given reasons for the Commission's conclusions. The Minister, having considered such a report, may make an Order prohibiting specified arrangements, agreements or practices in the trade concerned. An Order so made by the Minister does not have the force of law unless and until it is confirmed by an Act of the Oireachtas.

To date 19 sets of fair trading rules have been made relating to the supply and distribution of a wide variety of commodities, and six public enquiries have been held in relation to the supply and distribution of radio and television sets, building materials, motor vehicles, grocery goods, chemists' preparations and carpets. Reports of all six enquiries have been submitted to the Minister, and five of these have been published. The other report, relating to carpets, is at present under consideration by me. Orders have been made in relation to the supply and distribution of radio and television sets, building materials, motor cars and grocery goods. In the case of chemists' preparations, the Commission recommended the making of an Order, but the then Minister decided not to act on the Commission's recommendation as he felt that an Order on the lines recommended would not entail any marked alteration in the manner in which the trade was being conducted. The operation of the Orders relating to motor cars and radio and television sets has been reviewed by the Commission, and reports have been submitted in this matter to the Minister. In both instances the Commission's recommendation was that the Order should not be altered, and this recommendation was accepted.

In regard to goods which are subject neither to Orders nor fair trading rules, the Commission give advice, on request, to manufacturers and traders and seek by negotiation to procure a satisfactory settlement of complaints concerning the operation of restrictive practices. The Commission also keep themselves informed of new ideas and developments in regard to restrictive trade practices in other countries and maintain relations with other similar bodies abroad.

An examination has been carried out of the operation of the Restrictive Trade Practices Act, 1953, in the light of experience over the past six years. In the course of the examination, consideration was given to the question whether legislation embodying a different approach to restrictive trade practices, such as is followed in some other countries, would be more suitable to conditions here. The conclusion reached was that the fundamental structure of the 1953 Act has stood the test of experience and that it should be retained. The Act has undoubtedly enabled substantial progress to be made in a relatively short time in eliminating some of the more objectionable features of restrictive practices in many trades. Experience has shown, however, that some modifications of the Act are desirable in relation to the scope of public enquiries and the procedure for the review by the Commission of the operation of Ministerial Orders.

A public inquiry must deal with all the conditions which obtain in regard to the supply and distribution of the goods, and all restrictive practices affecting their supply and distribution. This arrangement precludes the holding of an inquiry of limited scope, for example, an inquiry confined to one particular practice. I consider it desirable that the Commission should be empowered to hold such limited inquiries and Section 2 of this Bill provides accordingly.

The review of the operation of existing Orders is obviously an important part of the Commission's functions. Conditions in trades are liable to change and it is desirable that the effect of Orders should be closely watched by the Fair Trade Commission. The 1953 Act requires the Commission to keep the operation of Orders under review and provides that the Commission may submit to the Minister a report in the matter together with their recommendations as to what action should be taken. If a report by the Commission should indicate the necessity for amending an Order, it would be necessary to have a further public inquiry.

This procedure for the amendment of Orders is cumbersome and unsatisfactory. I have considered this difficulty and I am satisfied that it can be surmounted by the introduction of the new procedure which is provided for in Section 6 of this Bill. That section provides that the Commission may on their own initiative, and shall, at my request, hold a special review of the operation of an Order. The Commission are required to publish notice of their intention to hold a special review and give interested parties an opportunity of making submissions in relation to the subject matter of the review. It will be open to any interested person to ask the Commission to hold a public inquiry instead of a special review, and if the Commission decide against holding a public inquiry, they must inform the party concerned of the reasons for their decision.

The Commission will be required to submit to the Minister a report of every special review and, if they are of opinion that the relevant Order should be amended, they must recommend accordingly and indicate the form of amending Order which they consider necessary. A copy of the Report of every special review will be laid before each House of the Oireachtas.

I propose to take advantage of this occasion to introduce a new provision authorising the Fair Trade Commission to investigate restrictive practices imposed by employers or employees affecting the use of specific materials or methods for manufacturing or construction purposes. Section 4 of the Bill provides the Commission with the necessary power to undertake enquiries into these matters. Enquiries of this kind may be undertaken only at my request.

In essence, the aim of Section 4 is to enable the Commission to investigate complaints that restrictive practices relating to the use of specific materials or methods prevent the reasonable development of trade and business and inflate costs. It is not the intention that Orders will be made on receipt of a report from the Commission dealing with practices of this kind.

