Restrictive Practices (Confirmation of Order) Bill, 1981: Second and Subsequent Stages.

Minister of State at the Department of Industry, Commerce and Tourism (Mr. D. Gallagher)

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

The object of the Bill is to confirm the Restrictive Practices (Groceries) Order, 1981 which was made by the Minister for Industry, Commerce and Tourism on 4 March under section 8 of the Restrictive Practices Act, 1972.

This order implements the recommendations of the Restrictive Practices Commission in the report of their inquiry into the retail sale of grocery goods below cost. The Minister for Industry, Commerce and Tourism requested the commission to hold this inquiry because the unease at the time in relationships between suppliers, wholesalers and manufacturers centred on the question of below cost selling and it was considered that this practice should be subjected to detailed examination.

The commission in their report of their inquiry do not recommend a ban on below cost selling. They consider that such a ban would only be justified if grave danger to the common good would result from the practice. Such a ban would be a radical interference with freedom to trade and would constitute a form of official resale price maintenance representing a reversal of State policy which had brought progress to the trade and great benefits to the consumer. On the evidence at the inquiry, the commission concluded that the adverse effects which below cost selling can have on manufacturers, distributors and consumers was not at present so great as to be a grave danger to the common good. Their conclusion that a prohibition on below cost selling would not be justified is strongly reinforced by the numerous points of difficulty which prohibition would entail.

In arriving at the conclusion that a prohibition on below cost selling could not be justified, the commission considered the incidence of below cost selling and its impact on Irish manufacturers, the distributive trade and the consumers.

As regards the manufacturers, the commission accept the evidence of manufacturers that the practice of below cost selling has created difficulties which have absorbed considerable management time and energy and sometimes led to bad relations with their customers. Concern was expressed on behalf of the manufacturers that below cost selling was an encouragement to imports and that loss of sales to imported goods could lead to significant job losses. However, no evidence was produced that the practice has led, in the past, to any significant loss of market to imports and while reasons were given why it might do so in the future, equally persuasive reasons were given for the contrary view that imports would be encouraged by a ban on below cost selling. The commission concluded that the present and foreseeable circumstances of the food industry did not justify the prohibition of the practice.

In relation to the distributive sector, the commission concluded that below cost selling has been a very powerful weapon in the hands of the multiples in competing with independent competitors and that it has undoubtedly been, on occasion, an important and maybe decisive factor in causing the close down of individual shops. However, it cannot be regarded as being largely responsible by itself for the decline in the number of grocery outlets over the years. This decline has followed a similar pattern in other EEC countries and is the result of developments in the trade and society generally. It would have happened in any event, had there been no such thing as below cost selling.

The commission's conclusion in relation to consumers is that it would not be in their interests to recommend an abatement of present competition. There was no call on behalf of the consumer for a ban on below cost selling. The one body representing consumers at the inquiry considered that below cost prices were a worthwhile help in keeping prices down in a time of inflation. They rejected the idea that below cost prices are misleading, saying that shoppers, in general, have a very good idea of prices and would not be misled as to the overall level of prices in the store. Another body representative of consumer interests said in a letter to the commission that they support the general principle of competition in trade and would object to any restriction which would interfere with this. The commission note the point that, since items sold below cost are usually staple goods, or at least goods in very wide demand, reductions in their price should often particularly benefit poorer customers.

The adverse effects for manufacturers and distributors, while they would not justify the prohibition of below cost selling, were considered by the commission to justify the retention of the constraints on the practice in existing legislation, namely the power to withhold supplies from retailers who sell below cost and the prohibition of advertising below cost. These constraints can be very effective in practice and must have an important effect in limiting the extent to which below cost selling is practised. The commission have made recommendations for the amendment of these two provisions which would have the effect of extending and strengthening the present regime. The order which the Minister made on 4 March is to implement the commission's recommendations in this regard and also their recommendations for the consolidation of the existing orders and that coverage of all provisions should apply to the same range of goods, that is, foodstuffs with certain exceptions and nonfood groceries.

Before deciding to accept the commission's recommendations, very careful consideration was given to the conclusions and recommendations in the commission's report. As regards the various sectors involved, I consider that there is as much evidence to support the argument that a ban on below cost selling would actually lead to increased imports as there is in support of the case that it would improve the position of Irish manufacturers. The commission's conclusion that the present and foreseeable circumstances of the Irish food manufacturing industry do not justify the prohibition was one to which particular importance was attached.

