Before we commence, I propose that speaking times be allocated as follows: eight minutes for group spokespersons and five minutes for all other Senators, with the Minister of State to be called on to reply not later than 4.25 p.m.
Report on Grocery Goods Sector: Motion
Is that agreed? Agreed.
I move:
That Seanad Éireann notes the report of the Joint Committee on Agriculture, Food and the Marine entitled, Report on the Grocery Goods Sector - Increasing Equity and Transparency in Producer-Processor-Retailer Relationships, which was laid before Seanad Éireann on 23rd October 2013.
I thank the Cathaoirleach for his invitation to address the House in regard to the recently published report of the Oireachtas Joint Committee on Agriculture, Food and the Marine, entitled Report on the Grocery Goods Sector - Increasing Equity and Transparency in Producer-Processor-Retailer Relationships. The Minister, Deputy Richard Bruton, cannot be here today to contribute to the debate as he is on an important trade mission to India. He sends his apologies.
I welcome the publication of the committee's report, which considers a wide range of issues and makes a series of 13 recommendations which primarily fall for consideration by two Ministers, namely, the Minister for Agriculture, Food and the Marine, and the Minister for Jobs, Enterprise and Innovation. As the report itself notes, it focuses on four key areas. These are the proposed code of conduct in the grocery goods sector, pricing and its impact on primary and secondary suppliers, support for local produce, and labelling. In my contribution I will concentrate on the issue of regulating certain practices in the grocery goods sector, which falls within the remit of the Department of Jobs, Enterprise and Innovation. I will also briefly address some of the issues raised in the report relating to policy responsibilities of other Ministers, namely, the Minister for Agriculture, Food and the Marine and the Minister for Health.
The Government is strongly of the view that it is important to ensure there is a balance in the relationship between the various players in the grocery goods sector, with a view to ensuring Ireland continues to have robust agrifood and retail sectors. This is a particular priority given the importance of these sectors to the national economy. Regulation of certain practices in the grocery goods sector is intended to achieve such a balance, taking into account the interests of all stakeholders in the grocery goods sector, including the consumer, and the need to ensure there is no impediment to the passing on of lower prices to consumers.
As the joint committee's report notes, the issue of regulating certain practices in the grocery goods sector has been on the table for several years. The central issue has been the question of whether a voluntary code of conduct was required or, on the other hand, whether a statutory response should be pursued. Views differ on this aspect, as the report notes. In May 2011, the Minister, Deputy Bruton, published the Travers report, which addressed the issue of attempts to seek a voluntary code of conduct. The report found that there did not appear to be any likelihood of such a voluntary code being agreed. To this end, a draft statutory code of conduct was prepared as the basis of a public consultation process.
The unlikelihood of a voluntary code being agreed was also recognised by the commitment in the programme for Government to regulate - I emphasise the word "regulate" - for certain practices in the grocery goods sector. At the time of the publication of the Travers report, the Minister recognised that regulation of the grocery goods sector was a highly contentious issue and there was an inevitable strain in the relationships between suppliers and retailers. These relationships should be built on solid principles of mutual opportunity and fair competition, which does not always happen. The Minister expressed his disappointment that there had been no agreement on a voluntary code, regulation by Government being always the option of last resort. He added that where regulation is contemplated, it should be forensically designed to avoid unnecessary costs for consumers and businesses and ensure a fair balance between them. As the report of the joint committee shows, these views remain as valid today as in 2011.
The committee's report notes developments at EU level on the issue of the relationship between various parts of the food supply chain. In September 2013, a voluntary initiative on principles of good practice in the food supply chain was launched and adopted by certain European associations. However, not all elements of the supply chain signed up to this initiative, mirroring the different views on the value of a voluntary system that emerged in Ireland from the Travers report process. In a parallel exercise, the European Commission published its Green Paper on Unfair Trading Practices in the Business-to-Business Food and Non-Food Supply Chain in Europe earlier this year. The Commission also commenced a public consultation process to gather the views of market participants on the occurrence of these practices, their possible effects and the most effective remedies, if required. That consultation process was guided by a range of questions to respondents, including queries as to whether they considered unfair trading practices to be pervasive and whether there was consumer detriment in the presence of such unfair commercial practices.
Given the diversity of respondents involved in the exercise, there was little consensus on any of the range of questions. The Commission is considering the results in order to decide whether it will initiate any proposals in this area. However, none of this precludes any member state from taking measures it considers necessary. Such complementarity between EU work and national work is recognised by the Commission. Obviously, we will all take an interest in the implementation of the voluntary initiative and the impact of its development over the forthcoming months. It will not, however, halt the implementation of the commitment in the programme for Government.
To give effect to that commitment, work is at an advanced stage on the drafting of the consumer protection and competition Bill. That legislation will provide for the amalgamation of the Competition Authority and the National Consumer Agency, implementation of the recommendations of the advisory group on media mergers, and amendments to both competition and consumer legislation. It will also contain enabling provisions to allow the Minister to regulate certain practices in the grocery goods sector. It is hoped the Bill will be published by the end of the year for debate in the Oireachtas in early 2014. While the exact wording of the legislation is not yet been agreed by the Government, I propose to address several of its proposed provisions that are germane to the issues raised in the joint committee's report.
The first point to make is that the Government, in accordance with its programme for Government commitment, will not be legislating for a voluntary code of conduct.
Statutory regulation of certain practices will be introduced. Although not finalised, it is likely that these will take the form of a series of regulations, with associated sanctions, rather than a code of conduct. This links in with the main recommendation of the committee.
Second, the report calls for the appointment of an independent ombudsman to oversee and enforce the regulations. As the House will appreciate, the establishment of a new stand-alone State body to oversee this issue would, in the current economic climate, not be feasible for reasons of scarce financial resources, duplication with enforcement of existing legislation in the Competition (Amendment) Act 2006 on activities that prevent, restrict or distort competition in the grocery goods sector, and the need to ensure there is no unnecessary proliferation of public service bodies. Hence, as has already been noted in previous comments on this matter in the Oireachtas, the amalgamated Competition Authority and National Consumer Agency, NCA, will be the independent body assigned the responsibility for overseeing and enforcing these regulations. This new body will be given the powers to enforce the regulations. However, in enforcing any regulations, the basic tenets of fair procedure and natural and constitutional justice must be upheld. It is important to note that the introduction of any regulations does not, and cannot, guarantee anything regarding the prices received by any given link in the supply chain. Negotiations on price will remain an issue between the contracting parties, as happens in any commercial relationship. The intention of the new regulations will be to regulate certain practices, not set prices.
On the issue of disclosure of margins by retailers, the contents of the financial statements of companies are governed by relevant EU company law directives and regulations and by the applicable accounting standards. The requirements regarding the preparation and publication of the accounts of limited companies and groups are determined by the first, fourth and seventh EU company law directives and by the EU IFRS regulations. These requirements are largely reflected in the Companies Act 1963, the Companies (Amendment) Act 1986 and the European Communities (Companies: Group Accounts) Regulations 1992, as amended.
