Dáil Éireann díospóireacht -
Wednesday, 9 Nov 2011

Vol. 746 No. 1

Competition (Amendment) Bill 2011: Second Stage (Resumed)

Question again proposed: "That the Bill be now read a Second Time."

Deputy Mattie McGrath

This subject is very relevant, especially in view of topical issue raised by Deputy Catherine Murphy. It is a very important issue.

While the Minister is doing his best, the policy of having two pillar banks, which was also the policy of the previous Government, is absurd. While we must save the banks and have functioning banks, having only two strikes a blow against competition. We know now it is a fallacy. I am not saying the Minister for Finance or the Minister of State at the Department of Jobs, Enterprise and Innovation, Deputy Sherlock, is giving us spin but I contend the banks are lying through their teeth. They lie in every survey and lied to the previous and current Ministers for Finance, and they are getting away with it.

The Competition Authority's mission statement claims its brief is to ensure that competition works well for consumers and the Irish economy. Nothing could be further from the truth. The Competition Authority was set up in 1991. There have been resignations of former chairpersons and comments by other chairpersons. The authority had been an abject failure and it has stood idly by. If it has board members, why do they not offer their resignation? The authority is toothless. I do not make these comments because finances are scarce but because, during the Celtic tiger years when there was plenty of money, it did nothing. With the compliance of the previous Government, of which I was a member, it allowed big cartels to take over everything and put out of business the very people Deputy Catherine Murphy was speaking about, the small businesspeople who represent the backbone of the economy. They have been wiped out, hoovered up, closed down and cast to the winds. This is unbelievable and is the practice in a huge array of sectors, including the agriculture and cement industries and all industries in between.

In every town, including Clonmel, big businesses have been encouraged to set up on the outskirts and have got preferential rate deals. They have squeezed the commercial lifeblood from the towns, and squeezed it from the hard-working ratepayers, including the Minister of State at the Department of Jobs, Enterprise and Innovation, Deputy Perry, who are involved in many businesses. These ratepayers have been in towns for generations, three in some cases, but have been destroyed. Our following of the aforementioned pattern ten years after America, England, France and elsewhere is ludicrous.

The Minister for Finance referred to codes of practice introduced by the banks, but these are a joke. The Competition Authority cannot ensure competition and — I hate saying this in the House — one might as well bring in paper from the toilets as codes of practice because they are ignored by the greedy people who got us into this mess. Why would they not ignore them when the Government, following the example of its predecessor, paid a promissory note of €700 million only last week? They are laughing all the way to the bank — pardon the pun — and laughing at us. The ordinary taxpayer and small businessperson are crucified. We must keep some of the hard-earned taxpayers' money, but not to bail out the speculators, gamblers, bankers and others whom the Government said it would burn. I stated last night the Government was to have a fire hotter than hell's fire in order to burn so many of them. It has not burnt any of them; it just followed blindly the path of the previous Government, which represents an abject failure. When we consider what occurred in Greece and what is happening in Italy, we realise there is hope that we may change our ways. We are being forced to change our ways.

I referred to the big conglomerates. The county council in south Tipperary gave planning permission for a Tesco store in Cahir and it was upheld by An Bord Pleanála. It was going to close the premises of a businessman across the road and put in a facilitatory new roundabout. The businessman was told by the council to talk to Tesco on the grounds that it might buy him out. Is that what we want? The businessman was a self-employed young man, younger than I am, employing 14 people. Stores such as Tesco export all their money and invest nothing in the community. Although they create a few jobs, we lose twice as many in other sectors. They have got away with murder because of "hello money" and everything else.

If we have only two pillar banks, they know they will be able to mop up and threaten the people about whom Deputy Catherine Murphy spoke. The code of practice limiting the number of telephone calls or business transactions is baloney. One is living in fear of the banks. The dirty look on a manager's face when one enters a bank is telling because it demonstrates banks do not want the aforementioned businesses anymore because they know they will be bailed out by successive Governments. Why would they care? They do not care. Codes of practice are a waste of time. I want to focus on the operations of CRH. It was fined €28 million by the Polish Government. It only expanded its operations there since this economy subsided. It has brought down many a small business in my constituency. I cite the Tarrant brothers which was tremendous family-owned business that gave valuable employment and a wonderful service to the ordinary people, including me and my colleague, Deputy Tom Hayes, who lives closer to it than I do. That company gave credit, it knew the people and looked after them. Roadstone came in and blew it out of the water with unfair competitive practices while the Competition Authority sat idly by. I do not know what we pay its members or why we have that authority as it is a pure waste. It has been set up since 1990 and it should be suspended forthwith because it is not doing its job. It has been an abject failure. It has been said by more eminent people than me that the Competition Authority in its negligence has had as detrimental effect on our economy as have the bankers who brought us to our knees. The authority has sat idly by. Previous Regulators did nothing to regulate the financial services industry. They sat idly by and were rewarded. The Competition Authority has done the same in regard to business practices. What Roadstone has done to small companies around the country is a disgrace.

