Micheál Martin (Cork South Central, Fianna Fail)

I welcome the opportunity to contribute to the debate and I apologise for my inability to attend yesterday evening.

As the House will be aware, the main objective of competition policy is to prevent and remove distortions of competition resulting from the actions of companies or public authorities, thus enabling markets to function effectively. A regulatory framework that upholds effective competition increases the competitiveness of industry and induces firms to innovate and enhance their efficiency and thus enables them to compete more efficiently in home and international markets. Competition reduces price differentials and avoids waste of resources. A dynamic business environment that ensures competition sets incentives to innovate and foster productivity growth. Effective competition in "home markets" also prepares companies to compete internationally. A competitive economy not only ensures the optimal functioning of the European market and the growth and competitiveness of European industry, it also creates benefits for consumers and society as a whole. Consumer welfare is at the heart of competition policy.

The Bill arises from an investigation conducted by the Competition Authority between March 2003 and June 2004 regarding possible price fixing among self-employed actors and advertising agencies. In this case, the authority found that an agreement between Irish Actors Equity SIPTU, on behalf of the actors, and the Institute of Advertising Practitioners in Ireland, on behalf of advertising agencies, was in breach of competition law in that it provided for both specific fees for services rendered and various other terms and conditions. In August 2004, the authority published its decision and the acknowledgement and undertakings made to it by both Irish Actors Equity SIPTU and the Institute of Advertising Practitioners in Ireland in which both parties agreed not to fix fees and to comply with the provisions of the Competition Act 2002.

The authority's investigation centred on section 4 of the Competition Act, which prohibits anti-competitive agreements, decisions and concerted practices. Section 4 applies when "undertakings" are engaged in arrangements which have as their object or effect the prevention, restriction or distortion of competition in trade in any goods or services in the State. Section 4(1) states:

Subject to the provisions of this section, all agreements between undertakings, decisions by associations of undertakings and concerted practices which have as their object or effect the prevention, restriction or distortion of competition in trade in any goods or services in the State are prohibited and void, including in particular, without prejudice to the generality of this subsection, those which (a) directly or indirectly fix purchase or selling prices or any other trading conditions . . .

Section 3 of the Act defines an "undertaking" as "a person being an individual, a body corporate or an unincorporated body of persons engaged for gain in the production, supply or distribution of goods or the provision of a service". This definition has been in use in Irish competition law for some time and is supported by EU case law. To establish a breach of section 4, the authority must demonstrate that there is an agreement, decision or concerted practice; that the parties to that agreement, decision or concerted practice are undertakings; and that the object or effect of the agreement, decision or concerted practice is to prevent, restrict or distort competition.

In this case, the parties did not dispute the existence of an agreement. The agreement was contained in a document entitled 2002 Agreement on Minimum Fees Effective from 1 October 2002. The institute did not contest that it was an association of undertakings and that its members were undertakings in their own right. The issue the Competition Authority then considered was whether actors were "undertakings" and whether Irish Actors Equity was an "association of undertakings" for the purposes of the Act. It was a question of whether the actors in question were self-employed independent contractors, who are subject to the Act, or employees, who are generally not subject to the Act. The authority considered this issue to be particularly important in this case where the trade union has both employed persons and self-employed independent contractors as members. The authority stated in its decision that, while it was perfectly legal for a trade union to represent employees in collective bargaining with their employers, its trade union mantle could not exempt its conduct when it acts as a trade association for self-employed independent contractors.

The authority also stated that if one were to take an inflexible approach and find that all trade union members were exempt from the Act, the protections afforded to consumers by the Oireachtas in enacting the Competition Act could easily be bypassed in that associations of independent pharmacists, publicans and barristers, to name but a few, could obtain sanctuary for their members by adding "union" to their name and obtaining a negotiating licence. It is important to understand that the authority carefully considered a number of factors before reaching its decision.