The EU 11th company law directive, implemented as the European Communities (Branch Disclosures) Regulations 1993, addresses the requirements applicable to branches of EEA companies. Irish subsidiaries of EEA companies can submit the audited group accounts of their parent to the Registrar of Companies instead of their own individual accounts, provided certain conditions are met. EEA companies that have an Irish branch are required to submit only the company accounts to the Registrar of Companies. Irish companies that are subsidiaries of EEA companies and which are themselves parent companies need not produce consolidated accounts provided certain conditions are met. There are similar provisions for subsidiaries of non-EEA companies. In such cases the consolidated accounts of the EEA or non-EEA group must be submitted to the Registrar of Companies.
There are no plans to amend this disclosure regime in respect of specific sectors in the economy as this would be open to accusations of discrimination and, were it to be required generally in the economy, it could have implications in terms of business costs and attracting foreign direct investment. Most of the other issues such as an all-Ireland market for contracted winter milk and closer relationships between the multiples and local producers are policy matters for the Minister for Agriculture, Food and the Marine. However, on the first point, I understand that the supply of milk for processing, North or South, is being monitored with the ending of milk quotas in 2015. On the second point, I understand the development agencies have been active in promoting closer links between multiples and local producers. On the issue of minimum prices for alcohol, the House will be aware that the Minister for Health has proposed such a move in his recent initiative on the issue of misuse of alcohol. The Minister for Health also has a role in food labelling. I am sure both Ministers will take note of the points raised today in respect of their areas of responsibility.
I look forward to hearing the reactions of the House to the report and its views on its recommendations. I will relay these to the Minister, Deputy Richard Bruton, on his return from India to allow him to consider them in the process of finalising the proposed legislation. Of course, the issue will be debated further when the Bill comes before the Oireachtas for debate in the new year.
It is a pleasure to welcome the Minister of State. The report of the Oireachtas Joint Committee on Agriculture, Food and the Marine, Report on the Grocery Goods Sector - Increasing Equity and Transparency in Producer-Processor-Retailer Relationships, is based on extensive hearings by the committee on the draft statutory code published by the Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton. It is up to the Minister and the Government to make up their minds on this issue, taking account of the report of the committee, as well as the deliberations in Seanad Éireann.
I commend the joint committee, particularly its Chairman, Deputy Andrew Doyle, on the seven days of hearings it arranged between March and July last which offered the key participants in the grocery sector an open and fair opportunity to set out their position and respond to the considered questions of the committee. I acknowledge the contribution to the committee of Senators Michael Comiskey, Paschal Mooney, Mary Ann O'Brien, Brian Ó Domhnaill, Susan O'Keeffe and Pat O'Neill.
I speak with conviction today as I spent 16 years working for 24 hours a day, seven days a week with the grocery trade in Ireland. I know the trade intimately and am a big admirer of it. The Irish grocery sector impacts on every parish in the country as a source of employment and producer of food products and it impacts on every citizen as a purchaser and consumer. There is an inherent tension between our fellow citizens as suppliers, who are seeking the best price for their produce, and all of us as purchasers, who are seeking the best value and price in our purchases. The recession and the consequent cut in our disposable income have meant that consumers are looking for better value more than ever. A recurring theme from the grocery trade during the hearings was that consumers are strapped for cash and are intent on seeking out the best value. We, as consumers, are putting pressure on the retailers to give us cheaper prices and better value.
It is a recurring theme in Ireland that the multiples and convenience groups are creaming off excess profits and that the grocery sector is not truly competitive. It is hard to argue that the sector is not competitive when we see the impact of the arrival and continued expansion of Lidl and Aldi and their steadily growing market share. Again, the case has been made that average food prices here were considerably higher than the European average, while ignoring the fact that we have the highest minimum wage costs in Europe aside from Luxembourg. We have seen Irish grocery prices which, in 2008, were 37% higher than the EU average drop to 18% higher over a period of two years. The narrowing of prices with our nearest neighbour, the United Kingdom, is even more dramatic. Our grocery prices were 62% higher than those in the UK in 2008, but that differential has dropped dramatically to just 4%. This was the testimony from the Competition Authority at the joint committee's hearings. A drop from 62% to 4% must be put on the radar.
Of course, we all want a fair deal for the supplier, retailer and consumer.
How much State intervention is needed and justified, given the actual fierce competition in the grocery sector and the significant lowering of Ireland's higher prices, by comparison with other European countries? This country is proud to operate an open economy with transparent pro-development laws. One of the benefits of this approach has been a consistent inflow of foreign investment, jobs and exports. As part of his work to promote foreign investment in Ireland, the Minister is seeking to ensure Government actions do not place Ireland at a disadvantage as a welcoming country for investment and enterprise.
I am concerned about the possible implications for Ireland's reputation as a friendly country for foreign investment of the interventionist tone of some aspects of the committee's report. I have particular concerns about the sixth recommendation, which is "that legislation should be introduced to force the publication of profits and turnovers of the large multiples and large processors operating in this country". In page 21 of its report, the committee expresses "serious concerns about the use of own-brand products". Surely it is far too interventionist for legislators to become involved in the marketing strategy of retailers.
The committee's report fairly sets out the arguments presented to it in favour of and opposing the introduction of a statutory or voluntary code of conduct or code of practice for the grocery trade. It ultimately comes down in favour of the introduction of a statutory code in its first recommendation. I have to admit the arguments are finely balanced. However, I have an overriding concern that we should not put our enterprises at a disadvantage by comparison with our EU partners generally. As the Minister of State has said, the preparation of an EU code is at an advanced stage. It will incorporate a set of principles aimed at achieving transparency and equity. Apparently, it is supported by the supplier and representative bodies at European level. Its publication is due shortly. I ask the Minister of State to set out his views on the proposed EU code. Does he think it might be more prudent to align Ireland with the EU code, rather than going it alone?
It is easy to stereotype the convenience store groups and the multiples as baddies that are focused on ripping off all suppliers. I suggest members review the testimony and exchanges of the Musgrave Group, which includes the Centra and SuperValu stores, and of Tesco Ireland at the joint committee on 26 March last. The representatives of the Musgrave Group described how they work proactively and positively to source Irish food. My local Centra retailer, Ms Breda Cahill, has three stores and employs 74 people. She stated frankly at the joint committee meeting that "without our retail partnership with Musgrave, its integrity and the way it does its purchasing, I would not be here today."
At the same meeting, the former CEO and current chairman of Tesco Ireland, Mr. Tony Keohane, described that company's positive programme of engagement with Irish suppliers. He mentioned that Tesco has "400 Irish suppliers", over 70 of which had been engaged in the previous year as part of a proactive programme with Bord Bia programme. He pointed out that Tesco's food exports from its Irish suppliers to its outlets elsewhere are worth approximately €700 million per annum and account for "9% of total Irish food and drink exports". Scores of Irish companies have got started in export markets through Tesco outlets abroad. One of those companies is Lir Chocolates, which would not employ over 200 people in Navan and spend €20 million in the Irish economy if it did not get started by selling to 700 Tesco stores in the United Kingdom. I thank my colleague, Senator Feargal Quinn, who gave us our first opportunity on the Irish market. I also thank Tesco for giving us our first opportunity to export. Connie and myself actually started in the North before going to the United Kingdom.