I feel, however, that it will serve a useful purpose if practices of the kind involved are enquired into and reported on by an impartial body such as the Fair Trade Commission. As stated in last year's Government White Paper on Economic Expansion, restrictive practices, whether by employers or labour, inflate costs of production and distribution and retard the expansion of output and employment. The development of the economy depends on our being able to offset the competitive advantages of other countries by more efficient production. It is essential, therefore, that restrictive practices of this nature be abolished and it will be an object of Government policy to secure enlightened co-operation towards this end.

The Bill provides also for a few minor amendments of the Act of 1953 which are, in the main, consequential on the principal amendments which I have already mentioned. I am satisfied that this Bill will improve the procedure established by the Act of 1953 for the investigation of restrictive trade practices and for the elimination of those practices which are unfair and are against the public interest. I commend the Bill to the House.

Mr. Cosgrave

I do not think there are any objections to the proposed amendments. There are, however, two matters arising out of the Minister's remarks to which I want to refer. The Minister referred to the Order dealing with motor cars and I should be glad to know if he can say why the cost here of assembled cars is so high when no purchase tax is payable, whereas in Britain purchase tax is operative. Can he say whether the unassembled cars cost more here and, if so, what is the reason for their costing more? What other factors are responsible for the price of cars being high here, as compared with Britain, where the purchase tax is operative. The difference is very slight and the purchase tax there is quite a considerable element in the price structure.

Section 4 empowers the Commission to cause an inquiry to be held

"whenever so requested by the Minister ... into the refusal or alleged refusal by employers or employees (or any combination of employers or of employees or of employers and employees) to use particular materials or particular methods for manufacturing or construction purposes."

Will this section apply to a problem such as that which exists for container traffic at the Port of Dublin?

Major de Valera

There are some welcome features, if not precisely in the Bill, in the Minister's statement, upon which I should like to comment. The first is the proposal for improving the machinery for the review of Orders. That is a move which is highly desirable. Orders in the administrative way, and perhaps particularly affecting trade and commerce, are made by the Minister on the advice of his Department in particular circumstances. Nobody will complain that these matters, which are made the subject of an Order, are not gone into to the best of the Department's ability. What can happen—and I have no way of knowing how frequently it can happen—is that an Order is made in a particular set of circumstances. Grant for the moment it is the best in those circumstances, but changing circumstances bring about another situation and it could be that within a comparatively short space of time there is occasion for its review.

It is true that at present if representations are made to the Department, Orders and circumstances will be reviewed, but perhaps the very fact that one sometimes has to wait for specific representations makes the problem all the more difficult. A routine, if I may call it so, or a systematic scheme for the revision of such administrative orders is called for and, in so far as the Minister's proposal moves in that direction, it is a very welcome one, and one which will commend itself to the public in general.

Of course, it may be argued that there will be uncertainties in the situation. It may be argued that an Order favours an interest that had an element of uncertainty right from the beginning, but specifically, if it is a question of a duty or an Order of that nature, I do not know whether these would come within the category considered here. I am talking of Orders generally, and they should be reviewed. If an Order of that nature is made, it is made for the benefit of the community as a whole and, inevitably, for the benefit of some active section of the community. If, when it is made, there is, so to speak, a threat over it that it will be unmade, it may be argued that that takes away from the advantage of the Order in the first instance. I do not think that is so. The actual position is that any ordinary Order can be unmade and this provision does not in any way affect those circumstances.

On the whole, the provision for review as well as being administratively of help to the Department is good from the public point of view and the Minister's attitude is to be commended. There is something else that appeals to me in the second remark of the Minister. It is in regard to public inquiry. A person can call for a public inquiry and if he does not get it, he must get the reasons. That is both a good and a courageous provision. It is a good thing that, wherever possible, information on public matters is available to the public and that the reasons for decisions affecting the public should be given to the public. It is one of the safeguards of a democratic system.

Within all reason—the reasonable demands of administration; you cannot have a public inquiry to determine everything and everybody realises that—the provision for doing these things in public and doing as much of the administrative business of the State in public is a good one. Further, as that, to some extent, recognises that principle, the Minister's remarks in that regard should be underlined.

