Seanad Éireann díospóireacht -
Wednesday, 1 Apr 1981

Vol. 95 No. 14

Restrictive Practices (Confirmation of Order) Bill, 1981: Second and Subsequent Stages.

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

Minister of State at the Department of Industry, Commerce and Tourism (Mr. D. Gallagher)

The object of this Bill is to confirm the Restrictive Practices (Groceries) Order, 1981, which was made by the Minister for Industry, Commerce and Tourism on 4 March 1981. This order implements the recommendations of the Restrictive Practices Commission in their report of their inquiry into the retail sale of grocery goods below cost.

In July 1979 the Minister requested the commission to hold this inquiry because at the time the unease in relationships between suppliers, wholesalers and retailers centred largely on the issue of below cost selling notwithstanding that there were already in existence certain constraints on below cost selling. These were the power of suppliers to withhold supplied from retailers who sell below cost and the prohibition of advertising below cost.

The commission in their report deal with the incidence of below cost selling and its impact on the interests of Irish manufacturers, the distributive trades and consumers. As regards the manufacturers the commission concluded that the present and foreseeable circumstances of the food industry do not justify the prohibition of the practice. Concern was expressed on behalf of the manufacturers that below cost selling was an encouragement to imports and that loss of sales to imported goods could lead to substantial job losses. No evidence was produced, however, that there had been serious damage to the sector arising out of the practice. While reasons were advanced that the practice could lead to significant loss of market to imports in the future, equally persuasive reasons were given for the contrary view that the withdrawing of the freedom to sell below cost would encourage imports as the prevalence of bonus offers and special terms in the trade would drive retailers in competition to seek competing lines which, most often, could be imported lines. The commission did accept the evidence of the manufacturers that the practice of below cost selling has created difficulties which have absorbed considerable management time and energy and sometimes led to bad relations with their customers.

In so far as the distributors are concerned the commission concluded that below cost selling has been a powerful weapon in the hands of the multiples in competing with independent competitors and that it has been on occasion an important and maybe decisive factor in causing the close down of individual shops. It cannot, however, be regarded as largely responsible by itself for the decline in the number of grocery outlets over the years. This decline is the result of developments in the trade and society generally and would have happened in any event had there been no such thing as below cost selling. The course of events in Ireland in this regard has followed a similar pattern in other EEC countries.

The commission's conclusion in regard to the consumers was that it would not be in their interest to recommend an abatement of present competition. The one body representing consumers which gave evidence at the inquiry considered that below cost prices were a worth-while help in keeping prices down in a time of inflation and would be opposed to a prohibition on below cost sales. The idea that below cost prices are misleading was rejected by this body which held that shoppers in general have a very good idea of prices and would not be misled as to the overall level of prices in a store. Another body representative of the consumer indicated in a letter to the commission their support for the general principle of competition in trade and said they would object to any restriction which would interfere with this. It has been suggested that consumers have changed their attitudes since the inquiry, but the only statement that I have seen reported which was issued by a representative of a consumer body repeated support for the practice.

On the evidence at the inquiry the commission concluded that the adverse effects which already manifested themselves are sufficient to warrant retention of the constraints imposed by existing legislation, somewhat strengthened. The outcome of the inquiry has not been such as to suggest that below cost selling has so adversely affected the common good as to warrant a prohibition of the practice. The commission considered that such a ban would only be justified if grave danger to the common good would result from the practice. Such a ban would be a radical interference with freedom to trade and would constitute a form of official resale price maintenance representing a reversal of a State policy which had brought progress to the trade and great benefits to the consumer. It would also limit the scope for the deployment and development of retailers' skills in meeting competition and particularly competition in prices which is vital to trade. The implementation of a ban would also lead to numerous difficulties in application and enforcement.

Very careful consideration was given to the commission's conclusions and recommendations. In regard to the effects of below cost selling on the various sectors involved particular importance was attached to the commission's conclusion that the present and foreseeable circumstances of the food industry do not justify the prohibition. I consider that there is as much evidence to support the argument that a ban on below cost selling would lead to increased imports as there is in support of the case that it would improve the position of Irish manufacturers.