I draw the Minister of State's attention to the forthcoming forum on revitalising retail, which I will host on 12 December next along with Don Nugent, who is the director of Dundrum Town Centre. The forum will be led by Sir Terry Leahy, who is a former CEO of Tesco plc and is currently a senior adviser at Clayton, Dubilier & Rice. Competition is fierce in the retail trade, which employs 250,000 people in this country. Companies and retailers have to cut prices. We tend to forget that a range of jobs and professions are involved in the retail trade.
I ask the Senator to conclude.
The multiples will be represented at the forum on revitalising retail that I am hosting. Ms Breda Cahill, whom I mentioned, will be at the forum as a small independent retailer. Damien O'Reilly of DIT's school of retail and services management will also be there. The establishment of Lir Chocolates was an eye-opening experience for me. This is very important, a Chathaoirligh.
I know it is, but we have many speakers.
Other than my colleague, Senator Mary Ann O'Brien, very few people in this Chamber are involved in the export trade or deal with retailers. We are familiar with the legacy of what Senator Quinn has done for Ireland and Irish companies. If anybody else has such experience they can talk up, but I do not think there is.
It seems that many Senators are shopkeepers.
I apologise to the Minister of State for having to leave the Chamber now. My colleague, Senator Brian Ó Domhnaill, will be here shortly. I have spoken to the Minister of State privately about these matters. He has said he will get back to me about my query.
I am glad to have an opportunity to speak about the report prepared by the Joint Committee on Agriculture, Food and the Marine. When I was a member of the other House some years ago, I was a member of the Joint Committee on Enterprise, Trade and Employment when it examined this whole area. The document we are discussing contains some quotes from a report drawn up by that committee in 2010, which considered the impact the squeeze from the multiples was having on suppliers. There must be an emphasis on balance in this debate. Consumers must be to the fore. More so than ever, consumers are looking for value for money now. There must be a balance between suppliers, those involved in the chain, consumers and the multiples we are speaking about.
Tesco currently has 26% of the grocery market, which represents a decrease of 2% on the figure from earlier this year. Dunnes Stores has 23% of the market. As we all know, Aldi and Lidl have a combined 14.5% of the market but are consistently increasing their share of it. It appears that as part of its latest drive to attract consumers, Tesco is targeting the Aldi and Lidl sector of the market by offering vouchers. I would not say it is a price war. While this is good news for consumers in the short-term, we must consider its long-term consequences. We have had bread wars and milk wars in the past. We will have such events in the future as individual retailers try to increase their market share by targeting their competitors.
It is interesting how Aldi and Lidl have changed and adapted to the Irish market over the years. When they first came here, many of the products and lines on offer in Aldi and Lidl would not have been recognised by Irish consumers because they were foreign. They have changed and adapted. I constantly read reviews and comparisons of items. Aldi and Lidl consistently seem to do very well, inasmuch as their products get four or five stars. They are opening in every small town and urban area in the country, which shows they have a definite target, and the consumer is responding. I do not think anyone can argue with the voice of the consumer in this debate.
Own brands were mentioned by Senator Mary White and in the report. There was criticism of the fact that own brand products are used and that they are giving more power to the retailers. I would agree with the point made by the Senator. One cannot interfere with what retailers put on their shelves. I know this is just a glancing review but when they give their customers an own brand alternative of which nobody knows the source, these products seem to rate consistently and strongly in surveys of quality and value for money. I know consumers respond to this. I do not know whether I would agree with that aspect of the report. Perhaps many own brands are sourced directly from suppliers in this country. What is being offered to the consumer is clear. I do not know whether the State can impose restrictions on that. I look forward to the debate we will have on the legislation amalgamating the Competition Authority and the National Consumer Agency. This proposed amalgamation has been discussed for quite a long time. It arose originally in an effort to reduce the number of quangos, but it serves a better purpose than that. It will be very important to have the balance between competition, which is very necessary, and consumer rights. Without competition, consumers certainly would suffer.
The Minister of State outlined the value this new body would have, particularly as an alternative to the proposal that there would be an ombudsman. I know they have had set up an ombudsman for this area in the United Kingdom but there is a cost involved in it. We will have this agency that is independent and will regulate the industry. The Minister of State addressed the question of legislating for a code of conduct in this sector, which comes up time and again. I note that he said we are expecting legislation towards the end of this year. I suppose that will be in six weeks time. Perhaps it will be early next year at this stage. That legislation will regulate conduct and the relationship between suppliers and retailers. The content of that legislation will be very important and will probably give us an opportunity to debate this issue further.
Senator Mary White spoke about the fact that costs have come down. It is clear they have come down here. Food prices are 18% above the EU average when they were 34% above it two years ago. I put that down to consumer demand and consumers looking for better value for money. I visit supermarkets regularly and retailers are definitely responding to consumers' demand and concerns regarding the price, not just of individual items but of their grocery basket as a whole, which remains the same for most households 80% to 90% of the time.
The Oireachtas Joint Committee on Jobs, Enterprise and Innovation and the Oireachtas Joint Committee on Agriculture, Food and the Marine were told that the cost of doing business here is high although the cost has come down, and the National Competitiveness Council will tell us on an annual basis how we are improving in that area. I do not think we will get transparency regarding pricing. I think the best way to do it is through consumer demand and awareness. The media plays a very important role in that regard.
The issue of alcohol and minimum pricing is very important and I am glad it has been addressed in the report. I attended a conference on this issue. The figures show that if one can increase the price of alcohol, it will have a direct bearing on consumption, especially among young people. I do not think we can ignore the facts. I know the Minister of State at the Department of Health, Deputy Alex White, has proposed to do something in this area. We are looking to see how the Scottish proposals fare now that they are before the European Commission. It is a no-brainer. We need action and to address this serious issue. Perhaps the Minister of State can look at doing something in respect of loss leaders and retailers reducing the price of alcohol to a ridiculous price where in some cases it is cheaper than water. It is a serious issue that I hope will be driven home by the Government.
I welcome the Minister of State and thank him for coming to the House to debate the report by the Joint Committee on Agriculture, Food and the Marine. There is a very delicate balance in the supply chain between producers, processors, retailers and consumers. We are entering the big bad world of business, yet we are talking about our citizens who are paying tax, have voted us in and are paying for food. If there is any unfairness in that supply chain, this is where we feel we have to get involved but, again, I stress it is a very delicate balance.
Rather than go through the report, which we have all read, I will give a few stories of my own experience in the market. We are a small company with 120 employees. It is easier for me to discuss retailers in the United States than those in Ireland or the United Kingdom because they are not so close to home and I can avoid a conflict of interest. A small food business today that wants actively to supply retailers must have the systems and processes in place to do so. If we go into a meeting with a retailer, we truly need to know in detail what we are about - our pricing, how it is made up and the retailer's pricing, expectations and margins. These things are easy enough to find.