In so far as the distributive trades are concerned, the commission's view that while below cost selling has, on occasion, been an important and perhaps decisive factor in causing the closedown of individual shops, it could not be regarded as being largely responsible, by itself, for the decline in the number of independent grocery outlets is accepted. There is no doubt but that the advances made in this country over the past number of decades have had great implications for the distribution trade. These advances have manifested themselves in the manner of preparation and presentation and sale of foodstuffs, in the social fabric of our society, entailing certain changes in the pattern of distribution of population, higher standards of living and altered consumer attitudes and expectations. These are normal forces of change, whose effects would have been felt even if there were no below cost selling.

Below cost selling has, indeed, an element of unfairness in it which affects mostly the independent sector. However, the commission make the point that, even if the practice were to be prohibited, alternative and equally damaging forms of competition would still be open to the larger traders. Furthermore, below cost selling is not a weapon against which the individual trader has no defence. It is clear that, even at its fullest development, the multiple sector needs to be supplemented by independent outlets. The attractions offered by the independents, such as extended hours of business and personal service and their ability to develop and to exploit local opportunities as they occur, should ensure their continued existence. While some further diminution of numbers may occur, due to the operation of the forces mentioned, I do not believe that there is any danger that independent grocers will disappear from the scene.

I cannot see that the prohibition of below cost selling would be justified in any way by the consumer interest. The commission's view that such a ban would be a radical interference with the freedom of trade and would constitute a form of official resale price maintenance which would represent, up to a point, a reversal of a State policy which had brought rapid progress to the trade and benefits to the consumer is fully accepted. Following the enactment of the Restrictive Trade Practices Act, 1953, the area of the supply and distribution of grocery goods was one of the first sectors to benefit and individual or collective resale price maintenance was the first practice prohibited by order under the Act.

It is of interest to recall here the words of the then Minister for Industry and Commerce, Mr. Seán Lemass, on the introduction of the proposed restrictive practices legislation in 1952, which were that "the aim of policy must be to foster competition wherever possible and to introduce that element of risk into every trade which will force those engaged in it to strive towards maximum efficiency at all times". This policy has underlain all restrictive practices legislation in the intervening years and we have seen the fruits of it in the elimination of such practices as widespread resale price maintenance and the strengthening of competition to the benefit of all those involved in the sector, including the consumer. The outlawing of below cost selling would be a backward step in this policy which could only be justified if there was the clearest evidence to support the backward step. No such evidence has been produced.

The general conclusion of the commission is that "the fact that the commission has not recommended the prohibition of below cost selling is due, not to any belief that there are not quite serious problems in the grocery tade, but to a belief that the problems have comparatively little to do with below cost selling" and it suggests that the real cause must be looked for in such areas as unequal power relationships and discriminatory application of terms and conditions of supply. Having regard to this and to various proposals which have been made regarding problems in the sector, it has been decided to request the Restrictive Practices Commission to hold such an inquiry into the supply and distribution of grocery goods as would allow of treating all issues which are considered relevant to the overall problems of the sector.

I would like now to refer briefly to the provisions of the order which serve to strengthen existing controls, which are the power of suppliers to withhold supplies from retailers who sell below cost and the prohibition on advertising below cost. In the existing provisions relating to both of these controls the cost price is determined by net invoice price, including VAT, at which the goods were purchased. For the purposes of the new order ‘net invoice price' is to be calculated from the latest invoice relating to the delivery of like goods. This amendment will get over the problem previously experienced of associating a particular invoice with particular goods and is expected to increase the effectiveness of both controls. It will also be of particular benefit in enforcing the prohibition on advertising below cost.

There has also been incorporated into the order a provision for the application of a ‘four week rule' in respect of stocks, which will also apply to both the power to withhold goods and the prohibition on advertising. Under this rule, in the case of stocks sold by a retailer more than four weeks after the date on which a supplier's price list for like goods has been altered, the cost price of the goods is to be calculated by reference to the supplier's current best list price and not the net invoice price. This rule is intended to deal with a situation where traders who had stocks laid in would be free to sell more cheaply and would be likely to make the most of their publicity in regard to these items. There would then be increased temptation to other traders to break the law and match the cheaper prices. The rule should also help to lessen the disparity in prices between different retailers.

