Richard Bruton (Dublin North Central, Fine Gael) | Oireachtas source

I move: "That the Bill be now read a Second Time."

This Bill, which is major reforming legislation, has three main objectives. First, as part of the programme of reform we are implementing across my Department, it will merge the National Consumer Agency, NCA, and the Competition Authority to create a powerful body with real teeth acting to protect and vindicate consumers' rights. New criminal investigation functions are being added to the significant powers that already exist in order to combat serious white collar crime and improve competitiveness and protect consumers.

Second, we are introducing strong regulations and enforcement powers to ensure fairness between suppliers and retailers in the grocery goods sector. There is potentially an inequality between these players that could be abused in a manner that would not be in the interests of jobs, consumers or sustainable safe food. Relationships will continue to be based on commerce and prices will continue to be set by hard negotiations. This is in the interests of consumers.

Third, diversity of content and ownership across the media remains an important part of a healthy democratic society. We are retaining the basic model of current laws, which is based on the principle of avoiding intervention by the Government in media ownership except in specific circumstances following procedures determined by law. This is in keeping with the recommendations of the advisory group established to examine this matter. However, it is important to modernise these laws to reflect international best practice and the latest technological developments. For this reason, we are implementing in full the advisory group's recommendations, with some enhancements, and making important changes to update laws in this area.

I now intend to deal with each of the main elements of the Bill in turn, the first being the amalgamation of the two agencies. Reform of the public service is one of the key commitments in the programme for Government and rationalisation of State agencies is a major part of that commitment. As part of that rationalisation, the Competition Authority and the NCA are being merged into one body, the competition and consumer protection commission. Since both were set up under statute, legislation is required to establish the new commission.

As consumer welfare is at the heart of competition and consumer policy, the merging of the two bodies will ensure improved co-ordination of these two policy areas. The merger of the NCA and the Competition Authority will lead to the establishment of a new body with stronger powers and more resources to deal with competition and consumer issues. The basic aim of consumer and competition policy is competitive markets with better services and lower prices for the consumer. The merger will benefit consumers, bringing together the economic and legal expertise of the Competition Authority and the practical knowledge and experience of the NCA into an effective integrated organisation. It will lead to efficiencies and synergies in carrying out the functions of the new body due to the existence of a stronger and more co-ordinated body dealing with consumer and competition issues.

An effective mechanism for overseeing competition and consumer empowerment in the marketplace is the best way to ensure that there are no barriers to entry and that jobs growth and innovation are promoted. This legislation will promote competition and consumer standards, long-term competitiveness and jobs growth.

The Bill sets out, primarily in sections 6 to 45, inclusive, of Part 2, the structure, powers and functions of the new merged body. Many of these sections cover traditional provisions on the establishment of a new body and the dissolution of existing bodies. In terms of structure and corporate governance, the new merged body will comprise a chairperson and between two and six members who will act in a collegiate manner. This structure is modelled on that of the Competition Authority and, consequently, there will be no board. The initial members of the new merged body will be the members of the Competition Authority and the CEO of the NCA. Appointments thereafter can only be made by me as Minister following an open recruitment process undertaken by the Public Appointments Service, PAS.

As is the case with the two existing bodies, the new competition and consumer protection commission will be independent in carrying out of a range of functions, such as enforcement, investigations and merger determinations. The commission will be accountable to the Oireachtas and me as the Minister for Jobs, Enterprise and Innovation in line with usual accountability and governance procedures and practices. Since being announced as part of the rationalisation plan for State agencies, my Department has worked, and is continuing to work, with both bodies to ensure a smooth transition from the two separate entities to a single dual-functioning body responsible for competition and consumer protection.

Crimes under competition law are often viewed as victimless. Let me be clear - we are all the victims of such crimes. Where the operation of the free market is restricted by collusion or other nefarious practices, the result is that consumers pay more than they should have to, whether it is to heat their homes or buy cars. The State and people as taxpayers are victims if companies engage in bid-rigging in respect of public procurement contracts for the building of roads, the fitting out of hospitals and schools or any of the services purchased by the State. All of this adversely impacts on national competitiveness and job creation.

