Phil Hogan (Carlow-Kilkenny, Fine Gael)

I thank the speakers who contributed to the debate on this important issue. I am disappointed the Government has tabled an amendment to this reasonable motion, which calls for additional resources for the Competition Authority to do its job properly and for a change in the way the Competition Authority does its business in terms of imposing fines rather than being tied up in court action, and removes the issue causing clogging of the system of work in the Competition Authority, as the Minister of State, Deputy Killeen, pointed out in terms of mergers and takeovers. I wanted to remove much of such work in terms of applying thresholds for turnover that would be exempt from notification from the Competition Authority.

In any case, the most important issue of contention in this debate is predatory pricing. I want to set out exactly why the Minister for Enterprise, Trade and Employment is wrong in his definition of predatory pricing. The Minister claims that there is no need to legislate for predatory pricing as it is already prohibited by the Competition Act 2002, but he is wrong on this issue. There is no express mention of predatory pricing in the Competition Act, under either section 4 which deals with anti-competitive arrangements or section 5 which deals with abuse of dominance. The Minister seems to be relying on legal precedent from the European courts, in the Akzo case, that predatory pricing is an abuse of dominance where it is carried out by a firm that is dominant and therefore caught by the general provisions of section 5, but it is critical to understand that the Act contains no express prohibition of predatory pricing.

This is further evidenced by the failure of the Competition Authority to take a single prosecution for predatory pricing since its establishment in 1991. Accordingly, for the Competition Authority to initiate a prosecution for predatory pricing, it must first establish that the party involved is dominant, which under European law typically means that it has either a national or local share in excess of 35%. Recently, the Competition Authority interpreted a local newspaper company, which is a subsidiary of the Independent Group, as not being dominant despite having a market share in excess of 65%.

The Minister is wrong, predatory pricing is not expressly banned by the Competition Act and is only rendered illegal if, which is a big if, the Competition Authority determines that a party is dominant. In the grocery trade, for example, none of the current players would be regarded as dominant, either on a national or local basis. Tesco, for example, with 26% of the national market share is not dominant despite being the subsidiary of a global retail giant. Similarly, the discounters are way down the dominance scale.

The Minister's refusal to expressly outlaw predatory pricing is curious. Announcing his decision to revoke the groceries order last week, the Minister declared that he intended to strengthen the Competition Act by making some practices — hello money, resale price maintenance and unfair contract terms — illegal. He mentioned nothing about long-term agreements or about how we can pass on to consumers the discounts and rebates that all of us know are being subsumed into the retail sector. Is he changing the long-term agreement arrangement in the context of the Competition Act?

I pay tribute to the Oireachtas committee, chaired by my colleague, Deputy Cassidy, of which I am a member, for the investigation it carried out on the grocery trade. Following much investigation where all the players were brought before us, the committee clearly came down on the position of reforming the Act and the groceries order to ensure that predatory pricing was banned and that discounts and rebates, in other words, the benefits of volume buying, were passed on to consumers, but the Minister ignored that.

The Minister is trying to have it every way. He is trying to spin that he is abolishing the groceries order to give the impression that this will be good for the consumer but, unfortunately, he failed to publish at the same time the necessary changes in the Competition Act for the small print to protect the small suppliers and to ensure that there is choice, diversity and a balance in the trade that will continue to give the necessary competitive edge in the food sector. It is curious that the then chairman of the Competition Authority, Dr. Fingleton, was more worried about a particular sector of the economy that has shown in the year to June 2005 a reduction in prices of 1.5% and had no particular inclination, no more than the Progressive Democrats, to deal with issues of anti-competitive practices like access to the professions, particularly the legal profession and the medical profession, where we need to free up an enormous amount of competition because of the astronomical increases in prices which professional bodies have been charging, uninhibited by anybody in the Competition Authority or by any Minister in recent years. Therefore, the Minister's refusal to ban predatory pricing is misplaced.

The motivation for his refusal to expressly outlaw predatory pricing is worth exploring. The likelihood is that he is merely following a Competition Authority edict — he is doing what he is told by the authority — that it can deal with the issue at its discretion without the need for new legislation, and his officials, who have suffered regulatory capture by the authority, will not question this advice. At best he is naive, but at worst he could be accused of being afraid to tackle the vested interests in the economy that have a large market share but which are unlikely to be dominant. If it could be illegal for someone to engage in predatory pricing with a 35% market share, should the fact that a company has a 30% market share absolve it of onus not to engage in predatory pricing? The practice should be rendered illegal, it should not be based on the level of market share of the player. I want to see consistency and equity displayed by the Minister and I am disappointed that he has failed to take that opportunity.

I thank Deputies Ned O'Keeffe and Glennon whose hearts were in the right place on the issue with which we are dealing. They realised the motion before the House is reasonable and balanced. As Government Deputies, they cannot support this motion but they certainly gave the Minister much food for thought by spiritually looking at this motion in the right context.

The most hypocritical contribution came from Deputy Fiona O'Malley. The Progressive Democrats has a serious problem about banning predatory pricing in spite of the fact that in 2001 the then Minister for Enterprise, Trade and Employment, Deputy Harney, listened to all the views in the grocery trade and banned predatory pricing, kept the groceries order in place and found no need for change. What hypocrisy. The then Minister, Deputy Harney, also ensured that no investigation was ever carried out of their friends in the professional bodies across the board who were contributing enormously to the higher charges in this economy.

The record of the Government on competition policy since 1997 leaves much to be desired. In an area where consumers should have benefited from increased competition, greater transparency on pricing and the liberalisation of sectors which were formerly operated as State monopolies, consumers have been the real losers. On many occasions while Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney introduced regulators into various sectors of the economy and Ministers followed suit across various areas of activity. With the introduction of regulatory agencies, we were supposed to see the introduction of more competition with more players being able to get into the marketplace, but what we got was more price increases.

I am critical of the energy sector in particular. The Commission for Energy Regulation was set up and, while I do not want to cast aspersions on the individuals involved because it was their job to look after the energy sector when they were originally in the Department of Public Enterprise and they are suffering from regulatory capture, there has been an increase in energy prices of 61% in the past three or four years. So much for regulatory authorities. If that is the price one must pay for more competition and regulation, we are better off without them. That applies across the board in many different sectors, and there is empire building in terms of regulatory agencies. All sorts of legal, accountancy and other entities are being created in all these regulatory authorities without accountability to this or the other House, and the criteria on which they were appointed need to be reviewed.

I was very surprised at the attitude of the Competition Authority in a recent debate on the groceries order. The report issued on the order by the Minister when he was announcing his intentions stated categorically there is no evidence the order has led to higher prices. However, this was not the advice the authority was giving to the Department. It said explicitly that one could make a saving of €500 per year as a result of lower prices, in spite of the fact the CSO, in giving evidence to the Oireachtas committee, punctured that argument successfully.

Competition is important to the future of this economy and it is very important that we have liberalisation of the sectors. However, we want to achieve it in a balanced way and give the necessary resources and powers to the Competition Authority such that it can have a proper enforcement function rather than operate according to a political agenda. The manner in which it has done its business in the past has been quite unsatisfactory. Less red tape is needed in the economy and the authority, if properly resourced, should have a role to play in this regard. I ask the House to support the motion.

See this speech in context