These are the main provisions in the order for the strengthening of the existing constraints on below cost selling. The order also extends the power to withhold goods to own label goods and the prohibition on advertising below cost to special offers that is, offers which have the effect of reducing the average price of goods below net invoice price including VAT, even though the prices of individual items might not be below that level. Advertising on behalf of as well as by retailers will be prohibited under the new legislation.

It will be seen accordingly that the order has the effect of strengthening the existing constraints on below cost selling, making them more effective, and will facilitate enforcement. The order, being in consolidated form, will lead to greater ease of interpretation. In accordance with section 8 (3) of the Restrictive Practices Act, 1972, it must be confirmed by an Act of the Oireachtas, and I have no hesitation in recommending the confirming Bill to the House.

Mr. O'Toole

I welcome the fact that this Bill has come to the House after a long time. The report of the Restrictive Practices Commission was placed before the Minister on 14 November last and it has taken four months to get the Bill to the floor of the House. The contents of the order are extremely disappointing, because the Minister has failed to grasp the real issue of below cost selling and has accepted the recommendations of the Restrictive Practices Commission. I do not find fault with the commission's report. While it has anomalies and while one reading through it is led to the logical conclusion that the commission must recommend the prohibition of below cost selling, nevertheless in the next paragraph there is a complete change. As far as I can see, logic goes out the window. One of my colleagues was reported yesterday as saying it would take some kind of a dodgy theologian to figure out the logic of all this.

I cannot say the same about the Minister as I said about the findings of the commission. During the time the inquiry was taking place we had not experienced the kind of price war with which the grocery trade are now confronted. We had sporadic outbreaks of below cost selling and, as is rightly mentioned in the commission's report, it was not a great problem. As the Minister of State mentioned and as the accompanying GIS statement with the commission's report mentioned, the evidence given by two groups on behalf of the consumer agreed that below cost selling should be retained. At that stage they had not experienced the kind of price war which is now going on. The multiples also felt, in their own interests, that there was no way in which a prohibition on below cost selling should be entertained. The Minister for obvious reasons failed to state the up-to-date position in relation to consumer groups who gave evidence at the inquiries held by the Commission. A representative of the Irish Housewives Association recently said on television that in the light of this latter experience she now felt that the damage caused by below cost selling as evidenced in the current price war was sufficient to warrant a ban on below cost selling. The Consumer Association of Ireland who had supported the continuation of below cost selling at the inquiry, stated on RTE in the last six weeks that in the light of this new experience there ought to be a change of heart in relation to below cost selling. Even stranger, one multiple who backed the pretension of the right to sell at below cost at the inquiry hearings, pleaded with the Minister five weeks ago to intervene in this on behalf of his company because he felt that it would ruin him. A second multiple in this city, while they have not gone on their knees pleading with the Minister, are known to be screaming for mercy at this stage because the kitchen has become too hot and they cannot stand the heat.

I have no doubt that if the commission were faced with the experience which the trade faced in the last couple of months they would have come out in favour of a prohibition on below cost selling. The kind of headlines carried in the national newspapers five or six weeks ago where one multiple which happens to be a multi-national company entered the race shortly after the start of the price war saying that they were entering the war to eliminate the opposition, frightened the daylights out of people who were directly affected by the price war. Hence one multiple decided to scream for mercy. In the light of that evidence which was not at the disposal of the Commission when they heard evidence, the Minister who has had the report of the commission since last November and has experienced what is happening now should take the experience that the trade are going through into consideration and come out on the side of a ban on below cost selling.

The Minister said in his introductory statement in relation to below cost advertising and the other measures under existing legislation, that they will help to tighten up the problems created by below cost selling which, he admits, has an element of unfairness. If there is a tightening up on the advertising of below cost selling, surely it must have something inherently bad, unfair and unsavoury about it. Yet, we have the withdrawal from the brink by the Minister, in not imposing what he must know to be the correct course of action. Trying to turn the scrum around so as to be seen to be pro-consumer and to portray me and any other Opposition as being anti-consumer will not cod anybody. The facts speak for themselves. The consumers have come out publicly and expressed their view in relation to the damage caused by below cost selling. On the question of advertising I quote one amazing sentence from the commission's report at paragraph 4.9:

We believe these reasons still hold good, and that furthermore the prohibition on advertising is useful in discouraging the unbridled spread of below cost selling since the power of below cost prices to attract is obviously limited by their not being allowed to be brought to the attention of many possible customers.