On the question of whether actors are "undertakings" within the meaning of the Competition Act, as a starting point, the Competition Authority considered whether the Revenue Commissioners treated actors as employees subject to PAYE or as independent contractors. The authority's investigation revealed that the vast majority of actors in the State are not treated as PAYE employees. It also considered other factors, such as the following: actors providing advertising services generally are not obliged to work for a single advertising agency, as they may work for several at the same time; such actors generally do not receive the benefits one usually associates with a contract for labour. For example, they generally do not receive holiday pay, health insurance, maternity leave etc.; such actors do not generally have employment security; such actors are free to accept or decline specific work as they see fit; and actors generally are not thought of as employees of a particular agency.

In light of these factors the Competition Authority took the view that actors are independent contractors and, therefore, are "undertakings" subject to the Competition Act. However, the authority acknowledged that there may be some actors who have genuine contracts of service and who are therefore employees, as is the case with some musicians. However, its investigation revealed that the vast majority of actors providing advertising services under the agreement that it examined were independent contractors and, therefore, undertakings. Having found the actors to be undertakings, it followed that Irish Actors Equity in this case was an association of undertakings and subject to the Competition Act.

The Competition Authority may enforce competition law by seeking appropriate civil remedy in the High Court or by recommending the prosecution of a criminal action by the Director of Public Prosecutions. Generally, the authority pursues a criminal prosecution only where there is clear evidence that parties are in breach of the more serious hard-core provisions of the Act.

Although the authority's investigation revealed an element of price-fixing, it elected, in this instance, to pursue civil relief. However, prior to the commencement of proceedings, the parties expressed their willingness to address the authority's competition concerns and signed undertakings. As I said earlier, these undertakings are appended to the authority's decision, which is published on its website. The authority also acknowledges the right of Irish Actors Equity to represent employed actors in collective bargaining with employers. It is clear that the Competition Authority carefully considered many factors in arriving at its decision in this case. In exercising its statutory functions, which this House bestowed on it, the authority did not lightly arrive at its decision.

The explanatory memorandum accompanying the Bill states that if the Competition Act 2002 applied with full force and effect to trade unions and their members, then trade unions would revert to their old common law status as unlawful "combinations" and trade union leaders would be prosecuted as parties to a criminal conspiracy.

I would like to refer to the laws governing freedom of association and trade union regulation. The law relating to trade unions falls into two distinct phases — statutes enacted mainly between 1871 and 1906 in order to secure trade union freedom and remove trade unions and their activities from the operation of the law; and statutes enacted since 1940 which sought to introduce a measure of public regulation of trade unions. Also, the Constitution of Ireland, which came into force in 1937, has had an important impact on industrial relations law and practice. A significant body of case law has developed in regard to the freedom of association guaranteed in the Constitution, as it applies to the activities of trade unions. The principal statutes governing the activities of trade unions in Ireland are the Trade Union Act 1871, the Conspiracy and Protection of Property Act 1875, the Trade Union Acts 1941, 1971, and 1975 and the Industrial Relations Acts 1990 to 2004.

Trade unions in Ireland derive their legal status largely from the Trade Union Act 1871, which provided a measure of protection for bona fide union activities and removed the taint of illegality from them. The 1871 Act also introduced a system of voluntary registration for trade unions. Unions could register with the Registrar of Friendly Societies but in order to do so they were required to have written rules setting out their objectives, benefits and so on. Registration confers certain powers and advantages on unions, which are not enjoyed by unregistered unions.

The relevant provision in the Irish Constitution in regard to freedom of association is Article 40.6.1°, which guarantees liberty for the exercise, subject to public order and morality, of "the right of citizens to form associations and unions". However, laws may be enacted for the regulation and control in the public interest of the exercise of that right. Article 40.6.2° provides that laws regulating the manner in which the right of forming associations and unions may be exercised shall contain no political, religious or class discrimination.

The constitutional guarantee of the freedom of association has been considered in a number of precedent-setting legal cases, which have had an important bearing on the conduct of industrial relations in Ireland. The courts have established the principle that a freedom or right to associate necessarily implied a correlative right not to join any trade union or a particular trade union.

Trade union legislation enacted since 1940, in contrast to earlier legislation, sought to introduce some regulation of trade unions by the State, principally in the form of a system of licensing of unions. The negotiation licence requirement sought to introduce some degree of regulation into a situation, where there was a large number of unions, many of them small, a considerable degree of union rivalry, which resulted in difficult inter-union disputes, and a tendency for disaffected groups of members to form breakaway unions. These measures, which were fully supported by the wider trade union movement, were designed to facilitate effective and stable trade union structures and promote more orderly industrial relations.

