SELECT COMMITTEE ON ENTERPRISE AND SMALL BUSINESS díospóireacht -
Tuesday, 21 Feb 2006

Competition (Amendment) Bill 2005: Committee Stage.

Chairman

I welcome members and remind them and visitors to ensure that their mobile telephones are switched off. Today's meeting has been convened for the purpose of considering the Competition (Amendment) Bill 2005. I welcome the Minister for Enterprise, Trade and Employment, Deputy Martin, and his officials. It is proposed that we consider the Bill from now until 4.15 p.m., when we will suspend for the Order of Business. Consideration of the Bill will resume at 5.30 p.m. until 7 p.m, if not concluded earlier. Is that agreed? Agreed.

SECTION 1.

Chairman

Amendments Nos. 1 and 2 are related and may be discussed together by agreement.

Mr. Hogan

I move amendment No. 1:

In page 3, to delete lines 25 to 27 and substitute the following:

"‘grocery goods' means any household necessary, or food or drink for human consumption, that is intended to be sold as groceries, and includes—".

I have tabled these amendments because the definition in the Bill of grocery goods and household necessaries differs from that in the groceries order. I would like to know the reason the scope of the definitions is restricted in this legislation vis-à-vis the groceries order. The Minister did not give an explanation on Second Stage in respect of the rationale behind the application of these measures to fewer categories of grocery goods than applies in the groceries order. I would like to hear his explanation in that regard.

Minister for Enterprise, Trade and Employment (Mr. Martin)

The amendments propose to widen the scope of the products covered by the Bill to include any "household necessary". In some instances, that term goes beyond what was contained in the groceries order. This issue was discussed at some length in the course of preparations on the Bill. I understand that it was referred to on Second Stage, although I stand to be corrected in that regard.

The reason household necessaries or any household necessary were excluded was because the definition as contained in the groceries order was proving extremely problematic. Members will be aware of the High Court decision on disposable nappies which added to the uncertainty about what products were or were not included. In fact, I posed the question as to whether disposable nappies would be included in the term as defined in amendment No. 2. I do not think the House can answer that question with any certainty. This would be likely to change as the range of products typically available and sold in grocery stores increases. For example, some grocery stores are now selling televisions, clothes, hardware and so on. The nature of grocery stores is changing. Many large grocery stores are now part of much larger department stores.

Sometimes products sold in a grocery department are also sold in a homeware department. While I appreciate the efforts made in amendment No. 2 to ring-fence the definition of a "household necessary", I remain concerned that its inclusion could create difficulties in interpretation and enforcement. It might also have the effect of extending the provisions of the Bill beyond the traditional groceries trade. For example, would any household necessary be covered when sold in stores other than grocery stores? If so, it would have implications for the term "grocery retailer" as used in amendment No. 2. Certainty is a key requirement in ensuring compliance guaranteeing enforcement and no interest will be covered by creating doubt and giving rise to court debate in future as to which products are covered and which are not.

There is merit in confining the definition to food and drink because these categories cover the bulk of products sold in conventional groceries stores. According to some estimates, 60% to 65% of products sold even in the largest supermarkets is made up of food and drink and this can increase to as much as 75% when individual products are weighted by sales value. Some grocery stores stocking 30,000 to 40,000 products earn the bulk of their income from perhaps 100 product lines, mostly food and drink. I remind the committee that I have increased the coverage of food and drink beyond what is provided for in the groceries order by extending the provisions to cover fresh produce. Fresh produce was originally excluded from the order on foot of the ban on selling at below net invoice price, the logic being that because of the perishable nature of produce, retailers should be allowed to sell it at whatever price they could get before it became unsaleable. However, as there is no longer a ban on selling below cost, there is no longer a logic in excluding fresh produce.

For the principal reason of the introduction of uncertainty, I am not predisposed to accept the amendment.

Mr. Hogan

I would have expected the Minister to have studied the High Court decision of Ms Justice Finlay Geoghegan in the Dunnes Stores nappies case and, therefore, to have included the definition that arose on foot of her judgment. The latter would provide certainty in law as to what we should include in the legislation. Will the Minister indicate the goods that were covered in the groceries order and those that will not be covered on foot of its abolition and in the definitions of "household necessaries" and "grocery goods".

Mr. Martin

That is the very point. There was no legal certainty under the existing groceries order.

Mr. Hogan

What about the decision of Ms Justice Finlay Geoghegan?

Mr. Martin

With respect to the judge, there were no legal certainties.

Mr. Hogan

She is a judge of the High Court.

Mr. Martin

That is a High Court case, which can be appealed to the Supreme Court, and it related to nappies. It could be something else next week. In any event, disposable nappies should not be included in the groceries order because it is overly restrictive to broaden the scope.

Mr. Hogan

Is the Minister satisfied that he is taking account of the High Court decision in the definition of "household necessaries"?

Mr. Martin

We are excluding household necessaries and confining the legislation to food and drink. It is a sensible approach to achieving legal certainty.

Mr. Hogan

I want to know if there is any removal of uncertainty regarding the definition in the context of the High Court case that laid down a particular view, which is not the Minister's view. One cannot second guess the courts.

Mr. Martin

I have no intention of second guessing the courts. That journey was not completed.

Mr. Hogan

What does the Minister mean?

Mr. Martin

Ultimately, the Supreme Court arbitrates.

Mr. Hogan

The case is not being appealed.

Mr. Martin

I know but there is an absence of legal certainty from our perspective.

Chairman

I presume the Minister is referring to 30,000 to 40,000 items per store. On the basis of the evidence they gave to us, that does not include Lidl or Aldi. It is large stores carrying approximately 40,000 items.

Amendment, by leave, withdrawn.

Amendment No. 2 not moved.

Chairman

Amendments Nos. 3, 9 and 16 are related and may be discussed together by agreement.

Mr. Howlin

I move amendment No. 3:

In page 4, between lines 33 and 34, to insert the following:

"(6) A person who contravenes section 15B shall be guilty of an offence and shall be liable to the penalties provided by this Act for breach of sections 4 and 5.".

I have tried to confine my few amendments to the most significant issues arising in the Bill. While the legislation is neither long nor complicated, its scope is broad and there are serious issues which stand to be addressed. The most important aspect of the Bill is the teasing out of anti-competitive practices in the groceries trade, for which reason amendments Nos. 3 and 9 address predatory pricing as the greatest fear among people in the trade.

Amendment No. 3 is straightforward in seeking to insert a new subsection (6) in section 1 to state that a person who contravenes the new section 15B shall be guilty of an offence and liable to penalties provided by the Act for breach of sections 4 and 5. I see no logical reason that some infringements of the Competition Act should be criminal, while the infringement of the new section 15B, which deals with anti-competitive conduct in the grocery trade, a very important and pressing issue, should be civil only. The effect of the amendment, if accepted by the Minister, would be to create a criminal sanction for breach of the provisions.

The case is very straightforward and I do not need to set out the provisions of the new section 15B to establish what are the offences in question. Those offences include price fixing, attempts to ensure resale values and other issues we spoke about at length elsewhere. Unless there is a compelling reason, which I have not yet heard, that such practices should be regarded as less anti-competitive than others covered in competition law by criminal sanction, amendment No. 3 should be accepted. It is interesting to note that elsewhere in the Oireachtas, a Cabinet colleague of the Minister is arguing that, to send the right signal, criminal rather than administrative sanctions are required for illegal fishing. Such sanctions are required to address predatory pricing and anti-competitive activity in the grocery trade if we are to preserve the sort of platform the Minister has indicated he wishes to preserve.

Mr. Martin

Predatory pricing is a criminal offence under section 5. The new section 15B relates to similar practices, including hello money and advertising practices, which are not prohibited in all circumstances. There is a competition test within the Act. Due to the fact that both the conduct and questions are not prohibited in all cases, it would be inappropriate to criminalise those particular activities. The civil route is, therefore, better. Agreements or concerted practices which are anti-competitive and prohibited under section 4 of the 2002 Act are potentially criminal in nature. The matter was debated at length in the Seanad. Such activity includes hardcore, cartel-forming conduct which is regarded as among the most serious anti-competitive offences. Unilateral conduct on the part of single undertakings as prohibited in the Bill is less serious and cannot amount to cartel activity.

Furthermore, civil prohibition has the advantage of allowing aggrieved parties or the Competition Authority to proceed quickly in court to challenge any suspect conduct or practice. Section 6 of the Competition Act deals specifically with hardcore offences in respect of breaches of section 4(1) or Article 81 of the treaty. Section 6 also covers very serious anti-competitive agreements, decisions and concerted practices by associations or undertakings while section 5, which deals with the abuse of a dominant position, is not covered by section 6 as it relates to unilateral action albeit by a dominant firm. Such abuse is not considered to be a hardcore offence under the existing provisions of the Competition Act as, by its nature, it cannot amount to cartel activity. It would be disproportionate to attempt to attach hardcore status to lesser offences committed by non-dominant firms acting unilaterally. Criminalisation imposes a burden of proof beyond a reasonable doubt whereas there will be instances in which quicker relief is sought.

Mr. Howlin

I did not read out the new section 15B because I did not intend to imply that it dealt with predatory pricing. That is one of the major reasons that I want to deal with it in subsequent amendments.

Let us consider the new section 15B, which the Minister categorised as soft core. As there is obviously a tolerance for soft core, we will deal with the issue of the new section 15B which will prohibit the imposition of resale price maintenance regarding the supply of grocery goods. I refer here, for example, to the practice whereby manufacturers or suppliers specify the minimum price at which goods may be resold. Is that soft core? It would prohibit the application to a grocery goods undertaking of conditions dissimilar to those applied to equivalent transactions with any other grocery goods undertaking.

The new section 15B(2) prohibits a grocery goods undertaking from directly or indirectly compelling or coercing, whether by threat, promise or any other means, another grocery goods undertaking to make any payment, grant or allowance for the advertising or display of grocery goods, This is the so-called "anti-hello money" issue. One would have thought it a serious enough matter and the new section 15B(4) prohibits a retailer from compelling any other grocery goods undertaking from making any payment or granting any allowance to the retailer in return for the latter agreeing to stock the undertaking's products. This concerns the payment of hello money to keep the retailer's products on one's shelves. We all agree that the notion that one should be given a bung to stock one item in preference to another is anti-competitive.

Those issues are not minor. The Minister has dismissed their importance but I certainly believe them to be so. He introduced two other issues, the first being that, by having a criminal sanction, one increases the burden of proof. For most anti-competitive issues, we have that threshold. Second, they are not anti-competitive in all circumstances. This amendment does not change that criterion; it simply states that, where such an offence has been proven, the sanction should be criminal. I do not believe that the Minister's position is consistent in this regard. Does he persist in the view that the four issues that I have outlined are insignificant or soft core in some way?

Mr. Hogan

I wish to speak not only to Deputy Howlin's amendment but also to amendments Nos. 9 and 16, which are being taken with it.

Deputy Howlin said that there is a great deal of good in what the Minister is doing in the first part of the new section 15B. However, he undoes that good in the new section 15B(5), which states that conduct such as that described by Deputy Howlin shall not be prohibited unless it has as its object or effect the prevention, restriction or distortion of competition or trade in any grocery goods in the State or any part thereof. In such circumstances, therefore, a supplier is being asked to take a case against his or her customer without any clear parameters or guidelines in respect of what he or she is taking on. In a pure free market fashion, we all agree that what the Minister has addressed in the new section 15B are the unsavoury aspects of the Restrictive Practices (Groceries) Order 1987, such as the prohibition of hello money, shelf display, and all those study tours now so prevalent. These activities are very much unconducive to a level playing field. One might expect multiples to do that, since they have the financial power to buy their way into a market. However, the Minister is asking someone in the new section 15B(5) not to do those things, thereby undoing some of the good work done in the remainder of the section by asking a small supplier to take on a large multiple regarding the practices listed in the rest of the legislation.

I agree with Deputy Howlin that various civil or criminal prosecutions are laid down in the Competition Acts. I do not know why the Minister might not wish consistency across the board in the amendments introduced in respect of civil and criminal prosecutions, as the case may be. We are making a reasonable point to the Minister. In the Bill he has accepted that he does not want price-fixing, hello money, price display moneys, study tours or any of those unsavoury practices. Then he undoes his good work in the new section 15B(5).

Mr. Martin

Deputy Hogan includes a competition test in amendment No. 4, which is what he refers to regarding the new section 15B. He says that I am undoing the offences and prohibitions that we have created by including a competition test but, in essence, in the preamble to his amendment——

Mr. Hogan

I am not including a competition test.

Mr. Martin

The Deputy's test is whether a practice has as its object or effect the prevention, restriction or distortion of competition or trade in any grocery goods.

Mr. Hogan

To what is the Minister referring?

Mr. Martin

Amendment No. 4.

Mr. Hogan

Is amendment No. 4 being taken now?

Chairman

No, we are dealing with amendment No. 3.

Mr. Martin

The Deputy is arguing generally about——

Deputy Hogan

We can discuss amendment No. 4 when we come to it.

Mr. Martin

The Deputy should be aware that consistency of position is important.

Mr. Hogan

The Minister should stick to the debate on amendment No. 3 in order that we might identify his position.

Mr. Martin

I am entitled to——

Chairman

Members should direct their remarks through the Chair. We are dealing with amendment No. 3.

Mr. Hogan

At least I tabled an amendment. The Minister did not table any.

Mr. Martin

With respect, that is no defence. It concerns consistency of policy. We would have a ludicrous——

Chairman

Members should direct their remarks through the Chair as has always been the case with this committee. We are taking amendments Nos. 3, 9 and 16 together.