The kind of logic applied in that sentence is that below cost selling is a good thing, that it keeps down prices and helps the poorer sections to buy staple foods at a cheap price. But there is a ban on the advertising of this same facility to those same people because they should not know about it. I cannot see the logic in saying that one cannot advertise because there is something unsavoury about it but that one can sell at below cost prices to one's heart's content provided one does not tell people about it. The whole thing is crazy, illogical and nonsensical. The mind boggles at the Minister's approach especially in the light of his experience of the current price war. The only advantage in this order is that it gives a clear definition of below cost selling and of grocery goods, a legal definition that can be used for the future. I will have a further opportunity to go into the effects of below cost selling and the effects of the unbridled expansion of multiples and so on at a later stage in this House.

The acceptance by the Minister of the recommendations of the commission will mean that my party and many thousands of people, not grocers, not distributors, not manufacturers, not multiples alone, but ordinary consumers in the long run will be victims of the spurious kind of approach now in train.

Most amazing of all is the statement by the Minister, Deputy O'Malley, which was reiterated today by his Minister of State, Deputy Gallagher, that a further inquiry is being initiated to deal with terms. I fully agree that the trading terms which are applied in relation to the purchasing of grocery goods are the kernel of the problem. In 1972 the Restrictive Practices Commission made available to the Minister all the relevant information he needs about trading terms. I see no reason for a further inquiry for the same purpose.

The information obtained in the 1972 inquiry is available to the Minister. He failed to take action on the recommendations and information available to him from that inquiry. The only reason I see for promising a further inquiry is as a sop to the consumers and to the trade in general. He knows he should be implementing the legislation under the Monopolies and Mergers Acts and the Restrictive Practices Acts. He should be taking a much closer look at the recommendations in the report and banning below cost selling. He has not done that. He has said that we will have an inquiry into terms. The fool is being sent further. That is the conclusion I draw from what the Minister said.

There is also a statement in the commission's report bolstering up their argument in favour of the retention of below cost selling that they see no justification in introducing a prohibition at this time. This begs the question: at what time and in what circumstances should below cost selling be prohibited? No indication is given as to when in the view of the commission this type of attitude should be adopted. There is much information in the commission's report. At the time and in the circumstances in which they held the hearing they were probably justified in the long run in recommending that, but since the report was presented to the Minister many things have happened in the grocery trade. The experience in the past few months in the current price war has been beyond all expectations of what might happen in the grocery trade. The intensity and the vindictiveness were never envisaged by the commission.

The Minister is aware of all these facts and yet, for some unknown reason, he has accepted a recommendation on below cost selling which is now completely out of date. The Minister knows that, and he is trying to retrieve the position by promising a further inquiry into terms. He is trying to hang his hat on the consumer peg, despite the fact that the two major consumer organisations have taken their hats off their pegs in the past few months because of what they see happening around them. The Minister's reaction is very disappointing to me. I reject the argument made by the Minister in accepting this recommendation even though it may have had some validity at the time.

Mr. Horgan

Nobody disputes the fact that what we are dealing with here is a price war. Can the Minister or anybody explain to me how you can have a war in which there are no casualties? If there are to be casualties, where are they to fall? What is happening in this price war, to which this Bill inadequately, to put it mildly, addresses itself, is not just savage and cut-throat commercial competition. There is nothing unusual about that. It is also a classic example of a new kind of economic colonialism which, if not masterminded, is certainly heavily influenced from abroad by large multinational stores and chains.

Even when we use the terminology of war and battles, there is some kind of assumption that there is a proportionality between the forces engaged but, when we look at the fact that the turnovers of the two chains engaged in this price war, and which are controlled from outside Ireland, approximate to almost twice the total turnover of the grocery trade in Ireland, we have to ask ourselves are the terms of this competition fair. If they are not, as they cannot be with that kind of discrepancy, are the Government doing enough to make them fair? In this party we believe strongly that the terms are not fair, and that the Government are only tinkering with the problem, only fiddling with the minor nuts and bolts of a machine which is in danger of going very seriously wrong.

