Written Answers. - Cost of British Publications.

Mary O'Rourke

Ceist:

606 Mrs. O'Rourke asked the Minister for Enterprise and Employment the current situation in relation to addressing the cost of magazines, recorded music and books imported from Britain. [16992/96]

As indicated in my reply to a related question from the Deputy on 16 May 1996, as reported in Volume 465 No. 5 at Column 1368-1370, the only investigation which I initiated in the case of products imported from the United Kingdom, relates to the retail price of magazines. The reply is included as Appendix 1.

As the Maximum Prices (Magazines) Order, 1996 is currently the subject of High Court proceedings, I am not in a position to say anything further in the matter at this stage.

APPENDIX 1

Imported Magazine Prices.

27. Mrs. O'Rourke asked the Minister for Enterprise and Employment the outcome of his meeting with the magazine distributors, Newspread and Easons; the measures, if any, he now proposes to take to rectify the current overcharging for magazines, books and compact discs imported from Britain; and if he will make a statement on the matter. [9939/96]

Minister for Enterprise and Employment (Mr. R. Bruton): 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 to 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 sterlingvis-á-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.
The Minister for Commerce, Science and Technology felt it important that the wholesalers and retailers should be given the opportunity to offer their views on the director's findings. Accordingly the Minister for Commerce, Science and Technology discussed the findings of the director's report with representatives of Newspread on 3 May 1996, Easons on 10 May 1996, and National Federation of Retail Newsagents on 14 May 1996.
The Minister also plans to hold discussions with the Irish Retail Newsagents Associatioin on 20 May 1996.
Both Easons and Newspread contended that, in addition to the imposition of VAT at 21 per cent here compared with zero in the UK, magazine prices were more expensive here because of the costly nationwide distribution system arising from the large number of small newsagents, the population spread and density. In some instances, they say that both supply the same shops with same magazines. They emphasised that their aim was to achieve price uniformity, a situation which is common in other European countries. The issue of the ready reckoner facilitated the achievement of price uniformity. They also stated that they compete aggressively against each other in the efficiency and nature of service provided to retailers, including financial arrangements for magazine returns. Each of them in their turn, claimed that their monetary margin were declining in recent years and that the benefit of the appreciation of the poundvis-á-vis sterling was being passed onto consumers.
For their part the National Federation of Retail Newsagents, referred to the imposition by the importers of a weekly service charge which has seriously eroded their margins and were not being reflected in increased magazine prices.
The Minister is yet to be satisfied that the present distribution and pricing arrangements serve the best interests of consumers. However, since the Minister has not yet concluded the round of discussions with the interested parties, if would be inappropriate to indicate at this stage what further action will be taken.