Mr. Martin

I would consider it very inconsistent to agree a position on this amendment and subsequently argue a different position on the amendment immediately following. All that I was doing was putting forward my opinion. Why are people so sensitive regarding a debate?

Chairman

We conduct our affairs in an orderly fashion in this committee.

Mr. Howlin

On a point of order, I have never encountered a situation where reference is made to things that have not yet been reached. We do not know whether later amendments will even be moved. Let us deal with the issues that we put to the Minister and he can reply from his perspective.

Mr. Martin

I am doing so. I am dealing with the issue.

Mr. Howlin

Whether Members on this side are consistent is of no consequence. The important matter is the quality of the Bill.

Mr. Martin

I will not say that again.

Mr. Howlin

The Minister can do so. A distinguished former colleague talked of the——

Mr. Martin

I did not realise that the Deputy had raised it.

Chairman

The point of order has been taken.

Mr. Howlin

The Minister is throwing up smokescreens

Chairman

We are taking with amendments Nos. 3, 9 and 16 together because they are related. I will get a reply from the Minister in respect of them.

Mr. Martin

With respect, I am replying. I am somewhat surprised at the attempt to censor what I say in a genuine answer.

Mr. Howlin

The Minister should move on to the debate.

Mr. Martin

I should point out that it is not the Chair who is trying to censor me.

Regarding the specific amendment, Deputy Howlin suggested that I was somehow describing soft progress as hard core. Certain activities are more pernicious when exercised by a dominant firm or as part of an agreement or restrictive practice than when done unilaterally by a non-dominant firm. There are degrees of offence in all walks of life and that is no less the case in this sector.

Mr. Howlin

Nobody is arguing with that.

Mr. Martin

There are, therefore, strong criminal sanctions in respect of predatory pricing, abuse of dominance, cartels and so forth. We equally prohibit another series of actions and allow for civil redress in respect of those offences. To deal with Deputy Hogan's point, we are also allowing for the Competition Authority to initiate or pursue civil actions against people who engage in such offences. Regarding the competition test mentioned, we have taken advice from the Competition Authority that there would be significant inconsistencies with the parent Act if one excluded such a test and that, in certain situations, those people could engage in some activities that would be pro-competitive. We simply do not wish to prohibit activities that would be pro-competitive in a normal situation. It is a balanced position. One of the most persistent criticisms of the Competition Authority by members of the Opposition has been the alleged delays and difficulties in achieving criminal convictions, particularly with regard to cartels.

What the Deputy is asking me to do here is to bring the difficulty that currently applies to obtaining criminal prosecutions to a conclusion and apply it to this list of offences as well. The burden of proof would be much more significant. That is a factor we must take on board. In many of these instances people will want more immediate relief or a quicker process to resolve issues than a criminal prosecution.

Chairman

Is the amendment being pressed?

Mr. Howlin

We have not begun the debate yet, Chairman.

Chairman

I beg your pardon.

Mr. Howlin

The Minister has not given a coherent reason. He said that in order to achieve efficiency in the court he is not providing for criminal sanction for these issues. Let us consider what we are talking about. The first is the prohibition of resale price maintenance. On Second Stage and in his public comments, the Minister said he regarded the prohibition of resale price maintenance as a serious matter, whereby one cannot fix a price and insist that the retailer only sell at that price. Is the Minister telling the committee that this is not a significant issue anymore? Is it now a minor issue?

Mr. Martin

The Deputy should not put words in my mouth. He should make his point and I will respond.

Mr. Howlin

That is very decent of the Minister. He is telling me how to conduct my Committee Stage contribution.

Chairman

Questions are asked and the Minister responds.

Mr. Martin

I responded to that point. We are not saying that these——

Mr. Howlin

Do I have possession, Chairman?

Chairman

You have possession, Deputy Howlin. Please continue.

Mr. Howlin

The Minister must be in bad form. Did he get bad news?

Mr. Martin

I am in very good form.

Chairman

The Minister should allow Deputy Howlin to continue without interruption.

Mr. Howlin

In his first response, the Minister indicated that these matters were of a lesser order. The tape can be played back for the Minister, if he wishes. He went on to say that it is normal in legislation to provide for degrees of infringement. The implication of what he said is that this was a soft core or minor matter of lesser importance. Plain English indicates that. However, most people involved in or with any understanding of the trade would regard the four items covered under section 15B, all of which were illegal to some degree under the 1987 groceries order, although that can be debated separately, as significant issues. Does he regard the prohibition on the imposition of resale price maintenance as a minor issue? That is the first question. It might be useful if we take questions seriatim.

Mr. Martin

I have already dealt with that issue. I do not see it as a minor item and that is why it is prohibited in the Bill.

Mr. Howlin

It is obviously a lesser offence than the others that require criminal sanction.

Mr. Martin

Yes.

Mr. Howlin

Why?

Mr. Martin

I have already dealt with this comment, Chairman, but I will deal with it again.

Mr. Howlin

We are terribly sorry to take up the Minister's time, lest he might have to repeat himself or explain his thinking to the committee. Perhaps the Minister of State would have more time to deal with the committee if the Minister is too busy.

Chairman

The Minister to respond without interruption.

Mr. Martin

Those remarks should be withdrawn. I am not-----

Mr. Howlin

The Minister sounds as if it is too tedious to explain himself.

Mr. Martin

It is not tedious. I find the Deputy's position — I will not say his feigned anger but in any event——

Mr. Howlin

The Minister just said it.

Chairman

The issue is amendment No. 3.

Mr. Martin

Basically, it is not appropriate to criminalise activity which is not anti-competitive per se. In other words, some of this activity can be anti-competitive if used in certain ways but there are other instances where it can be pro-competitive. There are examples to illustrate that point. This is not a “beyond any reasonable doubt” proposition in all circumstances as is the case with the three or four items provided for in section 15B which are being prohibited. I have not used the term “minor” in the debate. Deputy Howlin has used it on a number of occasions.

Mr. Howlin

Softcore.

Mr. Martin

I did not use that term either; the Deputy did. I used the term "hardcore" in respect of abuse of dominance, predatory pricing or cartel-type activity to which strong criminal sanctions and penalties apply.

It depends on one's perspective on this issue. Some people in the trade, even those who argue against the abolition of the groceries order, say that if we did not have the competition test — and that is not why we introduced it — we would be discriminating against certain sectors, such as symbol groups and so forth. This is a balanced measure that seeks to prohibit the activities. Some of these activities were badly dealt with in the groceries order in terms of terminology and definition. People had an illusion of protection for a long time, particularly with regard to "hello" money, for example. It was badly drafted in the groceries order.

We are taking a balanced position here which prohibits the offences. They are not criminalised in the same way as other offences that are captured by the Competition Act because there are potential situations where they could be pro-competitive. In addition, it would be wholly inconsistent with the parent Act, which is about facilitating competition within the sector. We also do not wish to distort the wider economy and other sectors inadvertently by providing for something in this legislation which could have an impact on other sectors, albeit that would not have been the original intention.

Mr. N. O’Keeffe

Who will adjudicate on whether it is anti-competitive or pro-competitive? The Competition Authority has not had a great record because in the past it penalised and chased the small operator rather than the big combine. That has been my experience and it has been echoed in this committee. Who will adjudicate on this competition area? This is a very important part of the legislation.

Mr. Martin

Ultimately, the courts will adjudicate on cases that either the Competition Authority, individuals or companies bring forward. I cannot comment on particular cases.

Mr. N. O’Keeffe

I am not asking the Minister to do so.

Mr. Martin

The Competition Authority pursues cases irrespective of size. However, the criminal route is a difficult one.

Amendment put.

The Committee divided: Tá 4; Níl, 7.

Tá

• Breen, Pat.
• Hogan, Phil.
• Howlin, Brendan.
• McHugh, Paddy.

Níl

• Brady, Martin.
• Callanan, Joe.
• Cassidy, Donie.
• Dempsey, Tony.
• Martin, Micheál.
• Nolan, M.J.
• O’Keeffe, Ned.

Amendment declared lost.

Chairman

We move to amendment No. 4. Amendments Nos. 5 to 8, inclusive, are alternatives. Amendments Nos. 4 to 8, inclusive, may be discussed together.

Mr. Hogan

I move amendment No. 4:

In page 4, to delete lines 34 to 49 and in page 5, to delete lines 1 to 32 and substitute the following:

15B.—(1) Subject to the provisions of this section, all arrangements, decisions, and practices, by grocery undertakings, which have as their object or effect, the prevention, restriction or distortion of competition in trade in grocery goods, in the State or any part of the State, shall be prohibited, including in particular, without prejudice to the generality of this subsection, those which—

(a) directly or indirectly attempt to compel or coerce another grocery goods undertaking, whether by threat, promise or any means, to resell or advertise for resale any grocery goods at—

(i) a price fixed directly or indirectly by the first mentioned grocery goods undertaking, or

(ii) a price above a minimum price fixed directly or indirectly by the first mentioned grocery goods undertaking,

(b) apply dissimilar conditions to equivalent transactions with any other grocery goods undertaking,

(c) directly or indirectly compel or coerce, whether by threat, promise or any means, any grocery undertaking to make a payment or grant any allowance for the advertising or the display of grocery goods, or

(d) directly or indirectly compel or coerce, whether by threat, promise or other means, another grocery undertaking to make any payment or grant any allowance to a retailer in respect of the provision of space for the display marketing or sale of grocery goods within a retail outlet.

(2) Following the commencement of this Act and without prejudice to the generality of subsection (1), the Minister may make such regulations as may be appropriate to prescribe any additional arrangements, decisions or practices that are contrary to section 15B(1) or to provide for any related aspect required for the effective enforcement of this section 15B(1).

(3) Nothing is this subsection shall affect any right of the Authority to bring proceedings for an offence under section 6 of this, or of any other person to issue proceedings under section 14 of this Act.

As currently worded, the section purports to prohibit a number of specific activities which were formally outlawed by the groceries order. It purports to prohibit certain activities when carried out by a grocery undertaking, including resale price maintenance, hello money, the imposition of unfair contract terms and the compelling of people to pay for advertising allowances. The changes are being introduced by the Minister because of fears that such activities, while prohibited by the groceries order of 1987, might not be prohibited by the Competition Act 2002, where carried out by a non-dominant undertaking.

The amendment proposed by the Minister has been criticised as it makes no provision for other anti-competitive activity formally prohibited by the groceries order but which will not be prohibited when carried out by a non-dominant undertaking, such as persistent targeting of a competitor by a larger but non-dominant retailer through a range of tactics including loss leading, below-cost selling and predatory pricing. There seems to be an inconsistency in prohibiting certain types of anti-competitive behaviour by non-dominant undertakings while tacitly ignoring others. Legal opinion which has been brought to my attention confirms that the unilateral pricing practices of non-dominant undertakings will not otherwise amount to a breach of current European or Irish competition law.

The second criticism of the change proposed by the Minister is that the provisions are nullified by section 15B(5), to which reference was made in the context of Deputy Howlin's amendment No. 3. Section 15B(5) causes difficulty because it seems to nullify what the Minister is attempting to achieve in the other sections. Section 15B(5) states that the four practices outlined are only prohibited when they constitute conduct that prevents, restricts or distorts competition in the State or any part of the State. The caveat which is introduced effectively renders the earlier protections afforded by the Bill worthless, and considerable expense and detailed economic analysis will be necessary before they can be effectively invoked.

If somebody was to take a case under that section, it would cost an enormous amount of money to build up the case. That is not in the spirit of what the Minister is attempting to achieve. The Minister has inserted section 15B(5) on the basis that language is replicated from the Competition Act 2002. That is not entirely correct. The wording used in section 15B(5) is used to describe the generality of anti-competitve behaviour before listing some specific examples of such behaviour without prejudice to the generality. That is my legal advice which I present before the select committee.

In this case, the wording is used to the opposite effect, to restrict the application of the specific instances of anti-competitive behaviour. It is a perverse distortion of the provisions of the Competition Act 2002 to claim that section 15B(5) replicates the language of the 2002 Act. This is not done.

It is also suggested that to properly replicate the provisions of the Act, section 15B should be entirely recast in a similar manner to section 4 of the 2002 Act. This would ensure that all anti-competitive behaviour is prohibited and that some specific examples of such behaviour can be instanced. The provision would also ensure that additional anti-competitive practices could be listed in the Bill or subsequently by the Minister via statutory instrument. I am informed that EU law specifically recognises that member states may enact stricter laws than the EU competition measures that prohibit acts of unfair trading practice, be they unilateral or contractual. This means the Minister could strengthen and re-cast this section of the Bill without interfering with EU precedents or contravening EU law.

Section 15B(5), as a result of enormous cost and analysis that would be required to take a case, effectively forces a small player in a market, in taking on a larger player, to expend much money. Therefore, such players would be risking themselves, their families and their business in taking on a big multiple and dealing with issues of retail price maintenance, hello money, display space and various other advantageous allowances which may be happening in the marketplace. If these issues were to be contested through the courts, it would cost a considerable amount of money to achieve a favourable outcome, under section 15B(5). The Minister should reflect on this.

Mr. Howlin

I wish to speak on amendment No. 5. Are we discussing amendment No. 5 with other amendments?

Chairman

Yes, we are discussing amendments Nos. 5 to 8, inclusive.

Mr. Martin

Are we not still discussing amendment No. 4?