I listened to the Minister with interest which turned into incomprehension and almost a sense of ridicule. Throughout his speech, time after time the Minister admitted that the effects of this price war, substantially if not entirely controlled from abroad, are serious for individual retail outlets. The Minister went on to justify his minimal policy of intervention — one might almost call it a policy of non-intervention — by setting up straw men and by proving clearly that these straw men can be knocked down. The Minister recognised that below cost selling "has undoubtedly been on occasion an important and maybe decisive factor in causing the close down of individual shops". This is precisely what the people who are complaining about below cost selling are saying, and the Minister is agreeing with them. What does he go on to say?

However, it cannot be regarded as being largely responsible by itself for the decline in the number of grocery outlets over the years.

There is an understandable tendency on the part of spokesmen for the independent retail grocers to maximise the effect that they believe below cost selling has had on their operations. But none of them with any sense will claim that below cost selling alone has been largely responsible for the decline in the number of independent retail grocery outlets. Of course it has not been, but the case that the Minister is rejecting is not the case that is being made. The case that is being made is that the virtually unfettered allowance of below cost selling has had a serious effect on the trade as a whole and will have a more serious effect on the trade as a whole.

Later on in the Minister's speech he admits that below cost selling has an element of unfairness in it. He admits that that element of unfairness affects mostly the independent sector. Having admitted these charges he then goes on to say:

... I do not believe that there is any danger that independent grocers will disappear from the scene.

Who seriously believes for a moment that independent grocers will disappear from the scene? As long as there is one huckster shop in Bailieborough the Minister will be able to stand over that sentence. The grocers, no matter how threatened they feel, would not go to the wall in defence of the statement that the price war will lead to the total elimination of independent grocers; of course it will not. But they will go to the wall, and are going to the wall at present, to defend the statement that below cost selling is not only affecting them very deleteriously but poses many long term problems for the trade for the consumer, the food industry in this country, for jobs in manufacturing and in retail and ultimately — and indeed perhaps not so ultimately after all — for the consumers themselves.

In effect, therefore, the Minister is confirming most of the fears which have been expressed, but his predictions are not related to what people say will actually happen. In fact the things he is predicting will not of course happen, but what he has not addressed himself to are to the predictions of what will happen. These predictions are that the price war and the unfair competition it involves will entail a steady erosion of the position of the independent Irish-based retailer, especially in the grocery trade and that the advantage will go to the multiples and, more especially, to multiples controlled from outside this country.

It was sad in a sense to hear the Minister justifying his inertia by referring to Seán Lemass and the idea of competition. We are all in favour of competition as long as it produces the goods, as long as it results in reduced prices to the consumers and an improvement in services. And there is a stage in the development of economic systems in which competition has precisely that effect. I would be the first to admit it. But, just as in wars there have to be casualties, in competitions there have to be winners; and, if there are going to be winners, there are going to be losers also. Again I would ask the Minister, in this competition, which he seems to think is so vital and could be allowed to go on virtually unchecked into the indefinite future, who will be the winners and who will be the losers.

It is almost undeniable that at a certain stage of development competition gives way to increasing monopolisation and monopolies, and that large food chains with financial fire power at their back can quite simply sink the opposition. Once the opposition has disappeared from the scene they can raise their prices again to a more profitable level. To do this, and to achieve a stranglehold, they do not have to put every independent retail grocer out of business — it would not be worth their while — as long as they put enough of them out of business. The way things are going at present it is the chains and multiples and not the Government who will decide how many independent retail grocers are put out of business.

There is a touching faith on the part of people who believe in the efficiency of the market, that the market always finds its own level, that competition will always exist and that competition will always be to the benefit of the consumer, the producer, the middle man and so on. But this tendency towards monopoly in the market, which I have outlined and which is evident already in many other areas of economic activity, is now becoming dramatically clear in the area of food retail distribution. There is a real problem here because, unless it is checked, we will find ourselves in the ironic situation of being a country which can produce food, at least potentially, perhaps more efficiently than any other country in Europe, importing more and more food that we could grow, market and sell ourselves.