One of the purposes of the Bill is to strengthen the enforcement of competition law by adding to the powers that will be available to the new commission. Breach of competition law is a serious white collar crime and, as with all other forms of crime, those who commit crimes must be punished accordingly. A suite of additional enforcement powers was provided to the Competition Authority in 2012 by me under the Competition (Amendment) Act 2012. I also sanctioned additional staff to be allocated to it in order to strengthen competition law enforcement.

Part 7 gives additional powers to the new commission by extending the provisions of the Criminal Justice Act 2011. In addition, some elements of the Criminal Justice Act 2007 have been incorporated into the powers of the new commission. As published, Part 7 also proposes the extension of the provisions of the Communications (Retention of Data) Act 2011 to serious competition law offences. However, the implications of the recent European Court of Justice, ECJ, ruling on the relevant EU directive on data retention and Ireland's Communications (Retention of Data) Act 2011 in general are being examined.

Other substantive changes to the Competition Act 2002 under sections 46 to 68, inclusive, of Part 3 of this Bill mainly revolve around the procedures to be operated by the new commission in respect of merger notifications. Many of these emanated from a public consultation process held in 2007 and 2008. I also intend tabling amendments on Committee or Report Stage, including some relating to the merger regime, based on the practical experience gained on the operations of the regime during the 11 years since its inception.

Regarding the Consumer Protection Act 2007, a series of five amendments is being proposed in sections 70 to 75, inclusive, of Part 5 on the basis of experience of that Act. I have previously stated that I intend introducing a further consumer rights Bill in 2015 that will update sales law and build on the experience of the Consumer Protection Act.

I will turn to the Bill's second main element, that being, the regulation of certain practices in the grocery sector via the enabling provisions in Part 6. At the outset, let me be clear that the Government is strongly of the view that it is important to ensure a balance in the relationship between the various players in the grocery goods sector and that Ireland continues to have robust agrifood and retail sectors, particularly given the importance of these sectors to the national economy. Regulation of certain practices in the grocery goods sector is intended to achieve such a balance, taking into account the interests of all stakeholders, including the consumer, and the need to ensure that there is no impediment to the passing on of lower prices to consumers. This balance is an important issue.

The need to regulate certain practices in the grocery sector has been asserted by many Deputies. Under the guidance of Mr. John Travers, an attempt was made to secure a voluntary code of practice. In May 2011, I published the Travers report, the findings of which were that there did not appear to be any likelihood of such a voluntary code being agreed. A draft statutory code of conduct was prepared and formed the basis of a public consultation process. Lack of any likelihood of a voluntary code was also recognised by the commitment in the programme for Government to regulate certain practices in the grocery goods sector. At the time of the publication of the Travers report, I recognised that regulation of grocery goods was highly contentious and that there was an inevitable strain in the relationships between suppliers and retailers. However, these relationships should be built on solid principles of mutual opportunity and fair competition, which does not always happen. I also stated at the time that I was disappointed that there had been no agreement on a voluntary code, as regulation by the Government should always be a last resort. Where regulation is contemplated, it should be forensically designed to avoid unnecessary costs on consumers and businesses and to ensure a fair balance is achieved between them.

As the House is aware, the Oireachtas has examined this issue a number of times.

The Oireachtas Joint Committee on Agriculture, Food and the Marine, under the chairmanship of Deputy Andrew Doyle, published a detailed report in late 2013 on the grocery goods sector and highlighted a range of areas which it believed were affecting the grocery goods sector in Ireland. The Joint Committee on Enterprise, Trade and Innovation also produced a detailed report on the retail sector in early 2011 under the chairmanship of Deputy Willie Penrose.

