Phil Hogan (Carlow-Kilkenny, Fine Gael)

I move:

That Dáil Éireann:

notes,

—the continued presence of excessive charging resulting in higher prices and reduced spending power for consumers;

—that since 1996 the Competition Authority has not secured one significant or meaningful criminal conviction for breach of the Competition Acts; and

—the insufficient resources allocated to the Competition Authority to do its work;

calls for reform of the Competition Act 2002 to allow for:

—the creation of a category of super complaints that can be made by bodies including the Director of Consumer Affairs, the Consumer Association of Ireland, IFSRA, the Financial Services Ombudsman and the Insurance Ombudsman;

—the publication by the Competition Authority of an annual report on the implications of State action for competition in the provision of goods and services which identifies areas where the State, either through direct involvement in the economy, or through regulatory systems, has restricted, inhibited or prevented competition;

—the referral of directors of companies found to be in breach of competition law to the ODCE for possible disqualification;

—the setting of a 30 day deadline by which time the Competition Authority should have responded to a complaint of anti-competitive practices;

—the outlawing of predatory pricing;

and calls on the Minister for Enterprise, Trade and Employment to significantly increase the resources of the Competition Authority.

Fine Gael regrets the need to move a motion like this in Private Members' time, particularly regarding competition law. However, the need to do so is quite clear. It is based on the failure of this Government to control prices, adding substantially to the ever increasing cost of living. We move this motion because of the complete refusal of the Government to deal with rip-off Ireland, its complete inability to tackle the vested interests, its complete antipathy to consumers and small businesses as a result of the flourishing anti-competitive practices it is happy to ignore and its complete ignorance of what life is actually like for those who every day find their hard earned cash not going as far as it should.

It is not merely a case of the Government standing idly by. This Administration has actively and deliberately worked against the consumer. It voted down Fine Gael's consumer rights enforcer. It allowed its national consumer agency legislation, the announcement of which came only after Fine Gael pressure, to become bogged down in the same bureaucratic nonsense that holds back everything else it does. It dithered on the groceries order and did not spell out the detail of what it would do on predatory pricing. It still has not done that and the Minister changed his mind substantially from what he said publicly in June, that he was going to completely abolish the groceries order. Instead, he decided in mid-October to change the Competition Act. Why did he do this? It seems the groceries order is not gone, even though the Minister has spun the story that it is gone. He did nothing to change long-term agreements between suppliers and retailers, so the discounts and rebates that are being swallowed up by retailers are not being passed on to consumers. The Minister is already in retreat on that issue, so we will have to wait and see the detail of the Competition Act.

The Government has allowed the introduction of 36 separate and distinct stealth taxes on everything from accident and emergency visits to college fees. We have not been shy about highlighting this rip-off mentality, but the Government has not been shy in criticising us for doing so. In a speech in his constituency on 4 November 2004, the Minister for Arts, Sport and Tourism, Deputy O'Donoghue, stated "One of the great myths is that there is in existence a rip-off Ireland mentality. That myth must be laid to rest for the sake of Irish tourism and the Irish economy". At one point last year it seemed that a Fianna Fáil spin doctor had instructed his minions in the Oireachtas to paint Fine Gael as unpatriotic for bringing up the issue. That strategy failed and I note the silence from the former cheerleaders for such a strategy in the Dáil and Seanad, since it became painfully obvious that such a strategy had fallen flat on its face. A recent television series may have contributed to that.

Fine Gael has a positive agenda in all this. Every time we highlighted excessive charging, we proposed a policy that would help alleviate that problem. Tonight is no different. We were delighted to make a submission on the establishment of a consumer rights enforcer to the consumer strategy group. We were gratified that the same proposal was implemented in principle, but under a different name, the National Consumer Agency. We would prefer to see it implemented sooner rather than later. The facts of the matter are exactly as our motion states: since 1996 the Competition Authority has not secured one significant or meaningful criminal conviction for breach of the Competition Acts. It is central to the achievement of effective levels of competition in the economy that there is an effective competition enforcement regime that operates in the interests of all consumers of goods and services in the State. Unfortunately, the performance of the Competition Authority and the operation of the Competition Act have not been as effective as consumers are entitled to expect.

