Deputy Pat Rabbitte gave me notice of his intention to raise on the Adjournment the reported plan by publicans in Dublin and in a number of other parts of the country to raise the price of the pint by 4p or more, and if the Department of Industry and Commerce intend to take any action in the matter.
Adjournment Debate. - Drink Price Increase.
Thank you for permitting me to raise this matter on the Adjournment. The reported decision by publicans in Dublin and in a number of other areas throughout the country to raise the price of the pint by 4p or 5p is a matter of concern which merits the close attention of the Minister for Industry and Commerce. The very least the Minister should do is to use the powers available to him to freeze the price at its existing level until an investigation can be held as to whether there was a valid case for all or part of the planned increase.
The price of the pint has increased significantly since the last order freezing prices in Dublin was lifted by the then Minister for Industry and Commerce, Deputy Ray Burke, in November 1988. I notice the figures published this evening suggest that the price of the pint has soared ahead of inflation. The example given was that the pint was £1.22 in 1985 compared with £1.52 in April of this year, a 25 per cent increase as compared with a cost of living increase over the same period of 17 per cent. That differential is before the purported increase of 4p to 5p. I would draw the Minister's attention to the statement by the bar persons union to the effect that they are fearful that there could be job losses consequent on this latest threatened increase. The pint of plain which, as I am sure the Minister agrees, is your only man, is getting out of reach of the ordinary pint drinker.
The standard response from the Minister has been that competition is sufficient to keep the price of drink down, but there has been substantial evidence in the past of publicans operating as a cartel to fix prices at an agreed level. The Minister and the publicans must think the public are very naive if they expect us to believe that publicans spontaneously decide to raise the price of the pint by the same amount on the same day without any consultation with one another.
Some people might say that an increase in the price of the pint is not a very important issue, but there is very big money involved here. If the planned increase of 4p per pint in the Dublin area was to be applied to the country as a whole, it would take in the region of £25 million out of the pockets of the consumers and put it mainly into the bank accounts of the publicans. Part of the extra revenue will also go to the Government as the VAT element of the price increase and the prospect of this bonus may explain why there seems to be such reluctance to do anything about the increase. The price of alcohol is already exceptionally high in this country and further increases will do nothing for our tourism industry. The pub forms an important part of Irish social life and the Government should take steps to ensure that customers are not the victims of profiteering by publicans.
There is a number of related areas which I would also like to refer to. Publicans are required to display the price of drinks, but a recent survey by the Office of Consumer Affairs showed that 82 per cent of pubs in the Dublin area were ignoring regulations regarding display of prices and that 57 per cent of pubs outside of Dublin were ignoring the rules. There are also huge variations between prices charged in different pubs for the same products and the outrageously inflated prices charged in pubs for minerals and "mixers". All of this points to the need to strengthen both the powers and the resources of the Office of Consumer Affairs. In his report for 1988 the then Director of Consumer Affairs, Mr. Jim Murray, contrasted the position of his office with that of Strathclyde Regional Council in Scotland, whose trading standards department covers a population of 2.4 million spread over a smaller area, yet has a staff of 242. This was ten times the number of staff available to Mr. Murray, whose office was responsible for enforcing almost 50 consumer protection, trading standards and competition laws. If we are serious about defending the rights of consumers and protecting them against exploitation, then we must provide the resources to do so.
I have seen newspaper reports that publicans are planning to increase prices. I have also seen reports that the organisations which represent publicans have denied that there is any collusion in respect of price increases. I have not as yet seen evidence that, as suggested by the Deputy, there is a concerted plan to increas prices in Dublin and in other parts of the country. The Restrictive Trade Practices Intoxicating Liquor and Non-Alcoholic Beverage Order, 1965, provides that a retail trade association or a group of persons engaged in retailing of such drinks may not decide or recommend retail selling prices. The order prohibits price fixing by the trade. The Director of Consumer Affairs and Fair Trade has taken prosecutions under the order but so far unfortunately without success. On the basis of his experience from these cases he is conscious of the high standard of proof that is apparently required to satisfy our courts before a conviction for this offence can be obtained.
It is clearly much easier to allege collusion than to establish legally that it exists to the satisfaction of the courts beyond reasonable doubt. I am of course unhappy that a potential for price fixing exists which is to a significant extent apparently immune from prosecution. It may well be that restrictive practices or competition legislation is not the best route to tackle concerted price rises in the licensed trade. It may well be that the restrictive licensing system is at fault. If the system creates barriers to entry that make collusion easier and limits competition, then perhaps it should be liberalised.
While drink is not a necessity I am concerned about the matter because it has a very heavy weighting in the consumer price index. As a consequence, increases in the price of drink have an inordinate influence on the rate of inflation and accordingly have an effect on wage negotiations, particularly for example the negotiations that are ongoing at the moment. Excessive wage increases in turn lead to a lack of competition and increased unemployment. I would find it totally unacceptable if publicans were to push up their prices by collusive action, with consequences going far outside a simple price increase. This is all the more undesirable when the economic conditions are as benign as they are today. Inflation is at a lower level than for decades past. From the evidence of property prices for public houses, particularly in Dublin, it is clear that there is an exceptionally high level of profitability in the licensed trade. In these circumstances, publicans need to fully justify any increases, not just to me as Minister but particularly to their customers.
I have outlined the favourable economic climate for publicans. I know that business can have increased costs but these need not always be passed on automatically to the consumer. At present the rate of increase in costs is lower than it has been for very many years. Every other business looks to achieving savings by increased efficiency. In the current case I note a report in the newspapers that a trade union official, as Deputy Rabbitte has adverted to, has said in the last day or two that recent wage increases would give rise to the need for no more than a 2p increase in prices. In any event, I cannot see that increases, where they are justified, should be uniform.
It is a matter of some regret that in the on-license trade there is little or no evidence of competition. Consumers should bear in mind that there is plenty of evidence of competition in the off-license trade and in supermarkets. Consumers, having compared prices and made a judgement, should support only those publicans whose prices fairly reflect the product and service on offer. Consumers should take advantage of price information displayed. The proper display of drink prices is a matter of continuing concern to me. The Director of Consumer Affairs will, at my request, institute an immediate survey of licensed premises and rigorously enforce the law by court action if breaches are discovered.
I mentioned at the outset the difficulties of proving collusion under existing legislation. This is an area which is receiving my particular attention in the preparation of the Competition Bill. In other jurisdictions, where competition law is based on the principles of Articles 85 and 86 of the Treaty of Rome — as the Bill will be — it is not necessary that written agreements exist to establish — and for the courts to accept — that there has been collusion. It is possible to reach that conclusion on the basis of examining the behaviour of the parties concerned. I will be doing what I can to ensure that the courts are enabled to follow a similar line.
The public need protection from price fixing arrangements, whether formal or on the basis of a wink and a nod, and I hope when that measure is being considered in the Competition Bill, I will have the support of all sides of the House.