Dáil Éireann díospóireacht -
Thursday, 19 Jun 1980

Vol. 322 No. 7

Restrictive Practices (Confirmation of Order) Bill, 1980: Second and Subsequent Stages.

Minister for Industry, Commerce and Tourism (Mr. O'Malley)

I move: "That the Bill be now read a Second Time."

The object of this Bill is to confirm the Restrictive Practices (Motor Spirit) Order, 1980 which I made on 23 May 1980 under the Restrictive Practices Act, 1972.

This order extends for a further six months the currency of a statutory ban on the operation of new company-owned motor spirit stations by oil companies, created by the Restrictive Practices (Motor Spirit) Order, 1972. That order, as amended, is due to expire on 18 July 1980.

The 1972 order was made following an inquiry by the Fair Trade Commission, requested by the Minister for Industry and Commerce in 1970, into the growth of the number of retail outlets directly operated by the petrol companies. In its report of the inquiry the commission argued that the growth of the control by the oil companies over the retail market needed to be halted for a time in the public interest as it felt that this development would lead to dominance over the retail market by the oil companies and increase the risk of such restrictive practices as price fixing and market-sharing. The 1972 order halted this development for a trial period of three years. It was reviewed by the commission in 1975 and on their recommendation extended for another three years until the summer of 1978.

During that review the commission also received representations on matters relevant to the orders which their terms of reference did not allow them to consider. The commission had suggested, accordingly, that when they next reviewed the ban they should also review the other aspects of the orders relating to the motor spirit trade. I decided, therefore, to ask the commission to hold an inquiry into the operation of the orders as a whole, into any matters germane to the operation of those orders and also into the conditions which obtain in regard to the agreements under which stations, which are company-owned but not company-run, are operated. This latter aspect was included because I was anxious that concern expressed by, and on behalf of, persons who were operating company stations without the security afforded by employee or tenant status should be thoroughly explored. Pending the receipt of the commission's report I extended, by way of orders in 1978 and 1979, the ban for a further two years to 18 July 1980.

I had hoped to receive the commission's report in time to have action taken in relation to its recommendations before the expiry date of the current order. However, before the commission had completed their report a certain development occurred which I regarded as being very relevant to the inquiry. This was the announcement by one of the petrol wholesalers that supplies of petrol would be withdrawn from uncontracted retailers who could not take a specified minimum delivery of petrol. The commission considered that this was an issue which would affect their consideration of the question of the future status of the ban on new company stations and was very relevant to their inquiry. They decided, therefore, to re-open the inquiry and hold further special sittings to deal with this issue only. These sittings were held in March last. This development of necessity has delayed the submission by the commission of its report of the inquiry. I hope to receive it shortly, however, and I am confident that it can be examined and action taken in relation to its recommendations before the end of the year. To facilitate this I have extended the currency of the statutory ban on the operation of new company-owned motor spirit stations for a further six months.

The Restrictive Practices Act, 1972, provides that orders of this kind shall not have effect unless they are confirmed by an Act of the Oireachtas. The Bill now before the House is the confirming Bill which is necessary to give the force of law to the order. The order, however, may not be amended but must be accepted or rejected as it stands.

This is an uncontroversial measure and I have no hesitation in recommending it to the House.

Mr. O'Toole

As the Minister has just said this is an uncontroversial measure and I welcome it on behalf of the Fine Gael Party. It extends the ban on the extension of oil company-owned retail outlets. The announcement this year by a petrol company in relation to minimum deliveries seemed to me, the public at large and obviously the Minister, be cause of the action he took, to be restrictive and to be in abuse of the powers which those people seem to be able to wield in the case of tenants of petrol filling stations. I am glad to hear the Minister will be receiving the report of the commission very shortly in relation to the extended terms of reference which considered the conditions under which tenants work in company-owned filling stations.

