Previous statements by me in this House and in particular my reply to a relevant question on 17 April 1996 (columns 119-122) made it clear that the investigation recently undertaken by the Director of Consumer Affairs related solely to the prices of magazines imported from the UK.
The Minister for Commerce, Science and Technology published the report of the director on 22 April. The principal findings of the report was that: 1. The importation and distribution of magazines in Ireland are controlled by Easons and Newspread. 2. The prices of UK magazines are different from most other imported goods of UK origin because the sterling price is readily visible to Irish consumers. 3. Both importers operate a system of forward buying of sterling four times a year at or about the same time. 4. As magazines are subject to value added tax at the rate of 21 per cent in Ireland, whereas they are zero rated in the UK, the Irish cover price will always exceed the indicated UK price, unless there is to be an extraordinary depreciation of sterling vis-à-vis the Irish pound. 5. Whilst the benefit of the Irish pound's appreciation against sterling has been passed onto consumers, it was not possible to establish, in the time available, the speed at which the reluctantly favourable price reductions occurred. 6. In order to cover the costs associated with distribution throughout Ireland, the importers take a margin, additional to the normal importers' margin, known as an “uplift” which was agreed with the National Prices Commission in 1983 at 5 per cent and is now almost 10 per cent. 7. The most disturbing aspect of the complex pricing arrangements operated by the importers derive from the practice of distributing ready reckoners to newsagents which give the same Irish retail price for the same UK cover price, a situation the director comments could not happen by accident.
Thus in the director's view the matter justifies an investigation by the Director of Competition Enforcement to be appointed under the Competition (Amendment) Bill, 1994.