It is bad enough that so much of our renewable natural resources, natural resources which are at least as precious as the depletable mineral ones, are exported without sufficient value being added to them by way of processing and processing industries. But if we are to become a major food importing nation, if our consumers' purchasing power is going to be devoted to increasing employment in the countries which are exporting their food to us, then we will have nobody to blame but ourselves and the Governments that let it happen. Or, in the final analysis, if we are to become a pauper economy, a beggar economy, the social welfare recipient of the EEC, globally passive and indolent, having given up the fight, it is because we did not wage the battle when it was important to wage it.

In relation to consumers it is undeniable that in the short term below cost selling is of advantage. But there is below cost selling and below cost selling. This party are not opposed to below cost selling in principle; we supported a Government which introduced subsidies on basic foods. That is a form of below cost selling but it is a form of below cost selling which is directed and controlled by Government in the interests of particular sections of the community and, indeed, in the interests of fairness and equity across the community as a whole. We are not in favour of below cost selling which is controlled and directed by private, increasingly monopolistic enterprises whose main function is not to serve the customer or the consumer but to make profits for their shareholders. It is not perhaps even widely recognised that one of the effects of the price war has almost certainly been artificially to depress the consumer price index, because the sampling that goes on for the consumer price index must inevitably include outlets where below cost selling takes place.

The CPI which is an important determinant of certain wages and other forms of remuneration can be quite deleteriously affected and distorted by the existence of the price war at a particular point in time. That is an area in which the consumer is being asked to give back with one hand what he has taken with the other.

Despite all the rhetoric about competition it is obvious that the Government have no opposition in principle to intervening in the price war. The Bill before us improves marginally a number of forms of intervention. Therefore, we must take all the rhetoric about free and unfettered competition in that context at least. We are not talking about whether the Government should interfere. We are talking about the scope of their intervention and about the efficacy of their intervention. It is obvious that this form of intervention will only postpone the day on which that proportion of the Irish retail grocery trade is further whittled away and further eroded by unfair competition.

There are a number of ways in which Government intervention could be more effective. The RGDATA have suggested one such way and that is the use of the placet-planning mechanism to restrict the size of supermarkets in terms of construction and operation, regardless of who may be involved. So far as I know this is a mechanism which has been adopted with some success in the Federal Republic of Germany. It is not a particularly socialist or radical innovation. Yet, through its fairly simple mechanism it would help to combat the unfair advantgages which are enjoyed by the big combines and particularly by the multinationals.

Another area in which effective action might be taken, if the Government do not intend banning below cost selling, would be to examine the restriction that the outlets involved in below cost selling impose regarding the number of items that may be purchased. The supreme cynicism of these outlets is shown by the fact that they are only prepared to allow each customer to purchase a modest number of below cost items. Their rhetoric will indicate that the reason for this is to allow all consumers a fair chance but in reality the situation is that these outlets do not want a situation in which some of their competitors would arrive in the stores early in the morning and buy all the below cost items on the shelves. If there were such bulk buying other traders could sell the items bought at below cost at a reasonable price and still make a profit. In other words, the outlets we are talking of are not in the wholesale business and in particular they are not in the wholesale business to operate to the advantage of their competitors. I suspect that if the practice of restricting customers to a very limited number of items below cost were to be made illegal the rhetoric of the chains concerned, particularly those with foreign connections, would be exposed for what it is because no chain could afford to continue to fill their shelves with below cost items as quickly as they would be depleted in the event of the restriction being lifted.

What is interesting so far as I am concerned is that there is more suspicion than gratitude on the part of any consumer to whom I have spoken about this below cost selling. Naturally, consumers take advantage of the situation but they are not under any illusion that the bonanza will last and that the below cost goods will be available indefinitely. They know very well that there will be a price to be paid at the end and they suspect that they will be the ones who will have to pay that price in terms of higher prices with increasing monopolistic food outlets. All they can do is to take advantage of the goose that lays the golden eggs while it is still alive.