Mr. Howlin

My listing is for amendments Nos. 4 to 8, inclusive. Does Deputy Hogan wish to take his amendment separately? My statements on this Bill relate to predatory pricing, so perhaps it should be dealt with separately.

Mr. Martin

We should deal with them separately. One amendment deals with section 15B while the other deals with predatory pricing.

Mr. Howlin

I do not know why they were grouped.

Chairman

Is that an indication that the Minister is going to accept this amendment?

Mr. Martin

We will debate it first.

Chairman

On section 1, amendment No. 4, I call Deputy Howlin. The Minister has no objection to debating amendment No. 4 on its own.

Mr. Martin

I am open to the Chair's ruling. There may have been a genuine understanding, but my understanding is that we were debating amendment No. 4 separately. There appear to be substantial differences between it and the other amendments.

Mr. Howlin

That makes sense.

Mr. Martin

Amendment No. 4 is a re-casting——

Chairman

Is it agreed to take amendment No. 4 separately? Agreed. I call the Minister to respond to Deputy Hogan's remarks.

Mr. Martin

This amendment is designed to replace all of section 15B as it appears currently in the Bill. In essence, the amendment incorporates a different style of drafting by re-casting the language in the passive voice. The changes do not improve either the language or the legal certainty of the Bill.

I note that in section 15B(1) of the amendment, the Deputy has included what I might term a competition test, designed to ensure that the conduct described is only prohibited when it has a negative impact on competition. I welcome the fact that the Deputy now accepts the need for such a provision, which he seemed to oppose at an earlier time, both on Second Stage and earlier today. I cannot see that the Deputy's proposal is substantively different to what already appears in section 15B, although there are some matters with which I would take issue.

The amendment would also go beyond the specific conduct prohibited in the drafts of the Bill by prohibiting "all arrangements, decisions and practices" which prevent, restrict or distort competition. The Deputy is clearly intending this to be a catch-all type provision. The purpose of the Bill is to prevent specific unilateral conduct by grocery goods undertakings. The changes suggested by the Deputy are both dangerous and unnecessary. They run the risk of taking us beyond the intended scope of this Bill.

I have no idea what type of activities the Deputy is trying to cover. Much of the activity that would be captured by such general terminology as that suggested by the Deputy in his amendment would in any event be prohibited already under sections 4 and 5 of the 2002 Act. In so far as this is the case, my concerns would be heightened as the proposal could impact on a court's interpretation of the 2002 Act.

In subsections (1)(a), (1)(c) and (1)(d) of the Deputy’s amendment, the reference to “any like means” becomes “any means”. This significantly changes the meaning so that we are no longer necessarily considering compulsion or coercion. That goes beyond the scope of the Bill before the House. Subsection (1)(d) of the Deputy’s amendment is intended to replace section 15B(4) of the Bill. On the face of it, the amendment is an attempt to prohibit hello money in all cases, and not just on the opening of a new store. That goes beyond not just the Bill itself, but the prohibition that existed with the groceries order. I do not believe the grocery trade wants such a change.

Subsection (1)(d) of the amendment as drafted is not very different from subsection (1)(c) and would probably be unnecessary in any event. Subsection (2) would allow the Minister of the day to make regulations to proscribe specific additional forms of conduct. I would have serious difficulty with vesting such a wide-ranging power in the hands of the Minister. Given the legitimate interests of Members of the House and this committee, I do not believe that Deputies would wish for a future Minister to have the power to make such regulations without reference to Members. Subsection (3) relates to the nature of the prohibited conduct, an issue I will have cause to comment on elsewhere. This subsection causes me considerable difficulty, particularly regarding the criminalisation argument. This amendment causes serious problems and I reject it.

Mr. Hogan

The Minister has indicated he has serious problems with the amendment and has given his opinion. I am glad he qualified what he stated by saying it was in his opinion. I am sure there will be a conflicting view on the interpretation of this section. This amendment provides wording for enabling legislation rather than restrictive circumstances where the Competition Act would be brought to bear. None of the examples under EU law prohibits this from being introduced.

I wish to be consistent across the Competition Act 2002, but the Minister does not feel obliged to do so. The Minister actually opens the door for some form of hello money, particularly in the case of a new store opening. The Minister stated on an earlier section that he wished to ban hello money, and that he had a problem with it in any circumstances. The Minister has left the door ajar for potential hello money in certain circumstances, such as the opening of a new store.

Mr. Martin

I was pointing out that those were the circumstances under which hello money was prohibited under the groceries order.

Chairman

Is the Minister discussing marketing money? Is there a different terminology in order to receive money?

Mr. Martin

That is covered later.

On the enabling measure, it is open to the Oireachtas at any stage to bring primary legislation back to the House. In subsection (2) of Deputy Hogan's amendment it states:

Following the commencement of this Act and without prejudice to the generality of subsection (1), the Minister may make such regulations as may be appropriate to prescribe any additional arrangements, decisions or practices that are contrary to section 15B(1) or to provide for any related aspect required for the effective enforcement of this section 15B(1).

That gives unilateral powers to the Minister of the day, to turn, in essence, the Act on its head. There has been jurisprudence on this subject in the past two years.

Mr. Hogan

I do not follow jurisprudence.

Mr. Martin

The Deputy might do so in this case because it dealt with the position of secondary legislation versus primary legislation. It also reviewed the degree of latitude the Minister of the day should have in drafting regulations that are almost in line with the content of a primary Bill, particularly when done in a unilateral manner without recourse to the Dáil. Given the huge interest in this debate I cannot foresee a situation where any such regulations would not be significant, whether on the subject of competition law, the groceries order etc. It should be the subject of primary legislation.

Mr. Hogan

I included subsection (2) to allow the Minister, subsequent to the passing of the primary legislation and with regard to case law, to spare a small, family-owned business the enormous financial burden of taking a case against Tesco or any other multiple if it experienced a serious problem with resale price maintenance, hello money or price fixing.

Mr. Martin

The comprehensive report compiled by the Department on the groceries order identifies the way that, over the years, certain things were slipped into legislation with the Oireachtas scarcely knowing, not least the definition of below net invoice price. Its route into the groceries order, as well as its economic rationale, is unclear.

The proposed amendment could equally be used as a vehicle for introducing anti-competitive, anti-consumer measures very quickly and without any recourse to the Legislature.

Amendment put.

The committee divided: Tá, 5; Níl, 7.

Tá

• Breen, Pat.
• Costello, Joe.
• Hogan, Phil.
• Howlin, Brendan.
• McHugh, Paddy.

Níl

• Brady, Martin.
• Callanan, Joe.
• Cassidy, Donie.
• Carty, John.
• Dempsey, Tony.
• Martin, Micheál.
• O’Keeffe, Ned.

Amendment declared lost.

Chairman

Amendments Nos. 5 to 8, inclusive, will be discussed together by agreement.

Mr. Howlin

I move amendment No. 5:

In page 4, between lines 45 and 46, to insert the following:

"(2) A retailer (whether or not it enjoys a dominant position) shall not engage in predatory pricing or any other unfair conduct in relation to price which is likely to eliminate or significantly reduce competition.".

This and the other grouped amendments are germane to an issue I am interested in teasing out with the Minister. Although we may not have arrived at the same conclusions, I believe we share the objective of addressing the issue of predatory pricing. I do not hold my amendment up as a comprehensive answer to this but, in the absence of anything better, I recommend it to the committee and the Minister for consideration.

A new subsection will prevent a retailer — with the important sub-clause "whether or not it enjoys a dominant position" — from engaging "in predatory pricing or any other unfair conduct in relation to price which is likely to eliminate or significantly reduce competition". The Minister was present during the debate on Second Stage and will be aware of the great concerns that exist on the issue of predatory pricing. His response was that the matter is already provided for in the Competition Act and that a disservice would be done to the object of the legislation if the settled policy of that Act was dislodged with a clear prohibition on predatory pricing. He quoted significant case law from European courts which would have to be reheard if a new legislative provision was made, to which I replied that it is unusual for a parliamentarian to rely on judicial rather than legislative protections. I am concerned that predatory pricing will be tolerated and am not convinced that the Competition Act 2002 deals with this comprehensively, although I am aware the Minister tried to give hand on heart assurances on this matter in the other House.

I wish to address the question of what constitutes a dominant position. In United Brands v. the Commission, 1978, the Court of Justice defined the dominant position as “a position of economic strength enjoyed by an undertaking which enables it to prevent effective competition being maintained on the relevant market by affording it the power to behave to an appreciable extent independently of its competitors, customers and ultimately of its consumers”. This judgment attached a significant weight to the dominance of the market by a particular enterprise.

The threshold of dominance is an important consideration because the market share possessed by any undertaking may be the crucial factor in determining whether a firm enjoys a dominant position. The problem, however, is that no definitive rule exists as to the percentage of market share which will bring an undertaking within the scope of Article 82, which was transposed into Irish law by the Competition Act 2002. In the aforementioned case, a share of 40% to 45% of the banana market in a relevant member state was deemed by the court to be sufficient. However, in the Hoffman-La Roche case, the Court of Justice ruled that a firm was not in a dominant position despite holding 43% of the market for vitamin B3. In the Virgin-British Airways case, the Court of Justice found that an undertaking with a market share of less than 40% was in a dominant position under Article 83.

I provide these examples to demonstrate the lack of certainty in terms of what constitutes a dominant market share. Prosecutions under the legislation will not, therefore, have a clear guideline from the case law referred to by the Minister in his conclusion to the debate on Second Stage. In the Virgin Airways-British Airways case, the market share was found to be dominant, even though it was 39.7%. The percentage of dominance is not enough in itself and other factors must be taken into account, which I want the Minister to address because we want some degree of clarity with regard to how the grocery trade in Ireland will operate in the future. How will the Competition Authority monitor dominance and the issue of predatory pricing?

I put forward this amendment because it simply removes market dominance, which is one of the threshold issues. The actual practice of engaging in predatory pricing or any other unfair conduct which is likely to eliminate or reduce competition could be adjudicated in the courts if my proposals are accepted. I admit that a significant flaw exists in my proposal arising from the lack of definition for the term "predatory pricing." However, it is a fair indication to the courts when they have to determine which unfair conducts on pricing are likely to eliminate or reduce competition. If the Minister is not inclined to accept my amendment or the alternative formulation proposed by Deputy Hogan, I would ask him to explain his confidence in the ability of existing law to address this issue. That will ensure the fears of those who are following this debate, particularly people in the groceries trade who are very animated about the issue, if my phone calls and e-mails in the past few days are anything to go by, can be addressed.

Mr. Martin

What I say now applies equally to Deputy Hogan's amendment on predatory pricing, which is amendment No. 7. When I have dealt with the predatory pricing issue I will comment on the other two amendments. I repeat what I said on Second Stage and frequently during the course of the debate on the groceries order, both inside and outside the House. I accept Deputy Howlin's point that we are agreed on the principle but enforcement is the issue.

I share the Deputies' abhorrence, and that of many Members of the House, of predatory pricing. Predatory pricing is an abusive and anti-competitive practice which damages business, the economy and the interest of consumers. It is the act of a dominant firm, however, and is already prohibited by section 5 of the Competition Act 2002. That is where the difference arises. We have discussed the matter at length with our legal advisers and the Attorney General and reiterate our strong assertion that this is already prohibited by section 5 of the Competition Act.

We would argue that Deputy Howlin's amendment, in so far as it relates to the clause about the non-dominant firm, is a contradiction in terms. To engage in predatory pricing an undertaking must have some significant power.

Mr. Howlin

What is the——

Mr. Martin

I will deal with dominance later. Not alone must it have both the financial muscle to withstand sustain losses, it must also be certain of eliminating all existing and potential competition so as to allow it subsequently unilaterally impose prices on the market by which it can recoup any losses in due course. That is the ultimate operation.

In so far as the amendment refers to predatory pricing by a dominant firm, we believe that is not necessary. Section 5 of the Competition Act 2002, which is supported by European Union case law, is more than capable of prohibiting such reprehensible conduct. Section 5 of the 2002 Act is modelled on Article 82 of the European Union treaty and is designed to prevent the abuse by an undertaking of a dominant position in the market. Section 5(1) of the Act provides that any abuse by one or more undertakings of a dominant position in trade for any goods or services in the State or, crucially, in any part of the State is prohibited. Relevant market, therefore, is very important. Section 5(2) provides that such abuse may include directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions.

There is European case law supporting the use of these provisions to establish predatory pricing. European jurisprudence in the matter is based on the so-called Akzo case involving a Dutch multinational chemical company of that name. In December 1985, a fine was imposed on the company for a predatory abuse of a dominant position. The European Court of Justice rejected an appeal by Akzo in July 1991.

An unnecessary amendment to existing legislation such as this one can do untold harm because there is an assumption that the Legislature does not legislate unnecessarily. In other words, if we were to accept this amendment we could undermine the key section 5 in the Competition Act 2002 because we are qualifying or diluting the application of that section and may inadvertently weaken the legislative position on predatory pricing. It could also have implications for other sectors of the economy in terms of the abuse of a dominant position in other sectors.

The other key point is that there is a significant difference between predatory pricing and aggressive pricing. They are not one and the same. Aggressive pricing is about competition. No one here is suggesting we should ban competition.

We have taken advice on this amendment and it appears it could significantly weaken the provision of the Competition Act 2002. It presupposes that section 5 of the Act does not already prohibit predatory pricing, which is the effect of the amendment. It seriously undermines the interpretation of section 5 of the Act and would cast serious doubts on the application of existing case law in regard to that section. In other words, if we put this measure in the section, any subsequent read of it would be that we are including this measure to strengthen something the Legislature believed was weak. In that way, it would undermine what is already in place.