Cemex is another company in my constituency and I have received e-mails from concerned groupings about it. That company was taken over recently and all the workers have been tossed to the wind. The practices in which CRH engage will result in similar companies having to close. The practices they employ are a smokescreen to close companies in order that CRH can continue its monopoly. That is happening on a daily basis before our eyes. We need to wake up and smell the coffee. Why do we have the Competition Authority and codes of practices? They are nothing more than smokescreens. People have been paid to draw up such codes of practice.

I wish I had more time to speak but I appreciate the Chair's forbearance. CRH is one of the companies that must be dealt a blow and stopped in its tracks. Our economy is being swallowed up by the greed of the bankers. Business people who are trying their best in spite of the bankers are being subsumed, attacked, taken over and being literally evicted from their rightful businesses even though they have paid rates and taxes. The Minister of State, Deputy Perry, understands what I am talking about. I know his background in business. This Bill is some effort in this respect but it only tinkers with the real problem.

Deputy Thomas Pringle

I welcome this opportunity to speak on the Bill. It is estimated by the former director of the Competition Authority that anti-competitive practices cost this State approximately €4 billion per year. That is a huge amount of money when one considers, as Deputy Mattie McGrath mentioned, that €700 million was paid to bondholders of Anglo Irish Bank last week. If we could address unfair competitive practices the State would be in a much better position and we would not be in the ridiculous position in which we are now of having to pay off bondholders and implement massive cutbacks in the social welfare budget in the coming weeks.

Deputy McGrath mentioned the price fixing cartel that operates in the concrete industry, which has received a good deal of publicity recently. It highlights the extent of the problem we face. It is a huge burden on the taxpayer, given that the State and the taxpayer are the biggest customers of the concrete and quarry industry. Through our capital programme we pay over the odds to companies that have agreed the prices they would charge for products. I have seen figures that estimate the cost to the State and the taxpayer from the price fixing operated within the concrete and quarry industry to be €2 billion. It is amazing that practice has been allowed to continue and there has been no serious examination of it. In preparing for my contribution on the Bill I read that complaints were made going back to the 1990s about the operation of price fixing and cartels within the concrete and quarry industry, yet no investigation was commenced, nobody was pursued for it and the Competition Authority has been toothless in dealing with it.

There was an announcement in recent days that CRH is moving its share transactions and its centre of business from Dublin to London and to the stock exchange there. Perhaps it is doing that because it was conscious of the bad publicity that has surrounded the cartel in which it is the main operator to ensure it inflated its profits and prices and put other businesses and operators out of business. Perhaps there is a further reason other than its dealings in shares and trading that it is moving its centre of business from Dublin to London.

Deputy McGrath said that the Competition Authority is ineffectual, of that there is no doubt. I do no know how effective it could be but I have read that its directors complained in October last year that the embargo on public service recruitment has resulted in the staff in the office of the Competition Authority being reduced from 59 to 40. How can it be effective in monitoring competition in the economy when the blunt tool of the embargo has reduced the number of staff in its office? When one considers the cost effect of price fixing by the cartel operating in the concrete industry on the State and the industry's customers, it would be in the interest of taxpayers to ensure that the Competition Authority can investigate that practice, yet the State, in the interests of taxpayers, is enforcing the embargo on the authority which has resulted in a reduction in its staff. The Competition Authority cannot assist the Director of Public Prosecutions in pursuing prosecutions because it does not have the necessary staff. It can carry out only one investigation per year and can only hope to complete that if it is not required to do other work on mergers and takeovers. It is a farce. This legislation will be useless, when enacted, unless the Competition Authority has the necessary staff resources to investigate these practices. We hear a great deal about cost benefit analysis from the Government side of the House and given that anti-competitive practices are costing the economy €4 billion a year, great benefit would be derived from giving the Competition Authority powers and resources to ensure it can fulfil its remit and investigations, pursue prosecutions and ensure that these practices do not continue.

When introducing the Bill yesterday the Minister said that section 4 will give the Competition Authority new rights to pursue several enforcement measures or several remedies in cases it pursues. These remedies include forcing companies to discontinue their unfair practices, to cease or adjust their dominant position within the market in which they operate and that is it. The remedies do not include the imposition of civil fines, therefore, there is no deterrent for companies to cease what they are doing. They can be sure that the Competition Authority does not have the resources to investigate and pursue them and if the authority were to pursue them, all the companies would have to do is give an undertaking in the court that they will discontinue what they are doing from this point on. There is no remedy available to the State to punish such companies for all the profits and unfair practices from which they have benefited during the years in which they have been engaged in them by way of imposing fines that will hit their directors and owners in their pockets.