This is no way in which to run an economy, to run a consumer service or to control trade in the interest of Irish producers of food and of the jobs of those who are involved in food processing and, ultimately, of those who are buying the groceries at the end of that chain. Therefore, I appeal to the Minister even at this late stage to abandon this other report that he is commissioning and to take firm and decisive action on the basis of the information available to him. He must have enough information now to make three times the intervention and the restriction on below cost selling as is the case in respect of this Bill. If he fails to do this and in particular if he fails because he is afraid that to do so would be to his party's disadvantage electorally during the next few months both he and the Government will stand indicted yet again for putting party before country.

Mr. Enright

The Minister should stop now and consider seriously what he is doing by way of this legislation as it affects the Irish grocery trade. The Government should be giving leadership in this fundamental and important area. The Minister must be concerned with the ever-escalating import figures so far as food is concerned. Last year, for instance, we imported foodstuffs to the extent of more than £500 million. I am convinced that between 90 and 95 per cent of these imports consisted of goods that could have been produced, processed and marketed at home. The Government must face up to the situation. The people have become aware of the failure of the Government to take action in this whole area.

The matter before us is one of the most fundamental to be debated here for a long time. Many of the jobs that were lost last year could have been saved if the Government had realised what was happening. This country should be almost self-sufficient in terms of food production. If the seriousness of the present trend is not recognised by the Government we can only hope that it will be recognised by some officials of the Department. If the present trend in food imports continues, the figure in that regard will equal, if not exceed, the figure for our exports of foodstuffs. If that happens a very serious situation will have been created for all of us. Somebody must face up to the facts sooner or later but if much more time elapses before action is taken, it will be too late to do anything effective.

We have allowed a situation to arise in which a very sizeable portion of the grocery trade, over 30 per cent of it, is now really controlled by two main supermarket groups, Quinnsworth and Tesco, and they are engaging in a price war. As far as I can see, their aim is to take over an even greater share of the Irish food market. In some of the larger supermarkets in the bigger towns I have been invited to see the imports of food and to see not only a lorry load but a lorry with a trailer behind arriving from Britain with foodstuffs, items we are well capable of producing in Ireland at a competitive price.

I do not think it is by accident that we have outside the gates of this House this afternoon members of the Irish Association of Distributive Trades and the members of RGDATA. These people are there, I believe, largely because of this Bill and this order. That is mainly why they are picketing this House. They are not here for pleasure but in an effort to bring home to the Government the error of its ways. Obviously, the Government are not listening to or heeding the message from rural Ireland.

There is grave concern throughout the country about what is happening in the food trade. It is time the Minister shouted stop and took action. The Bill and the order are being used as smokescreens by the Government because of their failure to take action. We have seen mini-budgets day after day. If the Government wanted to do anything in regard to controlling escalating prices and to reverse that trend, the way to do it is to restore the full food subsidies that were in existence from mid-1975. The power lies with the Government to take action. Fine Gael and Labour Party Members have asked the Minister to have a complete reappraisal of food imports. The Minister and his Department should consider the items being imported that were formerly produced here. A number of the bigger firms have moved the production of some of the goods to Britain. We should think of all the jobs that have been lost in this way. We should take serious stock of ourselves, a nation that should be almost self-sufficient in regard to food. We are allowing the situation to deteriorate and get out of hand by permitting ever-increasing food imports.

I am seriously concerned. I assure the House and the country that if we are in the next Government the orders the Minister has brought in this afternoon will be reversed. If we have the opportunity we will try to re-establish the food industry as an area for growth and also re-establish associated industries in that sector. There is a tremendous range of job opportunities in this field. The tragedy of bringing in these orders that we have here today is that they will lead only to further food imports by multinational supermarket groups. The expansion of these groups is obvious to everybody. They are slowly but surely wiping out the middle and small business men, the medium size grocery and the family supermarket or grocery shop. They are being eliminated in rural Ireland and in our larger towns and cities. Minister, you must be aware of this matter in your own constituency.

An Ceann Comhairle

Would the Deputy please use the third person and address the Chair?

Mr. Enright

I have received numerous representations in this matter and so I am certain have many Deputies opposite. The time for action has arrived; but, unfortunately, the Government have decided on the wrong action. The Restrictive Practices (Confirmation of Order) Bill and the attitude of the Minister in accepting the report presented to him represent a blunder of the highest order and I am dismayed by the action of the Government. Surely the Minister is aware that nobody can sell an item below cost. There may be many different devices to bring in business to the supermarket chains, and they succeed, but when people go to buy the special items they are caught on other items in these supermarkets. With massive publicity and expenditure on advertising the supermarket groups are succeeding in attracting business. I believe that by the manner in which they have done it they have seriously damaged the whole food industry, which is in a state of total disarray. Does the Minister intend to let the situation drift further?