I again salute Bord Bia which helps any Irish producer that needs knowledge or training. Bord Bia goes as far as getting ex-buyers from some of the giant retailers in to train us as well as the buyers have been trained. There is much in place for Irish producers. One thing in the report that I thought was a bit nanny state-ish was the recommendation was that smaller suppliers should have a small amount of legal assistance in dealing with retailers. I am not sure that is necessary because Bord Bia is in place. I started with just myself. I was the only employee and did not have a clue. I had never even seen a retailer. Once again, Senator Feargal Quinn was the first retailer to give me a chance.
She was lucky she met someone so pleasant.
He likes chocolates.
He will be up for sainthood soon - Pope Senator Feargal Quinn. We recently held a very pleasant meeting with a retailer in the US. Beautiful products were presented and the retailer wanted to list them but they also wanted to know how much we were prepared to put forward to support it in its in-house foody advertising magazine. Did we know that four promotions had to be offered and funded by us per year? My product is in on the supermarket shelf of this retailer on the east coast of the US, but let us say there will be 20% off around St. Patrick's Day. I, as the supplier, am funding it. I just wanted to provide a reality check. It is a case of: "Yes, we'll list your product but we want you to contribute to our magazine, we'd like you to list out the promotions and also, by the way, there is a display fee at the seasonal times of the year where we're going to give you special new space in our seasonal fixture and there will be a cost to that." Retailers have ways and means. I am not complaining. I am just trying to let everyone know that this is business. We are used to it and are making good margins and good money but one needs to be strong and resilient. We are living in today's world and it is a tough one.
Coming back to the report, I was lucky enough to be at the seven hearings. I will mention one thing I would like everyone to think about.
I ask Senators to consider a foodstuff that is vital to each and every one of us, that being, milk. Between 1995 and 2011, the price of milk for the consumer increased from 77 cent per litre to €1.11 per litre. For the farmer milking the cows every day, the price decreased from 32.8 cent to 32.5 cent. Even if we take nothing more out of my contribution today than this, it says a great deal. I do not know the percentage differences. Not being an accountant, I am not very good with figures. However, if this is meant to be equity, it does not add up.
The bangers demand that retailers' profits be published, but I listened carefully to the Minister of State's remarks on EU law. We must be grown up and straighten our shoulders. Slightly jokingly, I will ask the Minister of State to explain to the House again how Revenue knows exactly what taxes to collect from retailers if they do not publish their profits or accounts. I am sure he knows the answer. Obviously, there is some way of knowing, but it is not allowably transferable to the entire community of a country. It is an interesting issue, albeit not just in the context of retailers and supermarkets, but also in terms of Starbucks and other large global organisations that have been in the news.
The Minister of State lived in Brussels for a few years. As the globe grows smaller, perhaps more transparency is necessary for each country's version of Revenue. It can be difficult. We all want to know whether a retailer is making more money in Ireland than it is in the United Kingdom. We do not want to know its business, only whether the prices paid by Irish consumers are unfair. I am not trying to beat the retailer.
On the matter of increasing equity and transparency, was there equity in terms of milk? I do not believe so. I respect that I am a European and that we must have fair trade under EU law, but transparency does not come to mind. Perhaps we need to examine EU law.
I welcome the committee's recommendation on strong local links. In particular, the Musgrave Group made a fantastic submission to us. Speaking as someone deeply embedded in the local artisan food market, SuperValu has sought to help locals, but so has Tesco. Aldi and Lidl are clever, and thankfully so, as they are engaging locally and trying to help people. We cannot beat them down for doing this.
I was worried when I heard that an ombudsman would need to be created, in that it would require more money. At our hearings, retailers stated that costs would travel down the food chain. This sounds like an incredibly business-like approach to amalgamating the two bodies and installing the ombudsman beneath that level.
The Senator should conclude.
I will make a final point, after which I promise I will sit down. The dreadful horsemeat scandal occurred at the beginning of the year. Regardless of whether one likes my opinion, I could feel the pain. We will never get to the bottom of the situation. When retailers are under pressure to produce ever more cheaply, for example, when footfall demands the cheapest burgers, that pressure will collapse on the supplier. Look at what happened.
I agree with Senator Deirdre Clune on alcohol as a creator of footfall. Regardless of whether we like it, cheap prices are presented in giant adverts in Sunday newspapers to get people to walk into shops. Alcohol must not be continued to be used as a way of creating footfall.
I welcome the Minister of State. While we are awaiting some figures, research that has already been conducted, particularly from the University of Sheffield's alcohol research group, clearly showed that a policy of minimum pricing or price controls led to fewer deaths and hospital admissions. There is a price tag on both. We all agree that we need to tackle prices. We just have to work out precisely how to go about it, and the sooner the better. We in this country have a cultural and emotional relationship with alcohol that will cause difficulties for anyone trying to impose new rules.
I will turn to this report and the proposed legislation. I am a member of the committee and, for us, one of two key elements is the facilitation of retailers that are independent of the multiple chains to compete on a fair and equal basis with their larger competitors. Surely this is at the heart of everything we are trying to achieve. The second element is the prevention of discriminatory practices by brand holders that are large monopoly or duopoly suppliers, as these might prevent independent retailers from getting foods on competitive terms for their customers. In addition, we want to protect jobs in the farming community. This is an important factor, given the fact that 40% of people live in rural communities. We also want to protect jobs in the valuable retail sector, where thousands of jobs have been lost and thousands more are employed. We do not want to lose sight of what we are trying to achieve, namely, some level of equality.
As Senator Mary Ann O'Brien stated, it is a tough old world out there if one is in business. If one is balancing everything fairly well, one is hopefully making some money. One encounters such expenses as needing to pay for a brochure or publicity, but that comes part and parcel with the market in question. The Senator was not complaining about it, merely observing its existence. I welcome the statutory code suggested in the report. I am always disappointed that this debate about codes always seems to go one way. One side claims that it will cost money, make businesses less competitive and be impossible for them while the other side claims that, without it, businesses cannot compete. It seems to be a laborious statement of the position over a long period. I would have expected there to be a benefit for the retail sector in being subject to proper standards under a good code.
The Senator mentioned horsemeat. Clearly, problems arise when there is not enough regulation of the food chain and price drives everything. I would love to know what went on behind the doors of some of the larger retailers in terms of what they said, did and knew about the cost of the burgers they were selling on their shelves. Surely be to goodness they knew that one could not make an edible burger from good meat for 8 cent. It is not possible. Evidently, someone knew something, but we have not got to the bottom of that situation. A statutory code to ensure equality between smaller and larger retailers is not before time.
The Senator also referred to the price of milk and the return to farmers. This major issue arose at the agriculture committee. The fear is that we will eventually reach a point at which no milk is produced. For the chocolate makers among us, this would be a serious problem. It is okay for me, as I might be able to give up milk in my tea, but it might not be okay for the Senators. There is a serious problem with milk supply. Perhaps we do not-----
Do not forget the cocoa market.
