Tony Killeen (Clare, Fianna Fail)

The Irish Competition Authority is one of the most proactive and successful enforcement agencies of competition law in Europe. I congratulate the authority on bringing proceedings in a very significant case to the Dublin Circuit Criminal Court last Monday and on being the first enforcement agency in Europe to secure a criminal conviction for a competition offence.

I would like to mention one aspect of the Competition Authority's work which has not been referred to in the debate, namely, the authority's role in regulating mergers and acquisitions in the economy. I applaud the authority for the way in which it has it has successfully taken on this responsibility under Part 3 of the Competition Act. The authority's regulatory procedures are open and transparent. All notifications and determinations are published and the authority must consider all submissions made to it, whether in writing or orally, by the parties concerned or by any other party.

I wish to comment on one issue raised in the debate, namely, the confusion which seems to surround the concept of predatory pricing. Predatory pricing is an abusive and anti-competitive practice that acts against the interests of consumers. It is a tactic employed by a firm that is dominant in its market and involves the sale of product below cost for a prolonged period to damage or eliminate a competitor. I stress the phrase, "below cost" in this context because Deputy Howlin seemed to suggest that predatory pricing involved the sale below fair market value which he defined as including a reasonable profit margin for the seller. Not alone is this not an accepted definition of predatory pricing, it is not a definition that is supported by EU case law on the topic. Predatory pricing is the sale below cost. Cost in this case means the marginal cost of the product, according to EU case law.

Chapter 7 of the report on the groceries order prepared by the Department of Enterprise, Trade and Employment, deals with this issue in some detail and I urge Deputies to read it. Furthermore, as the Minister, Deputy Martin, said, predatory pricing should not be confused with other forms of low cost selling, such as for promotional reasons, to dispose of old stock, or to match a competitor's prices. The groceries order was not a suitable vehicle to prevent predatory pricing because it was unable to make the distinction between legitimate low prices and genuine acts of predation.

On the other hand, predatory pricing is now prohibited by section 5 of the Competition Act which outlaws the abuse of a dominant position in a market. It is important to stress that the concept of dominance under section 5 of the Act can be measured either in the State or in any part of the State. Therefore, the Act is sufficiently flexible to allow the authority or the courts to tackle predatory pricing in all circumstances, including small local markets.

The Competition Authority has extensive powers and a dedicated division of expert staff who investigate allegations of companies abusing a dominant position. The circumstances of each allegation are unique and each complaint is assessed case by case. The penalties for any undertaking found to have engaged in predatory pricing are up to €4 million or 10% of the company's turnover. These are substantial penalties. I repeat the point made by the Minister, Deputy Martin, that these penalties are much greater than those which applied under the groceries order and are likely to act as a real deterrent to any business contemplating predatory pricing.

In the course of his speech, Deputy Hogan listed about 18 home heating oil distributors in counties Galway and Mayo that he claimed had been driven out of business by large distributors. He said that this did not make him confident that the business was being conducted properly. This was also reported in The Irish Times. It is a matter of public record, however, that of the 18 companies listed by Deputy Hogan as having been subjected to unfair and anti-competitive practices, eight are being prosecuted by the Director of Public Prosecutions on indictment for alleged breaches of the Competition Acts.

This Government continues to see competition as the life blood of a vibrant economy and we are committed to removing unwarranted constraints on competition in all sectors of the economy and placing the consumer at the top of the policy agenda. Increased competition in the economy has a critical role to play in helping to keep prices under control. A good example is the aviation industry where competition from low cost airlines has substantially reduced the cost of air travel.

While much needs to be done to encourage competition in some sectors of the economy, the Government is working hard to bring about these changes. The Competition Authority has proven itself to be a powerful advocate for such change as well as being a fearless, independent and effective enforcement agency. Since the enactment of the most recent Competition Act, the resources of the authority have virtually doubled. Today it employs 52 people across a broad range of skills and disciplines necessary for the performance of its functions.

There is every reason to have the utmost confidence in the performance by the authority of its advocacy and enforcement functions. The authority enjoys a unique reputation internationally as evidenced by the quality and experience of those who have been attracted to come from other parts of the world to work at enforcing Irish competition law.

The Government keeps the resources available to the authority under close review. For example, further funding for the authority has been sought in the context of the Estimates process and I am hopeful that the authority's enforcement resources will be expanded in 2006.

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