Brendan Howlin (Wexford, Labour)

As Deputy Hogan rightly stated, as far as most Members are concerned, this is the most important focus of the Bill. While this is not a lengthy Bill as far as the number of sections are concerned, it will have a major impact on the manner in which the operation of the grocery trade will be re-regulated or deregulated. There are genuine concerns among the existing players that this will have the impact of killing off the smaller players. All the reassurances Members have received from the Minister in recent months have not succeeded in abating those fears. While the Minister for Enterprise, Trade and Employment, Deputy Martin, has asserted he knows such matters in his heart, we need clarity in this respect.

I greatly fear that the core issue of predatory pricing will not be addressed. In all his responses on Second Stage and on Committee Stage, the Minister has relied on the fact that section 5 of the parent Act, that is, the Competition Act 2002, deals with the issue of predatory pricing. The problem is that he relies on European Court judgments in this regard. In my Committee Stage speech, I pointed out a difficulty in respect of that reliance. The Minister also acknowledged that no domestic judgments exist to give clarity in this regard. It always strikes me as odd when parliamentarians of any shade or hue prefer to rely on judicial decisions rather than on clarity of legislation to protect a vital interest.

Amendment No. 3 is in my name and seeks to insert a relatively simple new clause: "A retailer (whether or not it enjoys a dominant position) shall not engage in predatory pricing or any other unfair conduct in relation to price which is likely to eliminate or significantly reduce competition." From the Minister's perspective, the amendment's greatest weakness is its clarity. It sets out the objective that all Members are agreed upon. However, inserting such a clear objective into legislation must frighten the horses or something. Perhaps it was unusually candid of me on Committee Stage to note that the amendment's weakness is that it does not define the issue of predatory pricing. However, the Minister has done so in his utterances. He has stated that we all share an understanding as to what constitutes predatory pricing. However, that is not the case. As Deputy Hogan has rightly noted, the core issue is that reliance on section 5 of the Competition Act 2002 implies a reliance on the establishment of a dominant position.

On Committee Stage, the Minister took issue with the amendment I tabled and stated that it was contradictory in that it sought to deal with the issue of predatory pricing while simultaneously dealing with it in cases where an individual predator did not have a dominant position. He appeared to believe that this was a contradiction in terms. However, it is only a contradiction in terms if there is clarity as to what dominant position means and as I pointed out, no such clarity exists. I hope the Minister of State will take careful note of this point.

The issue of what constitutes a dominant position is anything but clear. All we can go on is European law, and in United Brands v. the Commission in 1978, the European Court of Justice defined dominant position as:

[A] position of economic strength enjoyed by an undertaking which enables it to prevent effective competition being maintained in the relevant market by giving it the power to behave to an appreciable extent independently of its competitors, customers and ultimately of its consumers.

This judgment obviously attached a considerable weight to the notion of what constituted a dominant position.

What percentage of the market constitutes a dominant position? As I tried to demonstrate on Committee Stage, there is no clarity on that issue. The threshold of dominance is an important consideration because the market share possessed by an undertaking may be a crucial factor in determining whether the European law as transposed into Irish law has been breached. However, the problem is that there is no definitive rule as to what percentage of market share will come into the scope of Article 82, transposed into Irish law by the Competition Act. In the United Brands v. the Commission case, a share of 40% to 45% of the banana market in a relevant member state was deemed by the court to be sufficient. Hence, a market share of 40% to 45% was determined to be dominant. However, in the Hoffman-La Roche case the European Court of Justice ruled that a firm was not in a dominant position holding 43% of the market, for vitamin B3 in that instance. In the Virgin Atlantic Airways Limited v. British Airways plc, the European Court of Justice found that an undertaking with a market share less than 40% was, in fact, a dominant position as understood by Article 83.

As I indicated on Committee Stage, the Minister is giving us firm assurances that the issue of predatory pricing is dealt with in the European law under Article 83, transposed into Irish law by section 5 of the Competition Act 2002. The problem is the reliance therein on the issue of what is dominance. There is no clarity in that regard, nor could the Minister indicate what dominance is. That is why I tabled amendment No. 3 to detach the issue of dominance where there is, as I have suggested, "predatory pricing or any . . . unfair conduct in relation to price [this is the crucial bit] which is likely to eliminate or significantly reduce competition".

To detach that obvious anti-competitive practice from any notional threshold of the market is an important consideration. If the Minister of State will regard that as contradictor, as the senior Minister did on Committee Stage, he lacks the understanding to grasp my intention and that of most who have come to address this issue, that is, to create certainty in the law on this critical issue of the avoidance of predatory pricing, the elimination of competition and the creation of dominance in the market over time by wiping out the competition, either in parts of the country or in the whole of the country.

From my perspective, this is the most critical issue. We debated the issue at length and I will not go through all the jurisprudence that the Minister bantered with us on Committee Stage. I seek this final opportunity for us on this side of the House to address real concerns which have not been addressed in all the utterances of the Minister on this issue to date, that predatory pricing will not follow from this enactment and that it will not create dominant players to the exclusion of smaller or weaker players in the groceries market henceforth.

See this speech in context