Ms Isolde Goggin:

I thank the Chairman and members for the invitation to attend today. I am accompanied by Mr. Patrick Kenny who is on my right. As the Chairman said, Mr. Kenny is a member of the authority and also the director of the cartels division, which looks after the criminal enforcement side of our activity. On my left hand side is Mr. John Evans, who is the manager of the monopolies division, which looks after the civil enforcement side.

We are very happy to have the opportunity to explain the mission and role of the Competition Authority and to explain to the committee our activities in the areas of grocery supply and retailing.

Our mission is to ensure that markets work well for Irish consumers, for business and for the economy as a whole. Our focus is on ensuring that the competitive process works to respond to the needs and tastes of Irish consumers. Increasingly in these tough times, as members have heard repeatedly in the sessions over the past few weeks, consumers are very focused on value for money.

Competition plays a key role in improving the competitiveness of the economy and when speaking about competition we are speaking about more than costs. Some people make their purchases based primarily on costs but competition is partly about that but is also about our ability to foster innovation, to improve quality and to achieve sustainable improvements in living standards and job opportunities for all. This leads to greater choice, increased innovation and quality, lower prices to both business and consumers and of course to increased employment.

Our role is to promote competition in the economy and for enforcing Irish and EU competition law. We do so by taking action to deter anti-competitive behaviour. A key role is the investigation of anti-competitive practices such as price fixing or other anti-competitive agreements or abusive conduct by firms that are dominant in the market. Let me mention, that in one area we are different from competition authorities in other member states. Our role is to investigate and either to make referrals to the Director of Public Prosecutions or to take a case before the courts. We do not take decisions ourselves on breaches of the law, which is not our role but the role of the courts. In some ways that is different from competition authorities in many other member states. We also have responsibility for merger control in the State and this has been a very active area in the food and grocery sector in the past few years, including Glanbia's acquisition of Dawn Dairies and Golden Vale in 2011 and at the retail level we also reviewed and approved the take over by the Musgrave Group of Superquinn in 2011.

We promote competition in many different ways. For example, we examine the competitiveness of market sectors, advise Departments and other State agencies on competition issues and we promote a culture of competition more generally through activities such as road shows, information booklets, guidelines, conferences, seminars and so on. In 2008, we published a detailed series of reports as part of our grocery monitoring project. A number of specific aspects of competition law are currently in place which apply specifically to the grocery sector, under the Competition (Amendment) Act 2006 and I will speak more about these later.

To return to the point of what competition comprises, it is about more than simply selling goods at the lowest possible price. The range of consumers benefit from variety in terms of price, quality, service and innovation. Given the pressure on household budgets in recent years, Irish consumers increasingly seek value in their weekly shop. They are becoming less brand-loyal and are migrating to own-brand offerings and discount retailers. The proportion of the household budget spent on groceries varies significantly, in accordance with income levels. In terms of income, the lowest 10% of households would spend up to one-fifth of their budget on food, much of it on essentials such as bread and milk. Therefore, the availability of a range of goods at low prices is very important for vulnerable consumers.

I mentioned our role in competition enforcement and how we prepare cases and bring them to court or to the attention of the Director of Public Prosecutions. Competition enforcement is complex. Good cases require not only credible evidence, but also witnesses who are willing to be put on the stand and cross-examined in court. This, as we have discovered over the years, is easier said than done. This applies to normal competition enforcement to which I have referred, such as anti-cartel activities, anti price fixing and the abuse of dominance. It also applies to the Competition (Amendment) Act 2006 which was passed to address the perceived imbalance in bargaining power between large retailers and producers. The Act makes certain practices illegal if they have an anti-competitive purpose or effect. These practices include compelling or coercing payment, or granting of allowance, for the advertising or display of grocery goods, or a retailer compelling or coercing payment for providing space for grocery goods within a new retail outlet, a newly expanded outlet, or an outlet under new ownership, within 60 days after the opening of the outlet.

This Act was passed in 2006. Our experience in the seven years since then has been that we have received few substantive complaints, basically for the reasons discussed substantially by the committee. Smaller producers may be unwilling to complain to the authority or to take court action, which they are entitled to do, for fear of retribution which could mean delisting. Larger producers suffer less of a power imbalance and they can negotiate on a more equal footing with retailers and are less likely to need the protection offered under the Act.

The most recent policy proposals in the grocery sector recommended implementing a statutory code of practice for grocery goods undertakings. A number of consultations were carried out on this in 2009 and 2011. On both occasions, the authority made submissions to the Department of Jobs, Enterprise and Innovation’s consultation pointing out the difficulties involved in enforcing codes of the kind proposed. I mentioned the evidential difficulties of getting somebody who is prepared to go on the witness stand and face cross examination. There is also a danger of significant compliance costs on small and large businesses alike, but more significantly for small businesses. Also, codes may not solve the problem they are intended to solve, in that the power imbalance may remain, even when manifested through codes of conduct or a terms of business agreement.

However, I am here today to inform the committee that if the Minister decides to introduce such a code and decides the authority - the amalgamated competition and consumer agency, the legislation for which is being worked on by our parent Department - is the agency which will have the task of policing it, we will fulfil that role diligently. Nobody has ever accused us of not doing the job we were given to do through legislation. Given there is open debate still happening in the EU and that an adjudicator has just been appointed in the UK to oversee the grocery supply code of conduct, one proposal we would make would that it would be a good idea to set a term for review of the operation of any such code after a certain period.

I will conclude by saying we will be very happy to take any questions from the committee when my colleague has spoken.