There is an argument that civil fines may not be constitutional under Article 38.1°, the interpretation of which is that the imposition of fines is the imposition of a punishment and should be treated as a criminal matter. Surely we should test that. This legislation, which should include provision for civil fines, could be tested in the courts and they could establish if it is constitutional. We should address that once and for all rather than having competing legal opinions as to whether it is constitutional. We should strengthen this legislation to provide for the imposition of civil fines and it should be tested by the courts. Civil fines can be considered without requiring the full rigours of a criminal prosecution and proving a case beyond a reasonable doubt. Civil cases could result in civil fines being imposed on a company where a jury reaches a conclusion based on the balance of probabilities. Companies will only be deterred if they realise their market dominating practices can hit them in their pockets.

The debate on this Bill refers repeatedly to the role of deterrents in ensuring competitive practices. However, deterrents will not stop these criminal practices because criminals only worry about getting caught and paying for their crimes. If people see an opportunity they will grasp it. Unfortunately, this Bill does not provide a real deterrent and for this reason I ask the Minister to consider amendments on Committee Stage to include civil remedies.

Deputy Tom Hayes

I am sharing time with Deputies Corcoran Kennedy and Kyne. I am grateful for the opportunity to speak on the Competition (Amendment) Bill 2011, which has been welcomed by many of my colleagues in this House. There is no doubt that anti-competitive practices have cost the State billions of euro in recent years. It is estimated that the abuse of company law costs the State approximately €4 billion per year. Under no circumstances should such abuse be tolerated, particularly at a time when the country is in dire economic straits. There is an old saying that competition is the life of trade. It is important, however, that competition is always fair.

The Bill will strengthen the enforcement of competition law in this country. It provides for new or increased penalties, introduces more effective deterrents and ensures an improved sanctions regime for those who engage in anti-competitive practices, such as price fixing and cartels. The fine on criminal conviction for hard-core offences will be increased from €4 million to €5 million and the maximum prison sentence will increase from five to ten years. Fines for summary convictions will be increased from €3,000 to €5,000 and judges will no longer be able to dismiss cases based on the trivial nature of the offence.

Experts have regularly highlighted the expense associated with investigations into infringements of competition law. Provision is made in the Bill to order a person convicted of an offence under the Competition Act 2002 to pay costs to the Competition Authority or ComReg.

The aforementioned provisions will act as a deterrent for potential offenders but it is also important to prevent offenders from repeating their crimes. This is why a person convicted of a breach of competition law is automatically disqualified from being a company director or involved in the promotion, formation or management of a company. This provision will be extended to all contraventions of sections 4 and 5 of the 2002 Act and will serve to protect law-abiding companies against those who seek to make profit with disregard for the law.

The issue of price-fixing by Irish concrete companies has been raised in my constituency and is now getting the national attention it deserves. In June 2011, Thomas Goode of Goode Concrete claimed to be involved with his rivals in illegal practices aimed at maintaining prices at artificially high levels. Deputy Mattie McGrath spoke about CRH and the smaller companies which were driven out of the market in the constituency we represent. A number of companies which were established in Tipperary South to quarry limestone rock have gone out of business over the years.

Thomas Goode's allegation is particularly important given the amount of business the companies he cited do with local authorities. They are paid out of the public purse with money that is difficult for the local authorities to find. When budgets are being drawn up for roads and other local needs or when councils have to make decisions on road repairs, they have to bear in mind the cost of materials. Why, at a time when house prices and labour costs are falling dramatically, is the cost of building materials not decreasing? I have been told by builders that the cost of building materials is not decreasing. I urge the Competition Authority to investigate this issue. Departments and local authorities are going to great efforts to cut costs but their suppliers need to respond.

Retailers and supermarket chains are another group which is being ignored in regard to investigations and regulations. The IFA was subjected to searches but it was not the other way around. Certain major supermarket chains have a lot to answer for and, if competition is the life of trade, we should reconsider the maximum size permitted for outlets on the edge of our towns. Small retailers are coming under considerable pressure from the large supermarkets outside many towns.

The issue of the below cost sale of alcohol by certain major supermarket chains is regularly raised with me by my constituents. This kind of marketing is not only irresponsible but also puts local shop owners under pressure. It is a major problem, although I note it has been addressed by the Government in recent days.