My concerns are increased by the fact that the amendment purports to establish a rule in regard to predatory behaviour that would apply only to the retail grocery trade. That is not justifiable. I cannot accept the implication inherent in the amendment that predatory behaviour is somehow unique to the grocery business.

In fairness to Deputy Howlin, he alluded to the fact that the amendment does not define what is meant by the term "predatory pricing", and that raises significant issues of a legal and drafting nature. I accept Deputy Howlin is using the amendment as a catalyst for a debate on the issues but nonetheless it creates huge difficulties in accepting an amendment in that there is no definition of the term "predatory pricing" in the amendment.

In terms of Deputy Hogan's amendment No. 7 on predatory pricing, the language at (c) purports to place controls on what is called restriction of offer by a grocery undertaking. Amendment No. 12, also put down by Deputy Hogan, purports to do the same, thus the language in amendment No. 7 would be unnecessary if amendment No. 12 were adopted. I will address that issue when we come to discuss amendment No. 12.

Deputy Howlin raised the issue of dominance. The Deputy is correct, and he quoted the legal precedent established by the European Court of Justice, which I will not read out again. It is clear that in assessing dominance, the Competition Authority, like all European Union competition authorities, must take into account the degree to which an undertaking has market power, in other words, if and to what extent it encounters constraints in its ability to behave independently by reference to the market facts. The Deputy is correct. It is not just about percentages in any given market. That is the reason for the differentiation between 35% in one market and 60% or thereabouts in another.

Legal jurisprudence suggests that a number of factors must be considered in determining whether a firm is dominant. I beg the committee's tolerance as I go through the issues that are included in terms of determining whether a firm is dominant. These include, but are not limited to, relative market shares and the level of concentration in the industry; the ability of the allegedly dominant firm to act independently of its competitors; absence of or low countervailing buyer power; absence of potential competition; economies of scale or scope; overall size of the undertaking; product or service differentiation; easy or privileged access to capital markets or financial resources; control of infrastructure that is not easily duplicated; technological advantages; a highly developed distribution and sales network; product differentiation; vertical integration; barriers to entry; and barriers to expansion. Dominance in itself is not the offence; the offence is when that dominance is abused.

The European case law I mentioned earlier interprets the existing law as it is drafted, and it is the combination that gives it strength. The relevant market is important. It is not just the overall market share in the State or all of those factors. The Competition Authority is free to decide that a town in a given area in Ireland is a local market whereby within that market we determine whether dominance exists and whether there is an abuse of dominance.

Deputy Hogan's amendment No. 6 is about the provision of space, which we dealt with in the other House. The amendment is not necessary because section 15B(3) is designed to deal with allowances for advertising or the display of grocery goods. We presume that displaying or advertising a product would necessitate the provision of space for that product. There is an overlap, however, in the provisions relating to the prohibition on "hello money", which are set out at subsections (4)(a), (b) and (c) of the section. Each of subsections (4)(a), (b) and (c) refer to providing space for grocery goods. That is the reason, in subsection (4), we use the language “without limiting the generality of subsection (3)”. The amendment does not add anything to the Bill in terms of clarity and may even lead to some confusion.

I have dealt with Deputy Hogan's amendment No. 7 on predatory pricing. Amendment No. 8 seeks to delete, on page 5, line 29, "has" and substitute "is likely to have". The language used in section 15B(5) is consistent with and replicates the language used in section 4 of the Competition Act 2002. If this were amended as suggested by the Deputy in respect of the new provisions it would introduce inconsistency into the Competition Act. It might also introduce confusion and legal uncertainty as to why the conduct specified in this Bill should be subject to a different test than are the types of practices covered by section 4 of the Competition Act. Section 4 is modelled on Article 81 of the EU treaty. The wording in the current draft of the Bill mirrors the text of Article 81. The amendment would, therefore, also be inconsistent with the competition rules as set out in the European Union treaty. That is why I am not predisposed to accepting this amendment.

Mr. N. O’Keeffe

The real issue in this Bill is predatory pricing. We can use fancy language but if we cannot find a frame of words to outlaw predatory pricing we will finish up with one dominant retailer in a country of 4 million people. Currently there is a racket in Easter eggs. Easter eggs are being sold below cost in many supermarkets. A large company can zoom in on a town and close down a small trader by selling three items for the price of two or whatever it wants to do.

Pricing must be done in a blanket way. Otherwise the multiples could take advantage of a town in any part of this island and close down a retailer they see as a nuisance or who they see as causing them anger and annoyance. This amendment would oblige any store that puts predatory pricing in place to apply the same prices in all its retail outlets across the country. In other words, if a retail outlet employs predatory pricing in Mitchelstown and it has other retail shops throughout this island it must apply the same pricing in the other outlets, whether they are in Letterkenny, Sligo or Galway or Boyle. Otherwise we will have a crisis on our hands. I do not want to name names, but we will have a dominant player on this island whose target is 45% of retail space outside the UK. The chief executive of that company in the UK has said that is the target. That involves a 3% margin on the stock market, paying its shareholders 3% and getting substantial capital appreciation on that market. If we cannot come up with a suitable form of words to prevent predatory pricing, we will lose the battle.

Chairman

Deputy O'Keeffe is seeking an assurance from the Minister that if a new player moves into Mitchelstown or Mullingar it cannot target Mitchelstown or Mullingar but must take their prices down across the country.

Mr. N. O’Keeffe

Yes, but we must arrive at a frame of words by agreement.

Chairman

What assurance can the Minister give Deputy O'Keeffe in that regard?

Mr. Martin

That is the subject of a separate amendment that will be dealt with later.

Mr. McHugh

Amendments Nos. 5 and 7 deal with the critical issue. They are specific and there is no ambiguity regarding them. If it is the Minister's intention not to create a situation where predatory pricing will become commonplace, he must accept the amendments as tabled because they specifically eliminate it.

It was fear of predatory pricing that created the battle to try to retain the groceries order. The elimination of the order has created the danger that the big operators will survive and will kill the smaller operators. That is a major fear. Nothing I have heard from the Minister in regard to abolition of the order has changed my view on that. I presume the Minister knows there is a very strong view on this committee that the order should not be abolished. We did much work on that and presented a report to the Minister. It had the unanimous support of members of this committee who are members of the Minister's party. They feel very let down by the Minister's action in going ahead against their advice, after they had considered the matter for a number of months.

I may be wandering a little, bit it is important to state that I believe the Minister allowed himself to be guided by the Consumer Strategy Review Group and the Competition Authority. Their advice was ill-founded. Not alone was it ill-founded, it was also flawed because it was based on very narrow thinking. There is no perception of the effect their view will have on society as a whole. This is a major issue.

Chairman

Is this the organisation that did not know the price of a pound of butter or a loaf of bread or the profit margins?

Mr. McHugh

That is one example. There are umpteen others in the reports we formulated and presented to the Minister. What we are talking about here is the kind of society we want. My fear is that this will create a society that is totally alien to what we want. If we look at what has happened in the UK we will see what is ahead of us. The Minister needs to reflect seriously and take everybody's view into account and not be guided by bodies whose advice we have proved is flawed.

Mr. Brady

I agree with everything Deputy Ned O'Keeffe said. A large store moved into my constituency in Dublin North East approximately a year and a half ago. It sold petrol at 90 cent per gallon. There were queues there morning, noon and night. It was very successful in putting a nearby petrol station out of business within a number of months. Another petrol station approximately 1 km away has gone out of business as we speak. I agree with Deputy O'Keeffe on predatory pricing. Pricing should be on a national basis and not used to target small retailers in the area where the large store is located. That is something we should be conscious of. It is important to keep small players in business as well.

Chairman

Is the Deputy totally opposed to below cost selling?

Mr. Brady

Yes, I am.

Mr. Callanan

I agree with my colleagues. Pricing should be done nationally. If a dominant player comes here and cuts prices it should have to do so nationally. There would then be at least some come-back.

Chairman

That is the assurance all members of this committee are seeking from the Minister.

Mr. Morgan

I am glad to hear such consensus here regarding this legislation. I do not know whether it was the Competition Authority or Mr. Eddie Hobbs that scared the Minister or gave him an excuse to bring forward this Bill.

Chairman

We might have given Mr. Eddie Hobbs the idea.

Mr. Morgan

Given the comments we have heard around the table, it would be an excellent gesture if the Minister withdrew the Bill. Amending it might help but there is still a fundamental problem with the groceries order. I oppose the Bill.

Chairman

The Minister has heard the views of the members. Deputy Hogan will conclude this round.

Mr. Hogan

We may not conclude, but I have tabled an amendment. The view being conveyed to this committee by the Minister is that he has taken on board, lock, stock and barrel, the view of the former chairman of the Competition Authority, Dr. Fingleton. During the hearings of this committee Dr. Fingleton said quite explicitly that the issue was price, not whether there were big or small players in the market. He said he was a free marketeer and saw no need to worry about the marketplace, and that once prices were low it did not matter who suffered, whether it was the indigenous food sector, the supplier or the retailer. It did not matter as long as the price was passed on to the consumer.

That was an admirable statement but he is now saying the opposite in the UK in his capacity as Chairman of the OFT, which is examining why there are so few alternative stores to Tesco and other major multiplies in small villages and towns in terms of competition. Tesco has taken over the convenience and multiple sector in the UK. Dr. Fingleton can change his position and he does so regularly depending on which way the wind is blowing.

Our legal advice indicates that the legislation does not take into account fears relating to predatory pricing. Mr. Michael Collins, SC, of whom I am sure the Minister and his officials are aware, was chairman of the Competition and Merger Review Group that reviewed on behalf of the Department the groceries order and several other matters in relation to competition law. He once stated: "If a case of collective dominance could be established this would at least lay the foundation for the argument that predatory pricing is an abuse of that collective dominance".

From my understanding — I have had occasion to look at this in the context of the Competition and Mergers Review Group — I believe the chances of establishing collective dominance are extremely slim. It is a matter of defining dominance. We have only one case law in this country wherein dominance is defined, namely, the Drogheda Independent case wherein the Competition Authority stated that even though it had 65% of the market it was not dominant. How can we have confidence in the enforcement procedures of the Competition Authority to decide the definition of dominance? People do not have confidence in the authority in terms of enforcement of this provision given its track record to date in interpreting such matters.

If a person wished to take a case in relation to predatory pricing, how long would it take and how much would it cost? It could, in terms of economic analysis and the legal argument necessary, cost a great deal. How long would it take a family business to pursue a case such as that referred to by Deputy Brady in relation to predatory pricing under section 5? A small business would not survive such action and would not be congratulated for doing so. Everybody accepts that predatory pricing is harmful because it prevents people providing diverse and competitive businesses in a small town or city. How to deal with such problems is what we are trying to tease out. Establishing dominance is a critical issue.

The Minister will need to reflect on the inclusion of an alternative mechanism to that provided. Nobody believes his bland statement that the Competition Act 2002 is sufficiently robust to deal with these issues. There is, at least, a difference of opinion in that regard. Why not take a belt and braces approach to this and agree that more robust legislation is needed to achieve his and our objective?

The Minister stated he believes predatory pricing is banned under existing law. However, we believe that may not be the case. He should not fear accepting an amendment which would ensure we are both right. He should provide a belt and braces approach that will provide reassurance to those affected and to those of us who are genuinely concerned about this matter. I believe a mechanism can be found to achieve that if the Minister is of a mind to return to the issue on Report Stage.

Mr. Martin

A number of points have been raised. Deputy McHugh stated he intends to support the amendments and that I should do likewise. To be frank, I am baffled by that statement because Deputy Howlin has already stated his amendment is not comprehensive enough and that——

Mr. McHugh

On one issue only.

Mr. Martin

I have not finished.

Chairman

Allow the Minister to conclude.

Mr. Martin

Deputy Howlin also said his amendment is flawed in so far as it contains no definition of predatory pricing. I accept he genuinely wishes to tease out the issues but there is no way I can accept an amendment that is not comprehensive or is flawed by definition from the outset.

Mr. McHugh

The Minister can accept the foundation of the amendment and add to it if he so wishes.

Mr. Martin

I did not interrupt Deputy McHugh.

Chairman

Please allow the Minister to continue.

Mr. Martin

Everybody has stated their opposition to predatory pricing. Acceptance of these amendments would damage our position on predatory pricing.

Mr. Howlin

That is not so. I explained why that is not so.

Mr. Martin

It would weaken our position and I have explained why. I went into great detail in my opening statement in explaining why these amendments would weaken our position. I offer the same explanation to Deputy Hogan who suggested we try to reach consensus on the issue. I readily accept the situation is not simple and that one cannot simply take a case and reach the promised land over night in terms of prosecution and so forth. Members are refusing to accept that the Competition Act 2002 deals with this issue in a stronger manner than what is being proposed.

Mr. Hogan

Is the Minister referring to section 4(1)?

Mr. Martin

No, section 5, which deals with the abuse of dominant position. It states that any abuse by one or more undertakings of a dominant position in trade for any goods or services in the State or any part of the State is substantially prohibited. Mitchelstown can be a defined market. If one engages in national pricing one creates a national market. However, I will deal with that issue when we come to deal with Deputy Hogan's amendment No. 12.

Section 5(2) of the Competition Act 2002 states:

Without prejudice to the generality of subsection (1), such abuse may, in particular, consist in—

(a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions,

(b) limiting production, markets or technical development to the prejudice of consumers,

(c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage,

(d) making the conclusion of contract subject to acceptance by other parties of supplementary obligations which by their nature or according to commercial usage have no connection with the subject of such contracts.