There have also been developments at EU level on the issue of the relationship between various parts of the food supply chain. In September 2013, a voluntary initiative on principles of good practices in the food supply chain was launched and adopted by certain European associations. However, not all elements of the supply chain signed up to this initiative, mirroring the different views on the value of a voluntary system that emerged in Ireland from the Travers report process. In a parallel exercise, the European Commission published its Green Paper, "Unfair Trading Practices in the Business to Business food and non-food supply chain in Europe", in early 2013 and commenced a public consultation on it to gather the views of market participants on the occurrence of these practices, their possible effects and the most effective remedies, if required. The public consultation process was guided by a range of questions ranging from asking if respondents considered that unfair trading practices were pervasive to whether there was consumer detriment in the presence of such unfair commercial practices. Given the diversity of respondents to the exercise, there was little consensus to any of the questions. The European Commission is considering the results to decide whether it will initiate any proposals in this area.

However, none of this precludes a member state from taking measures it believes may be required. Such complementarity between the EU work and the national work is recognised by the European Commission. Obviously, we will all take an interest in the implementation of the voluntary initiative and the impact of its development over the coming months, but it will not halt implementation of the commitment in the programme for Government to regulate in this area.

To give effect to the programme for Government commitment, the Government will introduce statutory regulation of certain practices. These will take the form of a series of regulations, with associated sanctions, rather than a code of conduct. This is a more powerful tool than a code. To oversee and enforce the regulations, there have been calls for an independent ombudsman. As the House will appreciate, the establishment of a new stand-alone State body to oversee this issue would not be feasible in the current economic climate for reasons of scarce financial resources, duplication with enforcement of existing legislation in the Competition (Amendment) Act 2006 on activities that prevent, restrict or distort competition in the grocery goods sector, and the need to ensure there is no unnecessary proliferation of public service bodies. Hence, as has been noted in previous comments on this matter in the Oireachtas, the new amalgamated competition and consumer protection commission will be the independent body assigned responsibility for overseeing and enforcing these regulations.

This new body will be given the powers to enforce the regulations and will build on the considerable enforcement and investigative powers the two current bodies have built up over recent years, rather than start afresh with a new body. Contravention of the regulations will be an offence, as will failure to comply with any contravention notice issued by the new competition and consumer protection commission. That body will also have the power to list publicly all undertakings that either have contravened the regulations or failed to comply with the contravention notices. This will inform consumers on which undertakings are not abiding by the regulations. The commission will also be able to act on its own initiative or on the basis of information supplied to it. However, in enforcing any regulations, the basic tenets of fair procedure and natural and constitutional justice must be upheld. Of course, if there are no suspect practices being carried out, there will be no issue for any contracting party to such relationships.

It is important to note that the introduction of regulations does not, and cannot, guarantee anything regarding the prices received by any given link in the supply chain. Negotiations on price will remain an issue between the contracting parties, as happens in any commercial relationship. What the new regulations will be intended to achieve is to regulate certain practices, not set prices.

These provisions are enabling provisions and set out the issues that will be covered by any subsequent statutory instrument, SI. Part 6 of the Bill, which covers sections 76 to 78, inclusive, sets out a long list of issues and activities which may be covered by such regulations. I intend that this implementing statutory instrument will be brought into force as soon as practicable after the Bill has been enacted, and I will consult with my colleague, the Minister for Agriculture, Food and the Marine, Deputy Simon Coveney, in drafting the regulations. This work will take place in parallel with the Oireachtas consideration of the Bill. The statutory instrument will be accompanied by a detailed regulatory impact analysis. The use of a statutory instrument rather than amendments to primary legislation allows for a more rapid response to changing conditions into the future.

With regard to some issues not covered by the proposal, I refer in particular to the disclosure of margins by retailers. The contents of the financial statements of companies are governed by relevant EU company law directives and regulations and by the applicable accounting standards. I understand the European Commission has no plans to amend this disclosure regime in respect of specific sectors in the economy as this would be open to accusations of discrimination and, were it to be required generally in the economy, it could have implications in terms of business costs and attracting foreign direct investment.

