Phil Hogan (Carlow-Kilkenny, Fine Gael)

I move amendment No. 2:

In page 4, to delete lines 34 to 49 and in page 5, to delete lines 1 to 32 and substitute the following:

"15B.—(1) Subject to the provisions of this section, all arrangements, decisions, and practices, by grocery undertakings, which have as their object or effect, the prevention, restriction or distortion of competition in trade in grocery goods, in the State or any part of the State, shall be prohibited, including in particular, without prejudice to the generality of this subsection, those which—

(a) directly or indirectly attempt to compel or coerce another grocery goods undertaking, whether by threat, promise or any means, to resell or advertise for resale any grocery goods at -

(i) a price fixed directly or indirectly by the first mentioned grocery goods undertaking, or

(ii) a price above a minimum price fixed directly or indirectly by the first mentioned grocery goods undertaking,

(b) apply dissimilar conditions to equivalent transactions with any other grocery goods undertaking,

(c) directly or indirectly compel or coerce, whether by threat, promise or any means, any grocery undertaking to make a payment or grant any allowance for the advertising or the display of grocery goods, or

(d) directly or indirectly compel or coerce, whether by threat, promise or other means, another grocery undertaking to make any payment or grant any allowance to a retailer in respect of the provision of space for the display, marketing or sale of grocery goods within a retail outlet.

(2) Following the commencement of this Act and without prejudice to the generality of subsection (1), the Minister may make such regulations as may be appropriate to prescribe any additional arrangements, decisions or practices that are contrary to section 15B(1) or to provide for any related aspect required for the effective enforcement of this section 15B(1).

(3) Nothing in this subsection shall affect any right of the Authority to bring proceedings for an offence under section 6 of this, or of any other person to issue proceedings under section 14 of this Act.".

Amendment No. 2 deals with predatory pricing, which is I suppose the principal issue in the Bill that has been the subject of dispute between the Government and the Opposition parties.

During the course of proceedings on Second Stage and Committee Stage, the Minister put all his eggs in one basket by stating that section 5 of the Competition Act 2002 should continue to be the mechanism by which predatory pricing is banned. However, no substantive legal arguments have been proven in court in this jurisdiction to show that predatory pricing is banned, so the Minister is reliant entirely on European law. Furthermore, abuse of a dominant position has been defined only in one case, which involved the Drogheda Independent newspaper. In that case, dominance was defined in such a way that the company was not deemed to be dominant even though it had 65% of the local market. If we accept that retailers of groceries and other products are to be adjudicated not to be dominant if they control 65% of the market, an awful lot of products will come under threat from big players.

The fundamental difference between the Government and the Opposition is that the Government is on the side of big business but we are on the side of maintaining competition in a market that is not concentrated in the hands of a few players. Whereas predatory pricing would remain a grey area under the Bill as it stands, we want to ban the practice explicitly under the Bill so that there would be no doubt about whether the law in this jurisdiction allows a dominant player to put smaller, more localised competition out of business. Amendments Nos. 2 and 3 are worthy of reflection.

The whole basis for abolishing the Restrictive Practices (Groceries) Order 1987 is to ensure the rebates and discounts available to retailers can be passed on to consumers. The Government has said that the free market will look after that.

Unfortunately, in the real world, major retailers will, in metaphorical terms, screw the small indigenous suppliers. Regardless of whether they supply sausages, bread, meat or whatever, they will come under enormous pressure, as they do at present. Such rebates are pocketed by the retailers, to the value of €2 billion in profits for a company like Tesco. They are not passed on to the consumers and, consequently, Members wish to see a mechanism which will enable that to happen.

Moreover, the multiples target small shops in a localised area, on a particular basis and restrict any special offers they might have to that locality. For example, a multiple could have a restrictive offer whereby a litre of milk would cost 10 cent while consumer purchases would be restricted to one or two units. Nothing in this law will prevent that from taking place. If this legislation passes without amendment, it will affect 137 shops in the Minister of State's constituency which are trying to compete with predation in their local community.

Everyone should be clear in this respect. If the legislation is passed in its current form, there will be nothing to stop large multiples with significant funds putting others out of business in a local community. Any special offers which a multiple might make would only be available, if it so wishes, within a small geographical area. There will be no obligation or compulsion to make such an offer available nationwide. The only basis on which a multiple will restrict an offer is to put its competition out of business. Hence, the non-restriction of offers should be made explicit.

Members have heard the Minister for Enterprise, Trade and Employment, Deputy Martin, assert that he wants to ensure that some aspects of the groceries order are enshrined in competition law. This means that he wishes to ban resale price maintenance and so-called "hello money". He wants to ensure that unfair credit terms are not imposed and that there is no obligation to compel people to pay for advertising allowances.

Unfortunately however, all these objectives are dealt with in section 15B(5), which effectively states that one must prove dominance before any of these activities are banned. Hence, small retailers will be expected to take cases against the large multiples if the latter are driving the former out of business. However, under the Competition Acts it would cost a fortune for such a retailer to make a case to the Competition Authority with the attendant barristers, solicitors, economists and required analysis. It could be another way to put them out of business. How can one expect a small retailer or supplier to take on the might of big business to prove what should be enshrined in law, namely, a complete ban on predatory pricing?

The proposed amendments will go some way toward ensuring a level playing pitch, genuine competition and choice for consumers so that big business will not put small players out of business in the local community through predation. I ask the Minister of State to reflect on the required balance in respect of the sale of products in this small country. Choice and diversity are required, as is a level playing pitch. Moreover, one must define dominance, which has not been defined satisfactorily in this jurisdiction. We should not rely on section 5 of the Competition Act 2002 as it would be very expensive to test. Will the Minister of State accept these amendments as a basis on which we can proceed and ultimately ensure proper competition in the marketplace across a wide range of consumer products?

See this speech in context