Subsection (3) also deals with mergers, acquisitions and so on.

Deputy Hogan referred to the commentary of Mr. Michael Collins, SC, in terms of collective dominance. Mr. Collins stated that collective dominance was difficult to establish because it did not exist. Something that does not exist is, by definition, difficult to establish.

Mr. Hogan

Case law would determine that.

Mr. Martin

I have read his opinion which focuses more on aggressive pricing. People have spoken a great deal about development of the trade and of how multiples have become more powerful and so on. There was more concentration in the Irish market during the operation of the groceries order than there was in the UK market which had no groceries order. That is the reality.

Mr. Hogan

The Minister is not taking account of symbol operators.

Mr. Martin

I am.

Mr. Hogan

The Minister is not taking them into account.

Mr. Martin

Yes, I am.

Mr. Howlin

The Minister should give us the figures in that regard.

Mr. Martin

One should not confuse symbol operators with truly independent retailers.

Mr. Hogan

I am not doing that.

Mr. Martin

Many small stores trade independent of any group. There has been a significant decline in the past 20 years in the number of truly independent grocers in the country. More than 20%, or approximately 2,500 stores closed between 1987 and 2002 during the time the groceries order was in operation. Many others gave up their independence to become part of a symbol group. I have no difficulty with that. Not only did the groceries order not protect those truly independent traders but it made it more difficult for them to compete not just with the multiples but-----

Mr. Howlin

There is no evidence of that.

Mr. Martin

Deputy Howlin should allow me to continue.

Mr. Howlin

The Minister cannot just make assertions, he must show us the evidence.

Mr. Martin

I am coming to that. The groceries order made it difficult for independent traders to compete not only with the multiples but, in most cases, with other traders of a similar size who belonged to a symbol group. Why is that? It is because during the operation of the groceries order wholesalers found themselves in the position of being able to determine, by the simple act of putting a price on an invoice, the minimum price which retailers could charge consumers for groceries. This vested enormous power in the hands of wholesalers and directly encouraged the growth of the symbol group style operations.

Truly independent traders did not enjoy the buying power of the symbol group competitors and this put them at a competitive disadvantage from the outset. Their ability to compete was taken out of their hands by the groceries order and because they were no longer free to decide the prices at which they could sell. The prices were directly linked to the price on the invoice. A truly independent trader who wished, as part of a strategy to compete with symbol group stores to sell milk or bread cheaply while recovering margin in other products like cornflakes or fish fingers, was prohibited by law from doing so. A trader was not allowed to sell below the price on the invoice even if it meant the product was being sold above cost and a profit was being made on the sale. More damaging was the fact that the truly independent trader was likely to be buying from a local cash and carry store which in many cases was supplying the symbol group retailer with whom that trader was competing.

The groceries order was not the panacea it is claimed in the context of the growth and development of multiple stores. While people have hid behind the claim for a long time, the order did not prevent concentration in the Irish market or the growth of Tesco, Dunnes Stores and others. There are other considerations which affect the market. The examples people have articulated occurred when the groceries order was in place.

Mr. Hogan

Will the Minister accept amendments Nos. 12 and 13?

Mr. Martin

I will not. I will come to them later.

Mr. N. O’Keeffe

The Minister quoted from the Competition Act, but my information is that it is impossible to enforce as its provisions on predatory pricing are too easy to get around. I understand the section is not worth the paper it is written on.

Mr. Martin

No.

Mr. N. O’Keeffe

No one has taken an action.

Mr. Martin

In a European case law context, actions have been taken.

Mr. N. O’Keeffe

No one has in our market.

Mr. Martin

Our provisions replicate the European treaty.

Mr. N. O’Keeffe

The provisions should be strengthened to outlaw predatory pricing.

Chairman

If members do not speak a little bit slowly, we will need an interpreter here at certain times.

Mr. N. O’Keeffe

I have a touch of flu. I simply wish to make the point that the section is not worth the paper it is written on as far as predatory pricing and the protection of the small retailer goes. No one has taken a court case on it. The point being missed is that it is necessary to engage in predatory pricing to gain market share. The issue is market share and becoming a dominant player. If one has access to enough wealth and trade, one can take out one's competitors. Businesses allocate certain funds to stores in certain towns and destroy the competition. That is the issue.

Mr. Martin

Article 82 of the EU treaty is the key provision on which the Competition Act and section 5 are based. It is by far the strongest legislative measure on the table today and is the subject of precedent in case law. Deputy Ned O'Keeffe says a case has not been taken, but it has. What is on offer in the amendments is a weakening of the position. I do not think Deputy O'Keeffe wants that. I certainly do not.

Mr. N. O’Keeffe

I find it difficult to argue with the Minister as he a friend of mine as well as a party colleague.

Mr. Martin

I value the Deputy's constructive insights into these matters.

Mr. N. O’Keeffe

Can the Minister find a form of words to strengthen the provisions we are amending here today?

Mr. Martin

While it is our belief that we cannot, we will reconsider the matter and revert to the Deputy.

Mr. N. O’Keeffe

I am prepared as a member on the Minister's side of the committee to allow him to reconsider and make an amendment on Report Stage.

Mr. Martin

We have looked at the matter.

Chairman

The Minister has agreed to consider the matter for Report Stage.

Mr. Martin

Well, no. I am trying to be very honest with the committee. We have looked at the issues, examined them and obtained legal advice, which is not inconsiderable.

Chairman

Is there another European jurisdiction from which precedent can be cited?

Mr. Martin

I have quoted the precedent in European case law, as has Deputy Howlin. It is not a simple issue and it is not just about market share. Deputy Ned O'Keeffe has asked me to consider the matter between now and Report Stage. We abhor predatory pricing and, on the strength of our legal advice, suggest that the Act, the treaty and European case law are very strong on the abuse of dominance. Predatory pricing is an abuse of dominance and is therefore prohibited and subject to criminal sanction under the provisions of the Competition Act. If people want us to reconsider the matter, I will do so, but without making any promise or commitment. I wish to be honest about how we have arrived at our current position.

Mr. Howlin

I wish to return to the basic focus on predatory pricing. I prefaced my original comments on the assumption that we all shared the common objective of opposing predatory pricing. Having listened to the Minister, I am not as sure of that now. While it is all well and good for colleagues from Fianna Fáil to be for and against a proposition at the same time, the issue is quite clear. I am honest enough to admit the instrument I propose might not be perfect, but it is the best on offer today. It is a far sight better than doing nothing, which is what the Minister proposes on the basis that the matter is covered already in the Competition Act.

The Minister said the best bastion against predatory pricing is Article 82 of the treaty. Articles 81 and 82 are designed to protect competition in the market but in no way preclude us from making a stronger bastion in our domestic law against predatory pricing. Similarly, Article 3(2) of Council Regulation No. 1 of 2003 states that member states shall not be precluded from adopting and applying on their territory stricter national laws which prohibit or sanction unilateral conduct engaged in by these undertakings. We have the ability to create stronger law which we should do if we are to take the Minister at his word that he abhors predatory pricing.

We asked people for submissions on the way in which we have dealt with predatory pricing to date. Can the Minister give me one instance of an Irish court decision which addressed predatory pricing in a local or national market since the 2002 Act was implemented? Does the Minister accept that there is no prohibition in the legislation or treaty on the introduction in this jurisdiction of a more robust prohibition on predatory pricing than the one encompassed in the EU treaty? Does an individual operator within the Irish groceries market who believes he has been subjected to predatory pricing have the right under the 2002 Act to take his own action to defend his position?

Mr. Martin

Deputy Howlin's remarks about people having both sides of the argument were very unfair. One could equally apply the accusation to the Labour Party.

Mr. Howlin

I am used to sharing a constituency with a Minister who is sometimes more opposed to Government policy than I am.

Mr. Martin

That is the person who consistently tops the poll.

Mr. Howlin

The Minister will find that happened on only one occasion.

Mr. Martin

He has to share hope with others. There is a balance to be struck between competition and having national laws which kill competition and keep prices high.

Mr. Howlin

We are getting close to the heart of the issue. The Minister does not want to outlaw predatory pricing.

Mr. Martin

I will come back to the Deputy's allegation about members of my party who are sitting on both sides of the fence. I argue that the Opposition are attempting to straddle both sides of the fence. They claim to be on the side of the consumer by calling for lower prices and running websites describing a rip-off republic, but when there is a proposal to abolish the groceries order and deal with an unacceptable market intervention which has kept prices artificially high and is a deficient act in itself, they disagree. I note also that the Opposition came on board on this proposal post-Eddie Hobbs.

We have not adopted the current policy on foot of the report of the consumer strategy group or the views of the Competition Authority. Our decision was based on the work undertaken by my officials and on advice taken in the context of the report that the Department compiled, which has not been robustly contested by anybody, including Deputy Howlin. There has been no substantive rebuttal of the key points in the report.

Mr. Howlin

The Minister should read my Second Stage speech again.

Mr. Martin

I was present when the Deputy made it. The key point in regard to the Deputy's amendments is that they would weaken the legislative position on predatory pricing.

Mr. Howlin

That is patently untrue.

Mr. Martin

If I were to accept those amendments they would weaken and dilute the strength of our Competition Act and what is in European case law.

Mr. Howlin

Is the Minister suggesting——

Mr. Martin

I have not finished.

Mr. Howlin

On that point, is the Minister suggesting that accepting the amendment somehow negatives our treaty obligations under Article 82?

Mr. Martin

If the Deputy's amendment is included in our Act, any subsequent reading of it in the courts would be that section 5(2) is overtaken by what the Deputy is putting in——

Mr. Howlin

Not at all.

Mr. Martin

——or that it is not sufficient.

Mr. Howlin

That is not so. It is just a different layer. Article 82 would apply equally in all court determinations. The Minister is wrong.

Mr. Martin

The Legislature does not legislate unnecessarily. That is a presumption the courts always accept and would accept.

Mr. Howlin

The Minister is wrong on that.

Chairman

The Minister, on the second and third questions.

Mr. Martin

Individuals would be empowered in terms of taking a case under the Competition Act. The Competition Authority has received ten complaints in regard to predatory pricing. Four were not followed up by the complainants. Three did not involve below cost selling, and others were not predatory. Irish courts will, of course, have regard to the European Court ruling, which I have already outlined.

Mr. Howlin

That was not the question. The question was is there any individual——

Mr. Martin

I am giving the position.

Mr. Howlin

The simple answer is "No".

Mr. Martin

It is not surprising. Globally, predatory pricing is quite rare because there are huge risks for the group or undertaking that engages in it. They have to make sure they eliminate all their competition and then make sure a new competitor does not arrive once they have done that. It is not something people go into willy-nilly.

Chairman

The Minister on the third question.

Mr. Martin

I have dealt with that.

Mr. Hogan

I am not surprised the Minister has come to conclusions regarding predatory pricing, given that no case has been taken. If that is the way legislation is being introduced here, that is fine. However, I remind the Minister that in the past the same officials working in the Department drew up a report on this issue and the groceries order. They came to a different conclusion in 2001 when the Tánaiste and Minister for Health and Children, Deputy Harney, was Minister for Enterprise, Trade and Employment.

Mr. Martin

That was not the same.

Mr. Hogan

A review was carried out in 2001 on the issue of the groceries order.

Mr. Martin

Before the 2002 Act.

Mr. Hogan

In 2001 the issue was discussed and analysed in the Department of Enterprise, Trade and Employment under a different Minister and the Department came up with a different result. I do not want to hear any hypocrisy about what has been going on in regard to predatory pricing. We are here to do a job in regard to the Minister's stated objective of banning predatory pricing. However, the Minister feels it has been banned already. We do not. We are trying to find a way of getting around that and if the Minister was a little more constructive we might arrive at a consensus. Section 5 of the Competition Act 2002, which the Minister constantly quotes, deals with abuse of a dominant position. The Minister expects us to take a pig in a poke and accept his interpretation, even though there is no case law in this jurisdiction.

Mr. Martin

We have case law. We are in the European Union. We are within the jurisdiction of the European Court.

Mr. Hogan

We have no domestic interpretation.

Mr. Martin

The Deputy should be constructive.

Mr. Hogan

What is the abuse of a dominant position? Will the Minister define that?

Mr. Martin

I read it out earlier. It is set out in section 5(1) of the Competition Act 2002.

Mr. Howlin

What is dominance?

Mr. Martin

I went through the legal jurisprudence on this earlier at some length.

Mr. Hogan

I listened carefully, but I am not convinced.

Mr. Martin

I explained the dominance issue. Deputy Howlin asked me to deal at length with the issue.

Mr. N. O’Keeffe

There is too much politics being made out of this.

Mr. McHugh

Where does Deputy O'Keeffe stand on this? Is he on this side or the other side or is he up in the air?

Mr. Hogan

We have put down a very reasoned amendment to ensure that the issues Deputy Brady outlined in regard to quotas——

Mr. Martin

Will Deputy Hogan explain how his amendment will make it any easier to prove abuse of a dominant position or predatory pricing?

Mr. Hogan

I am prepared to put down an amendment, which the Minister is not, that would explicitly ban predatory pricing

Mr. Martin

How will the Deputy's amendment make matters any better?

Mr. Hogan

It would ban predatory pricing.

Mr. Howlin

The Minister should answer questions rather than cross-examining the Opposition.

Mr. Hogan

Allow me to conclude.

