Dáil Éireann díospóireacht -
Wednesday, 18 Feb 1998

Vol. 487 No. 4

Priority Questions. - Retail Sector Developments.

John Perry

Ceist:

14 Mr. Perry asked the Tánaiste and Minister for Enterprise, Trade and Employment if her attention has been drawn to the fact that more than 8,000 small retailers closed in the past four years in the United Kingdom due to the continued rise of the multiples; the plans if any, she will put before Dáil Éireann to enable the small retailing and supplier sector in Ireland to withstand the onslaught and, in particular, the position regarding the continuing of the Restrictive Practices (Groceries) Order, 1987; and if she will make a statement on the matter. [4361/98]

Miss Harney

Developments in the retail sector here and in other EU member states are closely monitored by my Department. A comprehensive legal framework is in place in Ireland through which anti-competitive behaviour and abuses of dominant position can be challenged. This framework is enforced by the Competition Authority and by the Director of Consumer Enforcement. If this legislation is at any time seen as deficient in terms of responding to developments on the retail sector, it can be reviewed to make it more effective.

The Restrictive Practices (Groceries) Order, 1987, is enforced by the Director of Consumer Affairs. The Competition and Mergers Review Group, established by my predecessor, will examine the order as part of its terms of reference.

Mr. Perry

Over the past five years the Irish retail sector has effectively been taken over by UK multiples. Irish-owned firms are disappearing with the entrance of Dixons, Argos and Boots.

As regards the last mentioned, which is topical, I have a letter sent by Boots to a customer which stated it was working with its suppliers to ensure, where it made economic sense, that business was done with local suppliers and that they would be retained if that were the case. With the economies of scale of the UK multiples, that argument does not hold. Walking down Grafton Street today, is like walking down Oxford Street in London with the number of British multiples on the street.

While I welcome competition, it is very important trade is protected. Legislation must be introduced to protect the small businessperson. What is delaying the Competition and Mergers Review Group whose task was to produce a national strategy on competition policy and regulatory reform? It is badly needed to ensure the sector is not cleaned out. Is the Minister aware an 85,000 square foot super store is planned for Dublin? For that to break even, it would require a turnover of £50 million. The consequences for the sector will be devastating.

Is the Minister aware Boots is importing stock overnight from its UK headquarters and that a huge number of suppliers are now delisted? That has major consequences for the trade and I appeal to the Minister to request the management of Boots to clearly state their position and to follow through on a commitment given on entering the Irish market. It is now the largest single chemist in Ireland.

While I welcome competition, it must be fair. Otherwise, in five years' time, Ireland will be a sad country dominated by large multiples and small businesses, which served this country for 50 years, will be gone.

Miss Harney

I share many of the Deputy's concerns. It is important that we ensure indigenous industry is competitive because no legislation will protect any sector if it is not competitive, and our capacity to introduce legislation is limited. We cannot prevent those who may not be Irish from owning Irish industry. The challenge for us is to ensure that we develop our economy in such a way that our own companies can compete and can avail of the huge opportunities that exist not just on the domestic market but on the wider European and international market. The key to that is having the right support structure in place to ensure that the State, in so far as it can, supports the growth and development of Irish industry and does it in a very targeted and responsive way.

I am not sure why the mergers group has not yet reported in relation to the matters he has raised. They are an independent group who were established by my predecessor. They have met on many occasions and I look forward to receiving their report as quickly as possible. I have also agreed to meet the Small Firms Association together with the Minister of State, Deputy Kitt, to discuss their concerns in relation to the Boots take-over of HCR. In so far as I can, through moral, political or ministerial pressure, I will seek to ensure that Irish suppliers and Irish industry get an opportunity not just to continue to supply products to companies being taken into foreign ownership but also to sell their products into the wider chain of those companies. That applies to Tesco and many other companies. My predecessor got commitments that were subsequently given to me, both orally and in writing, in relation, for example, to Tesco. The only way of ensuring that those commitments are enforced is through the force of political and moral pressure. There is no legislative way we can enforce them because no legislative commitments were given, and that is the difficulty. That is the challenge for a very small economy like ours. With the right strategies and the right support for our own entrepreneurs, we can meet that challenge, but we will not necessarily meet it by legislation because our capacity to legislate is very limited. I reiterate that if our competition laws are not as effective or as vigorous as we would wish, they will be reviewed and strengthened. However, when our competition laws are enforced, we sometimes get complaints from certain sectors who might not like what is happening. There are many difficulties and many different perspectives that a Minister for Enterprise, Trade and Employment has to take into account. We have to ensure that the consumer gets value for money and can buy products at the lowest possible price. Sometimes there is a conflict between the interests and rights of the consumer on the one hand and those of the companies on the other. The challenge is to have the most appropriate and effective balance. We can do that with the right strategies and the right support.

Mr. Perry

Could the Minister guarantee that there will be an independent study of the commitments given by British companies in Ireland over the past couple of years, particularly Tesco? I would like the Minister to give details of the commitments and of her discussions to the House.

Miss Harney

I will be happy to do that. Deputy Owen already has the commitments and I would be happy to make them available to the Deputy. There has been an independent assessment. The bench-marking that my predecessor agreed with Tesco and carried out by the ESRI and An Bord Bia in relation to the existing Irish suppliers to the former Quinnsworth has been completed. The idea of the bench-marking was to ensure that not only was the same amount of Irish sourced material sold in Tesco stores but that it would, if possible, be increased. Until we get the bench-marking results it will not be possible to ascertain whether or not the commitments are being honoured. I assure the Deputy that if we can have an independent body, such as the ESRI, to monitor the commitments given on an ongoing basis, I would be delighted to do that. I will make the commitments available to the Deputy and to any other Deputy who is interested.