While effective competition policy requires a political willingness to pursue a pro-competition agenda, it also requires the competition enforcement authority to be pro-active, vigorous, resourced and focused in its pursuit of competition policy objectives. That is why we made the call for reform of the Competition Act at our national conference on Saturday and we repeat that call tonight. We need a Competition Authority that is properly funded, with the powers it needs and the legislative mandate that help and compel it to revolutionise the competition agenda. That is why Fine Gael is calling for a substantial increase in the funding available to the Competition Authority. This will be required if the objectives set out by the Minister for the National Consumer Agency are to be implemented. Together with reform of the Competition Act, we can transform the treatment of consumers.

To address concerns about the length of time that some investigations take the authority to conclude, it should be obliged to complete different stages of investigations within defined time limits, rather than the current open ended and non-specific provisions. In the UK, the Office of Fair Trading promises to give a response to a complaint as soon as possible and in any event within 30 working days. Similar measures should be enacted here as a matter of urgency and complainants regularly kept informed on the progress of the investigation. It is not fair to have people in limbo for a two to three year period while at the same time leaving them unable to plan ahead. In addition, Fine Gael proposes that specified bodies be given the right to make so-called super complaints to the authority on any market practice that is contrary to the best interest of consumers. Upon receipt of such a super complaint, the Competition Authority would be legally obliged to issue a report within 120 days assessing the nature of the problem and possible responses including action by itself or proposals for legislative intervention. Such reports would also be transmitted to the Houses of the Oireachtas. We propose that on an initial basis, the Director of Consumer Affairs, IFSRA, the Insurance Ombudsman, the Financial Services Ombudsman and the Consumer Association of Ireland should be designated as eligible to make super-complaints.

The Competition Authority should issue an annual report on the implications of State action for competition in the provision of goods and services in the State. This report should identify areas where the State, either through direct involvement in the economy, or through regulatory systems, has restricted, inhibited or prevented competition in goods or markets in the State. There should be a statutory obligation on Departments and on State agencies to respond to any comments or criticisms raised by the Competition Authority regarding State actions on competition within 30 days from the date on which the comments or criticisms are made.

For example, why is no one calling the Government to account for the licensing regimes on everything from pharmacies to buses? Anti-competitive practices that make life a misery for tens of thousands of people are perpetuated by the State, the very institution which is meant to be the consumer's guardian. The Competition Authority should be empowered to blow the whistle on this kind of action and, under the full glare of publicity, perhaps before an Oireachtas committee, tell the Government what it must do and when it must do it.

The Competition Authority should be conferred with the power to impose fines on individuals and businesses in breach of the Competition Act without the necessity for a court hearing. While I understand that there are constitutional issues in this respect at present, they can be overcome. Currently, the Competition Authority may only apply to the High Court for the imposition of fines it cannot impose. This should be reviewed to speed up the process whereby decisions may be made. Otherwise, it deprives the Competition Authority of an essential tool in competition enforcement, one which is available to the European Commission and in competition agencies in other European jurisdictions. If we are serious about competition and about taking on those in breach of competition legislation, where a company is found to have breached competition legislation, the company directors should be referred to the Director of Corporate Enforcement for possible disqualification or restriction under the Companies Act.

Much of the more cutting edge legislation in this area comes not from Ireland but from Europe. Under the new EU framework for implementing competition law, the European Commission has power to adopt commitment decisions. In effect, this would allow the enforcement body to make a binding decision which is accepted by the infringer, but without the need to go to court. In addition to that cost saving, it would establish a useful precedent in that commitment decisions would be legally binding. Therefore, Fine Gael proposes that the Competition Act be amended to allow the Competition Authority to issue commitment decisions of this nature.

Much of the time and financial resources of the Competition Authority is tied up with notification of mergers and takeovers. While this is an obligation in the Act, little happens to change the nature of mergers or takeovers when the Competition Authority is notified. Nevertheless, it takes a considerable amount of time and resources to deal with them. As far as this Competition Act is concerned, since 2002, out of the hundreds of cases which have been referred to the Competition Authority, only one change has been made by it in respect of mergers and takeovers.