Mr. N. O’Keeffe

On a point of order, the Minister is being reasonable. He is trying to accommodate to the situation. However he is getting too much aggression from the other side of the House. The Opposition is trying to dominate the proceedings.

Chairman

That is not a point of order. Deputy Hogan may conclude.

Mr. Hogan

Let us move on from the hypocrisy of the last statement.

Chairman

I remind members that we have ten minutes left in this session. Allow Deputy Hogan to conclude without interruption.

Mr. Hogan

The Minister mentioned the difficulty in understanding how quotas would operate. Deputy Brady has given an example where a retail or multiple outlet makes a special offer which is confined to a particular locality. The Minister's interpretation is that the multiple would be dominant in the locality. Would an individual in the locality be able to take a case and prove abuse of dominance under section 5 of the Act?

Mr. Martin

Yes, in a local market.

Mr. Hogan

What is the definition of the term "local market"?

Mr. Martin

It is up to the Competition Authority. The Competition Authority can make determinations in regard to any particular case. The Act includes any part of the country.

Mr. Hogan

I have a problem with enforcement by the Competition Authority. The Minister knows that.

Mr. Martin

I will deal with amendments Nos. 12 and 13.

Mr. M. Brady

: The Minister stated that the 2002 Act adequately deals with predatory pricing. If I am a small retailer, a big store moves in alongside me and I believe it is targeting me and that I am being treated unfairly because of predatory pricing, how can I address that? How much will it cost me? Only the super rich in this country can go to court. The ordinary person working for a living cannot take the super rich to court. They would not have the finances to do so. Nor would they risk it because by the time they had gone through all the rigmarole they would be out of business and on the dole. Can somebody explain to me what procedures are in place if I feel I am being unfairly treated?

Mr. Martin

The amendments put down by the Opposition do not deal with that issue and would not improve matters in any way. If a complaint was made and it was upheld the Competition Authority would take the case against the offending party.

Mr. Hogan

Who would pay for it?

Chairman

The Competition Authority.

Mr. McHugh

Why is the Minister so exercised about revoking the groceries order in a situation where there is no demand for its abolition? There is no demand in the Minister's party, if we want to bring it down to party politics as Deputy O'Keeffe might want to do. There is no evidence that it will lead to lower prices. Before he departed this country Dr. John Fingleton made the statement to this committee that if the groceries order were revoked it would lead to lower prices. When he was asked for the evidence, he did not have any. It was something that was in his head. I believe this is something that is in the Minister's head as well. There is no evidence to suggest this will bring about a better situation for the consumer.

Mr. Martin

The most recent survey by Nielsen showed that yet again, we have the highest food prices in Europe.

Chairman

In the past two years evidence was given to this committee that Irish prices have declined to 3.6% less than prices in the UK. UK prices increased by 2.4% in the past two years. Irish prices declined by 1.2%. Those figures have been verified by the Central Statistics Office.

Mr. Martin

I refer the Chairman to our own report.

Mr. Howlin

The CSO is the authoritative body. I am arguing for a position it already had.

Mr. Martin

Irish food prices are three times those of the UK. We have buckets of evidence to the effect that the groceries order kept prices artificially high. Where is the demand for its abolition? It comes from the ordinary person in the street.

Mr. Howlin

Do we have those figures?

Mr. Martin

The ordinary person has not been well served by the groceries order.

Mr. McHugh

In that case, I do not know any ordinary person, because nobody has come to me seeking to have it revoked.

Mr. Martin

The rationale for revoking it is that the consumer complains about prices all of the time. We are trying to alleviate the situation for the consumer and achieve a balance.

Mr. McHugh

The Minister is out of touch with ordinary people if he believes that is their view.

Mr. Martin

Someone has to represent the ordinary person here.

Mr. McHugh

That is why we are here.

Mr. Martin

I do not believe that is so.

Mr. Howlin

I propose we adjourn until 5.30 p.m. because there will be a division which should not be called while the Order of Business is in progress.

Chairman

Is that agreed?

Mr. Martin

We should take the vote now.

Chairman

The vote would take eight minutes, which would take us into the Order of Business.

Sitting suspended at 4.15 p.m. and resumed at 5.30 p.m.

Chairman

We resume our consideration of the Competition (Amendment) Bill 2005. How stands the amendment?

Mr. Howlin

The Minister, having had a coffee, may be more conciliatory in his view and may listen to the arguments posed not only by the Labour and Fine Gael Deputies but by members of his own party. I hope he will at least be minded to put forward the view that we should provide a more robust prohibition on predatory pricing. If there are deficiencies in my suggestion I am happy to give way to the Minister's proposals which I am sure, on mature reflection, he will offer to the committee.

Mr. Martin

I have already commented on the matter. I have examined my Chinese tea leaves but have been unable to come up with any further enlightenment in terms of the quality of the amendments before me. We re-assert the position as outlined by me in relation to European Court case law. The cases tried and prosecuted under that law remain the best legislative defence against predatory pricing, which we abhor. The amendments are flawed and I am unable to accept them.

Mr. N. O’Keeffe

May I ask a question?

Chairman

We have debated this amendment for 27 minutes.

Mr. N. O’Keeffe

That is not long.

Chairman

The Deputy may ask one question.

Mr. N. O’Keeffe

Reference was made to prices in the UK vis-à-vis Irish prices. It was stated that the margins here are much higher than in the UK. Did the Minister take into account our sparse population and the fact that we are an island which imports enormous amounts of goods? Did the Minister say prices here are 10% or 12% higher than in the UK?

Mr. Martin

They are three times higher.

Mr. N. O’Keeffe

I do not know where the Minister got that figure.

Mr. Martin

I got it from the Department's report.

Mr. N. O’Keeffe

Ten people could come up with ten different figures. Predatory pricing is rampant in the UK. Often all shops in a particular location are part of one large company. When I raised this issue I was told people had only one choice and that was to purchase from one combine.

Chairman

The Deputy should ask his question. We have debated this matter for long enough. The Deputy should not make a Second Stage speech.

Mr. N. O’Keeffe

Approximately 6% is the differential between the UK and Ireland, a figure which I understand can be substantiated.

Chairman

Perhaps when he is responding, the Minister will clarify——

Mr. N. O’Keeffe

Is the figure used by the Minister an Eddie Hobbs figure or did he get it from the consumer strategy group? I was going to suggest that Ms Anne Fitzgerald should leave the shop and I would do her returns every month.

Mr. Martin

It is neither. It is a EUROSTAT figure taken from page 127 of the Department's report on the groceries order.

Mr. Howlin

Is it a bacardi figure?

Mr. Martin

No, it is not.

Chairman

I ask members to allow the Minister to respond without interruption. Members have been permitted to ask questions and should give the Minister an opportunity to respond. Please give this Minister the same consideration as given to other Ministers who have come before the committee.

Mr. Martin

The figures are taken from table 16, page 127 of the Restrictive Practices Order 1987 — a Review and Report of Public Consultation Process by the Department of Enterprise, Trade and Employment. We compared the rate of food inflation in Ireland with that in the UK for the period since 1996, the year in which EUROSTAT updated its figures. Table 16 illustrates the difference between Ireland and the United Kingdom. Food price inflation in Ireland is three times higher than in the UK.

When one makes a comparison between Ireland and the UK in terms of the clothing sector no such disparity exists. The argument has always been that the disparities are based either on the higher cost base in Ireland or the higher cost input and so on. That does not stack up either because tax rates here are lower. One can argue the issue 101 different ways.

Mr. N. O’Keeffe

May I ask a question?

Chairman

The Deputy should listen to the Minister. The Vice-Chairman, Deputy Martin Brady, asked a relevant question prior to our suspension. He asked who would pay the costs if the Competition Authority took a case on behalf of a consumer. The Vice-Chairman asked me to have that matter clarified by the Minister.

Mr. Martin

If the Competition Authority takes on a case it pays the costs. Depending on the outcome, the courts may decide on whether the Competition Authority or the other party should pay the costs.

Chairman

Is the amendment being pressed?

Mr. Howlin

The Minister said food prices in Ireland were three times higher than in the UK. What he actually means is that the inflation rate was three times higher between 1996 and 2005. There are all sorts of reasons for this, including the fact that Ireland is a food producing country. The table immediately before the one to which the Minister drew the committee's attention, table 15, shows that food inflation was negative during the duration of the groceries order from 1987 to 2005. The figure in the table is minus 1.7%. The conclusion, as stated in the Department's report, is that food inflation is generally low.

Mr. Martin

The Deputy should compare that with table 17 on the next page.

Mr. Howlin

The Minister is comparing grocery prices to Moroccan clothes.

Mr. Martin

The Deputy should not be facetious.

Mr. Howlin

I am not being facetious. This is an important issue. The Minister has misled us on this before.

Chairman

The Deputy should ask a question.

Mr. Howlin

This is a Committee Stage debate.

Chairman

I am on the Deputy's side.

Mr. McHugh

We are supposed to be impartial and the Minister needs protection.

Mr. Howlin

This is an important issue and I have approached it with an open mind. The problem is that I have not heard a compelling case as to why the Competition Authority and the Minister decided that this was the beast to be slain. Food price inflation in Ireland is low. One can speak forever about food inflation in Ireland relative to the UK which from the 1940s had a cheap food policy, but quality food is important here and the maintenance of the food industry. There are other variables. One cannot simply compare food price inflation with clothes price inflation given we no longer have a domestic clothes industry in Ireland, no more than Britain does. The actual commodity price must at least be a significant factor. There are many other fixed prices but the commodity price is an issue. We import all our clothes and that is a factor in the disparity between the figures on price inflation for food and clothes.

Two things were apparent during the operation of the groceries order, namely, food price inflation generally was low in comparison to a range of other things one would imagine would have been prioritised by the Competition Authority, the Minister and his Department; and, second, for the bulk of the time the order was in force there has been a negligible difference in the disparity between items covered by the groceries order and those not covered. It escapes me, therefore, why this issue should command the attention of the Minister, his officials, the Competition Authority and, in a legislative context, the Dáil and Seanad. The Minister has made the call and I suppose he is entitled to do so. What we need to do is return to the issue of predatory pricing.

The Minister said that he shares entirely the Opposition's view and is also opposed to predatory pricing. However, he says the most secure and robust way to prevent the phenomenon is to rely on the European Court's determinations in cases other than Irish cases, of which the Minister admits there are none, on Article 82 of the European treaty. The Minister said that it would be dangerous to dislodge this approach, even through a stronger form of words in primary legislation. His position is that the robust defence against predatory pricing is very clear. I thought I had demonstrated, by quoting a variety of the European Court decisions on which the Minister relies, that one of the prime issues is determining what a dominant market position entails. It is like asking how long is a piece of string, particularly in light of the great variations in the case law that is available to be examined. I do not see that a very robust mechanism exists in Article 82, nor does the industry. The Minister has certainly failed to demonstrate its robustness. Saying it is so does not make it so.

Mr. McHugh

The Minister referred earlier to the ordinary person putting pressure on him to revoke the groceries order. I do not know what is his definition of an "ordinary person" but it must fit into the range of persons from representatives of Tesco to representatives of the Society of St. Vincent de Paul. People from that spectrum of individuals attended the committee. Tesco's representatives said they did not have a problem with the groceries order and the Society of St. Vincent de Paul asked that it not be revoked. The society represents the less well-off members of our society, while Tesco represents people who are very well off. That covers both ends of the spectrum. If the ordinary person sits somewhere between the two poles, who is he or she and why has he or she put so much pressure on the Minister?

Mr. Martin

The abolition of the groceries order is the right decision.

Mr. McHugh

Why is it right?

Chairman

The Minister to respond, without interruption.

Mr. McHugh

The Minister is becoming somewhat like the Minister for Justice, Equality and Law Reform. Something is right simply because he thinks it is right.

Mr. Martin

The decision to abolish the groceries order is the right one for the ordinary shopper because the order was a protectionist measure which kept prices artificially high. As I have said on many occasions, my belief is borne out by evidence. Tesco may not have pressed for the revocation of the groceries order but it does not represent the ordinary person in the street. It called for change in the groceries order.

Mr. McHugh

Who does the Society of St. Vincent de Paul represent?

Mr. Martin

The report sets out the positions represented to us by the various interested organisations but we did not share their conclusions on access to shopping. Personal experience in my constituency bears out my perspective on the issue of access.

Mr. McHugh

Did the Minister disregard the society's submission?

Mr. Martin

I did not agree with it. The predatory pricing issue in respect of which Deputy Howlin outlined his position has been before us for quite some time. It is not simply the case that we are stating something without any basis, we have sought legal advice. If I accepted Deputy Howlin's amendment or that in the name of Deputy Hogan, the effect would be to weaken the legislative and case law position on predatory pricing. I have said many times that amendment No. 5 could significantly weaken the provisions of the 2002 Act because it presupposes that section 5 thereof does not already prohibit predatory pricing. It is fundamentally flawed. Deputy Howlin accepted that his amendment was flawed and insufficiently comprehensive. I cannot accept it.

Amendment put.

The Committee divided: Tá, 5; Níl 7.

Tá

• Breen, Pat.
• Hogan, Phil.
• Howlin, Brendan.
• Lynch, Kathleen.
• McHugh, Paddy.

Níl

• Brady, Martin.
• Callanan, Joe.
• Cassidy, Donie.
• Dempsey, Tony.
• Hoctor, Máire.
• Martin, Micheál.
• O’Keeffe, Ned.

Amendment declared lost.

Amendment No. 6 not moved.