During the past 18 months I raised this matter in the House in relation to specific cases where one petrol company had issued notices to quit to certain tenants of filling stations. Those people have spent a lifetime in the service of that particular company. Their business is selling petrol on behalf of that company. It seems that the normal tenancy arrangements which apply to normal tenancies did not apply in this case. Those people had apparently no established rights to fixity of tenure. They could be thrown out without any trouble by the company for alleged failure by them to comply with regulations laid down by the company. Some of the alleged failures were nothing short of an excuse by the company to get rid of those tenants. I am glad to note that the commission have looked into this aspect of the trade. I am sure the Minister will act in a way worthy of him when the details of the commission's report are made available to him.

What percentage of the retail outlets are company owned, run by the companies themselves and worked by tenants? Company-owned stations run by tenants are an Irish phenomenon. This figure will give an indication of the power which oil companies wield at retail outlet level. The Minister mentioned the inherent danger in this preponderance of power in the production end, which could lead to market sharing and price fixing. I expect the agreement between the companies up to this has led to the overall price of the product being similar in all areas of the country. Recently there have been some minor differences between prices paid for petroleum products of different companies. There is a much different scene in the UK retail trade where there are large differences in price levels. This is probably due to a much more competitive atmosphere and a much more competitive line taken by different companies. This has not been the case here, and the consumer at the end of the day is the victim of this approach. I hope that the recommendations of the commission will be far reaching enough to ensure that there will be no reverting back to this position and ultimately the Minister will accept the recommendations furnished to him by the commission. I welcome this Bill on behalf of this side of the House.

Mr. Leyden

I welcome the introduction of this Bill and I would like to compliment the Minister for bringing it before the House today. The inquiry of the Restrictive Trade Practices Commission was complete but was reopened on 12 and 13 March to take further evidence in relation to the operation of certain companies concerning minimum drop proposals. The results of the inquiry have not been announced yet and have not been submitted to the Minister. I ask him, in advance of this finding, to exert every influence within his power on particular companies, who are now in the process of increasing the hire charge and rent of company-owned stations to tenants throughout the country.

I have got evidence of how Irish Shell Limited now propose to increase their hire charge by up to 300 per cent from the charges which have operated up to this. It seems they are not covered under the Prices Commission and they have not to apply to them for approval for such increases. They are not covered by the Landlord and Tenant Act, 1980. They are free to pursue their own approach in relation to the hiring of equipment to their tenants.

There are 485 company-owned stations throughout the country, 400 of those are not company-operated and 85 are company-operated. I am particularly concerned about the company owned but not company-operated stations. I have here an agreement sent to a particular tenant within the last few days which proposes an increase of the hire charge from £50 per month to £131 per month from 1 June next. They are exerting great pressure on this particular tenant and many other tenants to sign in advance of the findings of the Restrictive Practices Commission. This is very unfair and is a Rachman type approach to those particular people, who have given lifelong service to this company. Irish Shell Limited had a profit of £5.9 million last year. I do not wish to name firms but——

An Leas-Cheann Comhairle

The Chair was about to say that, but too late.

Mr. Leyden

I appreciate your concern about that but I have named them outside the House and I do not see why I should not name them inside this House. I was not concerned about my own position when I exposed the type of operation they had earlier in the year. In one company in Salthill, Galway, a 70-year-old man has been given until 24 June, this month, to get out. He is not allowed to renew the lease which he has had up to now. He has been ordered to get out. This again is in advance of the findings of the Restrictive Practices Commission inquiry. The Minister is considering this matter and I will submit to him the evidence in my possession. I will put to him that he should instruct these companies that no such change in their agreements should be made before the findings of the inquiry are published. Are they afraid of the findings of this inquiry? Are they afraid in advance that they will not be allowed to increase the rent on these stations after the findings of the inquiry are made known and when the Minister in due course will implement the findings of the inquiry?