No. We must take into account the fact that the price paid to farmers is not great.
The committee's report refers to the own brand problem. I say "problem" because problems have arisen from the widespread use of own brands. I am old enough to remember when there were no own brand products. When they began to be introduced, people were circumspect about them until they embraced them greatly. When one company appeared before the committee, it was clear that most of its business came from own brand products.
I do not know whose responsibility that is.
How can the Minister of State intervene in the market place? How can the Government decide a business can only have 10% of own brand products?. I do not think that is possible. If we live in a market environment driven by the market that is the price we pay, yet, on the other hand, there is clearly a difficulty with the own brand product undercutting the branded product and being used to drive business by cutting the price of milk this week or the price of bread the following week. That is a question that any code may have to consider. I do not have the answer but it is a very big part of the mix of retailing in modern Ireland and in all countries. Own brands have been with us now for a while. They are very well developed and sophisticated. The notion that they are some kind of yellow pack goods is long gone.
The report stated that no code could be implemented nor should it be. This will not be without taking into account what is happening in Europe. It is interesting to see that the voluntary code introduced in Europe turned out to be very voluntary - if such a thing could be so described - with very few people thus far signing up to it. The decision to have a statutory code here is welcome. Voluntary codes always have those difficulties. It is a question of how to align our proposed code with the European codes and regulations.
On the question of whether the role of ombudsman should be carried out by the National Consumer Agency, I wonder how many questions have been asked in the United Kingdom of the decision there to set up an ombudsman. No more than anyone else the United Kingdom is not looking to spend money either. I wonder why the option was for an ombudsman. Was it thought that placing it under another structure would dilute the power and give a statutory code in name only but without teeth? While I accept there are always some reservations about an ombudsman because of the cost, the idea of an ombudsman would send a very clear signal that the Government is serious about this piece of legislation. What do we know of the UK decision to set up such an ombudsman, where it has been decided that it is not that expensive to establish one?
The former Senator, Deputy Shane Ross, told us one time that he got a box of chocolates from Senator Mary White. I presume Senator Fearjgal Quinn got a few boxes of chocolates in his time.
In my first year in this House, on St. Valentine's Day I brought in a special kind of apple for each of the ladies in the Seanad and I was very strictly ticked off for gender discrimination. I think it was called a love apple.
I welcome the Minister of State. I am very honoured that both Senator Mary White and Senator Mary Ann O'Brien had nice things to say about me. Like the Minister of State in his contribution, I will concentrate on the question of whether the code should be voluntary or statutory. I have a concern about every time the Government decides - no matter which government - to interfere usually on behalf of a vested interest. As Senator Susan O'Keeffe said, the vested interest could be the independent traders or it could be those who have a view on private labelling, such as the branded products who do not want private labelling. The market place decides this is what happens. We operate in a market place in which many thousands of individual decisions are made. The customers make a choice whether they will go to this shop, whether they will drive past that shop and perhaps go to another town, go to German-owned shop or British-owned shop or a local shop. These are thousands of individual decisions. One of my reasons for being concerned about a statutory code of practice that is geared at Ireland only, is that it will be very difficult to enforce. One may wish to find out how much a company paid or, as Senator Mary Ann O'Brien said about the American company, whether they ask a retailer to contribute to its marketing. This would probably be illegal now in this situation. How can this be investigated if one company's headquarters are in Herefordshire - Tesco - or another's is in Dusseldorf or in Frankfurt? Such legislation will only impinge on the Irish-based retailer or multiple. Musgrave or Dunnes Stores are told we are going to pass a law which will only apply to them because we cannot enforce it with companies whose headquarters are based elsewhere. We would be the only country in the world that would do this.
I refer to those countries that have interfered in the trade. I am not familiar with the current situation but some years ago in Holland the trade managed to say that a shop could not be opened without a licence and only one shop in each street will be licensed, for example. This was done to protect the existing retailers. That could not be in the public interest. Most countries allow competition and the customer will decide where to shop. In 1988 I went to Leningrad and I asked to see a supermarket. Through an interpreter I asked the supermarket manager how many customers he had, assuming that he would not know. He replied that the supermarket had 6,800 customers. I said that was very impressive because the way we counted our customers was by means of the electronic check-outs. I asked him how he had estimated that figure. He explained it was the number of people in this town. I questioned the fact that they would all shop in the same shop but he assured me that they did and if it was a bigger town they would have a bigger shop. The state decided on the size of the shop. On a subsequent visit to St. Petersburg I saw what happened when the market place changed. The consumers rather than the state now made the marketing decisions. We must ensure we do not interfere very much and only where it is necessary.
I am wary of anything that has the potential to increase prices for consumers. That is my particular concern with regard to the introduction of a statutory code of conduct. It may put more costs onto retailers and therefore these will be passed on to customers. It is dangerous to introduce such a measure against the backdrop of a very depressed sector. As the report states, the retail sector employs a huge number of people. I am wary of the costs to business and the job losses that may result. I refer to the arguments made by Retail Ireland on the possibility of introducing a code of conduct in the grocery goods sector. That body made the very valid point that the Competition Authority has already stated that the retail sector is competitive. I know from my own experience as a retailer that it is an extremely competitive sector where one cannot stand still for a minute. I had to make sure that customers came into my shop instead of to my competitor down the street. That meant giving them the right product at the right price at the right time. We had to innovate to do that. That is why I do not understand how any vested interest such as the State, would say it wanted to discuss whether there should be private labelling or not; that is a decision for the individual customer.
EuroCommerce is the Brussels-based representative body for the 6 million retail and trading companies in the European Union. I was chairman of that body for three years and vice chairman for another three years. According to EuroCommerce, unlike other operators in the chain, retailers are under constant pressure from consumers who at all times vote with their feet for their favourite shops and they delegate their bargaining power to retailers. As a result, efficiency gains made by retailers are usually directly passed on to consumers. This translates into relatively small profit margins as compared to other operators in the supply chain they only make 2% to 3% on average. The suppliers and the manufacturers mainly make figures that are multiples of that amount.
This is amazing to consider although it is something of which I am well aware. On top of that, there is a wide variety of European Union and national legislation in the area. To take one example, Retail Ireland has highlighted the Competition Act 2002, which it states "already prohibits or prevents the compelling or coercing of payment or allowances for the advertising or display of goods". In other words, we already are in a position whereby that which Senator Mary Ann O'Brien stated took place in America could not happen. I do not actually understand this as I believe the retailer has the right to decide that it wants the lowest price, regardless of whether the lowest price is coming that way. However, we have passed some of these regulations.
Given the cross-border nature of retail, I have a slight concern that were Ireland to go it alone in this regard, we would be making ourselves less competitive. Our European Union neighbours would not have the cost burden of complying with a code of conduct while Irish retailers would have the associated costs. EuroCommerce describes this dilemma as follows:
Trading relations are very complex [but] there are huge differences across [EU] Member States. This means how they are regulated needs to be different; the perceptions of what is fair and unfair may be different; and indeed the rules need to be related to these different trading patterns, perceptions and priorities.
