Vol. 392 No. 4
asked the Minister for Industry and Commerce whether he has considered the case made by independent retailers of electrical appliances that the ESB are engaging in unfair trading practices in having available to them the exclusive use of the billing system for the purpose of hire purchase and also the deferred payment methods of trading; and if he will make a statement on the matter.
34.
asked the Minister for Industry and Commerce if he has any plans to meet with the ESB for the purpose of ensuring that their present sales policy for electrical goods does not permanently destroy small family retail businesses; the steps, if any, he proposes to take in this matter; his views on the merits of the case put by RTRA; his views on whether service to the consumer will suffer if the ESB gain a total monopoly of the electrical retail business; and if he will make a statement on the matter.
92.
asked the Minister for Industry and Commerce if his attention has been drawn to the fact that the retail electrical trade claims that they operate at a severe disadvantage in relation to the ESB because of the system of billing and accounts operated by the board; to the fact that electrical retailers do not have access to the system; if he considers that these claims are valid; and if he will make a statement on the matter.
I propose to take Questions Nos. 7, 34 and 92 together. I have considered the case made by the Radio and Television Retailers' Association and others that the ESB's retailing activities in the electrical appliances sector give rise to unfair competition for other electrical appliance retailers. In particular, I have considered suggestions that the ESB cross-subsidise their electrical appliance sales business, offer favourable credit terms and have an unfair advantage over their competitors in relation to their billing system.
At the outset I would like to emphasise that it is perfectly legitimate for the ESB to be involved in appliance retailing under the provisions of the Electricity (Supply) Act, 1927.
In relation to cross-subsidisation I am informed that the ESB's appliance sales business is operated on a normal commercial basis. In relation to their credit terms I am informed that the ESB's average percentage rates on all appliances is approximately 24 per cent which is similar to that offered on hire purchase by other retailers. These are, I understand, displayed on all merchandise in the ESB's showrooms. Exceptional special promotions are undertaken at the request of, and funded by, suppliers where interest free credit is offered for particular goods if payment is made within a year. Similar promotions are undertaken by other retailers.
The ESB's billing system undoubtedly facilitates the promotion of, and repayments in, their electrical appliances business, and in this regard gives the ESB an advantage not available to their competitors. While it is, of course, acceptable for any business to maximise its natural advantages, it must not do so, in particular, by availing unfairly of advantages it enjoys uniquely by virtue of being in a monopoly position. In order to ensure that such is not occurring in this particular case, I have decided to ask the Director of Consumer Affairs and Fair Trade to carry out an investigation into this aspect of the ESB's involvement in the electrical appliances sector.
Is the Minister aware of the fact, particularly in the Border area where the electrical retail trade has been under severe pressure for many years that the way ESB trading is heading will further endanger the livelihood of the small retail outlets in the Border areas, and in other parts of the country? Would the Minister agree that there may be a tendency for the ESB to use the sale of electricity to subsidise the sale of electrical goods?
I am aware that electrical traders in the Border area are at a particular disadvantage because of the difference in the VAT rates on both sides of the Border and the present development does not help an already difficult situation for them. I do not want to comment on whether this is subsidising the price of electricity or vice versa, but I am somewhat surprised that it had become the practice of the ESB in recent times to enter into the sale of brown goods as opposed to white goods. For many years their justification for engaging in the sale of white goods was to promote the sale of electricity. The same argument does not seem to apply in the sale of brown goods, many of which are minimal or negligible users of electricity.
What about free competition?
I now call Deputy Farrelly and I will call Deputy Bell again.
Is the Minister aware that the use of the ESB billing system to facilitate customer credit payments is an abuse of their monopoly position as a semi-State body? Would the Minister accept that the 24 per cent profit margin is not the actual margin and that they are working in real terms on a 2 per cent or 3 per cent profit margin. Would the Minister further accept that social welfare officers end up giving money to people who cannot pay their ESB bill which include items purchased under an ESB credit purchase scheme?
With regard to the first part of the Deputy's question, I have answered it already in the main reply by saying that I have asked the Director of Consumer Affairs and Fair Trade to carry out an investigation into that aspect to see whether there is an abuse of the monopoly position.
With regard to the question of public bodies advancing money for the payment of electricity bills, I agree that if any element of that included the credit purchase of goods that appeared on an ESB bill then it certainly gives the ESB an unfair advantage because the same facility would presumably not be afforded in respect of bills that were due to private retailers.
A Cheann Comhairle——
Sorry Deputy, I am calling Deputy Michael Bell.
May I first ask the Minister if he would give us some indication of how long it will take for this report to be returned to him? May I also ask him to include in the terms of reference of that examination, the question of whether the trading and sale of electrical goods by the ESB is on the same par as that of the retail trade?
I cannot say how long it will take the Director of Consumer Affairs and Fair Trade to investigate the matter but I will certainly have asked him to look at it as a matter of urgency. I hope to have a report within two months.
Deputy John Bruton has been offering.
Would the Minister not agree that his suggestion that the Director of Consumer Affairs and Fair Trade will investigate this matter is a farce in view of the fact that the Director of Consumer Affairs and Fair Trade has indicated in a letter to public representatives that he can undertake no investigations because he has not got money to pay travelling expenses to his staff and, therefore, his reply to this question is completely ridiculous in the sense that there is no capacity to do what he says is going to be done?
I am fairly confident that if the director is short of money for travelling expenses he can conduct this inquiry without having to incur any significant travelling expenses.
Does this mean that his other work in respect of ordinary consumer complaints will suffer——
This is leading to unnecessary argument.
In an office such as that of the director's, he cannot undertake everything he is asked to do.
I am calling the next question.
I will call Deputy Barry if he will be brief.
How can the director carry out his other work if he does not have enough money?
I think he normally gives priority to investigations which he is requested by the Minister of the day to carry out.
So ordinary consumers can wait?
Please, Deputy. Deputy Barry.
May I ask the Minister if his concern about the ESB's involvement in "brown" goods is going to be part of the investigation being conducted by the Director of Consumer Affairs and Fair Trade and whether, when he gets this report, he will publish it?
I do not think that question arises under the point I have asked him to look into.
Question No. 8.
May I ask a short question?
Very good, Deputy.
Will the Minister direct the ESB to cease the unfair use of the billing system in support of the ESB shop credit system?
I am sure we had this before.
I have already replied to that question.
Question No. 8, please.
The industrial development agencies have day to day——
On a point of order, I asked the Minister whether he would publish the report.
I do not know until I see the report. Sometimes these reports contain a lot of confidential commercial information which the director or whoever draws up the report may not want published. If confidential commercial information were to be given out as a matter of course it would be impossible for the people conducting the inquiries to get the necessary information to enable them to draw conclusions usefully.
Question No. 8.