With more people choosing to drink at home, it is time to address this issue before any long-term damage is done to society. If we address it, we will not only send the right message about enjoying alcohol responsibly and in moderation but also help countless small businesses throughout the country which are struggling to make ends meet. I urge that this issue be dealt with.

Publicans have gone through major changes. Consider the number of pubs that have closed. We are losing a great way of life. The pub scene, regardless of what one might say about it, attracted tourists and neighbours who came in to chat. Where we are going with the sale of alcohol, particularly in the big supermarkets, is causing huge difficulties. This is an issue we must address.

Deputy Seán Kyne

I welcome the opportunity to speak to the Competition (Amendment) Bill. Its speedy introduction is proof of the commitment to overhaul sections of legislation to help to create a business environment which promotes job creation, job retention, fair competition and choice for consumers. That this legislation was the subject of a commitment in the memorandum of understanding between Ireland and the European Union and the IMF is secondary to the recognition among the new Government parties of the need for law reform in key areas.

The amendments made in the Bill will provide for valuable reform in competition law and introduce enhanced penalties and sanctions for breaches of the law. The banking and financial crisis shone a light on an area which had operated in a light touch regulatory framework. The activities that have been uncovered so far demonstrate the need for strengthened laws to combat so-called white collar crime. I dislike the euphemistic connotations associated with the phrase "white collar crime", as if such acts are less serious and dishonourable than others. The effect of what has been uncovered from the activities and practices at some financial institutions and businesses during the latter half of the last decade is criminal in terms of the damage done to Ireland and its reputation. The creative accounting, share buying schemes and so forth all flew in the face of existing competition law. When enacted, this Bill will provide for tougher fines and custodial sentences and remove the use of the Probation Act, indicating the seriousness of the criminal acts committed in this area.

The value of competition has been undermined in the recent past. Competition helps to drive efficiencies and creates benefits for everyone. It helps customers by making goods and services more affordable, accessible and of a higher standard. That is why the provisions in the Bill to increase the scope of enforcement of competition law by private citizens are so welcome. Competition also helps business. The drive to increase efficiency and research and develop new products and services or just new ways of doing things is incentivised by competition. One often hears people speak about a company's competitive advantage, in other words, the edge it has over other companies. The Bill will be a vital tool in helping not only businesses to regain competitive advantages but also the country.

Of major benefit in the Bill is the provision that will empower the courts to place a costs order against the person who has been convicted. This will make the offending person or organisation responsible for the very considerable costs associated with investigating infringements of the law. Such costs include the cost of the initial investigations, researching documents and electronic transactions, the examination of witnesses and so forth. That costs may now be awarded against the offenders will act as a solid deterrent.

Competition, however, cannot be a free-for-all. It must be regulated with effective regulation and component regulatory alternatives. We experienced the downside of competition in the recent past and are living with the consequences. One example was the intense competition between banks to lend too freely at unsustainable rates. Obviously, we once had many more banks than we have today in competition with each other, fighting for customers and offering packages without recourse to a person's ability to repay. This culminated in the offer of 100% mortgages and also higher percentages for house furnishing and a car purchase for good measure. Once the first bank went down this slippery slope, others followed, fuelled by bankers' bonuses. The subsequent effects saw several banks leave the Irish market, to the detriment of consumers.

We must acknowledge the Bill's provisions relating to the rights of citizens. These will facilitate an increase in private enforcement of competition law by way of private actions, thereby empowering citizens in enforcing their rights. I agree with Deputy Tom Hayes about the out-of-town outlets which, through below cost selling or anti-competitive behaviour, can undermine the fabric of smaller shops and retail units.

In its report, Ireland's Competitiveness Scorecard, the National Competitiveness Council highlighted that Ireland had lost 31% of its cost competitiveness between 2002 and 2008. This affected Ireland's attractiveness as a location in which to do business. Everybody knows how attractive it was at the start of that period as a destination for investment owing to it being so competitive and able to manage costs and have a low inflation rate, despite the growth achieved. Competitiveness played a huge part in the country's growth during our realistic boom period before the property boom. There are many ways to reverse the trend and the provisions included in the Bill will help to restore Ireland's competitiveness, a crucial component for its recovery, both economic and social.

Deputy Marcella Corcoran Kennedy

I welcome the amendments proposed in the Bill which will further strengthen existing competition laws and make them more effective. I thank the Minister and his staff for their work in bringing the amendments before the House.

Competition is the engine that drives business and productivity and is good for consumers. Without it, the people would have poor choices and quality of produce and increased prices, all of which would be detrimental to the economy's recovery. The well-being of the economy is critical to the country's financial revival and the cornerstone of the work of the Government. Protecting consumer interests is a key part of this work and will benefit not only the people but also business, big and small, if anti-competitive practices such as cartels are further penalised and sanctioned.

