Vol. 502 No. 4
7 Mr. Perry asked the Tánaiste and Minister for Enterprise, Trade and Employment the proposals, if any, she has to amend or abolish the Restrictive Practices (Groceries) Order, 1987; if she has satisfied herself that this order is needed to ensure the future of the grocery industry; and if she will make a statement on the matter. [8346/99]
77 Mrs. Owen asked the Tánaiste and Minister for Enterprise, Trade and Employment the proposals, if any, she has to amend or abolish the Restrictive Practices (Groceries) Order, 1987; if she has satisfied herself that this order is needed in order to ensure the future of the grocery industry; and if she will make a statement on the matter. [8467/99]
I propose to take Questions Nos. 7 and 77 together.
I have no proposals to amend or abolish the Restrictive Practices (Groceries) Order, 1987. However, the competition and mergers review group, established by my predecessor in September 1996, is required by its terms of reference to review the groceries order. I expect the review group to submit its report later this year.
Does the Tánaiste agree, in light of the recent controversy over "hello money" and the changing structures of the retail grocery market, with the entrance of a number of UK retailers, the groceries order is more essential than ever and should be retained? Does she accept that the stability and fair competition which the order has provided has encouraged investment in the retail trade throughout the country? More than £500 million has been invested in the independent sector with the result that consumers have benefited from high quality stores in outlying regions.
Is she aware that more than 26 per cent of weekly domestic income is spent on goods covered by the groceries order? Is she further aware of the admission by Tesco that it has been overcharging Irish consumers for grocery products by as much as 3 per cent; that this practice seems to have been ongoing since last summer and that such an error could cost consumers up to £33 million in one year? I am disappointed that computers for schools—
The Deputy is making a statement.
The Deputy wants to make sure the Minister can answer.
It is important.
The Deputy seems to be imparting more information than he is seeking. The purpose of Question Time is to seek information, not impart it.
That is all the information I will seek.
I have said before in the House that we need competition. That is what keeps prices down. I also referred to the fact that goods not covered by the Groceries Order increased at a lower rate than those covered by it, which is extraordinary. However, I acknowledge that it has played a useful role. I have an open mind on the matter. I am awaiting the results of the Michael Collins review group which I will have in July. Clearly I am concerned about the matters that have come into the public domain. The hello money in relation to one supermarket is a serious matter being investigated by the Director of Consumer Affairs, who is the appropriate person. It is not an acceptable practice. We must have a level playing field. We have understood for quite some time that it is illegal and still believe that to be the case. I am determined to ensure that any deficiencies in the order in relation to that will be rectified as a matter of urgency.
I regret the issue that has come to light in relation to Tesco. I have been given an assurance that it will be rectified by the weekend. Perhaps they will consider returning some of the money to the consumer that was collected through overcharging. I do not know how they might do that but it is a serious matter. As the Deputy said, 26 per cent of net family income, on average, is spent on groceries. It is a high percentage and when added to the spend on mortgage or rent, almost all of the income is spent in that direction. We want competition in the market because that gives consumers better choice and perhaps better quality products at better prices but if there are deficiencies in computer systems they can eliminate the benefits that come from competition.
Is the Minister aware of the consternation and anger caused by the revelation that Tesco has been overcharging? Is she prepared to do anything other than say it will be investigated? Am I right in saying this was brought to light last October and nothing was done in six months or more? The IT system the Minister referred to must have been flawed or is it more serious than that? The Minister said it was accidental but was it? My colleague said £33 million had been taken out of consumers' pockets in one year. That is staggering by any standards. It amounts to £500,000 per week. What is the Minister doing to ensure other stores are not involved in this kind of activity? It is a national disgrace and a scandal. Will the Minister assure the House and consumers that she is doing more than mouthing platitudes? The country is in uproar over this. Radio programmes are inundated with calls on this issue. What does the Minister intend to do about this serious matter?
What legal action will be taken?
The only person who has the power to investigate these matters is the Director of Consumer Affairs.
That has not been happening.