Mr. Hogan

I move amendment No. 7:

In page 5, between lines 27 and 28, to insert the following:

"(5) Subject this section, a retailer, as defined in this Part, shall not—

(a) engage in predatory pricing for the purpose and intent of eliminating or reducing competition in the provision of trade in any grocery good in the State or any part of the State,

(b) directly or indirectly impose unfair selling prices, or

(c) impose any quota in respect of goods offered for sale at any retail outlet owned or operated by that retailer.

For the purposes of this subsection, ‘predatory pricing' or ‘unfair selling prices' constitutes the sale by a grocery goods undertaking at a retail price and in a manner that is likely to have the effect of eliminating or reducing competition from a particular competitor in the State or any part of the State, but does not include grocery goods that have been offered for sale in good faith for a substantial period of time.".

Amendment put.

The Committee divided: Tá, 5; Níl, 7.

Tá

• Breen, Pat.
• Hogan, Phil.
• Howlin, Brendan.
• Lynch, Kathleen.
• McHugh, Paddy.

Níl

• Brady, Martin.
• Callanan, Joe.
• Cassidy, Donie.
• Dempsey, Tony.
• Hoctor, Máire.
• Martin, Micheál.
• O’Keeffe, Ned.

Amendment declared lost.

Amendments Nos. 8 and 9 not moved.

Mr. Hogan

I move amendment No. 10:

In page 5, line 33, after "person" to insert the following:

", including the National Consumer Agency and consumer groups,".

The purpose of this amendment is to include other groups that may have a view on taking an action under the new section 15B. Not only an individual might want to take action under the new section 15B. A statutory group — for example, a group that is close to the Minister's heart, namely, the National Consumer Agency, or other consumer groups such as the Consumers' Association of Ireland — might want to do so. It is reasonable to include such groups.

Mr. Martin

The language we have used means that any party with a grievance would have an automatic right of action. That includes the new National Consumer Agency and any consumer groups. The problem is that creating a list might result in excluding individuals or groups. I will examine the issue between now and Report Stage.

Amendment, by leave, withdrawn.

Mr. Howlin

I move amendment No. 11:

In page 5, line 49, after "the" to insert "District Court or in the".

It would be onerous in terms of expense for any person to take a case in the Circuit Court or in the High Court. Why not include the District Court as well, particularly if an individual is taking a case for breach of the Act?

Mr. Martin

The Bill has been drafted to be consistent with the 2002 Act. It is conceivable, perhaps not probable, that remedies sought under this Bill would be required to have a wider geographical application than a District Court location. For example, injunctions or declarations might be sought in regard to countrywide conduct on the part of a grocery undertaking. Granting jurisdiction to the District Court could, therefore, require an aggrieved party or the Competition Authority to seek remedy in a number of courts and that would be cumbersome and inappropriate.

Mr. Hogan

Surely that would be taken into account before a case was taken.

Mr. Martin

I can see why the Deputy tabled the amendment, given that he put forward earlier amendments the purpose of which was to criminalise certain actions. I can see the consistency in the Deputy's amendments. I will examine the matter between now and Report Stage.

Amendment, by leave, withdrawn.

Chairman

Amendments Nos. 12 and 13 are related and may be discussed together.

Mr. Hogan

I move amendment No. 12:

In page 6, between lines 9 and 10, to insert the following:

"(5) Without prejudice to section 15B, any retailer selling grocery goods directly to the public at a retail price level that is less than the cost to the retailer of such goods, shall offer the goods for sale at that retail price in all retail outlets owned or operated by the retailer (whether directly or by a subsidiary or associated company) without restriction or quota.".

This is another very important issue in respect of which the Minister has made great play of the fact that discounts and rebates are not being passed on to the consumer in the form of lower prices. Suppliers in the food sector in particular are squeezed for lower margins by retailers and buyers in order to be allowed to supply goods and services to the particular retail shop and the benefit of savings can be pocketed by the retailer. Why not legislate explicitly to ensure that the consumer will receive the benefit of savings made in this way by retailers and multiples? In the real world, purchasers of goods and services squeeze their suppliers if they are having promotional offers or are engaged in some kind of low price promotion. That is why we are so concerned about predatory pricing.

If the Minister believes there are benefits from increased competition and purchasing power by multiples, in particular in the context of small suppliers, at least the consumer should get the benefit of it and not the multiple. Tesco is doing fine, having made a profit of €2 billion last year. If the Minister wants the person on the street to benefit from this legislation we must include mechanism to enable that to happen. If there are promotions relating to the opening of new stores, weekend offers or whatever else, we want to ensure that a multiple is not targeting a small shopkeeper in a particular locality, that there is not a quota of goods and services offered for sale and that the benefits of rebates and discounts available to the multiple will be available to consumers all over the country and not just those in one small location.

Mr. Martin

Deputy Hogan's amendment does not deal with the issue of discounts.

Mr. Hogan

We are dealing with amendment No. 13 as well.

Mr. Martin

By definition the abolition of the groceries order removes the raison d’être of discounts.

Mr. Hogan

That is not what happens in the real world.

Mr. Martin

It facilitates the non-applicability of discounts into the future and competition or the freedom of choice for people to decide at what price they want to sell.

Amendment No. 12 contains two essential provisions. The objective is to provide that where a grocery retailer sells goods below cost price the same price must be charged in all shops operated by the retailer nationwide. I will refer to that as national pricing for the purposes of this debate. The second is that the retailer must not restrict the amount of such goods a customer can buy. I will refer to the latter as controls on restriction of offer.

Amendment No. 13 defines costs as being inclusive of all discounts, rebates or other allowances received by the retailer on supply of the goods. The intention is to prevent multiples from targeting individual retailers in particular areas of the country. There is no reason that there should be a uniform price across the country. Any attempt to impose such controls would prevent competition in local markets. It is evident from the CSO figures that there are already differences between actual prices across the country. Dublin tends to have higher prices for some grocery basket items than areas outside the capital. That is how the market operates. This is a significant attempt to have the Oireachtas and Government interfere, unduly in my view, in the marketplace. To impose a national price would be contrary to actual experience. It would be an artificial restraint on competition.

The first and most fundamental issue to arise is that such a requirement would seem to create, de facto, a national market in the grocery trade. From the point of view of establishing dominance, competition law allows the market to be determined locally on a case by case basis. We discussed that issue earlier. Any implication, legal or otherwise, that the market was national could result in making the task of establishing local dominance and predatory pricing more difficult. We have had a long debate on predatory pricing. The effect of this amendment would be to undermine our case, particularly in the context of local markets wishing to establish dominance in predatory pricing.

The second issue is that if such a rule prevented a supermarket chain from charging low prices in one part of the country because it was not in a position to do so nationally, it could have an anti-consumer and anti-competitive impact. Such a rule might well prevent a multiple operator from determining selling prices in response to local trading conditions, such as, for example, the presence of a local farmers market to which the local store would wish to respond in a particular way. The impact of competition could, in this case, be severely diluted. It is likely that the imposition of national prices on the symbol groups would amount to a form of resale price maintenance by which prices charged by an independent owner-operator in, for example, Donegal could be determined by prices charged by his or her counterpart in west Cork. One of the advantages of abolishing the groceries order is that of encouraging individual stores to compete with each another. Exceptions would have to be created in respect of local produce not available nationally. A mechanism might also be required to differentiate between local and national delivery costs.

Important issues also arise in terms of enforcement, the most basic of which appears to be the manpower required to establish that multiples charge common prices across all their stores nationally. A second fundamental difficulty would arise in ensuring comparability of produce and pack sizes. For example, one would be required to check if the same brand of milk was being sold in Cork and Donegal and whether vegetables were comparable and being purchased from the same source. Placing controls on restriction of offer is not a new idea and was considered in previous reviews of the groceries order. It was rejected for a number of reasons, including perceived difficulties with enforcement and the potential reputational risk for multiples forced by a competitor to sell own brand products for resale. I do not believe the latter is a good reason not to proceed with such a provision. However, there are perhaps more fundamental issues that arise.

Such a regulation runs contrary to the general contract law principle of invitation. In other words, contract law holds that putting goods on display is not an offer to sell those goods; it is an invitation to the public to make an offer to buy them and no enforceable contract arises until such an offer is made and accepted. That being the case, controls and restriction of offer amount to a requirement to sell and thus may be in conflict with contract law.

The general thrust of the amendment is that controls and restriction of offer would apply only when a product was priced below cost. Enforcement would be problematic because I cannot see any mechanism by which a customer might prove a product was on offer below cost and thus force a sale. Circumvention of the controls might not be difficult with retailers placing limited supplies on open display at any one time and running to the stockroom every time the shelves were cleared.

The issue of fairness also arises. One reason for having a restriction of offer in certain cases is to ensure that all customers are given an opportunity to avail of the offering. It would be absurd to prevent the widest possible access to competitive prices. The proposed amendments give rise to the fundamental difficulty of defining what is meant by the term "below cost". This is a problem which also bedevilled the groceries order for the best part of 50 years. The requirement to include all discounts, rebates and allowances in the calculation of cost does not allow any means to account for such payments when made in arrears. How would the enforcement authority or court know at any given time whether the conduct in question is prohibited? National pricing and controls and restriction of offer would represent very serious interference in the freedom to trade and could only be justified by demonstrating that the public at large would benefit from such a measure. I am not satisfied that such benefits would accrue and I am not, therefore, predisposed to accepting the amendment.

Mr. Hogan

The Minister misunderstood the tone and spirit of the amendment, perhaps deliberately, because he has taken a free market approach. He does not understand, as outlined earlier by Deputy Martin Brady, what is happening to small retailers targeted by major multiples. I am seeking to ensure that all consumers, local and national, benefit when multiples engage in promotional sell-offs or discount selling. Multiplies have the financial wherewithal to target local retailers and will not encounter any difficulties in that regard, particularly under this legislation. I accept that the groceries order has been abolished. However, the Minister gave a commitment to protect people and to address the issue of predatory pricing in this legislation, thereby ensuring a level playing pitch for all.

I tabled the amendments in an effort to ensure that all consumers, not just local communities, benefit during promotional sell-offs and periods of discount selling. Such benefits should not be restricted. The Minister, in not accepting the amendments, is, through the legislation, restricting the point of sale and the cost of the product to local communities rather than the wider consumer.

Amendment No. 13 deals with rebates, discounts and allowances. What will now happen is that the indigenous food and drink sector in this country will be approached by multiples and offered preferential treatment by way of rebates, discounts and allowances in respect of promotional offers or their involvement in particular advertising campaigns. Who will pay for this? The supplier, not the retailer, will have to pay for it. The retailer will then pocket the money with no benefit to the consumer. If the objective of the legislation is to ensure that consumers benefit from competition in the marketplace — that is what we all want — the Minister could accept amendment No. 13, which would ensure that this happens. If the Minister can draft a better amendment than that tabled in my name, I would be happy to accept it. The spirit of my amendment is to ensure that consumers and not Tesco — which would allow it to double the €2 billion profit it made last year — benefit.

Mr. Martin

Fundamentally, the Bill is designed to protect competition, not competitors. The Deputy is being somewhat disingenuous. Acceptance of amendment No. 12 would result in the creation of a new floor below which prices would not ultimately go. We would be back to the groceries order by stealth in new legislation.

Mr. Hogan

No, that is not my intention.

Mr. Martin

That is what would happen.

Mr. Hogan

That is the Minister's opinion.

Chairman

The Deputy should allow the Minister to continue, without interruption.

Mr. Martin

Equally, I believe the concept of national pricing is mad-cap in nature. I do not see how it could be implemented across the country. I do not believe national pricing is competitive because it would, in essence, irrespective of local context or circumstances, result in everyone being trapped into charging one price and could restrict the right of an individual retailer as part of a symbol group to compete in a particular area. It would be an anti-competitive measure.

Mr. Hogan

The amendment relates to goods being sold below cost.

Mr. Martin

Who determines what constitutes below cost in any given situation?

Chairman

Am I correct in stating that below cost refers to a price lower than the cost of manufacture?

Mr. Martin

I would like to conclude what I am saying without being interrupted. The essence of this debate is whether one is overly protectionist or whether one favours competition. People have tried to straddle both sides of that fence.

Mr. Hogan

I am not doing that.

Mr. Martin

I am not saying the Deputy is doing that but people in general have tried to do it. There have been various bouts of protectionism throughout the country. I am sure members are aware of what happened in the food industry during the past 20 or 30 years. Enterprise Ireland and I have assisted Irish companies in the UK to gain access to the multiples being derided here today. We will not protect the Irish food industry or make it competitive by introducing what I consider to be unacceptable protectionist measures. To follow that course would be to do untold harm to our indigenous industries. Some of our own symbol groups are very successfully penetrating the British market, in which there is no groceries order. One group alone has approximately 2,500 stores in Britain. I met recently with Enterprise Ireland to hear of a range of indigenous companies which have gained access to Tesco in the UK and multiples in France. An island of 4 or 5 million people cannot protect itself with barriers.

Mr. Hogan

That is not the essence of the matter.

Mr. Martin

That is the essence. If I were to accept the amendment, it would be to regress 30 years.

Mr. Hogan

The Minister is entitled to his view.

Mr. Martin

Amendment No. 13 would not have the effect Deputy Hogan suggests it would.

Mr. Hogan

Has the Minister a better way?

Mr. Martin

I am taking the amendment that is before me.

Mr. Hogan

The Minister has no amendment.