For the economy to recover, people must have confidence that they are getting the best value for money in all sectors. They must know that if they are not getting fair treatment, the legislation is in place to allow them to pursue those who are taking advantage of them. If, for example, individuals or organisations are involved in hard core offences such as price fixing or anti-competitive practices or non-hard core offences such as the abuse of their dominant position in the market, people will have the protection of legislation to investigate and prosecute them. To this end, I welcome the increase in fines proposed in the Bill, including those for hard core offences, from €4 million to €5 million; the doubling of the sentence on conviction of an offence to ten years; the possibility that the costs of investigation and court proceedings could be paid by a body convicted of competition offences; disqualification from being a company director and being ineligible for probation. I particularly welcome the proposal which will make it easier for private individuals to prove an action for damages against a cartelist once public enforcement proceedings have been successfully taken.

The Competition Authority is due to merge with the National Consumer Agency in the near future and I look forward to the new body enforcing competition and consumer rights. The new agency's support for consumers is vital, as one individual can feel very small in the face of a powerful company. On this note, is legislation being considered to give the new agency powers which would enable it to take action on behalf of multiple consumers, similar to that granted to the Consumers Association which trades as "Which?" in England? This can occur after proceedings have been taken and an appeal has been concluded against a business, where it was ruled that an infringement of English or EU competition law had taken place such as price fixing between cartels. The Consumers Association can present the case on behalf of more than two consumers that those affected should be paid damages. It then collects and distributes the funds to consumers. An example of this occurred in 2007 when the association launched its first representative action on behalf of consumers who had been unlawfully overcharged for football shirts owing to price fixing. The absence of civil fines in this Bill disappoints me, as I understand the Competition Authority and others have identified them as the best sanction for those found to be guilty of non-hard core offences. While I acknowledge there are concerns in respect of its constitutionality, I urge the Department to reconsider such fines in the near future.

Crime in business must be exposed. Those businesses and their executives must be subject to severe civil and criminal sanction. In the past in Ireland, there has not been much evidence of white collar criminals being brought to justice. Every effort must be made by the Government to so do, with particular emphasis on the pursuit of those who contributed to the ruination of our economy and fiscal sovereignty. I look forward to the enforcement of these laws and to seeing white collar criminals behind bars in the near future.

Deputy John Paul Phelan

I am glad to have the opportunity to speak on this legislation. I fully support the Bill and the objectives behind it and as Deputy Kyne noted previously, it is a sign of the Government's commitment to the importance of competition in reigniting the economy over the next few years. I wish to mention specifically a couple of areas pertaining to this legislation. It is to be welcomed that the fines and sanctions available to the Competition Authority and the courts are to be increased in line with the seriousness of the offences under discussion. Deputy Kyne was right when he referred to how people talk about white collar crime as though it was a better category of crime than any other. Serious action must be taken against those who are found to be in breach of competition law, although this has not always been the case heretofore. The updating of this area of law through this Bill is to be welcomed. The Probation of Offenders Act 1907 is hardly legislation that could be considered to be relevant to competition law in present day Ireland and this Bill, among other things, will remove references to that Act from competition law.

I wish to mention a couple of areas in respect of which the Minister might respond in his concluding remarks. Specifically, I refer to the controversial role of the Competition Authority in respect of agriculture. Most of the activities of the authority, which is an important body in that area, have focused on its dealings with the IFA and I note its seizure of electronic equipment from that organisation, as well as the entering of its offices in Dublin. The authority must engage in a firm examination of both the relationship between the consumer and the shopkeeper or multiple grocer and the relationship between the multiples and the producers, that is, their suppliers. This aspect of competition has not been successfully investigated in the past and some practices, such as the payment of so-called hello money and so on that are known to exist in Ireland, have not been rooted out by the Competition Authority. The Minister should indicate the current position with regard to the provision of a statutory code of conduct for the aforementioned relationship between the large multiples and their suppliers, the primary producers. The Government has stated it is interested in pursuing a statutory code rather than the mooted voluntary code between those two sectors.

I also agree with Deputy Tom Hayes on the issue of below cost selling of alcohol. All Members are familiar with large advertisements, particularly in the Sunday newspapers, that usually are led by banner headlines regarding the sale of alcoholic products considerably below cost. The large multiples are in a position to use these products as a loss leader to get people in the doors to spend money on other items. At the same time, I refer to smaller suppliers, whether it be smaller off-licences or local public houses. I am not here to hold a particular candle for publicans but I believe the local pub is an intrinsic part of the community in many rural areas. Many of them have closed and I believe more will do so unless something is done about the abuse of power by the large multiples on the issue of below cost selling of alcohol.