The Minister touched on the very difficult and, one might say, touchy problem of internal restrictive practices, restrictive practices touching production. As everybody with experience of them knows, they are difficult problems and cannot even simply be stated. There are so many pros and cons in any particular case that you take up that it is extremely difficult to legislate, even in the particular instance, let alone generally. It has to be recognised that at the present day any restrictions on useful production here must be extremely embarrassing to our economy. Under present conditions and if peacetime conditions are to continue, as we all hope they will, we can live as a community only if we are competitive now. That means that, insofar as our exports are concerned, the wherewithal with which we earn our livelihood, we must be competitive and if it is only a matter of internal costs and a matter of living within our means, we must be equally competitive. It means new methods, in many cases. It means modernising processes, and so on. Perhaps it would not be the best time to go into the details of some of these things but, in those circumstances, it inevitably means problems of the nature the Minister has mentioned.

I do not know whether this Fair Trade Commission will be in a position to deal effectively with this matter. We can understand the caution of the Minister's statement in regard to it. Although some people might say now at this stage that there has been too much caution, this problem is best solved in a spirit of co-operation for the ultimate well-being of the community as a whole rather than legislate for such things, and therefore the Minister has been cautious. Nevertheless, it is a nettle that in some way or another will have to be grasped, if we are to get ahead.

Insofar as this commission may perhaps allow some examination of the problem and inform the Department, if nothing else, of specific circumstances, it is perhaps a useful mode. I hope I am not misinterpreting the position when I suggest that it is to be the function of the Fair Trade Commission in this regard. Perhaps an impartial or detached body which has the power to make these inquiries and can find out the circumstances in particular cases will be a useful thing. I only hope it will be usefully operated in such a regard. I do not think that in present circumstances I would help by being more specific. I think I can understand why the Minister has not been more specific in this, either.

With the recognition that competitive trade is essential to our economic setup—we have to live in a competitive world; maximum efficiency has to be attained at home for two reasons. namely, for the export reason and from the point of view of home costs, home employment and all these other things that are involved—this Bill, if properly administered—I do not mean to be censorious when I say that but it will require a good deal of intelligent administration to make it effective— will be a real contribution to the problems of our time.

Especially in the Minister's speech do I find something which, as I mention a few points, gives us a lead in our thought on this matter. With regard to the latter problems—the problems affecting production, whether you call them restrictive practices or whether it is fear of investment, on the one hand, or fear of loss of employment, on the other hand, whatever they may mean, these problems which stifle improvement in production methods and inhibit the greater production which is required—if some move can be made at first to inform us and the Minister and the Department accurately in such matters, then that is perhaps the best move that can be made initially towards grappling with these problems.

Mr. Booth

This is an opportunity when we must review generally the operation of the restrictive trade practices legislation in order to decide whether the amendment now before the House is in order and whether it is sufficient. I have stated before here and must state again now that the operation of this legislation, to my mind, leaves very much to be desired and to some extent appears to be based on a complete misconception of the ultimate public interest.

In his speech this morning, the Minister, when referring to reports submitted to him by the Commission, said the report must indicate whether the conditions as set up prevent or restrict competition or restrict trade or involve resale price maintenance. We have already had a report from the Fair Trade Commission on cross-Channel freight rates in which it was disclosed that these freight rates were arranged collectively by all the various transport concerns involved and it was stated by the members of the Fair Trade Commission that, in their view, this collective price fixing was not contrary to the public interest. In spite of that we find this constant reference to the iniquity of retail price maintenance by a supplier. This view, adopted by the Fair Trade Commission, with the full backing of State legislation, has resulted in cut-price shops being set up all over the country to the great detriment of those engaged in legitimate trade who are performing a useful service to the public and providing proper conditions of employment for their staff.

Anyone who tries to maintain a retail price is apparently condemned outright. I myself had a discussion with the Fair Trade Commission on this point. I pointed out to them, in regard to my own business, that retail price maintenance of motor vehicles was still being attempted and though I was informed this was strictly illegal and was not happening, the member to whom I was speaking eventually agreed that there was some price maintenance in the motor trade. He could only explain that he did not know of it officially; he knew of it unofficially and was proceeding to take no action.

That seems to me to be a hopeless way of running such an organisation as the Fair Trade Commission. It is unjust to say that the activities of the Commission so far have been of any great service to the public. The Order made in respect of builders' providers caused chaos and confusion in that trade, which was a legitimate trade, and caused a great deal of unemployment. It caused chaos and confusion in the motor trade also and resulted in unemployment, leading to the setting up of people in the motor trade who were unqualified, who did not employ properly qualified staff and who could not give proper service to the public.

