John McGuinness (Carlow-Kilkenny, Fianna Fail)

Deputy Cassidy will be taking two minutes of my time. He has done considerable work in his committee on the background to this Bill and the issue we are debating today.

I hope the Minister of State and his officials will report the suggestions made in this debate to the Minister, that those suggestions will be taken on board on Committee Stage and that the Government will accept some amendments to the Bill. Listening even to speakers on the Government side, it is hard to know how Deputies would vote in an open vote. Some have hedged their bets on this legislation. That is significant because there is obvious concern about the content of the Bill and the ability of the Competition Authority to enforce its provisions. The finer detail of the Bill reveals huge challenges for the authority and I hope it is up to them.

I am one of the few in this House who has served behind the counter in a shop, in the 1970s and 1980s. We served a community that relied on credit. Purchases were made by the quarter pound and precise numbers were counted out on the slicing machine. That was how the retail trade functioned. It relied heavily on the local cash and carry to ensure whatever special offers were being delivered by it could add to the profit margins or to the attractiveness as a retail outlet in that locality. During that time, I traded successfully with the support of that local community.

Despite the groceries order, however, I saw huge changes in the trade. The country moved from the position in the 1970s, with 20% interest rates, to where we are now with rates of 4% and little or no unemployment, with a huge focus on the consumer, competition and value for money. People vote with their feet, passing the small shops and going to the superstores.

I call the groceries order the restrictive practices order, because the groceries order sounds like a mechanism to protect those in the trade and prevent competition but it actually refers to price fixing, unfair discrimination, below net invoice price selling and hello money. Despite the order, the multiples still grew hugely, Lidl and Aldi came into the marketplace, Tesco developed and there was competition. A change took place whereby the corner shops no longer sold groceries, gas canisters and briquettes, and there was a greater spread of product in response to consumer demand. They are almost fast food outlets now with sandwiches and coffee to go.

They are able to survive on that basis. The Restrictive Practices (Groceries) Order 1987 acted as a deterrent in that it was a statement about this country to companies coming here to trade. It indicated that we were interested in our communities and in protecting and developing society. To use modern terminology, it told them that we were interested in social infrastructure and capital. Local authorities are now paying consultants to produce ideas on how to create social capital. We used to have it but have decided to trade it in for something which appears sexier. Consumers are being encouraged down the route of retail therapy at a time when social infrastructure is under threat of being wiped out.

I fear the Bill does not go far enough in terms of giving teeth to the Competition Authority, laying down a framework to govern the Tescos of this world and affording corner shops, which most speakers have praised as making a valuable contribution to society, protection from predatory pricing. Corner shops provided a sense of connection in local communities. They gave communities credit in the context of day-to-day living and functioned almost as a social centre in which information was exchanged. Birth, death and marriage announcements were made from my house because it was the only telephone in the locality. The current trend, on the other hand, is one of disconnection and I hope the Minister will take action to counter it in the Bill.

People doing their shopping will have several lists, perhaps one for Lidl or Aldi and another for Tesco, and will have some money left over to buy items they need in an emerging type of retailer, namely, the Centra or Spar type shops. I am informed the true independent sector, which consists of the shops being forced out of the market, employs more than 40,000 staff. These shops were the cornerstone of what we knew as local communities, each of which had a sense of place in a larger urban or rural setting.

In light of changes in the retail sector, I was not surprised that a debate would take place about the removal of the Restrictive Practices (Groceries) Order 1987. However, I expected the legislation to amend the Competition Act to provide protection from the rapid pace of change.

What do I wish to happen? I do not want one player to become dominant in the marketplace. I want competition as well as a degree of protection for independent retailers and small corner shops because I believe in the value of this kind of social infrastructure and capital. It is political nonsense to pay a consultant to create social capital when we are losing it elsewhere.

My problem with the Bill is that it focuses on dominance in the retail trade. The critical issue is the need to determine how one defines such dominance in order that a court case could be built should a retailer breach the legislation. No single retailer enjoys market dominance, as defined as a market share of 35% or 40%, whereas they all enjoy it when it is considered collectively. What will happens if a retailer finds he or a number of small shops are being targeted by predatory pricing? Will the Competition Authority step in on foot of a complaint and take a court case? Given that the authority has failed to show much bottle in this regard in recent times, I am not confident it would go to court. The other question is whether the Competition Authority has sufficient funding.

Reading legal opinion on both sides of the argument, it becomes clear this legislation will have the makings of a great court case at some point. Do we really expect an ordinary corner shop owner to take a major multiple or retailer involved in predatory pricing to court? He or she will have gone bust before the case is heard. We are providing for a complete open market. How can we introduce in legislation a definition of a dominant position and a procedure regarding requests to the Competition Authority concerning predatory pricing, hello money or any other practice which might come into play to guarantee a supplier, control prices or facilitate a retailer in becoming the dominant player in a locality? I am most concerned about this aspect of the legislation.

I read legal opinion indicating that the Competition Authority has not been particularly effective in enforcing competition law to date and retailers will have to be prepared to bear the heavy burden of enforcement. What steps will the Minister take in the Bill to ensure this burden does not fall on retailers? Other magazine reports indicate that Tesco is tipped to clean up in terms of market share. Although Deputies receive this type of information from those who lobby us, it should also be noted that Tesco reported a €2 billion annual turnover in Ireland in 2003-04, yet the company has not yet extended its network to every county and is only now gearing up to take on new consumers and become the dominant player in the market. If this transpires, we will have real trouble because the product on offer, including credit card and other facilities, will damage the retail trade here.

The retail sector extends far beyond corner shops and includes, for example, cash and carries. Viewed from this perspective, the numbers of employees who would be affected if the sector were to be damaged would begin to add up. A solid area of trade which has shown creativity and makes a significant contribution to indigenous employment would be damaged, its turnover reduced and its ability to compete in the marketplace called into question. This form of competition is essential.

Organisations which supported the Restrictive Practices (Groceries) Order 1987 have stated that these types of small shops are vital given the make-up of communities. Despite our prosperity, some people do not have sufficient income to afford a monthly shop, while others will always find managing their domestic budgets a challenge. This group relies on the corner shop. This will force them into a different method which they are not capable of following. As legislators we must be aware of that. I do not see enough in the Bill in terms of the funding or the teeth the Competition Authority requires in this new situation to defend in court what this Bill sets out. That will be detrimental to our society. I have reservations about the Bill. I hope the officials, Minister and Minister of State will acknowledge what is being said in this House and will bring forward some serious amendments to deal with the issues raised by the Members and by RGDATA.

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