In addition, while this may be straying a little from the remit of the Department of Jobs, Enterprise and Innovation, the issue of the licensing laws themselves is an intrinsic part of this problem. The system that operates in this State at present is that owners of public houses pay their licence fees based on their turnover. However, owners of off-licences or large multiples with off-licences attached pay a standard annual fee, regardless of the volume of alcohol sold through those outlets. We have moved in recent years to a position where the majority of alcohol is sold in the off-licence business. The aforementioned large multiples are in a unique position to be able to use these alcohol products as a loss leader to get people in the doors for other purchases. It is a highly unfair system whereby publicans continue to pay a licence fee based on turnover, whereas the multiples pay a flat rate. As the Department of Justice and Equality deals specifically with the issue of licensing, I ask the Minister of State, Deputy Perry, to convey to that Minister the inequities that exist in the current system with regard to the fees being paid by the large multiples and off-licences in general and in respect of the sale of alcohol in the future.

This Bill is quite technical and I support it fully. The idea of upgrading the sanctions available is appropriate and updating the legislation that applies to competition is important. However, this should be a first step by the Government, which I am sure it is, towards introducing further rigorous enforcement of competition to different sectors of the economy.

Deputy Bernard J. Durkan

I am glad to have an opportunity to speak on this important legislation. There have been many examples in recent years where the fixing of prices has had a large-scale negative impact on the consumer, and consequently this legislation is important. Equally important, however, is the legislation's effectiveness, and I have raised this point in respect of all legislation introduced to this House. Since I entered the Dáil, which was more than a year or two ago, I have seen countless examples in which the House, with the best of intentions and the best will in the world, passed legislation that was meant to address a particular issue. Two, three or four years later, however, Members found that despite such good intentions, for some unknown reason someone had decided to circumvent it and the situation had continued.

There have been anti-competitive practices within the banking system in recent years. A number of banks have pulled out of the country having created competition that was not positive but was extremely negative. It undermined the economy, after which having reached a certain point, the aforementioned banks withdrew from the situation when the going got tough, thereby leaving the economy and the consumer in this jurisdiction in a highly serious position. This has been done on countless occasions.

I refer to another graphic example. Local authorities receive much criticism and abuse, some of which is justified, but they used to operate a waiver system for refuse collection services throughout their respective functional areas. It then was decided that private enterprise could do the job more cheaply. The only difference was that private enterprise operators, while competing on the same routes and providing the same service, did not provide such a waiver. Consequently, after four or five years, all the waiver applicants would be left with the local authority and a classic example of this took place in County Kildare. This development left local authorities carrying a huge social responsibility burden and effectively created an indirect subsidy for those against whom the local authorities were competing. I could never understand the reason this issue was not tackled. I brought it to the attention of certain people, both in the local authority and elsewhere, at the time as it unquestionably was anti-competitive. It gave a hugely unfair advantage to those who were competing on the basis that, on the one hand, there was one group providing a service that entailed a cost by way of a social responsibility or social charge, while on the other hand, another group was providing the same service at a much lower rate and which was of precisely the same amount involved in the waiver system. This is not a criticism, simply a statement of fact. I cannot understand how this was allowed to continue and why the Competition Authority did not get involved, but that is what happened.

Although I accept the legislation envisages it, many anti-competitive practices are ongoing at present in regard to both the financial markets and the market speculation that takes place in regard to commodities. We know that at times of low interest rates commodities become very acceptable areas for speculation and investment, including short selling. The competition authorities, not just in Ireland but throughout Europe, need to focus on this area as a matter of urgency with a view to ensuring the consumer and the broader economy does not suffer as a result of the playful antics, for want of a better expression, of those who can afford to speculate and invest in a way which removes competition from the area by virtue of the strategic approach they adopt in regard to certain investments.

One can apply this point to many areas. Even in broadcasting, complaints are regularly received from independent broadcasters to the effect that they are not being fairly treated in regard to the public broadcaster. There are swings and roundabouts, and points for and against on this issue, but it is an area that needs to be examined to ascertain the extent to which competition is applied on an even basis — on the so-called level playing field we hear so much about. If it is not, we must ensure at least some attempt is made to address the issue and set matters right or, if not right, at least come to grips with identifying the full extent of the problem and trying to ascertain what can be done to make the system fair.

Anything that is fair, equitable and open should be proofed. Whether it may give the appearance of fairness, openness and competitiveness, it needs to be proofed. The practices going on from time to time are a clear indication that everything is not above board and that some peculiar practices occur which seem to be incredibly supportive of or conducive to certain forces in the market to an extent that is above and beyond the ordinary.