This complex area and the effect of globalisation must be stressed in this debate. Ireland going it alone with a statutory code of conduct may not be the best idea at present. Consequently, I urge members to reconsider the question of whether to have a statutory code. When Australia introduced a voluntary code, the authorities there indicated that unless it was made to work, they would then introduce a statutory code. This probably is the way to go, namely, to have a big stick but to talk softly. One should set out a voluntary code and tell people to make it work as otherwise one may be obliged to do something else about it.
It is always good to hear the expert, Senator Feargal Quinn. I welcome the Minister of State to the House and thank him for all his usual courtesy and kindness, as well as for his overview of the position. He did not say a single word with which I could disagree. I compliment Deputy Andrew Doyle, Chairman of the joint committee that has produced this report. I agree with him that the farming and food sectors play a huge role in the Irish economy, having particular regard for rural communities. The Irish food and grocery market is a massive player in the economy with a total estimated worth of €7.1 billion in 2011. It is important to bring forward a statutory code to address the imbalance of power in the supermarket-supplier-producer relationship. The report is all about equity and transparency in the producer-processor-retailer relationship, which is vital. The statutory code of conduct is supported by the Irish Farmers Association, RGDATA, which is my nominating body on the Industrial and Commercial Panel, and Food and Drinks Industry Ireland. I am glad the report recommends that small to medium-sized enterprises, SMEs, should be given support regarding any costs that may arise from a statutory code as in many cases, SMEs would not have the resources to deal with such legal issues.
A proposed code of conduct in the grocery goods sector is important in dealing with pricing and the impact on primary and secondary suppliers, support for local produce and labelling. As the Minister of State noted, ensuring a balance in the relationship between the various players in the grocery goods area is extremely important to everyone. Moreover, I accept that voluntary codes do not work. There has been huge strain in the relationship between suppliers and retailers. In previous Parliaments, when I was a member of the Joint Committee on Enterprise and Small Business, I had a lot to do with this issue and was a rapporteur a few times. In the committee's hearings, members found that large multiples had a huge dominance and unfair advantage over suppliers and in the agricultural area in particular, I can remember this with regard to vegetables and other products. In fairness to Senator Feargal Quinn, he probably was very honourable because I do not think his firm was mentioned but other large multiples certainly were. I will not go into that today.
I welcome the Government's intention to introduce a consumer protection and competition Bill, which I consider to be vital, to provide for the amalgamation of the Competition Authority and the National Consumer Agency and the implementation of the recommendations of the advisory group on media mergers and amendments to promote competition and consumer legislation, as well as the statutory regulation of a practice that should have been introduced. Although not finalised, as the Minister of State noted it is likely these will take the form of a series of regulations with associated sanctions, rather than a code of conduct. I agree wholeheartedly and this of course links in with the main recommendations of the joint committee, which did very valuable work.
I agree strongly with a point made by Senator Mary Ann O'Brien and my friend, Senator Deirdre Clune, as I believe do all Members, on minimum prices for alcohol. The use of alcohol as a loss leader must be stamped out. I am delighted the Minister for Health is so conscious and aware of the issue of the misuse of alcohol and understand he intends to take further steps in this regard. I concur fully with the previous speakers on this subject.
I welcome the Minister of State and like other speakers, I agreed with pretty well everything he said. When considering consumer protection in Ireland, some things about which Members were talking last night, such as the unproductive sectors, the sheltered sectors, services and so on obviously come to mind but I welcome the degree of competition in the retail sector. Data from the United Kingdom show that in the immediate post-war period, it took 30% of a family's budget to feed itself but that figure now is down to approximately 9%. This is an illustration of a competitive sector in operation. Sometimes, this will appeal to the consumers and I believe it mostly does. As Senator Deirdre Clune noted, as there is a strong wish for price competition, this kind of performance will attract business. Moreover, it annoys the suppliers and in this context, I think of one of our leading persons who has done this in producing a leading European brand and in building up an airline with 81 million passengers, namely, our friend and now the friend of the Taoiseach, Mr. O'Leary. He first achieved the highest productivity of any airline and the food industry always will be under pressure to increase its productivity. Second, he took on the suppliers by getting a 40% discount from Boeing, and while there is not an airport with which he has not had a row, the purpose is to reduce the price. Travel agents were eliminated altogether because it could be done more cheaply on the Internet and his was the first airline to dispense with the services of travel agents.
This is what happens and, to paraphrase Adam Smith, bread appears in the shops not because a bunch of philanthropists got together but because of the blowtorch of competition. As Senator Feargal Quinn has noted, the reason one innovates is because otherwise the business will be gone. Pre-Gorbachev retailing was described by Senator Quinn well and I applaud Mr. Gorbachev. I believe Trinity College Dublin gave him an honorary degree, although it may not have been for changing Russian retailing as I believe he also had some other claims to fame.
In this regard, however, the task for the Minister is that incumbents will always seek a way to keep out new entrants and will invent various reasons the competition is unfair and so on. In the research, most of these reasons do not stand up to scrutiny and there are ways in which producers can respond. I am delighted that a list produced by Bord Bia indicates there are 141 farmers' markets. Consequently, if one does not like Feargal Quinn or Hugh Mackeown in Musgrave Group and so on, there are 141 ways in which to deal with that. In considering the Members who are present, I note there are 23 such markets in County Cork, 19 in County Dublin and 14 in County Kerry - I believe Senator Paul Coghlan has left to go to one of them.
One also has the alternative used in the past if it was believed that merchants, intermediaries and retailers were getting too powerful, namely, the co-operative movement. The Minister of State hails from the Blackwater Valley, which is one of the centres of it. It has 150,000 members and a €12 billion turnover. There are alternatives that people should consider rather than grumbling about Tesco, Aldi or Lidl. That is the way the economy operates.
I support the decision not to appoint an ombudsman. The fear one has of bureaucracy is that people invent things to do - the so-called regulatory creep problem. We would be presenting a problem for the Minister's successor, namely, to abolish the position in the future. I commend the amalgamation of the Competition Authority and the National Consumer Agency. Where markets can do something, there is no need for bureaucracy also.
The Minister of State said that the Government, through its programme for Government commitment, will not legislate for a voluntary code of conduct. That is quite right as a voluntary code of conduct is not legislation, unless one would like to legislate for a voluntary income tax. There is an internal contradiction built in there which I am sure the Minister of State has diagnosed himself.
It will be very difficult to prove the loss leader situation. How come people allegedly selling things at a loss are profitable? I disagree with all of the complaints about the alcohol business. Alcohol consumption in Ireland is falling. Those applying the pressure for minimum pricing are the pubs, which are losing market share. How can one say to somebody who would like to sell one something for a certain amount that one insists one pays them twice as much? Consumption is falling and the younger generation is more responsible in its use of alcohol than my generation. It has become kind of a cause and I have grown rather tired of listening to people in the background say that the price of a bottle of champagne for the economic consultant should remain the same but the price of cider for the working class should be increased because they believe the working class is drinking too much cider. There is a patronising air about that argument in the context of falling consumption and I do not think Government intervention is required. Between now and next year, I hope to persuade the Minister of State at the Department of Health, Deputy Alex White, not to intervene. It also goes against European Court of Justice decisions. I thank the Minister of State and the Acting Chairman, Senator Pat O'Neill, for his forbearance.