The Minister of State, Deputy Kitt, who has responsibility for that office in the policy sense, has been touch with the new director and the matter will be investigated. I have not the power to give back to people the money that was overcharged. We are concerned about the matter. I do not know if there are instances of it in other retail outlets, but I will ask the director to investigate that matter also.
I share my colleagues' outrage at what has emerged. As the Director of Consumer Affairs is the person with power to investigate the matter we cannot get answers here. Will the Minister ask the director to look at exactly what occurred where a price was shown for a product yet when the bar code was put through the machine it showed a higher price? Is there something wrong with the bar coding system, which I understand is a complex matter Europe wide? Is the bar code on the products in Ireland falsely showing a price which is different from that on the flashing on the shelf where the product is displayed? Will the Minister raise that with the Director of Consumer Affairs?
Will the Minister state whether, since 1977 when the Groceries Order was first introduced, there has been any groundswell of opposition to it or requests that it be abolished on the grounds that it is non-competitive? We heard a submission recently at the Committee on Enterprise and Small Business that the order should be abolished as its function would be taken over by the Competition Act.
People have said to me that it is anti-competitive but I can hardly describe them in terms of organisations. The irony is that according to the last set of figures the goods covered by the order increased by a higher amount than those that were not covered. Competition seemed to keep the price of other goods down. That may be just a strange irony. I have an open mind about it. We want to ensure there is no below cost selling and prohibit the payment of hello money. Perhaps the penalties for a breach of the order are too small, a fine of up to £500 or six months in jail or a continuing fine of £50 per day. About ten breaches of the order have been investigated over the past ten years and three have gone to court. I will ask the Director of Consumer Affairs to examine all the matters. She has the responsibility to carry out an investigation and is the sole person who can prosecute for breaches of the order. If new breaches come to light I hope there will be prosecutions.
I ask the Minister to acknowledge that it would be unacceptable, given the scale of the suspected fraud on consumers, to leave it to the marketplace to correct whatever the fault was, intentional or unintentional. We are taking it that it was unintentional. Does she agree that the matter cannot be left without the necessary prosecutions or some appropriate punishment being decided on against this multiple? I received several phone calls from people who were outraged about this and remember there were other questions about Tesco at the time of their coming to do business in this jurisdiction. Many people are outraged that advantage seems to have been taken—
The Deputy is making a statement.
I do not wish to do so. Does the Minister believe that action should be taken against this company and that it is not good enough that the technological mechanism should right itself and we should all write it off to experience?
The investigation of the matter is for the Director of Consumer Affairs and any prosecutions in relation to summary offences are a matter for her. Clearly more serious offences are a matter for the Director of Public Prosecutions and there can be a fine for an indictable offence of £10,000 or three years imprisonment. There is much merit in what the Deputy says about how we rectify this. It is not enough to say it was a mistake, it will not happen again and we will move on from here. The company in question should be seen to reimburse their consumers. Perhaps that is something we can explore with the company. If the sum is as large as £33 million or £500,000 per week, it is a considerable amount of money. It is more than the turnover of many in the retail trade nationally. It has very serious consequences for competition as well as the effect it has on the consumers in question. It is obviously very bad publicity for the chain that this happened over such a prolonged period and only came to light when a competitor brought it to the attention of the Director of Consumer Affairs and the public in recent days.
I refer to the £2 billion turnover. In view of the exposure of this scandal and the similarities between it and the NIB scandal, will the Tánaiste appoint an inspector under the Companies Acts to inspect Tesco's books? I am very concerned that all risks be removed in this matter, particularly in light of the Grocery Order being questioned. Is the Minister aware of the conflict which may be caused by the introduction of dual pricing with the advent the euro? If difficulties are arising already, what will happen when dual pricing is introduced?
There is certainly a great deal of confusion about the euro. I know people who still talk about the half crown and the old money. I empathise with the Deputy and I wish we had an answer to this issue which I have just been discussing with the Minister of State, Deputy Kitt. He intends to explore possible ways of pursuing the matter with the Director of Consumer Affairs. We will come back to the Deputy on it.
Why was this matter not investigated when it first came to light last October?
My understanding is that it only came to light last weekend.
RGDATA were the first to highlight this issue. Complaints may have been made in regard to Tesco outlets in the UK before now.