There seems to be a misconception that retail price maintenance is an abomination and against the public interest. I deny that absolutely and I think a mounting degree of public opinion is being directed against the activities of cut-price establishments. Unless and until the Minister really grapples with this and informs the Fair Trade Commission by legislation or otherwise, that retail price maintenance is not necessarily against the public interest, this situation can only cause further hardship to staff and further dislocation to business generally with disimprovement in service to the public.

If it is permissible for the large transport organisations collectively to fix freight rates for cross-channel freight, I cannot see why it is illegal or improper for a supplier or a distributor to fix the retail price at which the goods shall be sold to the public and which will give to the retailer a reasonable margin of profit which is essential if he is to stay in business. I make no excuse for pleading that profit should be made in the retail trade because anyone who runs a business otherwise than on a profitable basis is heading for trouble. He cannot provide security of employment for his staff and he cannot make any provision for expansion in the business giving increased employment.

The whole procedure by which matters are referred to the Fair Trade Commission needs further review. I would much prefer that investigation should be undertaken by the Fair Trade Commission only where the Minister has satisfied himself that it is in the public interest that such an inquiry should be carried out. I am disappointed that there is not in the proposed amendment some restriction of the right to hold an inquiry. Anyone who is in business will know that you are apt from time to time to run into an awkward customer. A typical case occurred in my own business only a few weeks ago where we had supplied a vehicle under certain conditions to a motor dealer. He did not propose to conform with the conditions on which the vehicle had been supplied, which were conditions that were not repugnant to any fair trading rules. However, his reaction, when we tried to restrict him in his activities was immediately to say: "If you do not do what I want you to do I shall report you to the Fair Trade Commission."

There are many reasons which one can give for refusing to supply an article to another trader but all the time you have the threat being held over you that if you do not supply an article to a certain person he will report you to the Fair Trade Commission. Then you get into a long and rambling discussion with the Fair Trade Commission to justify your action. I do not see why people in business should be compelled to submit to cross-examination of their ordinary trading methods unless it can be clearly established that they are acting improperly or against the public interest.

At the moment anyone may be summoned before the Fair Trade Commission and asked to account for his actions. In the particular case to which I refer, only a few minutes after we had put the 'phone down we got a 'phone call from the Fair Trade Commission to say: "We require a full explanation as to why you are not prepared to supply a motor car to a certain person." We explained to them the situation as we saw it. They said they would look into it further. They made further inquiries, 'phoned us back and we gave them further information. At the heel of the hunt they said: "We have now satisfied ourselves that, in all the circumstances, you were completely justified in what you did." That was a complete waste of public time and money as well as my own time and money simply because a man who had a personal grievance against my firm used the machinery of the Fair Trade Commission to try to put pressure on my firm to do business with him which we were not prepared to do.

That was not the purpose for which the Restrictive Trade Practices Act of 1953 was passed. In actual fact, I do not believe that any real restrictive trade practices have been revealed or been stopped by reason of the Orders made under this Act so far, but the maximum amount of dislocation to business has been caused. I say that speaking as an employer but it has also caused the maximum amount of dislocation to members of the staff in well-established businesses. I cannot see that there has been any reduction in costs by reason of the activities of the Commission and I do not think there will be either.

I hope the Minister, either now or at a later date will reconsider the whole question of this legislation just as the price control legislation was considered last year. I was very much in support of that legislation which completely wiped out price control except where the Minister was satisfied that some element of price control should be reinstated. In the same way, there are undoubtedly restrictive trade practices both on the part of employers and employees and it is probably wise that there should be some Act which would enable the Minister to take action where he decides that the public is being adversely affected. However, the present situation is that anyone who is aggrieved because of non-supply or because of price may raise the father and mother of a row through the Fair Trade Commission which will get nobody anywhere.

If it was necessary to approach the Minister in the first place to establish a prima facie case for an inquiry, a lot of public time and money would be saved and quite a lot of unnecessary dislocation of ordinary trade and business would be avoided. The Minister is working very hard to make this legislation work. I feel that he has not gone far enough and I hope that as he becomes more settled in his new appointment—which is one of the most difficult in the Government—he will keep this whole matter under constant review to see whether the whole purpose of this legislation is in fact being carried out. I am satisfied that it is not. I should hope that a full and constant inquiry by the Minister and his staff would reveal that further amendment is still necessary if this legislation is likely to prove effective in the public interest.