The Trade Union Act 1941 made it obligatory for any body of persons wishing to engage in collective bargaining to hold a negotiation licence. Various conditions apply to the holding of such a licence. Once a trade union satisfies all the conditions, the Minister of the day will grant it a negotiation licence.

The legalisation of the activities of trade unions by the Trade Disputes Act 1906 gave trade unions general immunity from action in tort against them. Under the Irish common law of tort, employers would otherwise have a right to sue trade unions for loss or damages arising from trade union activities. For persons acting, in the words of the Act, "in contemplation or furtherance of a trade dispute" it gave immunity from liability for the torts of conspiracy to injure, inducement of the breach of a contract of employment and interference with the trade, business or employment of another. It also legalised peaceful picketing in industrial dispute situations. The Act did not confer a positive right to strike or to organise industrial action; it merely immunised against civil liability. Later the Trade Union Act 1941 restricted most of the immunities to trade unions holding negotiation licences and the members and officials of those unions. The 1906 Act was repealed by the Industrial Relations Act 1990, but its main provisions were re-enacted.

The Trade Union Act 1941 sets out restrictions for the carrying on of negotiations for the fixing of wages and so forth. The proposed Competition (Amendment) Bill 2007 would exempt members of the first type of body, both employed and self-employed, from the requirements of section 4 of the Competition Act 2002 in regard to collective bargaining, but would not exempt members of the second type of body. In that Act there are two types of bodies which can carry on negotiations on the fixing of wages or other conditions of employment.

I agree with the Deputy that collective bargaining by trade unions on behalf of their members is actively encouraged as a bedrock of social partnership. Bargaining can take place, for example, at individual level between an individual worker and his or her employer or at collective level between a group of workers and their employer or between an employer or employers' association and one or more trade unions. Under this process, standard matters such as wages or hours of work are determined and, in addition, some collective agreements lay down procedural rules that govern the conduct of industrial relations. Thus, voluntary bargaining and not the law has been the primary driver of regulation in the employment relationship in Ireland. My concerns regarding the provisions of the Bill also encompass certain reservations regarding the approach to extending or granting protections to the self-employed through the device of what is commonly understood as providing immunities to trade unions in the carrying out of their collective bargaining functions.

A major degree of institutional and trade union reform and protections were included in the Industrial Relations Act 1990. Since then more than 20 new and amended legislative provisions have been enacted and they have widened the scope of employment protection both collectively and individually. These have resulted from initiatives from various Governments, the updating of Irish law, the transposition of European directives and the delivery of various commitments in the respective social partnership agreements.

It would not be appropriate, in my view, to single out a specific individual or group of self-employed professionals, through the mechanism of an amendment to the Competition Act 2002, to legislate for their particular employment status or bargaining position. I am not unsympathetic to the problem identified arising from the decision of the Competition Authority but this issue requires further detailed analysis and assessment on a much broader basis than the position set out in the context of this debate.

During the Dáil debate on the Consumer Protection Act earlier this year, Deputies may recall that I indicated my intention to review the operation of the 2002 Competition Act and that I would bring forward proposals for legislative change where it is warranted. In October, I announced a public consultation on the operation and implementation of the Competition Act 2002. In addition to publishing newspaper advertisements requesting comments, observations and submissions from any interested parties, we also wrote directly to a number of experienced competition law practitioners as well as to business representative groups and the Irish Congress of Trade Unions requesting their input into the review process. The end of year has been set as the deadline for receipt of all submissions.

I ask the House and, in particular, Deputies Higgins and Stagg to allow the proposals contained in the Bill, including their wider European Union implications, to be examined in the context of this overall review. That is the context in which we would favour consideration of the issues raised in this debate. To separate, select, identify or specify one category of the self-employed, albeit combined within a particular union, is not the best way to deal with the issues that have arisen. They are complex and connected to the relevant EU directive, which governs the overall legislation we enact in the Oireachtas.

See this speech in context