In so far as the distributive trades are concerned the commission's view that while below cost selling has, on occasion, been an important and perhaps decisive factor in causing the close down of individual shops it could not be regarded as being largely responsible by itself for the decline in grocery outlets, is accepted. More than any other, the distributive sector has been the most affected by advances made in this country over the past number of decades. Such influences as the rapid growth of pre-packaging facilitating the development of self-service, and the spread of car ownership led to, and was in turn stimulated by, the development of the supermarket. These changes are generally agreed to have been to the considerable benefit of the consumer bringing the advantages of wider choice, one-stop shopping and on the whole lower prices. They also had the effect of bringing about a substantial reduction in shop numbers. These are normal forces of change, however, whose effects would have been felt even if there were no below cost selling.

The commission's view that the adverse effects which below cost selling has on the various sectors are not so great as to warrant a prohibition of the practice is fully accepted. Such a prohibition would in fact be a reversal of the policy which has underlain all restrictive practices legislation to date. The aim of this policy has been to foster competition wherever possible and to introduce that element of risk into every trade which will force those engaged in it to strive for maximum efficiency at all times. To impose a ban on below cost selling would be a backward step in that policy which would only be justified if there were the clearest evidence to support the backward step. No such evidence has been produced.

The general conclusion of the commission is that "the fact that the Commission has not recommended the prohibition of below cost selling is due, not to any belief that there are not quite serious problems in the grocery trade, but to a belief that the problems have comparatively little to do with below cost selling" and it suggests that the real cause must be looked for in such areas as unequal power relationships and discriminatory application of terms and conditions of supply. Having regard to this and to various proposals which have been made regarding problems in the sector, it has been decided to request and Restrictive Practices Commission to hold such an inquiry into the supply and distribution of grocery goods as would allow of treating all issues which are considered relevant to the overall problems of the sector.

I would like now to refer briefly to the provisions of the order which serve to strengthen existing controls which are the power of suppliers to withhold supplies from retailers who sell below cost and the prohibition on advertising below cost. In the existing provisions relating to both of these controls the cost price is determined by net invoice price including VAT at which the goods were purchased. For the purposes of the new order "net invoice price" is to be calculated from the latest invoice relating to the delivery of like goods. This amendment will get over the problem previously experienced of associating a particular invoice with particular goods and is expected to increase the effectiveness of both controls. It will also be of particular benefit in enforcing the prohibition on advertising below cost. There has also been incorporated into the order a provision for the application of a four week rule in respect of stocks which will also apply to both the power to withhold goods and the prohibition on advertising. Under this rule in the case of stocks sold by a retailer more than four weeks after the date on which a supplier's price list for like goods has been altered the cost price of the goods is to be calculated by reference to the supplier's current best list price and not the net invoice price. This rule is intended to deal with a situation where traders who had stocks laid in would be free to sell more cheaply and would be likely to make the most of their publicity in regard to these items. There would then be increased temptation to other traders to break the law and match the cheaper prices. The rule should also help to lessen the disparity in prices between different retailers.

These are the main provisions in the order for the strengthening of the existing constraints on below cost selling. The order also extends the power to withhold goods to own label goods and the prohibition on advertising below cost to special offers, that is offers which have the effect of reducing the average price of goods below net invoice price including VAT even though the prices of individual items might not be below that level. Advertising on behalf of, as well as by, retailers will be prohibited under the new legislation.

It will be seen accordingly that the order has the effect of strengthening the existing constraints on below cost selling, making them more effective and will facilitate enforcement. The order, being in consolidated form, will lead to greater ease of interpretation. In accordance with section 8(3) of the Restrictive Practices Act, 1972, it must be confirmed by an Act of the Oireachtas.

The Bill now before the Seanad is the confirming Bill which is necessary to give the force of law to the order and I have no hesitation in recommending it to the Seanad.

Mr. O'Brien

We welcome this Bill, not because we are enthusiastic about its proposals, which we think fall short of what is desirable, but because it affords an opportunity for a discussion. Retail grocers all over the country are surprised that the Bill does not take more severe measures to curtail below cost selling. I know that a commission were appointed to examine this subject. They set about doing their work and made recommendations as they saw fit and the Minister made his argument on the basis of those recommendations. With all due respect, I do not think there would be unanimity of view on the Minister's conclusions, even if we were all to make our cases on each recommendation of the commission.