The last speaker referred to the use of certain products as loss leaders. This issue has been submitted to the Members of the Oireachtas in recent months and a question mark arises as to why it should be so convenient and essential that alcohol is used as a loss leader. Of course, the purpose of this exercise is to target a certain group of people at a time of economic stress. When the younger generation feel times are tough, they feel bad and they need some release from what they see as their imprisonment. Therefore, they tend to take this route which is readily provided for them.

We must address the possible damage being done to society as a result of the cynical use of alcohol as a loss leader, which both promotes the sale of alcohol itself and seriously disadvantages those who operate licensed premises. We need only consider the falling numbers of those patronising licensed premises to find proof of this. In addition, we must remember the extent to which the use of alcohol as a loss leader by the major multiples is having a detrimental effect on rural society and changing the whole structure of that society. Instead of going to a pub for a drink, people find it more convenient to go to a house party, where there are no controls over consumption, sale, times or anything else. As a result, damage is being done to our society.

There are many such practices, although I do not propose to go into all of them as we all know what they are. It is high time we made the legislation work and challenged the people for whom the legislation was intended with a view to saying to them that this legislation is here for a purpose, not for somebody to circumnavigate or to come around by a devious route on the advice of some clever dude who puts its upon him or herself to say they have found the ultimate in ways and means to get around this and they can now ignore the legislation. Now is an appropriate time to do this. It is a time when people are more focused on making sacrifices and, as a result, they do not want to see somebody erode their hard-won gains.

Minister of State at the Department of Jobs, Enterprise and Innovation (Deputy John Perry)

I thank all Deputies who spoke on the Bill for their very useful contributions to the debate. First, I welcome Deputies' broad expression of support for the content of the Bill. I also look forward to examining the amendments that Deputies indicated their parties will propose on Committee Stage and which the Minister, Deputy Bruton, will certainly consider. I remind Deputies that the focus of the Bill is to strengthen the enforcement of competition law by providing a more effective deterrent and an improved sanctions regime. However, a number of other interesting points have been made. I will certainly study them and give them serious consideration in the context of other legislation being prepared, where relevant.

A number of Deputies, including Deputy Pringle, raised the issue of civil fines in their contributions. As indicated by some Deputies, the Competition Authority did indeed call for court-imposed fines as a remedy in civil proceedings to be taken by it in respect of certain breaches of competition law. However, in calling for such fines to be introduced, the authority recognised there were constitutional difficulties with the concept. In effect, what was being requested was that certain criminal breaches of competition law, which are currently criminal in nature, would be decriminalised but the breach would continue to attract very substantial and punitive fines. The balance of proof in such proceedings would then be the lower standard, that is, on the balance of probabilities, whereas in a criminal prosecution the Director of Public Prosecutions would be required to prove the breach to the high standard, that is, beyond reasonable doubt.

However, the concept of civil fines espoused by the Competition Authority is not provided for in Irish law in any sector, and I am advised by the Attorney General that providing for such fines would pose legal difficulties having regard to Article 38.1 of the Constitution which provides that no person shall be tried on any criminal charge save in due course of law. In the scenario outlined by the authority, the infringements and the penalties attached would stay the same. That being so, the courts would consider the infringements to be criminal, thereby requiring the protections afforded by Article 38.1 to be given to an accused. Thus, based on the advice from the Attorney General, civil fines were not included in this Bill.

Similar opinions were expressed by the previous Attorney General and these are shared by many practitioners and members of the Judiciary. The Competition Authority has also now accepted that the introduction of civil fines is not feasible, and it has been actively working with me and my Department on strengthening sanctions and penalties under competition law through the means being proposed in this Bill.

Some Deputies also raised the issue of the impact of the current legislation and the effectiveness of the Competition Authority. Since 2000, the authority has secured an impressive total of 33 criminal convictions. In the area of civil actions, it has won two cases and settled another three out of court. It has also issued a series of market studies on areas such as the professions which is helping improve competition in those areas for the benefit of the economy as a whole. The issue of sentencing is a matter for the courts in the first instance. While no one has been imprisoned for committing a competition law offence to date, it is notable that the courts have moved a long way towards the imposition of custodial sentences. In the Duffy case, Mr. Justice McKechnie expressed regret that due to the need for parity of treatment of offenders, he was precluded from such a custodial sentence on account of a previous decision in respect of the same offence. However, he stated that he saw "no room for a lengthy lead in period before jailing convicted persons becomes commonplace under this legislation". This view, taken together with the signal that the Oireachtas will send out by the adoption of the proposed measures, will undoubtedly lead to the imposition of custodial sentences in the future.