In his speech the Minister said:

On the evidence of the inquiry the commission concluded that the adverse effects which below cost selling can have on manufacturers, distributors and consumers was not at present so great as to be a grave danger to the common good.

What does "at present" mean? How many more grocery shops will have to close before action is taken? Will 500, 1,000 1,500 or 2,000 grocery firms have to close? If 2,000 more shops are closed, who will get their business? It is obvious that a major portion of that business will be taken up by multinational supermarkets who have little loyalty to this country as can be seen from the amount of food they import. We will have to consider where we are going with regard to the food industry. We have seen many factories getting into difficulties because so many food items are being imported.

The Minister must take action quickly and try to reduce the growth of supermarket chains. If he fails to take action this Government will be condemned, and rightly so, by the people. This Bill has met with widespread opposition. The people know increased food imports are damaging our economy. The loss of the home market can mean the difference between survival and closure for many food manufacturing firms. If these firms have a good solid home market they can survive, but if they lose the home market their chance of survival becomes slimmer.

The responsibility for this matter rests on the Minister's shoulders. He has a duty to the smaller shopkeepers, to the family supermarkets and to the workers but, above all, he has a duty to this country, to take proper action. I have stated the present position as clearly as I can. The continued growth of the supermarket chains must be curtailed. Their unfettered growth calls into question the Government's attitude not just in this matter but in their whole approach to employment. This challenge must be faced and positive action must be taken.

We will face a very difficult time if the control of food distribution leaves Irish hands. Everybody on this side of the House is very concerned about this matter. I believe that when the next election comes round the Government's approach will be that they allowed below cost selling to help the consumer. The majority of consumers realise that this is only a short-term gain, which in the long-term will mean dearer food for all.

When many firms were given monopolies in particular areas they increased their prices because there was no competition. If the Government use this type of argument with the electorate during the next election campaign, it will not go down very well with the majority of consumers. This is a smokescreen to try to distract people's attention from the real issue of ever-escalating price increases. Every housewife I meet is highly critical of the Government's failure to take action to control prices. When in Opposition, Fianna Fáil promised to control prices but they have failed to do so. The greatest blunder the Government made was to do away with food subsidies. If they want to help the consumer they should restore food subsidies and this would help reduce inflation.

This Bill is a very grave mistake and as a party we are opposed to it.

Minister of State at the Department of Industry, Commerce and Tourism (Mr. D. Gallagher)

Most Deputies have not addressed themselves to what we are trying to do here. We have heard about all sorts of things, — including a reference to an election although I do not know what election the Deputy is talking about, and he might have to wait much longer for an election — which are not concerned with the purpose of this Bill. It is designed to confirm an order which has already been made by the Minister. That is the only matter we are discussing.

It amazes me that there is such opposition to a measure which has been welcomed, particularly by consumers. Following publication of the report of the Restrictive Practices Commission, a spokesman for the Irish Housewives' Association was reported in the press as saying they believed below cost selling to be of benefit to housewives and that they were in favour of it.

Price wars are not something new. In fact, they have taken place from time to time over a long period. The only difference this time is that under-cost selling has been given greater publicity than in the past and Deputies are over-reacting to reports on this matter. Action was taken on the 1972 report by way of orders made in 1973. We are watching the situation closely and will do whatever we believe to be in the best interests of the community at large.

Deputy Horgan referred to competitiveness. We believe that competitiveness is a good thing. We do not want unfair competition but it must be recognised that competition is basic to our way of life. I stated in my speech that there is no evidence to show that what is happening has had any bearing on imports. Contrary to what Deputies have suggested, we have not had positive proof that the situation has changed.

This Bill is intended merely to confirm the order already made by the Minister and there is no need to go into further detail. Deputies have raised many matters which could more properly be raised on another occasion.

Question put and agreed to.

Agreed to take remaining Stages today.

Bill put through Committee, reported without amendment and passed.

Dáil Éireann díospóireacht - Tuesday, 24 Mar 1981