Members of both Houses have been asked by retail grocers in their areas to express their dissatisfaction with this Bill. That has happened in my area. People in the retail grocery business, supporters of the Government party, have made representations to elected representatives of all shades to voice their disappointment at this Bill. Outside the gates of Leinster House last week those people of all political shades left no doubt of their opinion of this Bill. They do not agree with the commission that this below cost selling is not playing a major part in closing down the small family grocer. They are quite certain that these big multinational chains are a major cause of closing down a number of small, family grocers.

I have heard it said by people who are well versed in these matters that it is the avowed objective of these multinationals to close down these small family groceries and to establish a monopoly for themselves. Having established the monopoly, then they will have the world to themselves. The other side of the story is that it will be possible, if that day should come, for the Government to impose maximum prices and so on. We should look at this remembering that that is their objective.

The ruthless way these people approach business can be gauged from the fact that while the commission were sitting they adopted a more restrained policy, but as soon as the commission drew up their report then a much larger scale price war developed between them. While I have respect for the Minister's conclusions, I would like to ask a question. I am informed that these multinationals at present have 70 per cent of the business in the greater Dublin area. If that figure is accurate, and I have every reason to believe it is, the time has come when some curb should be imposed.

If it is not right to impose a curb on their development at 70 per cent, will it be right to do so at 75 per cent, 80 per cent, 85 per cent or 90 per cent? When will it be right? Is it Government policy to let them trade unrestrainedly to gobble up the whole market and then to be in the position that monopolies are always in, to exploit the consumer? I am told they have gobbled up 45 per cent of the trade in the country as a whole. Do we sincerely believe that as well as the 70 per cent they have taken for themselves in Dublin they should be allowed to take 70 per cent over the whole country? If that view is sincerely held — I respect the right of the people to hold it — I claim it is a wrong view and I am opposed to it.

The fact that these multinationals set about below cost selling is a clear indication of what is at the back of their minds. The small family grocers, who provide a lot of service, are not in a position to embark on below cost selling. The argument put forward by the commission, and supported by the Minister, is that below cost selling helps to make the cost of living easier for the housewife. I support that, but where is it leading to in the long run? Do we honestly think that when these multinationals have taken a sufficient slice of the market for themselves, they will continue below cost selling? Would it not appear obvious to everybody that the opposite is likely to be the case? Below cost selling is not confined to this country, nor is it confined to the grocery trade.

These multinationals got themselves into a position of strength by crushing all opposition on the way up. Having crushed that opposition and set up a monopoly, they found themselves in positions of great power. Some of them are so powerful that it is said their infleunce on the kind of life we live is much greater than the influence of governments. They have got themselves into that position by a ruthless crushing of all opposition and competition. The signs of that ruthlessness are already evident in the south side of Dublin where one of these firms has crushed another. In the long run only the most powerful will survive. The small grocer will be cut out and the less strong big firms will also be cut out. We could be left in the long run with about two multinationals with the whole market to themselves. That is the danger I see. If the Minister does not see fit or think it necessary to curb that development now — and I respect his view — I hope a watchful eye will be kept on trends and developments and, when he sees the danger I see ahead looming nearer, he might take effective action.

I am disturbed by the fact that with 70 per cent of the market in the greater Dublin area cornered by these multinationals, it is not considered time to check that situation. In other countries there is legislation which prevents the development of these firms controlling more than a certain percentage of the trade of the countries — 35 per cent or 40 per cent or something of that nature. There is cause for alarm when it reaches 70 per cent.

A good deal of what the Minister and the commission said about the disappearance of the small grocers is undoubtedly due to a change in living circumstances — the pre-packaging of goods, the number of motor cars, and so on. I admit that makes some contribution to the situation, but those in the grocery trade are of the opinion that the biggest single factor operating against them is the ruthlessness of these people, and I think their ultimate intention must be obvious. It would take a lot to convince me that these firms have come into this country to sell goods below cost for the love of the people, or to cut down the cost of living, or to make life easier for the less well-off sections of the community. I am quite sure there are many Members in both Houses who would take a great deal of convincing on the same point. That argument is not tenable.