Deputy Tóibín raised the issue of the response to the various Competition Authority recommendations from such market studies. Of the 174 recommendations made to date, more than 120 have been considered and addressed by Government. Those remaining are still under consideration by the relevant Ministers, approximately 20 of which will be addressed in proposed legislation relating to the legal and medical professions. Thus, it is not the case that the excellent advocacy work by the authority is being ignored by Government.

A number of Deputies raised the issue of practices in the grocery goods sector. The programme for Government contains a commitment to enact legislation to regulate certain practices in the retail sector. Deputies may recall that in advance of legislating for the introduction of a statutory code of practice in the grocery goods sector, a facilitator was appointed to explore with stakeholders the possibility of agreeing a voluntary code of practice in the sector. Unfortunately, despite the best efforts of the facilitator, it was not possible to secure agreement on the development of a voluntary code. In light of this, the Government intends to give effect to the commitment in the programme for Government by including an enabling provision in the legislation to merge the NCA and the Competition Authority, which will allow for the introduction of a statutory code of practice to regulate practices in the grocery goods sector.

It is expected that this legislation will be published in the first half of 2012. In advance of the publication of the legislation, my Department published an outline draft code prepared by the facilitator as part of the facilitation project. Interested parties were invited to submit their views on the outline draft code and its provisions. The responses to this invitation are currently being considered in the context of framing the legislation to give effect to the commitment in the programme for Government.

I refer to two other issues raised in the debate. First, dominance, per se, is not an offence under competition law; rather, it is the abuse of any such dominance that constitutes an offence. Second, the Competition (Amendment) Act 2006 prohibits certain practices such as demanding “Hello money”. The Government is strongly committed to ensuring Ireland continues to have vibrant agrifood and retail sectors, particularly given the importance of these sectors to the economy. The Government considers it important, therefore, that there should be a balance in the relationship between the various players in the grocery goods sector. The introduction of a code of practice is intended to achieve such a balance, taking into account the interests of all stakeholders in the grocery goods sector, including the interests of the consumer and the need to ensure that there is no impediment to the passing on of lower prices to consumers.

A number of Members raised the issue of not applying the provisions of the Probation of Offenders Act 1907 to offences under sections 6 or 7 of the Competition Act 2002. Breach of competition law, particularly hard core conduct such as price fixing and other cartel behaviour, constitutes serious white collar crime and does not constitute "minor offences". The reference to offences of a "trivial nature" in the Probation of Offenders Act 1907 could not be considered to apply to such hard core offences. The proposal to not apply the Act sends a strong signal to potential offenders that certain competition law infringements are recognised for the serious white collar crimes that they are and that they will be sanctioned accordingly. This is consistent with the message on white collar crime in the Criminal Justice Act 2011.

I am aware that the Competition Authority, as the statutory independent body responsible for enforcing competition law in the State, has received information relating to alleged anti-competitive behaviour in the concrete industry. The Competition Act 2002 provides that the authority is independent in the performance of its functions. Under that Act, it is responsible for investigating breaches of the legislation. As investigations and enforcement matters generally are part of the day-to-day operational work of the authority, I have no direct function in the matter and it would be inappropriate to comment on any of its investigations.

Deputy Dowds raised certain practices engaged in by insurance companies. I remind the House that the regulation of the insurance industry is primarily a matter for my colleague, the Minister for Finance. I understand that the arrangement between insurance companies and approved repairers appears to be one where approved repairers are selected on the basis that they meet various qualitative standards with the approved repairer in return being guaranteed a minimum flow of work. The Competition Authority is aware of the practice and has previously advised my Department that such arrangements do not appear to breach competition law and appear to result in a more cost effective service being provided to the public.

A number of issues relating to the Competition Authority were raised by Deputies. Like all State bodies, the resources of the authority are kept under review in the context of the overall strictures applying to public sector numbers as a whole. On the issue of how it handles complaints, I understand that the authority operates a triage-type system to prioritise its work. Members may not be aware that the authority has published an informative series of booklets, both in hard copy and on its website, giving information to both consumers and business on the issue of competition law.

A query was raised about representative bodies being prevented from taking actions on behalf of consumers. However, representations can be made by the NCA, which can pursue action under section 81 of the Consumer Protection Act 2007 on behalf of affected consumers.

On the issue of alcohol abuse and substance misuse, the Minister of State at the Department of Health, Deputy Shortall, will issue a report on substance misuse shortly. This will deal with this issue, which is a concern for many people.

I thank Deputies who contributed to the useful and informative debate on this Bill. I look forward to constructive engagement on Committee Stage on the detail of the proposals in this Bill.

Question put and agreed to.