I welcome the Minister of State. As this report is outside my work area, it is great we can have this debate and that I can get an opportunity to hear my colleagues who have been able to provide such expertise in the drafting of the report. I thank my colleagues on the Oireachtas Joint Committee on Agriculture, Food and the Marine, namely, Senators Michael Comiskey, Paschal Mooney, Mary Ann O'Brien, Brian Ó Domhnaill, Susan O'Keeffe and Pat O'Neill. I join in the thanks and commendations to Deputy Andrew Doyle who chairs that committee and who brought all members together. Reading the transcripts of the debates and the report, the committee produced a final report endorsed by all.
I am part of a group which includes Senator Mary Ann O'Brien who has yet again proved her expertise in her area and demonstrated that balanced approach. I am speaking only as a consumer but we are able to have the full package as others are able to speak about different areas.
I would like to speak about a few issues concerning the recommendations contained in the report. Some of the issues were contained a Private Members' Bill entitled the Food (Fair Trade and Information) Bill 2009, but this report goes further than that. We have heard in this debate about the importance of the food sector to the economy from the perspective of the number of people employed in the industry and our ability to continue to grow exports, which is critical now but also in the years ahead. We want to ensure we continue to have that growth, but we need to look at the recommendations in the report.
It is fair to say this report seeks to address one of the main issues in the sector which is the dominance of some of the large retailers in the grocery sector. This is the elephant in the room that we are discussing today. It is an issue we need to tackle head on. There are many positives but we also need to look at some of the negative consequences and find the way forward.
I appreciate and understand that perhaps we have to look to the European Union and at an all-island approach, but will we be followers or will we take the initiative and a leadership role and say what we need to do, how we protect the consumer and the producers and that what lands on our tables is good quality food? As everybody wants to achieve this, how do we do it?
I refer to the example Senator Mary Ann O'Brien gave us about the disparity in milk prices. I have no doubt that if we were to drill down, we would find many other examples. That raises the question as to who is winning here. It is not the producers or the consumers. There needs to be a way where, to an extent, everybody can win and where nobody has the monopoly of winning the game every time.
I very much welcome the committee's recommendation to amalgamate, under the consumer and competition Bill, the Competition Authority and the National Consumer Agency, which has been mooted for some time. I am glad that will come to fruition because to me, as an outsider, it makes sense. The directors of the authority and the agency have been planning for this and I am glad this process can get under way formally when the legislation is enacted. That move will benefit the consumer in the long term.
Many Members spoke about profits and gave different perspectives, which is very healthy. Sometimes there is deliberate confusion in terms of people having to give their margins. Giving the profits of a company does not give one the individual price sensitivity of a margin. We need to be very careful. We expect small companies and retailers to disclose their profits and yet we are saying that large multiples can, in effect, hide them. In the United Kingdom, some major companies which have not paid their tax have been exposed. I want to know how we can be assured that Ireland gets its fair slice of the tax take for these companies. Do we connect up with the United Kingdom, Belgium and France to check if we are getting our fair share or do we rely on the companies to tell us what they are getting with no checks and balances? We have to go further on that issue and I do not accept the lobby from the large multiples on it.
We could have a big discussion on alcohol. I do not agree with Senator Sean D. Barrett. We need to get serious. There is legislation in place which needs to be commenced on separating the sale of alcohol from other grocery goods. At the very least, we should commence that. We do not have to wait to discuss it or draft it.
This has been an excellent debate on this complex issue which requires and deserves thought and debate. I thank all my colleagues on the Oireachtas Joint Committee on Agriculture, Food and the Marine, in particular those involved in the drafting of the report, including Senator Mary Ann O'Brien, on the work that went into it. The report cannot be left sitting on the shelf; it must be dealt with and implemented.
There are a number of areas, in particular in the food supply chain, which are under threat. If protections are not built in, some products will not be available to consumers in Ireland in ten years time. Milk is one of those products.
I fully appreciate the retail sector's reluctance to go down the road of a code of conduct, an ombudsman, etc. I also appreciate the retail sector in Ireland has lost 50,000 jobs over the past five or six years and that it is the largest employer, with 250,000 people working in it. It is a profitable sector because the retail price of food in a supermarket in the Republic of Ireland is, on average, 18% above the EU average.
As stated by Senator Jillian van Turnhout and others, most of the multiples do not disclose the percentage of profit they make in Ireland. It is all thrown into the one pot, so to speak, and an annual worldwide figure is given. That is wrong. The European legislation the Minister quoted must be re-examined. The Council of Ministers must examine this issue to determine if there is a way to allow member states to force multiples who operate within their area to publish the profits they make within that state based on the expenditure of the taxpayers who buy products in their stores. I am sure there is a way of doing that.
This is all about the supplier, the small producer, getting into the big game and supplying the likes of Tesco, Dunnes Stores, Aldi and Lidl. The majority of retail sales in Ireland are in the small country shop or grocer but we have all heard the stories about them being driven out of business due to the huge buying power of the multinationals and that comes with added benefits for the consumer. We must recognise that because it has brought about competition in the retail grocery sector, which must be welcomed, but issues arise in that regard.
I am fully supportive of a statutory code of conduct. It is the only way to give protection to the retailer and to the consumer but also to have checks and balances in place for the retailer, the producer and the middle man. I fully support the role of an ombudsman. There would be a cost but the cost in England was £5 million. With the economies of scale the figure would be much less here, but that is only 1 p per person for their weekly shop. We have to put this in context, and the retail sector must bear some of the cost.
On the continuing issue of so-called hello money, although the Competition (Amendment) Act 2006 was to deal with that, it has not. I have spoken to small producers who are still being told by major retailers that if they want the prominent position in the supermarket, they must pay hello or "coerce" money. That issue is not being dealt with because the small producer is afraid that if they report it to the competition ombudsman or the consumer agency, they will lose the contract with the supplier.
I agree with everything that has been said about the milk issue. There is a crisis within the liquid milk supply chain in this country. There is liquid milk and creamery milk. The liquid milk is the milk we drink year round, whether it is January or the middle of July, and there is additional cost because it is a year round production. Thirty-two per cent of the liquid milk suppliers have left the industry in the past ten years according to the National Milk Agency report of 2012. The farmer's share of the retail price has dropped over that ten years from 43% to 32%. While the retail price increases, therefore, the farmer's share, as referred to by Senator Mary Ann O'Brien, has dropped. Liquid milk producers are now producing milk at 7 cent per litre below the cost of production. That cannot continue. There are only 2,150 liquid milk producers in the State. If this issue is not dealt with, in five or ten years time, we will all be buying the UHT packets to provide the milk for our cereals, tea and coffee and to drink. That is something none of us wants to contemplate and unless this issue is dealt with on a statutory basis, we will no longer have the carton of milk available to us.