Down the years the family grocer played a big part in the life of this country and continues to do so. For one reason or another, people find themselves in difficult financial circumstances. It was, and is, traditional that these people would be accommodated by the family grocer. This would not happen with the big chain store. For example, take the people whose social welfare benefits were delayed. They have established a relationship with the family grocer. He will give them credit in the knowledge that they are honest people, who will discharge debts when the money comes. I do not think a facility like that is offered by the big stores. There are times in rural Ireland — and I am sure the Minister, who grew up in rural Ireland, will agree with what I say — when people in the farming business run short of cash, but their credit is good and the family supplier knows that when the creamery cheque comes or when the cattle are sold he will be paid. They get these facilities from the family grocer. There is no way they would get the same facilities from these big groups once they take over.

The family grocer was part and parcel of every little rural village but there would not be enough business to attract the multinationals into these villages. With the disappearance of the family grocer, the village will go and rural Ireland will lose one of its most pleasant characteristics. That is bound to happen if the take over by these big boys is not curtailed or restricted in some way.

I should like to see a further examination of the effect these people have on our import balance. I am convinced that a lot of foodstuffs, such as vegetables, being imported by multinationals could be produced at home. The development of these outlets curtails market gardening, which very often when located in areas close to provincial towns makes uneconomic holdings viable. A small farmer who has not the acreage to indulge in large-scale farming or big milk production and so on can supplement his income from the farm by market gardening to a degree by supplying fresh vegetables to his local store. They do a lot to make what would otherwise be uneconomic holdings viable. It is alarming to see the amount of vegetables that are imported by the multinationals. It is something that should give rise to serious concern. It is a problem that will, if it is not tackled this year or next year, have to be tackled eventually. The big multinational stores are contributing a lot to this unwelcome development.

Those are most of the reasons why I am disappointed with the Bill. There are good points in it — the Minister has drawn special attention to them — and I welcome them; but it does not go far enough. I am sure this matter would be of as much concern to the Minister as it is to me. I referred earlier to the renewed efforts that the big stores put into below-cost selling once the commission had finished its investigations. As a result of that, organisations that gave evidence before the commission were forced to change their minds. I have no hesitation in saying that that matter is of concern to the Minister as it is to me. It was a most undesirable performance that they should restrict their activities to a low-key until the commission concluded its investigation and submitted its report and as soon as that danger time had passed they rushed into the business of wiping out the small shopkeeper and increased their activities in the below-cost sphere. They did that to such a degree that it caused people to set up an organisation who reported to the commission that they were in favour of this below-cost selling because it tended to help the consumer and keep down the cost of living. However, they rushed into this with such renewed vigour that the people who gave their evidence earlier said on RTE, and elsewhere, that they were now changing their minds; that they had become alarmed by it. This is something that should be of concern to us.

I want to make it clear that I would not be a party at any time to any measure, however well-intentioned, which would result in the annihilation of the small family grocer who has played such an important part in the life structure of the country down the ages and who has rendered good service in times of difficulty. It is hoped that the small family grocer will survive. In addition to all this cutthroat opposition — below-cost selling and so on — which is not done for the love of the people or to assist the most necessitous but for the purpose of taking the whole market for themselves, ultimately — when we take into account the burden of rates on the small shopkeeper, the number of forms to be filled, the cost of clerical assistants, making VAT returns and so on, he is already in great difficulty without leaving him an unprotected victim for these unscrupulous people who have no other intention than to wipe him off the earth altogether.

Mr. Howard

The Minister has told us that the object of the Bill is to confirm the Restrictive Practices (Groceries) Order, 1981. He went on to say that the order implements the recommendations of the Restrictive Trade Practices Commission in the report of their inquiry into the retail sale of grocery goods below cost.

I listened with interest to the Minister's speech. To a great degree it leaned on the report of the Restrictive Practices Commission and brought into focus the recommendations of that commission. Therefore, I regard, as the Minister has already done, what is proposed in the Bill and what is contained in the Restrictive Practices Commission Report as fair game for criticism. I have no direct involvement or interest in the retail grocery trade but I met people and organisations who represent family-owned businesses, either shops or supermarkets, and listened to the fears they expressed in relation to this report. I am convinced that a large part of their case is a valid one and for that reason there are certain arguments I want to advance.