I do not wish to oppose the present amendment in any way but I feel in all conscience I must use this opportunity to protest against the unforeseen development which has taken place. It has resulted in cut-price shops, in sub-standard conditions of employment and a very low standard of service to the public by those engaged in this practice. I hope the Minister will keep these matters under review and I sincerely hope it will not be too long before he sees his way to recommending to the Government a further and much more drastic review of this legislation generally.

Mr. Corish

I merely want to ask the Minister one question. On page 6 of the typescript of his speech, he says in the first paragraph:—"I propose to take advantage of the occasion afforded by this Bill to introduce a new provision authorising the Fair Trade Commission to investigate restrictive practices imposed by employers or employees affecting the use of specific materials or methods for manufacturing or construction purposes." Would the Minister make clear, whether this section merely applies to methods of manufacturing or construction?

Mr. J. Lynch

First of all, I want to say that we in this country are not unique in having this system designed to offset restrictive practices. Most countries have a similar problem and have legislation designed to deal with it. As regards the Fair Trade Commission, I do not think it can be alleged that it acts indiscriminately or without full regard, not only for the public interest but for vested interests, if I could call them such. The suggestion that any complaints to be investigated by the Commission should first be submitted to the Minister in order to obviate public waste of time or public expense is hardly justified because the Minister if he received such complaints, would have to submit them for examination to some group of officers in his Department.

I think no body is better equipped under present circumstances than those who have been specially appointed for such a purpose and who have experience of dealing with these matters. If the Minister was first required to examine each complaint before permitting the Fair Trade Commission to take it up, I do not think it would in any way avoid waste of time or expense or indeed, as Deputy Booth suggests, eliminate possible annoyance to businessmen, manufacturers or anybody else because the questions that would be asked by the Fair Trade Commission would have to be asked by the Minister or his officers.

I want to say that there is no general condemnation by the Department of Industry and Commerce or the Fair Trade Commission of price maintenance. It is widely admitted, however, that price maintenance does in some respects create a problem and in some respects does operate against the public interest. It is only in cases where the Minister or the Fair Trade Commission is satisfied that there is such a danger to public interests that Orders are made and ultimately confirmed by legislation passed in this House.

Deputy Cosgrave asked, in relation to the cost of motor cars in this country, whether there might be any degree of price maintenance or, I imagine he suggested too, of restrictive practices. I think it must be admitted that the duty on the imported parts of motor cars must have some effect on the price of cars assembled in this country. The fact that the number of motor cars assembled here is by comparison with Britain, so small might also in some way account for the greater cost of production.

The Deputy asked whether this legislation was designed to apply to the particular problem of container traffic. In the first instance, as I think I explained, Section 4, which provides for inquiry by the Commission into refusal by employers or employees in manufacturing and construction to handle certain goods, can be applied only at the specific request of the Minister. It is not my intention to request the Fair Trade Commission to consider the specific problem of container traffic. The obvious reason is that it is well-known that the Labour Court is actively considering this question at the moment and it is hoped that it will be able ultimately to produce a satisfactory solution.

Deputy de Valera was quite right in saying that the matters sought to be dealt with under Section 4 are very difficult and complex. One has to be realistic and accept that such practices do exist and that, so long as there is machinery for investigating whether or not they do exist and for highlighting their existence, something would have to be done to deal with the problem. The intention here is not so much to legislate against these practices but, first of all, to establish whether or not they exist and, in that manner, to highlight them and then, if possible, by inducement and by an effort to get a degree of co-operation, to eliminate them. That is the extent to which this legislation goes and Deputy de Valera was right in appreciating that there had to be some caution and some reserve exercised in this matter.

With regard to Deputy Corish's question, manufacturing and construction are specifically referred to in Section 4.

Mr. Corish

It means nothing else only manufacturing and construction?

Mr. J. Lynch

That is all. Any restricted practices by employers or employees will be the subject of examination if the Minister requests the Fair Trade Commission to carry it out.

Mr. Corish

But not any other aspect of industry or commerce except manufacturing and construction?

Mr. J. Lynch

Quite.

Question put and agreed to.

Committee Stage ordered for Wednesday, 4th November, 1959.