Mr. Martin

Amendment No. 13 seeks in page 6, between lines 9 and 10, to insert a provision to the effect that the cost to the retailer of the grocery goods shall be calculated inclusive of all discounts. That does not provide for the passing on of discounts.

Mr. Hogan

Of course it does.

Mr. Martin

It does not say that. The obvious problem has been that once a below-net-invoice price was set, a significant climate for discounting was created. By removing the groceries order, we are changing the landscape fundamentally in that respect, as the Deputy knows. This is not just about passing on discounts.

Mr. Hogan

Is the Minister satisfied his free marketeer approach is the only way to achieve the objective of passing on savings to the consumer? Does he think there is no need to ensure through legislation that retailers do not pocket the savings they get from suppliers at the expense of consumers?

Mr. Martin

Ultimately, the consumer will win when there is genuine competition in the market. A national, legislative pricing regime would not only be impossible to implement, it would be wrong.

Mr. N. O’Keeffe

The market will be manipulated daily by retailers to whom I have listened attentively as they state as much about the British market. Over the last two days, it has come to my attention that Arla Foods has got into big trouble over the Danish cartoons — and I do not condone any of that. One of the larger British multiples has responded by delisting more British and Irish products from the shelves and taking surpluses which have come from Arla, a Danish dairy food company. It is simple manipulation. Irish and UK products have been dumped. We are not wanted in the far or Middle East either. There must be some form of protection because if it does not exist, rural Ireland will have no shops. Where will ordinary people go? There is no bus service for them and people on social welfare and unemployment assistance, of whom there are still plenty around, cannot afford bicycles. There will be a crisis.

While I am a great believer in the free market, to have it one must ultimately put some regulations in place. We have seen in another instance that the PDs who want deregulation wish to regulate BUPA by providing what can be termed "hello money" to the VHI.

Mr. Martin

Irish food companies sell products worth more than €2.5 billion to the UK market. While I accept the Deputy's point on a matter arising out of a specific international incident, markets work in different directions in such circumstances. Difficulties have been created for certain products on foot of what has happened, but other markets open. Very strong regulation is in place in Ireland which prohibits practices we do not wish to see flourish.

Mr. N. O’Keeffe

Truck after truck is arriving into Ireland carrying Danish dairy products.

Mr. Martin

That is not because of the groceries order.

Mr. N. O’Keeffe

They are cutting the price and there is no protection in place.

Mr. Howlin

Before we lose focus on the proposals in the amendments, I note we are not talking about the Irish export market or the penetration of the British, Danish or any other market by Irish food producers. At issue is the preservation of a regime in Ireland which gives people access to groceries at reasonable prices and to choice. Our fear is that the abolition of the groceries order and its replacement with the Minister's Bill will achieve the circumstance presented to the committee by the chairman of the Competition Authority. He did not consider it important that there might be one giant food outlet in a major town as long as prices were competitive and comparable to the best in Europe. The rest of us have different views. We think there should be consumer choice and proximity and that transport and spatial planning count. We are trying to get to a position where we have at least teased out the Minister's view. He appears to have simply swallowed a particular view hook, line and sinker which emphasises a narrow focus on prices in which nothing else matters. Access and other issues are not of consequence.

No mechanism is being suggested to offer protection if our amendments are not the right ones. The Minister has suggested nothing to ensure what he purports to consider the right outcomes, including consumer choice, competitive markets and low prices, is produced. On their face, the amendments deal simply with the issue of selling below cost to prevent people doing the very thing to which Deputy Martin Brady referred by breezing into an area with introductory offers which kill off the competition. While the larger company can take the hit, smaller competitors may not have even the wherewithal to mount a court action should it be warranted.

Mr. Martin

If one creates a national market, one kills off the prospect of a local retailer having any form of redress. A national market weakens by legislation the notion that there can be a local market in which one business is supplanted by another via predatory pricing. Under the existing legislation, the Competition Authority is empowered in a circumstance of that nature in a local context to take a case against the offending party on the basis of abuse of dominance or predatory pricing. If we create a national market, it will no longer be possible to prosecute, which is not what Deputy Martin Brady wants.

Mr. Howlin

I agree that might not be the best way to go but it is an object. To be blunt, what frightened me about the Competition Authority's presentation was the narrow focus on prices. Environmental degradation, working conditions in third countries and child labour are issues which can be ignored in favour of low prices. One can create a minimum wage economy within the retail sector and squeeze variables to achieve low prices if that is one's only objective, but the result would be a poor country.

Mr. Martin

That is not my focus.

Mr. Howlin

I was expecting to see a more structured mechanism rather than to be presented with a Minister looking into his heart and assuring us everything will be all right on the night.

Mr. Martin

It is a question of more than simply looking into one's heart. The issues to which the Deputy referred are covered by a broad spectrum of legislation including labour law on workers' rights and pay and conditions. The Competition Act was not designed to capture them. Spatial planning is captured under the legislation from another Department which acts to constrain the growth of multiples which, again, the Competition Act was never designed to cover. Other mechanisms are available to the Oireachtas and Government which impose restrictions and constraints.

Amendment, by leave, withdrawn

Amendments Nos. 13 and 14 not moved

Chairman

Amendment No. 15 has been ruled out of order.

Mr. Hogan

Why?

Chairman

It is outside the scope of the Bill.

Mr. Hogan

On a point of clarification, a Minister can introduce miscellaneous provisions on the back of any legislation that comes before the House. There is nothing to prevent us attaching an amendment or a new section to the Bill in order to deal with an issue that is relevant to it under the same miscellaneous provisions.

Chairman

Under Standing Order 125, committees have the power to make amendments to Bills provided such amendments are relevant to the provisions of the Bill and are not in conflict with the principle of the Bill as read on Second Stage.

Amendment No. 15 not moved.

Section 1 agreed to.

Amendments Nos. 16 to 18, inclusive, not moved.

Sections 2 and 3 agreed to.

Chairman

Amendment No. 19 is out of order.

Mr. Hogan

Why?

Mr. Howlin

Deputy Hogan's amendment is an amendment to the Competition Act, as is that in my name. I refer to amendments Nos. 19 and 20. The only possible exclusion from it, because they are both amendments to the Competition Act, would be that the Long Title does not encompass them. We have not dealt with amendment No. 23, which seeks to amend the Long Title. I do not believe the Chairman can presume the pleasure of the committee unless he takes amendment No. 23 first. That would put amendments Nos. 19 and 20 in order. It would be useful if we had a brief discussion on amendments Nos. 19 and 20 and brought this discussion to a conclusion by 7 p.m.

Chairman

I have made a ruling on the matter.

Mr. Hogan

We may be able to reach a compromise. Perhaps the Minister would state his opinion on these amendments.

Mr. Martin

I will do that. The issue with which amendment No. 19 deals is fairly serious. It is quite substantive in itself. I will deal with the amendments one at a time.

Mr. Howlin

I spoke because I would have been caught in the crossfire if I did not do so.

Mr. Martin

Amendment No. 19 deals with merger provisions and with media mergers in particular. Section 20 of the Act sets out the procedures that must be applied by the Competition Authority in examining mergers and acquisitions that have been notified under section 18 of the Act. I am not quite sure what the Deputy is trying to achieve. I presume that the amendment is designed to reduce the regulatory burden on parties to media mergers, which do not raise any competition issues but are notifiable simply because the parties operate in the media sector. The amendment would remove the specified examination procedure in respect of mergers and acquisitions notified under section 18 (1)(b), that is, those mergers which have been notified because they fall within a specific class, namely, media mergers. Essentially, this would mean that the Competition Authority would not be required to carry out the same type of analysis in respect of media mergers as it is required to do in all other merger cases.

I do not necessarily agree that there is an overly onerous burden on such notifying parties or on the Competition Authority because mergers and acquisitions which raise no competition concerns can be notified, examined and cleared by the authority with the minimum of fuss and concern.

Amendment No. 19 not moved.

Chairman

Amendment No. 20 in the name of Deputy Howlin is also out of order.

Mr. Howlin

On the same provision, to which the Minister is going to respond, I raised this matter under the Employees (Provision of Information and Consultation) Bill with the Minister of State with responsibility for labour affairs. Amazingly, when dealing with that Bill, which did not deal with an amendment to the Competition Act, the amendment was allowed to be tabled. I understand the difficulties with this. Perhaps we could have a nod from the Minister that he will take into account the odd decision of the Competition Authority to interpret the Competition Act as prohibiting actors from being represented by Irish Actors Equity as an anti-competition measure. It strikes me as bizarre.

Mr. Martin

I have a wonderful note here, which the Deputy will enjoy. I dealt with this matter in the House on an Adjournment debate with Deputy Michael D. Higgins.

Mr. Howlin

His contribution would have been much more colourful than mine.

Mr. Martin

It was much more pained in any event. There was great empathy and outrage on his part.

The bottom line is that, from the point of view competition law, policy, tax law and many other laws, there is no distinction between a self-employed actor, musician or journalist, on one hand, and a self-employed electrician, publican or hospital consultant, on the other. If there is a difference, it may have more to do with people's attitudes and culture. I refer, for example, to the belief that self-employed actors are necessarily poor, while self-employed electricians or barristers are necessarily rich. The instinctive response is to agree that it is terrible that poor actors are being subjected to competition law. That was the Competition Authority's decision with regard to Irish Actors Equity.

The Competition Authority quoted European case law in which the European Commission found opera singers to be undertakings. The Commission observed that artistes are undertakings within the meaning of Article 85.1 when they exploit commercially their artistic performance. The agreement subject to the enforcement decision between Irish Actors Equity, SIPTU and the IAPI used the term "artiste" and clearly involves the commercial exploitation of their self-employed Equity members' performances. The Competition Authority's decision at the time was on all fours with European law and this was acknowledged by Irish Actors Equity and SIPTU when they signed the agreement on undertaking. To create an exemption as suggested would place Irish law out of step with European law. The authority's decision, which is published on its website states what while it is perfectly legal for Irish Actors Equity to represent employed actors in collective bargaining with their employers, its trade union mantle cannot exempt its conduct when it acts as a trade association for self-employed contractors. In this particular case, the authority determined that the actors in question were self-employed contractors and not employees.

Section 4 of the Competition Act prohibits anti-competitive practices such as price fixing by undertakings and an undertaking is defined as "a person being an individual ... engaged for gain ..." etc. The definition has been in use in Irish competition law for some time and is supported by EU case law. The view expressed by the Competition Authority concerns this particular case only. It should not be taken as a definitive interpretation of law. Only the courts can interpret the law. However, the parties to the investigation appear to have accepted the authority's view because they entered into undertakings in settlement of the case, thereby avoiding the necessity of going to court.

In considering the question of whether self-employed individuals should be permitted to have a trade union negotiate on their behalf, we need to bear in mind that almost any group of self-employed contractors, such as barristers, publicans, doctors or pharmacists, could, by coming together, adding "union" to their name and obtaining a negotiating licence, attempt to circumvent the protections afforded to consumers by the Oireachtas in the Competition Act.

Mr. Howlin

All they would be obliged to do would be to obtain a negotiating licence.

Mr. Martin

This arose in the context of the IHCA.

Mr. Howlin

Charlie Haughey gave it a negotiating licence.

Mr. Martin

The Competition Authority intervened there recently in terms of its negotiating with private hospitals and the IHCA had to desist from acting on a collective basis.

Mr. Howlin

I will restrict myself, since we are out of order. Would the Minister circulate that note to us?

Mr. Martin

Yes.

Amendment No. 20 not moved.

Section 4 agreed to.

SECTION 5.

Chairman

Amendments Nos 21 and 22 are cognate and will, therefore, be discussed together.

Mr. Howlin

I move amendment No. 21:

In page 7, lines 3 and 4, to delete subsection (2).

This is a technical amendment. I am advised that, for consistency, it would be better to put the relevant subsection into the Schedule rather than into the body of the Bill.

Mr. Martin

I accept that Deputy Howlin is trying to be helpful. On the face of it, the amendment seems tidier. However, there is a very good reason for preparing the Bill in its current form. When enacted, the Bill will only come into force as a result of a commencement order under section 6(3). The intention is that section 5(2) will not be commenced until all proceedings currently in train pursuant to the 1972 Act have been disposed of. Once that happens, a second commencement order will be introduced to give effect to section 5(2). The Bill has been drafted in this format to facilitate the making of the necessary confirmation orders in due course.

Amendment, by leave, withdrawn.

Section 5 agreed to.

Section 6 agreed to.

Amendment No. 22 not moved.

Schedule agreed to.

Chairman

Amendment No. 23 in the name of Deputy Hogan is out of order.

Mr. Howlin

How can it be out of order?

Chairman

For the same reasons as I ruled earlier.

Mr. Howlin

For what reason? It seeks to amend the Long Title.

Chairman

It is outside the Bill's scope which is restricted to revoking the Restrictive Practices (Groceries) Order 1987.

Mr. Hogan

That is why I have tabled it.

Mr. Howlin

It is a bizarre notion. To introduce amendments, the Long Title has been changed. The notion that an amendment to it might be out of order cannot stand. The Chairman says the amendment is outside the Bill's scope, although it has been changed.

Amendment No. 23 not moved.

Title agreed to.

Bill reported without amendment.

Chairman

I thank the Minister and his officials for attending today's deliberations. When is it proposed to take Report Stage?

Mr. Martin

As soon as possible, with the agreement of the Whips.

Mr. Howlin

Does the Minister intend taking it before Report Stage of the Employees (Provision of Information and Consultation) Bill 2005?

Mr. Martin

I will get back to the Deputy on that matter.