The Minister said, in the concluding part of his speech, that the Bill would have the effect of strengthening certain constraints on below cost selling. There is an element of contradiction in that statement if we start off on the basis of giving our blessing to the principle of below cost selling — that is what we are doing in the Bill and that is what was done in the report of the Restrictive Practices Commission. Below cost selling is a weapon, as far as I am concerned, that is being used by the multinationals in the retail food trade for one objective, to gain control of the retail food industry here. To say otherwise is to ignore what are obvious facts. We have had a price war which is, if you like, the tip of the iceberg, and the iceberg is a relentless war itself to gain the control I speak of. The stakes in this issue are high. On the one side it is total control by the multiples, and the multinationals, of the retail food trade, and on the other side it is a fight for survival by family owned businesses, be they shops, groceries, or family owned supermarkets.

The lines of battle as far as I can see are clearly drawn. The multinationals are largely foreign owned and, unquestionably, foreign financed. They have vast resources at their disposal. Their success to date can be measured by the fact that five new companies now are estimated to control 75 per cent of the retail food market in the Dublin area and 50 per cent of the retail food market in the remainder of the country. They are backed with substantial resources, and the below cost selling exercise we witnessed in recent times is an indication that any tactic that can bring success to them, be it fair or foul, they are not adverse to putting into effect.

Their methods, as we have seen, are to undercut prices, to subsidise unprofitable prices from resources of their parent companies and very dangerously to pressure Irish marketing concerns and Irish food processing concerns, into supplying them at uneconomic prices. This eventually will have the effect of putting real businesses, Irish-owned businesses, involved in the processing and supply of Irish food products to the wall. These combines and multiples import cheap foodstuffs from whatever source they can obtain them. I am convinced that they are determined to use tactics, no matter how ruthless, in pursuit of victory in this warfare. That victory for them involves the total elimination of those on the other side.

Who are the people on the other side? The people on the other side are our people. They are the family-owned shop, the family-owned supermarket, Irish food processors and producers. The capacity of the land of Ireland to produce many of the foodstuffs we purchase and consume here is barely tapped. There is a vast potential in our land to produce many of the items that we import and consume. We have quite a substantial number of people engaged in producing foodstuffs. We have Irish workers employed in processing, manufacturing, marketing, distribution and sale of Irish goods. They are the people who are on the other side of that battle.

There is no use in deluding ourselves into thinking that the issues are other than what they are. By refusing to face up to the fact that below cost selling is a weapon that is being used to eliminate from the retail foodmarket Irish interests and Irish owned interests we are going along with a situation of putting Irish jobs and employment in industries and businesses here at risk. Therefore, as far as I am concerned, the issue is quite clearcut. I stand for the survival and the protection of the 11,000 who have main retail food outlets here. Fourteen years ago there were 17,000 retail food outlets here but today that figure has been reduced by 6,000. In the main those outlets have been built up by self-sacrifice on the part of the owners, by hard work and, without doubt, by a very good service to the public.

As Senator O'Brien mentioned earlier the family-owned outlets very often in the past stood by the poorer sections of our community when the wherewithal to purchase the essentials of life were not always readily available. I am concerned at, in fact I greatly regret, what I regard as a short-sighted decision, a weak decision by the Restrictive Practices Commission who came to the conclusion that they did. I believe that it is giving in before the might and the power of the multiples and the resources that are behind them.

For the Government to follow suit, to accept the recommendations of the Restrictive Practices Commission on this, to fail to support the family-owned retail outlets here is a measure of weakness with which I disagree. The Minister, in defending his attitude, in defending the decision of the Government to accept the recommendations of the Restrictive Practices Commission, advanced, in the course of his statement here, a number of reasons. Two phrases he used in the course of that address stuck in my mind. He said that the commission considered that a ban on under cost selling would only be justified if grave danger to the common good would result from that practice and that such a ban would represent a radical interference with the freedom to trade. In relation to what is in the common good I should like to ask if the forcing of people engaged in the processing and manufacture of Irish food, produced in Ireland, by the multiples to sell their products at uneconomic prices and put the jobs of their employees and suppliers in jeopardy is in the common good? That is what is happening. Is the driving of family shopkeepers to the wall as has happened over the years, putting sons and daughters who in other circumstances would have employment within these businesses, to seek jobs and on to the dole queues for the common good of the country?