On section 69 in Part 4 and the issue of media mergers, under the current system, if the Competition Authority determines that a media merger fails the competition test, the matter is closed and the issue does not go to me, as Minister for Jobs, Enterprise and Innovation, for a determination regarding the public interest aspect of the merger. If the authority determines the merger can be put into effect, I, as Minister, may direct the authority to carry out a full investigation based on the notification and analysis from the Competition Authority of its decision and the details of the merger as presented. As part of this process, the authority is required to give an opinion as to how the application of the relevant public interest criteria - the strength and competitiveness of media businesses indigenous to the State, the extent to which ownership or control of media businesses and control of particular types of media business in the State is spread among individuals and other undertakings which are listed in the existing statute - should affect the exercise of my powers. If I do not make a decision counter to the original Competition Authority determination, no more action is required. However, if I make a decision counter to the original Competition Authority determination, this decision must be confirmed by me through the making of an order which must be laid before the Houses of the Oireachtas. That is the existing procedure.

This Part of the Competition and Consumer Protection Bill 2014 will implement the recommendations from the advisory group on media mergers which published a report, the Sreenan report, during the lifetime of the previous Government. These recommendations are aimed at modernising the system for regulating media mergers to reflect international best practice and in line with the latest technological developments. However, the broad three-step process that currently exists in respect of media mergers will continue in existence in future: first, a determination by the Competition Authority, or the competition and consumer protection commission in the future, that a merger has taken place; second, a decision by the Competition Authority, or the competition and consumer protection commission in the future, on whether the merger should or should not be permitted to go ahead on competition grounds; third, in the event that the Competition Authority, or the competition and consumer protection commission in the future, lets the merger go ahead on competition grounds, a decision by the relevant Minister on whether the merger should be permitted to go ahead on the grounds of public interest.

There is no provision for, and the Sreenan report did not recommend, an ongoing regulatory function in respect of media ownership. The power only falls to be exercised in the event that a merger takes place, as defined, and that a merger is permitted to proceed on competition grounds. The key concept relating to the definition of a merger remains the concept of effective control. No changes are recommended or provided for in this respect.

Section 69 includes a comprehensive suite of proposals to implement in full the recommendations of the Sreenan report, with two amendments. The first sees a change in the relevant Minister for such public interest considerations from the Minister for Jobs, Enterprise and Innovation to the Minister for Communications, Energy and Natural Resources, with a major role for the Broadcasting Authority of Ireland in drawing up a report for the Minister prior to his making a decision on the matter from a public interest aspect. The Sreenan report noted that both Ministers could be the relevant Minister for the purposes of this test, but it came down on the side of the Minister for Jobs, Enterprise and Innovation as the Competition Authority, an agency reporting to that Minister, would be responsible for the competition test of the proposed merger.

However, given progress in the areas of media, broadcasting and the digital area, it is more appropriate that the responsibility be transferred to the Minister for Communications, Energy and Natural Resources.

The second change relates to designating the relevant joint Oireachtas committee as a notifiable body when the Minister for Communications, Energy and Natural Resources is considering any proposed media mergers from the public interest aspect. The Government believes that the opinion of the relevant joint Oireachtas committee is a very important element of the consultative process that would be undertaken. The Sreenan report did not foresee a specific role for the Oireachtas, but the Government believes that this should be included by way of a notifiable body in the consultation process. This will complement the views of a specific advisory panel which will be established to assist in the examination of any given media merger.

The proposed Bill sees the new amalgamated competition and consumer protection commission's role strictly limited to examining the media merger from a competition angle only. The public interest test and final decision rests with the Minister for Communications, Energy and Natural Resources. The new amalgamated competition and consumer protection commission will have no role in this aspect, unlike the current situation where the Competition Authority must give an opinion in the matter. This clear division of responsibility is one of the cornerstones of the Sreenan report's recommendations. It also includes a wider set of definitions, a longer list of relevant criteria to be taken into account and sets out a formal consultation process that should be followed in making a determination in the public interest.

I firmly believe that the effective mechanism for overseeing competition and consumer empowerment in the market place, which is one of the main aims of the Competition and Consumer Protection Bill 2014, is the best way to ensure there are no barriers to entry and that jobs growth and innovation are promoted. This will promote competition and consumer standards, long-term competitiveness and jobs growth. I look forward to working with Deputies on Committee and Report Stages of this Bill. In the meantime, I commend the Bill to the House.

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