There is a widespread problem with competition in this economy. However, there are some examples where there is a particular problem, for example, in banking, cement, insurance, home heating and gas. In the case of Cement Roadstone Holdings, profits have been extracted from the economy by means of a complex industry structure that is both anti-competitive and anti-consumer. The European Commission, European Court of First Instance and European Court of Justice have upheld findings of serious anti-competitive behaviour against CRH and others. While this has been the subject of many complaints to the Minister's Department as well as to the Competition Authority, no action has been taken and no investigation has been held.

While Sweden, Finland, the United Kingdom, France and Germany have since levied huge fines against the cement industry, Ireland's answer has been a stony silence, despite a more recent public statement from Dr. John Fingleton, former chairman of the Competition Authority, that CRH was using small concrete manufacturers as "proxies for the consumer". Last year alone, the German competition authority levied fines of €660 million on the German cement industry and the crackdown resulted in a dramatic drop in cement prices. Cement prices in Germany are running at half the price pertaining in Ireland.

In the home heating oil market, small oil distributors continually complain of the practice of differential pricing on the part of the major oil importers where discounts are applied to certain larger distributors who in turn discount the distribution charge from, for example, 5 cent to perhaps 3 cent or 2 cent per litre. This practice is unfair and anti-competitive given the limited access to market or choice available to the smaller distributor. Consequently, smaller distributors are being driven out of business or hoovered up by large distributors.

In Galway and Mayo alone, recent casualties have included Fuel Services of Loughrea, Muldoon Oil, Flanagan Oils, Gort Oil, All Star Motor Oil, Connell Oil, Cloonan Oil, Matt Geraghty Oil, Ruby Oil, Hughes and O'Boyle of Ballina, Gaughan Oil, Swinford Oil, Holmes Oil, Campbell Oil, Castlebar Oil, Heston Oil, Major Fuels and O'Gara Oil. This does not make me confident that business is being conducted properly. While the Minister may be trying to consolidate the market in the hands of the few, this leads to casualties rather than to lower prices. The end result will be higher distribution prices for the consumer, as consolidation occurs on foot of this differential pricing structure operated by the oil majors.

Moreover, attention should be paid to recent comments by a company called Vayu which pointed out that the criteria on which the Commission for Energy Regulation grants Bord Gáis increases in price is fundamentally flawed as it is based on both the cost of the gas and the cost of its transmission. The price increase includes charges for the pipes which are already in place and for which the capital cost has been deployed. A depreciation charge has already built into the prices. Why should the recent 25% increase in the price of gas also include an increase for the transmission network? Eircom are probably trying to adopt a similar course. Vayu contends that this cost is overstated so that the value of Bord Gáis will be increased in preparation for the potential privatisation of the company. All these areas remain untackled and ignored.

In the foreword of the 2004 report of the Competition Authority, the outgoing chairman outlined the scale of concentration resulting from a legacy of anti-competitive and anti-consumer policy and culture. In particular, he highlighted core areas of the economy where there are high levels of concentration in which consumers do not have adequate competition and choice.

While Members have heard many points being outlined and many lectures in respect of what must be done, they have seen little action from the Competition Authority or any other body. The then chairman, Dr. Fingleton, also outlined other sectors of the economy in which leading private sector firms have a market share of 50% as well as markets that are highly concentrated where, for example, four firms control more than 80% of the market.

As we recently discovered, in other key sectors of the economy such as the provision of legal services, the regulatory structure for the provision of those services is not adequately focused towards the needs and welfare of the users of those services. Poor competition in the provision of goods and services adds to the daily living cost for consumers. It also contributes towards inflationary pressures which affect the country's national competitiveness in an increasingly global trading environment. It is critically important to inject a new competitive dynamic into the economy for the benefit of all consumers of goods and services. It is not acceptable that according to the World Economic Forum's global competitiveness report, Ireland has fallen from fourth place in 2000 to 26th place this year.

The National Competitiveness Council has stated that Irish prices rose 22% more than those in other EU countries in the years from 1999 to 2003. The reason for that was the failure to provide for a competitive economy where anti-competitive practices were rooted out. Fine Gael has unveiled an agenda to deal with these matters and has brought it to the House in the desperate hope that the Minister may agree with it. I am disappointed that he has felt obliged to table an innocuous amendment which contains much on which all sides of the House agree as to what must be done.

See this speech in context