There is also the question of interference with freedom. Whose freedom are we talking about? Are we talking about the freedom of Tesco, perhaps, and others, to pursue and eliminate from the retail grocery scene the family-owned shopkeeper? Last year we imported food to the value of £500 million and a very high proportion of that food could have been produced, processed, distributed and sold here. The multinationals have not done anything during the time they have been here which would prove to me, or to any person who would objectively assess the situation, that they have any commitment or loyalty to the promotion of Irish home-produced foods. Their shelves are stocked with the cheapest imported foods they can obtain.

I am, therefore, concerned that the Restrictive Practices Commission in their assessment of the situation, and to some degree this appears to be acceptable to the Government, have looked upon the family-owned retail outlets as an expendable commodity that can be sacrificed in the interests of the multiples and, perhaps, in addition, to provide some short-lived advantage to the Irish consumer. Any advantage going to the Irish consumer in my view will be short-lived and of very doubtful benefit in the long term, because once effective control of the retail food industry here comes within the hands and authority of the multiples then their prices will be adjusted to recover the losses they incurred during the period they were engaged in this warfare to obtain control and, perhaps, not alone to recover those losses but to finance a prices war for the same purpose in some other country. The Irish housewife, and the Irish consumer, will pay that price when control of the retail grocery business here is effectively in the hands of a small monopoly.

I expressed the fears I genuinely hold with regard to the future of the retail food industry here. I regret and, indeed, I condemn the Restrictive Practices Commission in coming to a conclusion that I feel will be to the detriment of the family owned shops and supermarkets here. I cannot applaud the Minister, or the Government, for accepting almost in toto that decision. There is an obligation on the Minister, and on the Government, if sides are to be taken in this relentless warfare that is going on in the retail food industry to take measures, if they are taking steps at all to deprive the multi-nationals of what is an effective weapon, below-cost selling, in their attempts to win control of the retail food market from the family-owned trade outlets.

Mr. Mulcahy

I have listened to the previous speakers with great attention and interest. This is a very tricky area and I have not had an opportunity to think fully over my own position on it. I was impressed with what Senator Howard said. He made a good case. There are a few fundamental principles I should like to put out as a contribution to the debate. The Minister will be dealing with the points raised when he concludes. One principle is that one only gets paid for something in business if one contributes something to the chain of production between the origin of the product and the final consumer. We talk, for instance, about the notion of the addedvalue of distribution, the idea being that if a factory, for instance, produces a television set in Dublin and it is available at the factory gate it is not much use to somebody who wants that television set in Achill. In some way there is extra value that somebody is willing to pay for to get that set to their door so that they can enjoy the reception and entertainment available. In other words, there is the added value of distribution.

We are talking here about the relative merits of the distribution service offered by the larger multiples and supermarkets and the service provided by the smaller family-owned shops in villages and towns or in community districts in urban areas. We are trying to balance those two. In the middle of all this we have the question of productivity. If there is one thing that we have to get right it is productivity. We will not have anybody employed here if we do not produce goods and distribute them as productively as other countries do. We cannot ignore the opportunity for productivity. If we do eventually it will catch up in some way or another because it means that time is being wasted, it means that resources have been wasted. I would, therefore, remind all that agriculture, generally speaking, is behind what the country is capable of producing in agricultural terms. We debated this before in the Seanad. The NESC report produced a few years ago talked about opportunities for increased productivity in agriculture. We have talked, for instance, about the fact that the average output of milk per cow is in the order of 700 gallons whereas the average output of competing countries like Holland is 1,150 gallons. We have said it is possible to do this by better husbandry and management inside the farm gate. We cannot say that we should not do these things because of the effect on certain units in our society. We must become as productive as our competitors. We cannot just leave one part of the chain inefficient.

If I follow that reasoning I would be inclined to say that anything which will keep the costs of production down is worth it. At one stage emotive statements were made about the effect on employment here. We should remember that there are a lot of very happily employed people in the supermarkets and they are being trained very well. A lot of money is being spent in generating good work where people can progress to higher levels, managerial levels, of occupation. Computers were introduced and there is a lot of sophistication involved. People get a lot of satisfaction out of that type of work. In many cases the types of jobs generated in other ways might not be that satisfying or challenging, while they could be very interesting and involve very useful social purposes.