Again, I welcome the Restrictive Practices (Confirmation of Order) Bill, 1980. I have pointed out anomalies which exist at present and which are being taken advantage of by two major oil companies in this State. All the other companies will follow suit as fast as they can to ensure that they will get in ahead of the inquiry and with a view to making the maximum profit will exert the maximum pressure on these people who are not protected in law. Such people have given life-long service and dedication to these companies and now they are being told quite bluntly that they are required no longer if they are not prepared to pay those exorbitant increases of up to 300 and 400 per cent on their letting agreement. Again I emphasise the seriousness of this situation where 400 tenants and their families require protection. The Minister already has shown his concern by having the inquiry reopened when those companies were limiting their drops. I am confident that when this evidence is brought to his attention he will take whatever action is appropriate to ensure that no change will come about in advance of findings of the inquiry being made known which should take place very soon.

Minister for Industry, Commerce and Tourism (Mr. O'Malley)

The report of the Restrictive Practices Commission to which I referred in my opening speech will, I understand, be given to me on Tuesday next, 24 June, but of course it will take some time after that to publish it. As I indicated in the speech, the conditions under which company-owned stations are operated will be dealt with by the commission in their report, presumably in some detail. There is not much point in my giving any exposition of my views on this at this stage because I will have to consider what is in the report.

Deputy O'Toole inquired about the details of ownership of the petrol stations around the country. In 1979 there were 4,033 petrol outlets, as they are described. Of these 476 or 11.8 per cent were owned by oil companies and 3,557 or 88.2 per cent were independently-owned. What in the context is perhaps more significant is the throughput of both of them. Of the total throughput of 281,020,000 gallons, 102,709,000 gallons or 36.54 per cent was sold at company-owned stations and 178,311,000 gallons or 63.46 per cent was sold through independently-owned stations, from which it would appear that the volume of throughput in company-owned stations is very substantially higher than in the independently-owned ones inasmuch as 11.8 per cent of the stations sell 36.54 per cent of the petrol.

The question of higher charges, which was referred to by Deputy Leyden is, I understand, being considered at the moment by the prices division of my Department in consultation with the Attorney General in response to some complaints that have been made about this matter. It is contended, I understand, by the oil company concerned that the existing price control mechanisms do not apply to this form of charge, but that is a matter which is being examined at the moment. Whether it does apply or not, I would regard it as regrettable that very substantial increases in these charges are sought to be imposed at a time when it is known that a report of the Restrictive Practices Commission on these kinds of matters is about to issue. I would have thought it would have been better business practice, perhaps, not to be trying to push things at this stage, but apparently one oil company at least take the view that they should push.

These are the main points that have been raised in the course of the debate. I will have an opportunity during the Summer Recess to consider this report that I will get on Tuesday. I propose to introduce legislation here in the autumn which will take into account whatever of their recommendations I decide to agree to at that time, and I would hope that we might have what I might call more permanent legislation rather then have to be coming back every 12 or six months as the case may be, as we have been doing over the past few years pending this report. The legislation would, of course, deal with broader topics than just the question of company-ownership alone. I would hope that it would deal in some fashion with the method of operation of company-owned stations and perhaps the methods of control which companies exercise over independently-owned stations also which sometimes give rise to difficulties.

Question put and agreed to.

Bill put through Committee and reported without amendment.

Question proposed: "That the Bill do now pass."

Mr. O'Toole

I want to make two points. The Minister stated that he intended to introduce more permanent legislation to replace this statutory instrument system, which obviously is not satisfactory. Regarding what has been mentioned by Deputy Leyden and the Minister concerning jumping the gun by companies pending legislation, can anything be done to restrict the activities of companies in the interim or to curtail this kind of approach by them? Secondly, is it the Minister's intention to publish the recommendations of the commission prior to this legislation being introduced?

Mr. O'Malley

Regarding the activities of the companies concerned and the matter raised by Deputy Leyden, subject to the advice of the Attorney General, I may have powers under the Prices Acts to control those particular charges and am awaiting that advice at the moment. If I have powers, I shall make an order under the Prices Act, independently of this legislation. I hope to have the situation clarified in that regard in the next day or two.

So far as publication is concerned, the report would, of course, be published, either prior to or simultaneously with the publication of the Bill. It would, therefore, be available for consideration and discussion in the course of the discussions on the legislation.

Question put and agreed to.