Some expert and informed Members have contributed and I listened with particular interest to Senator Mary Ann O'Brien and my colleague, Senator Feargal Quinn. I should not name names but they have been in business and have a good deal to say to which we must listen carefully.
I want to make three points, one of which is about profits. I support scrutiny of profits of multiples in particular. I have mentioned Tesco previously. The margin Tesco gains on sales in its Irish operations rose in 2010 and 2011 to 7.2% while at the same time the margin across Tesco worldwide was less than 6%. Even at a time of recession in Ireland, Tesco was pulling more cash out of its Irish stores than anywhere else, and one of its executives in England referred to Ireland as "treasure island" for Tesco.
Second, it would be impossible to leave out the issue of labelling on a day when the Irish Farmers Association has revealed that various brands, which it has named, have been confusing consumers by using Irish labels that suggest they are using Irish pigmeat when the results from its DNA survey showed there is a mixture and that 52% of products are not Irish. I say that as a consumer who looks for Irish products when I go into a supermarket. I feel reassured, for example, when I see Glensallagh product in Lidl that I am buying an Irish product, only to I discover that I am not.
Senator Feargal Quinn spoke eloquently about the free market, and he is right, but the free market can only operate where all actors have full information on all available choices. Where there are subtle psychological tricks or deals being done behind the scenes which push Irish suppliers off the shelves because of the "hello" money referred to by Senator Brian Ó Domhnaill, the least we must ensure is that people know what is going on. At an IFA meeting in Mullingar last night, a farmer made a throwaway comment but we all knew what he was talking about. He said the minute one complains to the retailer, one is gone. That is the fear. That fear has to be addressed and the only way it can be addressed, while fully respecting the free market idea, is by providing information to people about everything that is going on. That is why I support the motion.
I call the Minister of State, Deputy Sean Sherlock, who has five minutes. I know he has a lot to sum up in five minutes.
Milk, chocolate, wine and roses, Pink Lady chocolates - where do I start?
That is ten seconds gone.
I have to declare an interest. I have tasted Senator Mary White's chocolates and recently took receipt of two wonderful boxes of Senator Mary Ann O'Brien's chocolates-----
One for everyone in the audience.
-----and they were fantastic. I will go through the issues very quickly. Regulations will be based on the draft code published by the Minster in 2011. The main issue for competition in the grocery goods sector is entry into the market. In this context, the retail planning guidelines were one of the main issues identified. That is from an earlier contribution. There is a commitment in An Action Plan for Jobs to examine consumer price issues. A report on that will be issued by Forfás in the coming months which will examine the reason price levels are so high in certain areas within the market.
The EU measures were a voluntary set of principles, not a code. They were adopted in September 2013. There are many players in the chain who have not signed up to those principles, which are similar to those behind the draft code published by the Minister in 2011. If a retailer or a supplier is not engaged in any prohibitive practice, they will have nothing to fear from the new regulations.
The issue of dominance in the market came up in the debate. Dominance in the market is not illegal but an abuse of that dominance is illegal.
I listened carefully to Senators Feargal Quinn and Mary Ann O'Brien on the issue of hello money and the subtle practices around trying to get a product placed on the shelves. We all appreciate that there are well established practices one engages in when one tries to get a product onto the shelf, but the Competition (Amendment) Act 2006 prohibits hello money being demanded. Natural justice demands, however, that defendants hear from their accusers. I am a former Labour Party spokesperson on agriculture and have dealt with the issues of hello money and sharp practices, but we appear to have a culture here where people are unwilling to challenge the type of paradigm that exists regarding pressures put on by certain multiples. If it is happening, somebody should come forward. There is legislation to deal with the issue but until somebody comes forward, what do we do? That is a rhetorical question.
That explains the issue of profits in respect of some of the large multiples to which the Senator referred. It is well known that some large retailers are private companies and are not covered by some company law requirements.
When I was spokesperson on agriculture, I regularly met the IFA which always states it is a price-taker. The IFA is the most powerful lobby in this country and I have always failed to understand how it is a price-taker. I have told the current and previous presidents of the IFA and others across the spectrum that I do not understand why the most powerful lobby in this country is a price-taker for the purposes of its interaction. I understand what happens inside the farm gate and the relationship with a co-op and we do not know what the dynamic of the market will be after 2015. As a personal opinion, I imagine that price levels will rise on the global market and will then stream off but I imagine there will be arrangements by which milk producers will strike a price with their individual co-ops to achieve stability within the price ranges for a guaranteed period. I am not on top of that matter as we speak but I take the point made about milk. I pay tribute to Deputy Andrew Doyle, Chairman of the Oireachtas Joint Committee on Agriculture, Food and the Marine because the committee's recommendation No. 9, which is very interesting, speaks to an all-Ireland market for contracted winter milk and that should be encouraged. The Minister for Agriculture, Food and the Marine, Deputy Simon Coveney, should take that on board.
As there is legislation pending in this area my officials who are here and I will take on board the points made today, and the issues pertaining to agriculture and the food sector will be conveyed to the Minister. I hope I have interpreted correctly Senator Mary Ann O'Brien's point about the nanny state. I agree with the point. The retail sector is robust and if one has a good product it will make it onto the shelf but there is a subtlety about how that happens and how high up or low down the product will be. There is no sharp practice there. We all understand that but we have to distinguish between that practice, which is inherent to the retail trade, and hello money.
I have not even begun to address all of the Senators' points. In the United Kingdom only one adjudicator was appointed. There are no full-time staff, the staff are sent in as required. The estimated cost was €5 million and I understand the point made about that but we propose including the role within the new NCA competition area and there will be a suite of resources available to enforce the role as required. On the issue of enforceability abroad, this applies to all member states that have codes or regulations. This is one of the issues raised in the EU Green Paper which the Commission is considering. It remains to be seen how that will emerge because I understand that it would not be part of the co-decision procedure but will be a function of whether member states take it on board. We have to acknowledge that there are two opposing lobbies within some of the employer and business representative organisations, to which members pay subscriptions.
There is no specific recommendation on own brands, but I hail from a town that was once the bastion of the Irish sugar industry and during my college years I worked in Irish Sugar. I recall one day taking off the Irish Sugar label, placing it on the ground and putting on another own-brand label. The price differential was 10p at the time. Two packets of the same product sit beside each other in the same shop. Is that a consumer issue? Is it a marketing issue? Is it a question of the psychology of markets? If I buy a packet of SuperValu tea it is as good as some of the other brands that are synonymous with Cork. Does that come off the same line? I do not know. As a consumer, I am conscious of it, that is the point I am making. Consumers are very intelligent about their choices and we have to allow for that dynamic and not necessarily legislate for it. That is a personal opinion but we will see what the legislation will bring.
I thank the Minister of State for his contribution. I cannot let Senator Deirdre Clune in to reply to the Minister of State's last point.
Question put and agreed to.
Sitting suspended at 4.35 p.m. and resumed at 6.30 p.m.