I mentioned those two points because I do not think it is as clear-cut as the speakers who have gone before me, including the Minister, have made it. I have sympathy with their viewpoint because I would like to see equality of opportunity, which in this context means that if a shopkeeper is trying to sell some grocery product he should be able to get that product at the same price from the factory gate as anybody else. That could be another important principle that one could bring into the discussion. At the same time, I recognise that the bulk order is what makes it possible for the producer to operate at a productive level.

The answer would seem really to me to be in more encouragement for the smaller outlets to group together in cooperative purchasing so that they can obtain the product at the same discount rate and at the same cost rate as the larger unified groups. I do not see in productivity terms how one can get around that. That is why the large co-ops have grown up in this country, and that is why we have more productivity coming up in our agricultural sector because of the development of the co-ops.

While I sympathise with the position, I see a number of basic difficulties in terms of trade theory. Maybe there is an inevitability in this. I am sure the Minister will have his words of wisdom to add to this.

Mr. McAuliffe

This Bill has come as a disappointment to everyone. We have seen agitation during the last two or three months in every town in the country. I was at several protest meetings in my own county, and we had people from all the parties there, including Fianna Fáil TDs. They assured the people that they were about to bring in a Bill that would not allow under-cost selling. The people who are selling under cost are very wealthy and they can afford to do it for a certain time. If you take our rural towns, shops are being closed down almost every day. The reason for it is that the multi-nationals are under-selling them, but they will not continue to sell below cost after they get rid of the competition: they will charge their own prices then and in a very short time they will show profit instead of selling at a loss.

It has been said here that selling is an encouragement to imports. That is the truth. If people thought it worth their while to listen to Deputy Tom Enright speaking last Sunday morning they would have heard of some of the imports he produced that were bought in Dublin: Danish bacon, Cyprus potatoes, British potatoes and various other commodities, all imported. That is the big trouble with the multi-nationals: quite an amount of goods that should be produced in this country are being imported from other countries. The extraordinary thing about it is that they are higher in price and yet people seem willing to pay the higher price for them. They may be better graded or something like that. We may be missing out by not grading our foods in a proper manner.

The statement was made by the Minister that there would not be substantial job losses. I am sure that every one of us has gone to supermarkets. In supermarkets nine out of every ten people working there are young girls between 16 and 20 years of age. Their conditions of employment are not great, their pay is not great, but they would not tell you that because they are badly organised. They will take any job when they come out of school rather than continue to attend school. I do not see it as any great advantage to the community. There are people who would walk a mile to save one penny on an item but they should not forget that soon there will not be family grocers and that they will have to pay through the nose in supermarkets who will command the full market.

The Labour Party had a motion in the Dáil a couple of weeks ago. Fine Gael have a Bill being voted on tonight. Our views were given during that debate in the Dáil, and I do not wish to add to what was said today.

Mrs. Hussey

I want to say a few words on this as somebody who is involved in examining this kind of measure that has come before us and in doing the family shopping. Undoubtedly there is a a possible conflict which I do not think is true. Many housewives have the idea that the bigger the supermarket the better for them, that the most important savings they can make is by weekly visits to these very large supermarkets, which are beginning to resemble enormous warehouses, outside large urban areas. They think that they will be much better off, that they will get everything cheaper. This idea is sold to them very strongly by the most powerful advertising methods possible, because the owners of these huge supermarkets and the backers, in many cases non-Irish backers, take full page advertisements in the newspapers and peak-time advertisements on television: they have all the tools of advanced commercialism at their disposal no matter how expensive they are. So it is a perfectly natural reaction of women that these huge places are where they should be and they will not give much thought to the small local person running a small shop until the day comes when they badly need something around the corner at the local shop or they need it on a Saturday morning or a Sunday morning, and they find that the local shop, which was thriving the week before, apparently has been shut down. It is only then that they realise where the trend of uncontrolled retail practices is in fact damaging what I would call the real quality of life.

I will not say very much on this Bill except to remind the House that very prominent consumer and housewives' representatives have shown that they are fully aware of the implications of below cost selling and price wars for the long-term prosperity of the country. They have shown that they are not taken in by the persuasive advertising and the noisy price war ads and the claims and counter claims of the supermarket managements. They are aware that there is another side of this coin, that 20 or 30 years ago when the supermarkets were only beginning there was a quality of personal service, flexibility as regards payment and a much better community idea.

It would be a terrible shame if the only small shops we are going to be left with are small branches of enormous news agent chains who are staffed but not run by the owners. I am a great believer in the concept of owner-manager in every enterprise. You find that when there is an owner-manager the thing is being run much better than when the thing gets very big and impersonal. I want to finish by saying that I believe the housewives of this country understand that they are being taken for a bit of a ride by the supermarket giants, and they look to legislators to face up to momentary popularity for the common good in the long term.

Minister of State at the Department of Industry, Commerce and Tourism (Mr. D. Gallagher)

I thank Senators for their contributions, and I will try to be as brief as possible in dealing with the points raised by the various speakers. It is not entirely accurate that the supermarkets were quiet during the inquiry. It took something like 18 months for the commission to bring in this report. It would be giving them quite a long time to follow the lines Senator O'Brien has been referring to. Regarding the assertion that the multinationals control 70 per cent of the Dublin market and approximately 40 per cent of the market in the country as a whole, this is not accurate. The commission accept and acknowledge that they control a good deal of the market. However, it is not true to say that they are foreign owned — we are referring to five multiples and only two of the five would be regarded as foreign owned. It is true to say too that abuses referred to are not entirely due to their expansion, and we have stated in this Bill that the commission are about to undertake further investigation into the distribution of goods generally. If it is found as a result of that investigation — a full scale inquiry might be a more accurate way to describe it— that there are abuses then I am sure the Minister will take the appropriate action.

With regard to imports of food, it is true to say that we have quite an amount of foods being imported which could well be produced at home. In the figures quoted we are not dealing entirely with foodstuffs which are in competition with what we are producing ourselves. We have things like fruit and so on included in these figures which give an imbalance and would indicate that the situation is far worse than it really is.

We have no evidence to show that below cost selling has in any way caused the increase in the imports which are mentioned. The commission have investigated these things thoroughly and I feel sure that their investigations will prove that what I am saying is correct.

Subsidising from abroad was referred to here and in the Dáil. The commission found nothing in the accounts of Quinns-worth, for instance, to suggest subsidisation from abroad. In regard to Tesco, this company hold that they had no trading loss in their first 18 months of operation, and losses here would be regarded as normal in a locality where they were setting up business for the first time.

In regard to the importation of foodstuffs, the Irish Goods Council have had discussions with those people and as a result of the negotiations which have taken place they have promised to display Irish goods in their stores. Let us hope that this practice is being followed.

I agree with Senators who spoke of the role of small shopkeepers and the part they have played in Irish society. If I might speak on a personal note for a moment, I happen to have been reared in one and I am proud of that. I would hate to see the small shopkeeper as we know him going out of Irish life, whether it be in rural Ireland or in our small towns. They still have a vital role to play and they are still doing a very good job, but you have situations where very often people are not prepared to accept change, to meet living styles and gear themselves to get into competition with supermarkets and other people in business. Where business people have adapted they are able to compete and the situation in their case is fairly sound. Very often you have a situation where an old person in charge of a business will not change, will not accept the reality of a situation, and this is one of the reasons why many of our small shops are not doing so well at the moment and are finding themselves in trouble.

Particularly in rural Ireland at the moment, people tend to go off shopping to the local town, to the local supermarket, and this is another thing which has militated against the business people in rural areas. Here, again, I think all of us could play a role by encouraging people to shop in their own towns, in their own villages. They should be made aware that by doing this they will be retaining their small shops, and by retaining their own places of business they will be helping to maintain employment in these areas.

Taking the broad aspect of the situation, the Minister would have to be directed by the report of the commission, who have gone into the matter thoroughly. Since they were instituted they have provided a very good service and they have been responsible for helping to introduce legislation which has helped to bring in controls for the benefit of the consumer and, I think, to the benefit of distributors and retailers in the time to come.

Again I thank Senators for their contributions. I would agree with most of what has been said. We are all practically on the same wavelength in relation to how matters should be dealt with and it is just a matter of emphasis on how things can be best controlled and geared.

Question put and agreed to.

Agreed to take remaining Stages today.

Bill put through Committee, reported without amendment, received for final consideration and passed.